Debt Forgiveness Snowball Effect

In 1982, with interest rates up to 13% from 5% in 1970, Latin American countries were unable to pay the interest accumulating on their debts, much less pay down the principal.

In August of that year, Mexico declared that it could no longer pay its foreign debt, triggering a decade-long debt crisis in the region.

Despite the $612 billion paid to service the debt in the 1980s and 1990s, the $237 billion of Latin American debt in 1982 grew to $660 billion in debt by 2001.

Foreign Debt: Forgiveness and Repudiation
By Enrique Carrasco, Charles McClellan & Jane Ro