The Peruvian External Debt: Problem and Prospect

Extract

Peru, in the period 1976-1979, along with half a dozen or so other countries occupied the center stage in the discussion of developing countries, which fact serious difficulties in meeting their external debt service and which face equally if not more serious problems of internal adjustment—especially little if any economic growth—as they try to raise themselves out of their financial crises. The countries which might be on such a problem list1 each have their own specific problems. All of them, in one way or another, have had a major fiscal problem which has absorbed the bulk of domestic credit into the public sector and created strong pressures to borrow abroad. Of course, the individual causes of the public sector problem vary. In several countries, especially those which export copper, adverse export prices since 1974 have contributed significantly to development problems. The "list" of countries will no doubt change and quite probably expand in the next year or two, especially if there is an almost inevitable recession in the United States.