There are many reasons to welcome the tentative agreement between the banks and Brazil that eases the crisis over servicing and repaying Brazil's enormous debt.
Brazil, with the largest debt of all developing nations, has posed complex problems. Its debt of $122 billion weighs heavily on the ability of that enormously important nation to continue its economic expansion and to achieve self-perpetuating growth. Now the burden of the debt has been relieved by reduced interest rates and extended repayment schedules, and new capital--more than $5 billion--has been assured to facilitate debt service and accelerated economic expansion. Furthermore, highly innovative arrangements have been drawn up to let the 700 banks holding the debt develop a variety of measures to ease their problems as well as those of Brazil.
Beyond Brazil, the arrangements provide encouragement to the search for a resolution of other major bank debts, which are concentrated in Latin America, and debts to governments, which are concentrated in sub-Sahara Africa. This agreement should inspire new steps in dealing with the No. 2 debtor of the Third World, Mexico, where progress already had been made. But the greatest effect may be on the negotiations with Argentina, No. 3 on the debt list, which--like Brazil--owes most of its debt to banks rather than to other governments.