Another Debt Crisis in the Making?

Debt crises have become more frequent across the world, especially in developing countries. More than 95 countries underwent some 600 debt restructurings during 1950-2010 with 280 restructurings taking place in 1980s and 1990s. The 1980s in Latin America were marked as a “lost decade”. The 1990s were not much better with many countries in unresolved debt crisis. The conditions improved over the last decade, as a result of a combination of internal and external factors like more favorable interest rates, growth of developing economies, changes in commodity prices, amongst others. Global changing conditions facilitated domestic and foreign borrowing. However, the increased borrowing was not driving economic and social development; it had limited impact on the real economy and became again more and more risky.

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