Deuda y desarrollo

I. Introduction
From very different perspectives the external debt of developing countries has been accused of being the main obstacle to the attainment of a sustained growth path that allows them to escape poverty. It is said that Official Development Assistance (ODA) flows do nothing but allow the payment of outstanding debts. Forgiveness is being asked for the debts owed by the poorestcountries to OECD creditors. However, considering that in general terms “debt” is synonymous of being condemned to eternal poverty is a serious misinterpretation of the problem. One must not forget that external debt is generated as a result of an agreement made by multiple operators on both sides, i.e. both the creditor and debtor countries, and that without the ability to borrow on their future growthit could be the case that many countries that have now reached significant levels of development would´ve been worse off.

The external debt of a country is but an insight into whether it has had the possibility to access financial markets for its development. The fact that a country is a large debtor does not mean anything negative in itself: it should only be interpreted as that country haschosen to borrow to finance its growth and, to the extent that it has done so in keeping with its ability to pay, debt should not pose any problem. Credit, whether commercial or official development assistance, specifically aims to contribute to the consolidation of a country´s productive sectors in order to generate wealth that may well be used to settle the repayments.

II. A story of debtand default
Let´s be serious! Debt contracts and loans are based on an expectation that debtors will repay. If creditors could not expect repayment, they would no longer make loans, and all the potential benefits of intertemporal trade –of enabling savings and investment decisions to be made– would be nullified. In spite of this, there is a long history of debts not being serviced on the agreedterms and of debt contracts ultimately being renegotiated. Quite often borrowers find themselves unable to service their debts on the contractually agreed terms or (in the case of governments) unable to do so without imposing unacceptable sacrifices on their populations. Eventually, creditors recognize this and have little recourse but to accept some losses.
Defaults on bank loans became morecommon in the 1970s when money deposited in Western banks by members of the Organization of Petroleum Exporting Countries, as a result of successive oil shocks, prompted a surge in bank lending, especially in Latin America. The lending splurge met serious consequences after US interest rate increases in the early 1980s (intended to bring inflation under control) and a successive decline in the terms oftrade of the borrowing countries led to a sharp increase in the cost these countries faced of servicing their debt. The perception of un-credit-worthiness and continued debt rescheduling led to the economic stagnation of the region and the renowned Lost Decade. International credit and capital flows to these countries and their private sectors were severely interrupted.
The first large scaledebt relief came in 1989, the Brady plan. When it was announced, the perception was that a large share of the loans these countries had taken up would never be entirely repaid, and that some form of substantial debt relief was necessary for these nations and their fragile economies to resume growth and to regain access to the global capital markets.
Brady bonds were issues by Mexico, by Argentina,Brazil, Bulgaria, Costa Rica, the Dominican Republic, Ecuador, Ivory Coast, Jordan, Nigeria, Panama, Peru, the Philippines, Poland, Russia, Uruguay, Venezuela and Vietnam, in an aggregate face amount of US$169 billion. It must be noted that the Brady Plan relieved the debt burden of countries whose indebtedness was primarily commercial. It did not cover countries whose outstanding debt was...