Brazil (B): The Real Plan

Abstract

This case describes the events between October 1998 and early January 1999. To prevent a devaluation of the real (Brazil's unit of currency), the International Monetary Fund (IMF) provided a standby loan to Brazil. The case outlines the conditions under which the loan was granted and the effect of the loan on Brazil's balance of payments. In January 1999, President Cardoso faces two new challenges: getting congressional support for fiscal reform and a moratorium on debt payments declared by one of Brazil's states. The case affords a discussion of the role of the IMF in helping countries in crisis and in promoting the stability of the international financial system, as well as a detailed analysis of Brazil's balance of payments. The case can be used in classes on international economics, international business, and international financial markets. See also the A (UVA-BP-0429) and C (UVA-BP-0431) cases.

Keywords: balance of payments, developing countries, economic development, economic policy, economic stabilization, exchange rates, foreign investment, international economics, macroeconomics, monetary policy

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