Mexico blew up the LDC crisis in 1982 but the Brady Plan wasn’t introduced until 1989. The 1980s were a lost decade for most of Latin America as debt negotiations advanced slowly, stalled, and broke down.
The same dynamics have affected many other defaulting nations. Even with EU support the Greek debt crisis has been a tortuously slow affair, with debt plans agreed only to be shown to be too moderate to allow the country to grow again.
The common thread in all these painfully slow accords, of course, is the slow adjustment of creditors to the size of debt write-off required. Creditors won’t take big haircuts voluntarily. At least not in one go – they have to be led there in tranches when they see the unviability of a country trying to pay off restructured debts while still weighed down by capital and interest.
The same dynamics look like they will play out in Venezuela. The country is now in default on almost all of its foreign currency bonds and, despite Maduro tenaciously hanging onto power, some investors are already thinking aloud about the debt renegotiation to come.