We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Latin American Financial Markets - Essay Example

Comments (0) Cite this document
Summary to essay on topic "Latin American Financial Markets"
The beginning of the foreign debt crisis for many developing countries started early in the 1980s when the price of oil and other prime materials dropped sharply. This resulted in a reduction in export-related income for the producer countries at a time when they had to cover the servicing of growing foreign debt…
Download full paper
Polish This Essay
Latin American Financial Markets
Read TextPreview

Extract of essay "Latin American Financial Markets"

Download file "Latin American Financial Markets" to see previous pages... This situation reached a crisis in August 1982 when the government of Mexico announced a moratorium on the payment of capital totaling approximately $20 billion dollars scheduled for 1982 and 1983. This resulted in a complete suspension of new loans to indebted nations, placing a heavy burden on those countries in Latin America where almost 50 percent of worldwide debt was concentrated.
Let us write or edit the essay on your topic "Latin American Financial Markets" with a personal 20% discount.. Try it now
The closure of international financing sources obliged the debtor nations, including Venezuela, to adopt adjustment policies that had a severe recessionary impact. Against this background, the Venezuelan government and the central bank agreed, in February 1983, on the establishment of a foreign exchange control system based on differential exchange rates. This allowed the granting of foreign exchange for basic imports and debt servicing at a preferential exchange rate, while the other transactions were directed toward the free market where the exchange rate was progressively devalued. The goal of these measures was to protect international reserves and to decrease aggregate demand, reduce consumption and investment expenses, while generating exchange savings that would permit servicing the foreign debt. These policies, however, affected the potential earnings and future possible consumption by the population.
Therefore, it was necessary to arrive at an agreement with international creditor banks regarding the refinancing of public-sector foreign debt, to achieve an important reduction in the servicing burden. The Venezuelan government began contacts with the banking community in 1983, and in 1986 a restructuring agreement was signed. This had to be modified in 1987 due to the fall of oil prices, but this proved to be only a transitory solution until a new restructuring agreement was designed in 1990 in accordance with the Brady Plan mechanism.
In this regard, it should be pointed out that 1988 ended for Venezuela with mounting pressures in the foreign exchange market and an increasingly adverse economic outlook. The presence of negative real interest rates gave rise to the inefficient allocation of resources and an accelerated capital flight. As a result, and in spite of existing exchange controls, net international reserves fell steadily and in amounts that fluctuated between $926 million and $4,900 billion between 1986 and 1988.
Additionally, in 1988, the fiscal deficit as a percentage of GNP reached 7.4 percent and the inflation rate surpassed 30 percent, which was the highest level reached in Venezuela until that time. Unfortunately, the inflation rate became even worse in 1989, when it reached 80.1 percent, the highest registered until now.

The 1990 Restructuring Agreement
For the purpose of guaranteeing the viability of the economic adjustment and reform program adopted in 1989, it was essential to resolve the problem of servicing the public-sector foreign debt. The servicing of such debt on average represented almost 40 percent of the value of oil exports between 1982 and 1988, while the interest payments represented slightly more than 20 percent of the total fiscal expenses between 1987 and ...Download file "Latin American Financial Markets" to see next pagesRead More
Cite this document "Latin American Financial Markets"
  • APA
  • MLA
(“Latin American Financial Markets Essay Example | Topics and Well Written Essays - 2750 words”, n.d.)
Latin American Financial Markets Essay Example | Topics and Well Written Essays - 2750 words. Retrieved from https://studentshare.org/miscellaneous/1503312-latin-american-financial-markets
(Latin American Financial Markets Essay Example | Topics and Well Written Essays - 2750 Words)
Latin American Financial Markets Essay Example | Topics and Well Written Essays - 2750 Words. https://studentshare.org/miscellaneous/1503312-latin-american-financial-markets.
“Latin American Financial Markets Essay Example | Topics and Well Written Essays - 2750 Words”, n.d. https://studentshare.org/miscellaneous/1503312-latin-american-financial-markets.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
Regionalism in Latin America
Regionalism has revived and changed dramatically in the 21st century following the decline in theory and practice of the globalization in 1970s. Currently, it seems to have overtaken the emerging potent of globalization, especially in the Latin America. Regionalism is a component of globalization but it may be a cause of threat to the globalization too.
10 Pages(2500 words)Essay
Integration Efforts in Latin America
In the auspicious conditions subsequent to the world war, majority of these states, particularly Latin America started to achieve an industrial revolution. In reference to Angeles-Castro et al (2011, p. 35), the industrial revolution had failed to be adopted a century earlier because of the different world political and economic conditions that prevailed.
10 Pages(2500 words)Essay
Emerging Markets and Financial Regulation
Financial instability and crisis have rocked most economies, with the recent one being experienced in the 2008-2009 period. One of the reasons cited behind this crisis has been a laxity on market discipline resulting in the lack of adequate warning signs that could have triggered the implementation of corrective measures.
2 Pages(500 words)Essay
UK and American Financial Markets
And in the neo-liberal economic order of the world today, national economies are ever more intertwined, making it impossible for any one nation to insulate itself and its people from the effects of the crisis. This is most obvious when we take a look at the data pertaining to the recent global economic recession, precipitated by the collapse of credit derivatives.
4 Pages(1000 words)Essay
Take home question Financial Markets of Latin American
On principle, common sense and previous experiences (let's remember the October 19th of 1987 crisis, when the Dow Jones suffered its worst fallen in peaceful times, going down in a 22% and tainting the European and Japanese Stock markets; or when the disaster came in 1988 due to the storm in the Asian financial markets originated an unexpected non payment over the Russian debt1) pointed at South American Countries as ones of the most probable to be infected by the recent financial market turmoil.
2 Pages(500 words)Essay
Emerging Markets
The demand of a market, on the other hand, is determined by factors such as fashions and trends, affordability and the availability of substitute and complement goods.
8 Pages(2000 words)Essay
Latin American Bond Markets
This is despite the many challenges involved. This paper explores the development of these markets and the challenges they face. It also seeks to delve into how regional financial cooperation comes into play between Latin America and its neighbors. Other
4 Pages(1000 words)Essay
The problem of unpaid labour in latin American economics
In Latin America, women and children make up the larger portion of the unpaid workforce. The children are denied the most important activities of their childhood such as sports in order to provide for their families. According to a survey conducted
12 Pages(3000 words)Essay
How Experience of Colonialism Affected Latin American Development And Post-independence
According to the report colonial powers contributed to the spread of Christianity and suppression of the traditional religions and introduction of new languages such as Spanish, English, Dutch, French and Portuguese. The Latin American political problems during the colonial period resulted from the paternalism and Spanish colonial system.
8 Pages(2000 words)Essay
Let us find you another Essay on topic Latin American Financial Markets for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us