-to-GDP ratio. In comparing debt forecasts with and without these effects, the difference in the forecasted debt decline is roughly 10-15 percent of GDP over a five years projection period for Brazil. Moreover, the channel through which the primary balance affects macroeconomic fundamentals is important. If a lower primary balance today raises growth next year, debt could fall initially but then decline slowly over the medium term, as the debt reduction effects of higher GDP are partially offset by the initial lower primary balance. If a higher primary balance today lowers
taken to explore market-based, voluntary debt alternatives. If they should fail, the international community must offer a solution or else face unilateral action.” 38/ 2. Comprehensive debt reduction operations The Aztec debt exchange had an impact that went well beyond its modest net debt reduction effects. It represented the first officially-sanctioned market-based bank debt reduction exercise for a large middle-income developing country debtor. 39/ It confirmed the gradual movement toward DDSR operations based on a voluntary market-based approach, and
must offer a solution or else face unilateral action.” 35 Comprehensive Debt-Reduction Operations The Aztec debt exchange had an impact that went well beyond its modest net debt-reduction effects. It represented the first officially sanctioned, market-based, bank debt-reduction exercise for a large middle-income developing country debtor. 36 It confirmed the gradual movement toward debt- and debt-service reduction operations based on a voluntary market-based approach, and the associated recognition that some write-down of contractual debt to banks was