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Brazil Exchange-Rate and Balance of Payments Policies
Many of Brazil's economic difficulties since the 1970s have been
blamed on external economic shocks. Brazil's heavy dependence on
imported petroleum
and on capital inflows from other countries made it highly vulnerable
to sharp rises in oil prices and to increases in interest rates.
Even when prices and interest rates declined in the late 1980s from
their earlier peaks, Brazil's economic problems persisted. Brazil
was surprisingly successful in adjusting its external payments after
the foreign debt crisis, which began with the Mexican default in
August 1982. However, Brazil paid a heavy domestic price for external
adjustment. Short-term measures to alleviate the balance of payments,
moreover, delayed long-term moves toward a more open and efficient
economy.
Data as of April 1997
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