The economic crisis of the ’80s that Latin America is still paying: how it originated and what are its consequences

In the ’80s Latin America suffered a economic crisis that today we continue to pay. It is about the crisis of external debta problem that has led certain countries to resort to a loan from the International Monetary Fund (IMF). Although resorting to this method has helped alleviate the crisis, it is a problem that continues to be faced in Latin America.

For example, in Venezuela, it has unleashed a series of protests, violence and looting where hundreds of people died in 1989. I knew the problem and how it affected Argentina.

What happened in the economic crisis of the ’80s

Due to rising oil prices and low interest ratesseveral Latin American governments had the purpose of industrialize their economies in the years leading up to the 1980s, but they ended up going into debt.

When commodity prices fell, interest rates rose and inflation rose. This caused the debt of the main Latin American countries to become priceless

Many governments such as Mexico, Venezuela, and including Argentinathey requested a financial aid to the IMF. The entity gave them capital to try to stabilize the economies but also launched debt restructuring policies.

Among them, governments had to reduce imports, increase exports and reduce public spending.

As a result of the great impact of the economic adjustments to face the debt, the following years are known as a “lost decade” in the social and economic development of the region.

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According to data from the Economic Commission for Latin America and the Caribbean (ECLAC), poverty increased markedly between 1980 and 1990, and there was a deterioration in income distribution, which increased inequality indices, reversing progress achieved. in the years prior to the crisis.

By accepting the IMF’s conditions, the debtor countries witnessed a great inflation and the purchasing power of its citizens decreased significantly, generating serious political and social problems.

This involved a radical change of economic model for many countries.

In the case of Argentina, the economic crisis and the defeat in the Falklands War contributed to the end of military rule who had been in power since 1976.

Although improvements began to be seen in the region after the 1990s with new debt restructurings and greater access to international markets, many of the economic indices took time to recover their pre-crisis levels.