Download file 448 KB Texto completo en español More of: David  Gallagher

Since 1982, nearly all Latin American countries have been facing a severe external financing crisis. The author outlines the process of debt accumulation in the previous decade, when the was an unprecedented supply of bank of funding. He argues that while the crisis was ultimately provoked by a deterioration in the borrowers’ terms of trade and a sharp fall in the international supply of funds, the debt accumulation process was already unsustainable, so the crisis was inevitable. As regards possible solutions, the author believes that the current negotiation process is reaching exhaustion point, and more durable and sustainable solutions to the problem will be needed. These will probably have to be generated by coordinated action from debtor countries, since the banks will seek to preserve the status quo.