Page 323 - DECO503_INTERNATIONAL_TRADE_AND_FINANCE_ENGLISH

Unit 28 : International Debt Crisis

Country specific data show that nearly 45 percent of the total $131 billion debt-service payments Notes
made by developing countries in 1982 were made by Mexico, Brazil, Argentina, Chile, Venezuela,
South Korea, the Philippines, and Taiwan—the developing countries where the exposure of U.S.
banks to debt repudiation is significant. Debt service payments by these countries, plus Spain, in
1982, and the amounts they owed to U.S. banks at midyear 1982 are given in Table 1. Spain is a
developed country, but since some analysts consider the risk that it will default to be nontrivial, it is
listed here.
Table 1

Debt Service Payments by Developing Countries
(Billions of Dollars)

Estimated Debt Amount Owed U.S.
Service Payments Banks at
Country in 1982 Midyear 1982
Mexico 18.5 25.2
Brazil 15.2 20.5
Venezuela 7.8 10.7
Spain 5.7 6.6
Argentina 4.9 8.8
South Korea 4.8 9.2
Chile 3.3 6.1
Philippines 2.1 5.3
Taiwan 2.0 a 4.4

Total 64.3 96.8

a A precise estimate for Taiwan is not available. The figure given is a maximum.
SOURCES : OECD and Federal Reserve Board.

Traditionally, the ability of a nation to service its medium- and long-term external debts is measured
by comparing its total debt-service charges (interest plus amortization) to its exports and its GNP,
taking into account its reserves. These data are available only with a lag, however. Data for 1981 and
1982 are now available (see Table 2), but they indicate only what was true, not what is now true.
Table 2
Estimated Medium- and Long-Term Debt Service Payments, Reserves, Exports, and GNP
for Countries Where There Is a Nontrivial Chance of Default and U.S. Banks Are
Significantly Exposed, 1981 and 1982
(Billions of Dollars)

Debt Ratio of
Service Debt Service
Payments Reserves Exports GNP to
Country 1982 1981 1982 1981 Exports GNP

Mexico 18.5 4.2 26.3 230.7 .70 .080
Brazil 15.2 6.7 27.0 a 274.2 .56 .063

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