14
Debt in the 1990s:
Latin America and Sub-
Saharan Africa
LATIN AMERICAN DEBT: CHANGE AND CONTINUITY
In contrast to what occurred during the crisis of the 19 3 Os, after the
1982 Mexican crisis Latin America's leaders resigned themselves to
negotiating separately with their private foreign creditors (who held
most of the region's external debt). The US was very much involved
in this process. Latin American leaders justified this approach by
saying that they had to prevent external lines of credit from being cut
off one after the other. In fact, Latin America has seen the worst of
both worlds: there has been a huge drain of wealth into the coffers of
private creditors - yet this has not prevented foreign banks from
cutting off their lines of credit. The Economic Commission for Latin
America (CEP AL) estimates the net transfer (see glossary) of capital
from Latin America to the North between 1983 and 1991 at more
than S200 billion. There has been a colossal transfer of wealth from
the countries of Latin America to the North's financial institutions.
Between 1982 and 1996, Latin America made S739.9 billion in
debt-servicing payments. Latin American debt has continued to grow
(see Table 14.1).
LATIN AMERICAN GOVERNMENT POLICY IN THE 1990s
The rate of poverty dropped in the 1950s and even more quickly
in the 1960s and 1970s. The 1980s were disastrous. In the 1990s,189