From Baker to Brady: Can the new plan work?

Robert Devlin ()

Brazilian Journal of Political Economy, 1990, vol. 10, issue 2, 224-236

Abstract: The Brady Plan proposes to stimulate reforms and development in countriesfacing problems with their external debt through debt relief and debt servicing. However,debt reduction is nothing new, as this was already an important component of the BradyPlan and its “market menu” strategy. The greatest contribution of this Plan is the willingnessto support the voluntary reduction of the external debt with public resources and publicinstitutional reform. As the Plan is conceptually correct, the difficulty is still in the lack offunds and public coordination. Without a greater commitment of public resources and astronger institutional basis for rewards and fines that can induce banks to “voluntary” losses,the Brady Plan will only produce a modest reduction in excess external debt. Furthermore,a partial reduction in excess debt produces mixed benefits for both debtors and creditors. JEL Classification: F34; F38.

Keywords: External debt; stabilization; Brady Plan (search for similar items in EconPapers)
Date: 1990
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