The precedents of countries that have defaulted

Paris (AFP)- Before Sri Lanka, which announced on Tuesday that it would default on its external debt, several countries were in default.

The most emblematic cases are the following:

– 1982: Mexico

In August 1982, global financial markets and nearly 1,000 creditors received a telex announcing that Mexico was in default. The debt was $86 billion and the interest was $21 billion.

Elected in 1976, President José López Portillo had accumulated debt and spent without taking oil revenues into account. The imbalance worsened in 1981 with the fall in the price of black gold.

After the announcement of the default, the United States gave Mexico a multi-billion dollar emergency loan and the IMF offered aid in exchange for drastic reforms.

In 1995, the IMF once again rescued Mexico with nearly $18 billion in aid, as part of a $50 billion international plan.

– 1998: Russia

The country had been affected by the Asian crisis, the ruble fell under pressure from speculators and the prices of raw materials, Russia’s main resources, are collapsing.

On August 17, the government devalued the currency, declared a unilateral moratorium on foreign debt and waived honoring its payments to national creditors.

Russia, whose public debt reached $141,000 million and domestic debt $50,600 million, had to wait 12 years to be able to return to international markets.

– 2001: Argentina

In economic recession for three years, Argentina was subject to a strict austerity plan and had lost control of its foreign debt.

At the beginning of December, fearing the collapse of its economy, the government limited the amount of withdrawals from banks. The repression of the riots leaves 33 dead and forces President Fernando de la Rúa to resign.

On December 23, interim President Adolfo Rodríguez Saá declares the largest debt moratorium in history: $100,000 million. Some creditors agreed to a debt restructuring in 2005 and in 2010 others rejected it.

At the beginning of 2016, Argentina was able to return to international markets after 15 years of absence.

– 2008: Ecuador

On December 12, 2008, Ecuador suspended the payment of nearly 40% of its international debt, which then amounted to 9.9 billion dollars, or 19% of the country’s GDP.

The president at the time, Rafael Correa, an economist elected in 2006, had decreed a selective moratorium since he considered that part of the debt was “illegitimate” due to irregularities during the negotiation in the early 2000s. It was the third time Ecuador had entered into payment. moratorium in 14 years.

– 2015: Greece

At the end of June and mid-July, Greece, mired in recession and subjected to strict austerity since the start of the debt crisis in 2010, defaulted on two repayments to the IMF for a total of 2 billion euros. .

An emergency loan from the European Union enabled Athens to quickly settle these maturities in order to continue to benefit from IMF financial assistance.

In August 2015, an agreement between Greece – whose debt was around 180% of its GDP – and its creditors on a third rescue of 86 billion euros in three years, eliminated the risk of a default which would have threatened cohesion of the euro area.

– 2017 and 2018: Venezuela

On November 14 and 15, 2017, Venezuela was declared in partial default on its debt payments by the rating agencies SP Global Ratings and Fitch.

The announcement rekindled concerns about Caracas’ ability to continue paying its approximately $150 billion foreign debt, as the country was going through a severe crisis due to falling oil prices and US sanctions, and its population suffered from severe shortages of food and medicine.

Its Russian ally grants it a restructuring of a credit of 3.150 million dollars

On January 2, 2018, Venezuela was again declared in default for failing to pay its sovereign debt obligations.

– 2020: Lebanon, Argentina and others

In 2020, the first year of the coronavirus, several countries defaulted: Belize, Ecuador, Zambia and Suriname.

A demonstration against the debt agreement reached by the Argentinian government with the International Monetary Fund, on March 15, 2022 in Buenos Aires. Elena BoffettaAFP/File

On March 7, 2020, Lebanon, plunged into a serious economic crisis, announced for the first time in its history that it would default on the payment of its external debt, amounting to 1.2 billion dollars.

Its total debt amounts to 92 billion dollars (170% of GDP). Beirut asks for help from the IMF, but the negotiations fail. In April 2022, the Fund announced an agreement in principle for a $3 billion aid plan, subject to the application of reforms.

In May 2020, Argentina, which is negotiating a restructuring of its debt, recorded the ninth default in its history, failing to meet a deadline of 500 million dollars. In March 2022, Buenos Aires concludes an agreement with the IMF for the refinancing of the debt that the country has towards the organization, some 45,000 million dollars.

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