Brazil, which six weeks ago reached agreement on a financial rescue package with its commercial bankers and with the International Monetary Fund, is now seeking an additional $3 billion in short-term financing to ease cash flow problems.
Major U.S. creditors have agreed to try to raise more money for Brazil in the two categories that the nation's financial officials say are causing problems, sources said, although one U.S. banker said "we learned about that $3 billion figure in the Brazilian press." Officials of the four U.S. banks that organized the complex refinancing package will meet in London on Monday with eight other international banks to review the nation's performance so far and to discuss additional financing, bankers and officials said.
"There is a feeling that . . . a case . . . can be made for increased confidence in Brazil" since good trade figures were published last week, one banker said, adding that with the "comfort level" of bankers raised by the trade figures, it may be possible to increase the short-term loan commitments that Brazilian officials say have been too low to enable them to manage their payments easily.
Central bank governor Carlos Langoni has said in recent days that Brazil "urgently" needs an extra $1.5 billion in each of two categories. The first--labelled Project 3 during the negotiations between Brazil and its bankers--is trade finance; and the second--Project 4--consists of the money market lines and credits that foreign banks have with overseas branches of Brazilian banks.
Brazil is using two arguments to try to persuade its creditors to come up with the money that it needs to keep paying its bills, sources said. One is that recent trade figures for March show that the nation is keeping to its promise of limiting imports and raising exports, and deserves some aid in continuing to meet its targets. The second, Brazilian sources say, is that last week's riots in Sao Paulo--the nation's largest industrial city--show that the nation cannot tighten its financial measures any further without threatening political and economic stability.
Bankers who have been encouraged by Brazil's unexpectedly large trade surplus in March may not be moved by arguments of political problems, one said yesterday. He added that he hoped the Brazilians would not pursue these too vigorously in talks with commercial bankers as this could be "counterproductive."
Next Tuesday, planning minister Antonio Delfim Netto is to give an address at a world trade conference in Chicago, making the link between political instability and the liquidity crisis of Latin American nations, sources said. Officials said he was expected to restate President Figueiredo's condemnation of protectionism made at the United Nations last year, while Finance Minister Ernane Galveas will discuss this with Treasury Secretary Donald T. Regan at a meeting in Washington scheduled for next Friday.