Thursday, May 28, 2009

Latin American debt

While doing some work, I was reading through ECLAC's Preliminary Overview of the Economies of Latin America. Here are the preliminary figures for public debt as a percentage of GDP in 2008:

Latin America - 26.1
Chile - 3.5
Paraguay - 12.1
Venezuela - 14.0
Dominican Republic - 16.7
Honduras - 17.4
Guatemala - 19.3
Mexico - 20.4
Ecuador - 22.6
Peru - 22.8
Costa Rica - 23.5
El Salvador - 31.2
Brazil - 30.1
Bolivia - 30.7
Colombia - 33.2
Nicaragua - 34.6
Uruguay - 39.9
Panama - 46.6
Argentina - 48.0

These aren't exactly what I would have expected. I know Argentina is an economic basket case, but how did Paraguay garner the number two spot on the other end? I would not have thought Guatemala or Honduras were under the Latin American average either.

The good news is that these numbers have dropped substantially over the past four years, in every country but Mexico, where they have remained constant (but still relatively low).

Oh, and while we're on the subject of economic basket cases. The Obama administration's own projections have U.S. public debt at 100% of GDP by 2010. Maybe we need to go learn from the Paraguayans.


Gabriel 1:17 PM  

Interesting post. Some comments.

1) Some of the countries in this list (Paraguay, Bolivia, Nicaragua, Honduras) had their debt reduced through forgiveness. So that's not likely to work for the US.

2) When you measure debt against government revenues instead of GDP some countries, like Guatemala, don't look as good. Guatemala has had a terrible time raising tax revenues over 10% of GDP.

3) Completely agree that lower debt numbers is good news. Even better is the reduced proportion of debt in foreign currency, historically a major vulnerability.

4) Yes, the US could learn something, but I'd rather they learn from Chile.

Greg Weeks 3:55 PM  

I had not thought about debt forgiveness. Where are such numbers?

We could learn from the Chileans, though we would have to nationalize some profitable natural resource to make it really work.

Gabriel 5:22 PM  

I was thinking mainly of HIPC countries (which does not include Paraguay). That information should be available at the World Bank website. Bolivia had a particularly large drop.

But there are other forms of forgiveness including Paris Club debt, and that applies to more countries. Of course, on top of that you have the defaults.

The comparison I was making with Chile was simply that it would be great if we were willing to save during good times to have a little more during bad times. Even without a national copper firm there are things we can do, for example not cutting taxes and lowering revenues when there is no real need.

Anonymous,  3:46 AM  

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