RIO DE JANEIRO — Finance Minister Dilson Funaro signaled Brazil's creditors Tuesday that his country intends to limit its annual payments on foreign debt to 2.5% of its gross national product. The move comes after Brazil obtained refinancing of $31 billion of its $100-billion foreign debt with international banks last week.
Funaro said during a visit to Argentina, another major Latin American debtor, that Brazil cannot achieve the annual 7% growth rate for its economy that the government is aiming for if it has to pay foreign creditors 4% of its GNP.
"Brazil comes first, the creditors second," he said.
Brazil's annual production of goods and services--gross national product--is about $250 billion. A 2.5% limit on debt service payments would cut net payments to foreign banks by $2 billion to $3 billion next year.
Payment of interest and unpostponed capital amortization cost Brazil nearly $12 billion in 1984. This fell to less than $11 billion last year as interest rates declined, and it is expected to cost about $9 billion this year.