Brazil has fallen behind on $152 million of debt repayments due from the state oil company, Petrobras, to a group of banks headed by Wells Fargo of California, banking sources said yesterday.
The nation has been strapped for cash for weeks, as international banks have failed to come up with all the money that they promised under a debt package negotiated more than two months ago. U.S. Treasury Secretary Donald T. Regan complained to reporters earlier this week that Brazil--which has more than $80 billion of foreign debt--was being crippled by the banks' refusal to lend as much short-term money as promised.
Brazil and some of its larger creditors last week began a new push to get more money for the nation under the two parts of its complicated four-part financing package that have been causing the trouble. One is the so-called Project Three, which involves trade credits. The other--Project Four--deals with the short-term lending lines that foreign banks supply to overseas branches of Brazilian banks. These lines are about $1.5 billion short of what Brazil was promised in February, Regan said.
There has been no noticeable increase in these credit lines since a creditors meeting in London early last week, where Brazilian officials and their lead banks outlined their need for more cash, sources said yesterday.
Smaller banks, in the United States and elsewhere, are mainly responsible for the shortfall in loans to Brazil and there have been reports in Brazil that the late payment of the Petrobras loan is partly in retaliation against Wells Fargo and other smaller banks. A New York banker, however, dismissed this yesterday as "spurious," pointing out that other banks in the syndicate headed by Wells Fargo are also affected by the late Petrobras payment.
An administration source commented that it was "not a new" idea that the Brazilians might start to "slow pay" the banks that have not pushed up their lending levels under Project Four. The nation is "in arrears on a whole lot of things" by a few days, the source said.
Several experts believe that Brazil will have to raise more money in a new loan from commercial banks this year, particularly if its cash crisis continues. It is one of the major debtor nations that reached agreement with commerical banks on new money and stretching out old loans in conjunction with a loan agreement with the International Monetary Fund.