Brazil

Brazil - Balance of payments After a decline in the mid-1960s, Brazil's reserve holdings grew spectacularly, reaching $6.5 billion by 1974. The prime reason was a steadily rising inflow of long-term capital investment, coupled with trade balances that were favorable or only minimally unfavorable. In 1974, however, a decline in the value of coffee exports and a doubling of import costs (partly attributable to increased oil prices) more than offset a further rise in capital investment, resulting in Brazil's first payments deficit in nearly a decade. Between 1976 and 1978, Brazil had a positive balance of payments, but large deficits were registered in 1979 and 1980. A surplus was achieved in 1981, in part because of Brazil's excellent trade showing. The surpluses in 1984 and 1985 were sufficient to pay all interest on the foreign debt. During the 1970s and early 1980s, Brazil increasingly came to rely on international borrowing to meet its financing needs. The foreign debt grew rapidly after 1974 as the government pressed for continued economic growth without regard for balance of payments pressures generated by the oil shocks of the later 1970s and without increasing domestic savings or improving the tax base. The huge trade surpluses of 1984 and 1985 halted the upward trend. However, the 1986 surge in consumer spending drained reserves to such an extent that by early 1987, the government was forced to suspend payments on $68 billion of the estimated $108 billion debt, the highest of any developing nation. An agreement was reached in April 1991 on 1989–90 arrears. In 1992, Brazil and the advisory committee representing foreign commercial banks agreed to a debt and debt service reduction for $44 billion. Under the Real Plan, the balance of payments dropped from a surplus of $10.5 billion in 1994 to a deficit of $3.1 billion in 1995, -$5.5 billion in 1996, and -$8.4 billion in 1997. This transformation in Brazil's trade position was due to an overvalued exchange rate, market opening, and suppressed demand for capital and consumer goods. A devaluation of the currency in 1999 led to a reduction of the trade deficit in 1999 and in 2000. In 2000, foreign direct investment reached a record $32.8 billion. That year, Brazil ran a $24.6 current account deficit, due in large measure to payment on its $17 billion foreign debt. The US Central Intelligence Agency (CIA) reports that in 2001 the purchasing power parity of Brazil's exports was $57.8 billion while imports totaled $57.7 billion resulting in a trade surplus of $100 million. The International Monetary Fund (IMF) reports that in 2001 Brazil had exports of goods totaling $58.2 billion and imports totaling $55.6 billion. The services credit totaled $9.3 billion and debit $17.1 billion. The following table summarizes Brazil's balance of payments as reported by the IMF for 2001 in millions of US dollars.

Current Account Balance on goods

-23,211 2,645

Balance on services Balance on income Current transfers Capital Account Financial Account Direct investment abroad Direct investment in Brazil Portfolio investment assets Portfolio investment liabilities Other investment assets Other investment liabilities Net Errors and Omissions Reserves and Related Items

-7,750 -19,745 1,639 -36 20,079 2,259 22,636 -796 873 -6,284 1,862 -250 3,418

Malaysia - Balance of payments Malaysia sustained a favorable trade balance throughout the 1960s and 1970s, recording its first trade deficits in 1981 and 1982, as world prices for tin, crude oil, rubber, and palm oil, the major exports, weakened simultaneously. Malaysia's balance of payments, like that of many other producers of primary products, was adversely affected in 1981– 82 by the prolonged recession in the world's industrial nations. From 1983 to 1986, however, Malaysia registered trade surpluses. In the 1990s, a significant growth in exports and a decrease in imports led to trade surpluses, along with a fairly large services deficit. In the early 2000s, however, exports declined, but so did imports of intermediate components used in the manufacture of the country's electronics exports; this contributed to continuing strong trade surpluses. The US Central Intelligence Agency (CIA) reports that in 2001 the purchasing power parity of Malaysia's exports was $94.4 billion while imports totaled $769 million resulting in a trade surplus of $93.631 billion. The International Monetary Fund (IMF) reports that in 2000 Malaysia had exports of goods totaling $98.4 billion and imports totaling $77.6 billion. The services credit

totaled $13.8 billion and debit $16.7 billion. The following table summarizes Malaysia's balance of payments as reported by the IMF for 2000 in millions of US dollars.

