Have We Turned the Corner?

Jul 1, 2003

It remains to be seen whether Latin America can break out of its cyclical history of excessive borrowing, default and financial rehabilitation - and achieve rapid, sustained growth.

It remains to be seen whether Latin America can break out of its cyclical history of excessive borrowing, default and financial rehabilitation - and achieve rapid, sustained growth.

Latin Americans love to party, but the mornings after are grim. The same principle applies to the

Mexico City: Bye-bye Bradys

region's relationship with the international financial system. Nearly 200 years ago, the newly independent states of Latin America borrowed enthusiastically in the City of London, only to go bust shortly after. The Republic of Colombia was the first to borrow in 1822 with a £2 million loan. Mexico was the first to default in 1827, followed soon after by almost every other Latin American government.

The cycle of excessive indebtedness, uncontrolled expenditure and default has continued ever since. Buenos Aires defaulted on its debts in 1890, but seven years later the Financial Times reported how that "enterprising city" had just

received...

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