Revista de Economia Política, 19(2) abril 1999: 103-120. Originalmente publicado em São Paulo: Fundação Getúlio Vargas, Departamento de Economia, Texto para Discussão n° .48, novembro 1995.
This paper is an account of the Brazilian 1987 negotiation of the debt crisis, that represented a turning point in the history of this world financial crisis. When the author assumed the Finance Ministry of Brazil, in April 1997, the country was in moratorium. The minister, after consulting international bankers, economists and state officials, prepared a proposal for solving the problem that was based in two key ideas: the securitization of the debt with a discount, and the relative delinkage between IMF and the commercial banks in the negotiations. In September 1997 the proposal received from the Secretary of the Treasury, James Baker, a public “non starter” answer, but, given the interest it immediately arose in the international financial community, eighteen months later the Brady Plan, that established the parameters for solving the debt crisis, had as core proposals these two ideas.