EXTERNAL INDEBTEDNESS
In 1973 the price of oil multiplied by four. Producing countries earned huge amounts of money, and private banks came to these countries with extremely low interest rates. 60% of the credits went to impoverished countries. In the case of Latin America, several countries in the region were under dictatorial regimes, which incurred debt in an imprudent or deliberate manner.
At the end of 1979 four detrimental events happened for these countries:
Interest rates rose (they multiplied by four from the end of 1970 to the beginning of 1980), which precipitated the debt crisis of 1982, which manifested itself strongly in Latin American countries. At that time, the acquisition of new loans was encouraged to deal with the payment of unpayable debts, causing as a result of this the economic catastrophe of that decade and the multiplication of the debt. [Citation needed]
The dollar was strongly appreciated.
World trade fell and exports from the South that were not oil were despised.
The structural adjustment plans were initiated.
A situation was reached, metaphorically explained by the analyst Ignacio Ramonet, in which the Third World countries invested more money in repaying the interests of that debt than in their own development
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