Latin American Debt Crisis

Document Type



Politics (Scripps)

Publication Date



Economic History | Economics | Growth and Development | International Economics | Political Economy | Political Science


The Latin American debt crisis officially began in August 1982 with Mexico’s announcement that it could no longer meet its interest payment obligations. External debt in Latin America had quadrupled from a 1975 level of $75 billion to more than $315 billion by 1983, which was about 50 percent of gross domestic product for that region. Variable interest rate loans meant that debt service (interest payments and the repayment of principle) grew even faster, rising to $66 billion by 1982 from $12 billion in 1975 (Gruppen 1986). The crisis was set in motion in the early 1970s when private bank lending to Latin America began to expand rapidly, eventually overtaking international development bank lending as the primary source of external funding for many rapidly growing Latin American countries.

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