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The conversion of foreign debt viewed from Latin America
- Source: CEPAL Review, Volume 1987, Issue 32, Nov 1987, p. 103 - 122
- Spanish
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- 03 Nov 1987
Abstract
Conversion of foreign debt is an econom ic policy instrument of both positive and negative potential for the regional economy. The positive potential includes reduction of the cumulative value of the debt and of the interest payments, improvement of the financial situation of enterprises, repatriation of fugitive capital, and direct foreign investment in priority sectors. The negative potential includes a net adverse effect on the balance of payments, increased inflation resulting from increased issue of money, denationalization of the economy using subsidized capital, and crowding out in the use of foreign exchange. The final mix resulting from conversion is determined mainly by the modalities with which this tool is used.
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