The balance of payments deficits after the late 1950s led to
a large foreign debt, most of which was accumulated after 1978.
Rapid increases in the external debt, by comparison with the
domestic debt, presented a double burden. Additions to the
domestic debt involved only the problem of finding, through
taxation, savings, or other means, the necessary additional local
currency to meet the additional charges on the interest and
amortization payments on the new debt. Increases in the foreign
debt, however, required not only the same local currency to meet
the enlarged budget item but also additional foreign currencies
with which to transfer abroad the increased interest and
amortization payments. This situation forced either a reduction
in imports or still further borrowing abroad.
Governments addressed the balance of payments deficits in the
1960s by imposing direct controls that restricted imports. Even
so they were unable to avoid increases in the foreign debt, which
rose from around US$62 million in 1960 to US$231 million in 1969
and US$380 million in 1974. After the 1977 liberalization of the
economy, import restrictions were loosened and foreign credit
became much more readily available. The total external debt,
including short-term loans and trade credits, was estimated to be
just under US$4 billion at the end of 1986. Medium-and long-term
debt of the government represented about 75 percent of this
amount. Another 7 percent was owed by government corporations.
Debt service payments on all foreign loans were US$410 million in
1986, up from US$342 million in 1985. Total debt service payments
as a ratio of export earnings from goods and services increased
from 21 percent in 1985 to 26.7 percent in 1986.
Data as of October 1988