ABSTRACT
This chapter begins with a brief survey of the accumulation of foreign debt in Chile before the crisis in 1982. The data indicate that the debt problem has only been postponed and that, notwithstanding a significant increase in export capacity, actual growth of overall productive capacity has been and continues to be limited. Until late 1981 the net capital flow into Chile exceeded the absorption capacity of the national economy, creating pressures for faster import liberalization and real exchange rate appreciation. Balance of payments and debt service projections show that in 1991–93 annual amortization commitments climb to 1.7 billion US dollars, and interest and profit commitments to nearly $2 billion. A drop in bank debt due to debt-equity swaps was nearly offset by a rise in debt with multilateral institutions. The negotiations with banks have been geared to reschedule maturities, to maintain short-term trade credit, and to obtain new loans to finance part of the interest payments.
