Justifying Debt: The Brazilian Military Regime’s Communication of Its Foreign Debt Policy

Brazil, one of the most important developing countries in the world, contracted substantial amounts of foreign debt to achieve its development goals when it was ruled by a military regime, between the 1960s and the 1980s. One of the major challenges that the Brazilian authorities faced in that period was how to justify their option for growing external indebtedness, something they have to do to both a domestic audience (the electorate) and foreign actors (such as commercial banks and international organizations). They had to show that the option for foreign debt was both reasonable and safe, and also that it would catapult economic growth.

I argue that there were at least three major lines of reasoning pursued by the authorities in the justification of Brazil’s foreign debt policy. The first was the idea that Brazil’s ever larger labor force would suffer immensely with slower economic growth, and foreign debt, in so far as it helped maintain the economy growing at high rates, provided a way to alleviate those social costs, especially in the complicated years following the first oil shock. The second line of reasoning consisted in highlighting Brazil’s enormous potential, whether in terms of population, sheer size, or natural resources. By pointing to these elements, the authorities were arguing that Brazil’s repayment capacity was guaranteed and that borrowing abroad was logical and sensible. A third common communication strategy consisted in relativizing the country’s growing level of foreign indebtedness. This could be achieved in several ways, e.g., by alluding to specific ratios that made Brazil’s situation seem solid or by simply dismissing comparisons with other countries. Overall, relativizing Brazil’s growing levels of foreign debt served to calm both Brazilians and foreign actors by arguing that the country had not reached any critical level of indebtedness. All three lines of argument had a kernel of truth, but they were also all problematic. The key issue to understanding the growing level of Brazilian indebtedness in the period was trust: the authorities had to maintain the confidence of creditors at any cost, so that there would always be new loans to the country. This research contributes, first, to Latin American historiography and studies of 20^th century military regimes, and second, to global economic history and the history of capitalism. By dealing with communication, it evidences the entanglement of the political and the economic and provides new insights about an important period in Latin American economic history.

I intend to divide the poster into five short text sections: an introduction, in which the question is posed; one section devoted to each of the lines of reasoning followed by the authorities; and a concluding section. I also intend to present at least two graphs showing different measures of the country’s debt to explain how the authorities could relativize any ratio. I might also include a picture of one of the finance ministers of the military regime.