ABSTRACT
As stated in the introduction, stabilization policies are undertaken in an effort to correct the disequilibrium in the external sector and to control inflation. It is important to highlight the fact that by 1975 foreign creditors were no longer willing to pump loans into the Peruvian economy. There are various reasons which might explain this sudden turnabout in foreign lending. Of particular relevance were the new tightness in financial markets which appeared in 1974-1975, the growing suspicion that the promised oil potential was greatly overestimated, and finally, the huge deficit in the current account (see Table 7). Whereas in 1973 suppliers of capital had suddenly flooded the country with loans in their eagerness to find customers able to absorb the liquidity surplus, by 1975 the behavior of foreign banks all but precluded the granting of loans needed to finance the current account deficit.
