Brazilian External Debt Bazaar: A History of Foreign Loans and Debt Crises

Introduction

Brazil has a long and complex history of foreign loans and debt crises. In this book, Rabah Benakouche provides a comprehensive account of Brazil's external debt from the colonial period to the present day. Benakouche argues that Brazil's external debt has been a major obstacle to the country's economic development and has contributed to a cycle of poverty and inequality.

The Colonial Period

Brazil's first foreign loans date back to the colonial period. In the 16th and 17th centuries, Portugal borrowed heavily from European banks to finance its colonial expansion in Brazil. These loans were used to pay for the construction of infrastructure, such as roads and bridges, and to support the Portuguese military.

The Empire of Brazil

After Brazil gained independence from Portugal in 1822, the new government continued to borrow heavily from foreign banks. These loans were used to finance the construction of railroads, ports, and other infrastructure projects. However, much of the money borrowed by the Brazilian government was also used to pay for the country's military and to support the lavish lifestyle of the imperial court.

The First Republic

The fall of the Brazilian Empire in 1889 led to a period of political instability and economic crisis. The new republican government was unable to service its foreign debt, and Brazil defaulted on its loans in 1898. This default triggered a financial crisis that led to a sharp decline in the value of the Brazilian currency and a wave of inflation.

The Vargas Era

In the 1930s, Getúlio Vargas came to power in Brazil and implemented a series of economic policies that helped to stabilize the country's economy. Vargas also negotiated a number of agreements with foreign creditors that reduced Brazil's external debt burden.

The Military Dictatorship

The military dictatorship that ruled Brazil from 1964 to 1985 borrowed heavily from foreign banks to finance its ambitious economic development plans. This borrowing led to a rapid increase in Brazil's external debt, which reached $100 billion by the early 1980s.

The Debt Crisis

In 1982, Brazil defaulted on its foreign debt, triggering a debt crisis that spread throughout Latin America. The debt crisis had a devastating impact on Brazil's economy, leading to a sharp decline in output, investment, and employment.

The New Republic

After the end of the military dictatorship in 1985, the new democratic government negotiated a series of agreements with foreign creditors that reduced Brazil's external debt burden. However, Brazil's external debt remains a major challenge to the country's economic development.

Conclusion

Rabah Benakouche's book provides a comprehensive and insightful account of Brazil's external debt. Benakouche argues that Brazil's external debt has been a major obstacle to the country's economic development and has contributed to a cycle of poverty and inequality. This book is a must-read for anyone interested in the history of Brazil and the challenges facing the country today.

Why You Should Buy This Book

If you are interested in the history of Brazil, the challenges facing the country today, or the global economy, then you should buy this book. Rabah Benakouche's book provides a comprehensive and insightful account of Brazil's external debt and its impact on the country's economic development. This book is a must-read for anyone who wants to understand the complex relationship between debt and development.