ABSTRACT
The banks’ achievements had costs, particularly in terms of the economic well-being of the developing countries, but they were nevertheless remarkable considering the predicament in which the banks found themselves when the debt crisis erupted in 1982. The banks sought to maximize the profits they could eke out of their developing country loans in the short term. Banks tried to pressure debtor countries to implement economic reforms from the outset of the crisis, but the efforts were only partially successful in the early years. Banks pressed the debtor nations to implement economic reforms from the outset of the debt crisis because they believed that the reforms would improve the debtor nations’ ability to service their debt. The banks used the International Monetary Fund as their principal vehicle to pressure the debtor countries to implement economic reforms. The banks learned their lesson in the 1976 Peruvian rescheduling when they tried to oversee Peru’s economic reforms themselves.
