The developing country debt crisis of the 1980s

In August 1982, Mexico declared that it was unable to service its external debts. Soon after, a number of other developing countries, mostly in Latin America, reported similar difficulties. The developing country debt crisis of the 1980s was not only the first systemic sovereign debt crisis that the International Monetary Funds had to deal with, but also presented a threat to the stability of the global banking system. This entry reviews the crisis effects and the crisis management over a decade until it was resolved by introducing debt relief measures. It showcases how the crisis changed the way the international monetary and financial system is dealing with financial crises.