ABSTRACT
Rescue packages, rescheduling exercises, and IMF' sponsored stabilization programs succeeded in preventing a major disruption of international financial markets, following the Latin American debt crisis of 1982. To consolidate this achievement, increasing consideration is being given to institutional reforms—at the national and international levels—designed to ensure a healthy economic recovery of the heavily indebted Latin American countries. In the case of Latin America since 1978, an empirical analysis reveals a mixed picture. When the conditions of 1981 are compared with those for 1978, the following facts stand out. The deterioration of Brazil's current account is entirely explained by adverse external shocks. Unfortunately, a significant part of the Latin American external success in 1983 was achieved at the cost of domestic output contraction Hence, part of the external gains will last only as long as the recession does.
