Blackwell Reference Online

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A problem on a massive scale as a result of the opec price rise of 1973, which quadrupled oil prices and led to a worldwide recession with high inflation, falling production and rising unemployment. All countries, rich and poor, were affected by it but it was the countries of the third world which suffered most, as commodity prices fell on world markets just when they needed exports to pay for the escalating costs of their imports. The opec price rise produced enormous surpluses for the Middle Eastern oil states which were deposited in European and North American banks, so money was available to finance the deficits of debtor countries. In 1970 only 12 countries had debts of over $1 billion and none owed over f 10 billion. By 1990 the three giants of international debt in Latin America – Brazil, Mexico and Argentina – all had debts of between $60 billion and $100 billion: 28 countries owed $10 billion dollars each. The world bank counted only 7 out of 96 ‘low’ and ‘middle economies’ which had foreign debts of less than f 1 billion. The relatively most indebted countries were in Sub-Saharan Africa, but the greatest volume of debt (60 per cent of the whole in 1980) was in Latin America, where debt had risen from $2–3 billion in 1970 to $340 billion in 1983, when foreign debt was 47 per cent of the region's GNP: annual interest payments were over a third of the value of its exports. ... log in or subscribe to read full text