Debt and Devaluation

Abstract

and b). There is variation among Latin American states, however, that does not simply turn on the raw quantity of debt held. The scale of the economy, its recent economic history, the politics of emerging democracies and former military governments, and each state's bargaining position with transnational agencies have implications for the relative indebtedness of a nation and the relative burden on its poor.Ecuador illustrates this point. Its oil boom and (comparatively) small amount of debt paradoxically put it at a disadvantage in debt negotiations. In fact, it fared worse in the rescheduling of its debt and repayment periods. As a consequence, Ecuador's debt assumed a higher percentage of Gross Domestic Product (GDP) than those of Brazil and Mexico, two of the largest debtors. The policies developed by two military and two democratic governments to mediate these transnational pressures exacerbated the negative impact on the popular class.