Sterilization of incoming capital flows

Doug Henwood dhenwood at panix.com
Sat Oct 24 13:35:44 PDT 1998


Enrique Diaz-Alvarez wrote:


>Me too. This may be a stupid question, but where is the money that the
>Brazilian government got in return for those short-term bonds? Why isn't
>it available to repay those bonds that can't be rolled over?

Some went into reserves, some went to finance the budget deficit, and some went to finance the giant current account deficit. Without that inflow, the deficits (both of them) can't be sustained.

Doug



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