Working Paper

The Politics and Economics of Cross-Border Credit/Debt Restructuring-The Experience of the "Periphery" Countries

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This year, in only a few months’ time we will be going through the 30th anniversary when Mexico announced that its government was unable to pay service on its external debt.

It was the initial episode of a crisis that on the debtor’s side mainly touched Latin America – although Côte d’Ivoire and our cousins in the Philippines were also involved in it – but brought about 10 years of economic stagnation, the “lost decade” as we got used to label it. On the creditor’s side, a banking “krach” that threatened almost all the major institutions, most specifically in the United States, was barely avoided by careful handling of it by the topmost government authorities, even if debatable as to the distribution of its costs between creditors and debtors. To-day confronted with the issue after 30 years it seems that little has changed, mostly the same real conflicts but also the same confusion of ideas keep coming back; “plus ça change, plus ce la même chose”.