Latin American debt crisis begins

On August 12, 1982, Mexico's finance minister told creditors the country could no longer service its external debt, a moment often taken as the start of the crisis. Years of heavy dollar borrowing to fund development, combined with the Volcker-era rate spike and falling oil prices, left Mexico, Brazil, Argentina and other Latin American governments unable to roll over their obligations. Commercial banks froze new lending, currencies devalued, and inflation surged across the region; per-capita income in much of Latin America was lower at the end of the 1980s than at the start. Resolution came slowly through Brady bonds in the late 1980s and early 1990s, which restructured the bad debt into tradable securities and let affected countries gradually regain market access.