On average, the role of export-credit operations (ECOs) in the Brazilian economy has been modest: during the 1985-89 period they involved only 2.57 per cent of total Brazilian imports, highly concentrated in "equipment" (excluding transport, but including government services), "cereals" and "coal", with the United States, Canada and France being the most important partners (covering on average 88.5 per cent of the total).
The subsidy, in principle, corresponds to the value of the difference between repayments according to market and "soft" conditions, that is, the difference between interest payments without and with soft terms.
However, problems arise because (i) soft loans are not always made available as soon as they are agreed upon, (ii) such loans usually benefit from a grace period, (iii) the interest rate on the loan and the discount factor can change over time, and, last but not least, (iv) ex-anteevaluations of the benefit are hard to capture by looking at ...
