• by IPS Correspondents (bonn)
• Tuesday, December 13, 1994
• Inter Press Service

BONN, Dic 13 (IPS) - Latin America may soon witness the return of a debt crisis, according to a just published report by a German non-governmental organisation (NGO) which notes that outstanding loans have shot up by nearly 40 billion dollars in recent years.

According to the report, Latin American countries had been loaned a total of 513 billion dollars up to the end of last year, compared to 473.7 billion dollars at the end of 1990.

This compares to total developing country debt which was estimated to amount to 1,750 billion dollars toward the close of 1993.

Paralleling the continuous hike in Latin American borrowings, debt servicing charges soared from 46.1 million dollars in 1990 to 57.3 million dollars last year.

The report, prepared by the Bonn-based NGO 'World Economy, Ecology and Development' (WEED) said the danger of an impending financial crisis is mainly because of an alarming rise in interest charges required to be paid on loans -- a development that had caused the debt bomb burst in Latin America back in the 1980s.

"It is particularly disquieting that such warnings tend to be ignored both by the community of international creditors as well as by NGOs whose focus presently is on the debt burden under which sub-Saharan Africa is groaning," argued the WEED report.

Its author Walter Eberlei explained that since 1989 the interest charges on dollar credits had declined considerably. This had helped developing countries save 25 billion dollars a year in interest obligations, as Germany's Ministry of Economic Cooperation and Development (BMZ) had calculated.

However, interest rates worldwide have been going up since the beginning of 1994, said the WEED, citing the September monthly report of Germany's central bank, the Bundesbank.

The hike had been triggered by fears of an impending inflation in the United States and other industrial nations as well as by the fact that capital demand worldwide had increased considerably against the backdrop of an ongoing economic recovery and persistent public deficits in the national budgets.

Indeed, interest rates increased slightly in all major industrial nations.

© Inter Press Service (2014) — All Rights Reserved. Original source: Inter Press Service

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