Current Account

8,409

Balance on goods

20,854

Balance on services

-2,951

Balance on income

-7,514

Current transfers

-1,979

Capital Account

…

Financial Account

-6,276

Direct investment abroad

-2,026

Direct investment in Malaysia

3,788

Portfolio investment assets

…

Portfolio investment liabilities

-2,472

Other investment assets

-5,565

Other investment liabilities

…

Net Errors and Omissions

-3,142

Reserves and Related Items 1,009

Cape Verde - Balance of payments

Cape Verde's massive annual trade deficit is only partially offset by remittances from Cape Verdeans employed abroad. Annual payment deficits were substantial and could be met only through foreign assistance. The average import growth rate between 1990 and 1995 was 14%, compared to a GDP growth rate of 4%. Debt in 2000 reached $301 million. Due to foreign investment, largely in free-zone enterprises, exports have risen in recent years. In 1992, banana, lobster, and fresh and frozen fish accounted for 92% of the country's exports, led by banana exports. In contrast, in 1999, shoe parts, shoes, and garments accounted for 76% of exports, led by shoe exports. The US Central Intelligence Agency (CIA) reports that in 2001 the purchasing power parity of Cape Verde's exports was $273 million while imports totaled $218 million resulting in a trade surplus of $55 million. The International Monetary Fund (IMF) reports that in 1999 Cape Verde had exports of goods totaling $26 million and imports totaling $241 million. The services credit totaled $106 million and debit $117 million. The following table summarizes Cape Verde's balance of payments as reported by the IMF for 1999 in millions of US dollars.

Current Account

-75

Balance on goods

-215

Balance on services

-11

Balance on income

-9

Current transfers

159

Capital Account

4

Financial Account

129

Direct investment abroad

-0

Direct investment in Cape Verde 54 Portfolio investment assets

…

Portfolio investment liabilities

3

Other investment assets

-14

Other investment liabilities

86

Net Errors and Omissions

-9

Reserves and Related Items -50

Mauritania - Balance of payments

An external debt of $2.6 billion in 1998 resulted in debt servicing that rose 38.5% from 1997 to 1998, causing a leap in the balance of payments deficit. External trade increased in the late 1990s, due to the creation of private exchange offices and the liberalization of exchange systems. Foreign investment began to resume as well. The country's outstanding foreign debt in 2000 was estimated at 220% of GDP, but due to debt cancellation and rescheduling, debt service payment problems were somewhat alleviated. Mauritania's external debt had declined to $1.6 billion by 2000. In the same year, Mauritania qualified for $1.1 billion in debt service relief from the IMF/World Bank Heavily Indebted Poor Countries (HIPC) initiative, and in 2001 it received strong support from donor and lending countries. In 2003, the IMF approved a three-year $8.8 million loan to the country. The US Central Intelligence Agency (CIA) reports that in 2000 the purchasing power parity of Mauritania's exports was $359 million while imports totaled $335 million resulting in a trade surplus of $24 million. The International Monetary Fund (IMF) reports that in 1998 Mauritania had exports of goods totaling $359 million and imports totaling $319 million. The services credit totaled $34 million and debit $153 million. The following table summarizes Mauritania's balance of payments as reported by the IMF for 1998 in millions of US dollars.

Current Account

77

Balance on goods

40

Balance on services

-119

Balance on income

-32

Current transfers

188

Capital Account

…

Financial Account

-26

Direct investment abroad

…

Direct investment in Mauritania 0 Portfolio investment assets

…

Portfolio investment liabilities

-0

Other investment assets

190

Other investment liabilities

-216

Net Errors and Omissions

-8

Reserves and Related Items -43

Sri Lanka - Balance of payments

Sri Lanka's balance-of-payments position is highly sensitive to price changes in the world market because it depends in large part upon a few export crops to pay for its imports. Since 1983, sharply rising defense expenditures, a decline in tourism caused by

continuing civil violence, and slumping world tea and coconut prices combined to exert pressure on the balance of payments. The deficit has also been partially offset by substantial foreign exchange earnings from tourism and from remittances by Sri Lankans working abroad. The current account deficit has declined each year since 1994 when it stood at $860 million. Export growth in 1999, however, slowed considerably to 2% and earnings from tea exports had declined 40% due to the impact of the Russian economic crises in 1998. In 2000, exports increased by close to 20% to $5.5 billion, and exports of garments and tea did very well. Other exports, such as food, rubber products, machinery, and processed diamond exports, also performed well that year. Sri Lanka floated the rupee in 2001, and the central bank began employing currency controls. Since then, the controls were relaxed. In addition, the government imposed an import duty surcharge to stem the flow of imports. The country's external debt stood at $9.9 billion at the end of 2000, equal to 60% of GDP. The US Central Intelligence Agency (CIA) reports that in 2001 the purchasing power parity of Sri Lanka's exports was $4.9 billion while imports totaled $6 billion resulting in a trade deficit of $1.1 billion. The International Monetary Fund (IMF) reports that in 2001 Sri Lanka had exports of goods totaling $4.82 billion and imports totaling $5.38 billion. The services credit totaled $1.37 billion and debit $1.76 billion. The following table summarizes Sri Lanka's balance of payments as reported by the IMF for 2001 in millions of US dollars.

Current Account

-265

Balance on goods

-554

Balance on services

-390

Balance on income

-281

Current transfers

959

Capital Account

49

Financial Account

380

Direct investment abroad

…

Direct investment in Sri Lanka

172

Portfolio investment assets

24

Portfolio investment liabilities

-35

Other investment assets

13

Other investment liabilities

207

Net Errors and Omissions

165

Reserves and Related Items -329