As a result, interest arrears mounted.

The country's commercial debt was said to stand at $10,600 million, plus $1,200 million in interest arrears, to some 500 banks.

The balance of the interest arrears would be settled through the issuing of 10-year bonds, with a three-year grace period and increasing amortization.

Brazil and the banks reached an accord in November aimed at bringing $4.5 billion of interest arrears up to date.

The private bankers seek payment of $8 billion in interest arrears.

The banks were demanding that Poland pay $250 million in interest arrears as a precondition to any agreement.

The agreement, reached in April, would pay international commercial banks the interest arrears.

In early June, Argentina began paying $40 million a month in interest, but those payments are not enough to prevent its interest arrears from rising.

Brazil must then come up with another $1 billion and the banks with another $2 billion by mid-1988 to cover other interest arrears for 1987.

With interest arrears of $5 billion, Miss Cardoso has resisted bankers' demands to resume interest payments.