A heartening number of Latin American nations now are making major efforts to deal with substantial economic problems, which generally include large amounts of money owed to foreign nations or banks. Most of the debtor nations taking positive actions are fledgling democracies. Where at all possible, they deserve international support as they seek to renegotiate the terms of repaying foreign loans while performing a delicate domestic juggling act.
The problems several are having in trying to obtain consensus on which economic course to take underline the need for understanding.
The challenges with which most must deal are so difficult that veteran Argentine economist Ra'ul Prebisch calls the overall situation ``the second crisis of capitalism'' in the 20th century, the first having been the major worldwide depression of the 1930s.
In most Latin American nations the needs simultaneously include: stimulate the domestic economy, tamp down inflation, chip away at unemployment, repay the interest on foreign loans, develop domestic industries, increase exports, and meet the demands of a long-impoverished populace for affordable consumer goods. As with any democracy, without sufficient popular support none of the other actions would be possible.
Several of the actions thus far carry promise.
Bolivia last week devalued its currency, raised gasoline prices, and froze salaries for the remainder of the year. It is trying to curb an inflation rate now above 1,000 percent a month.
Brazil, also last week, replaced its central bank president and finance minister. Their predecessors had resigned following disputes within the government as to the best way to restart the Brazilian economy and slow the inflation rate, now over 200 percent a year.
Earlier this summer new Peruvian President Alan Garc'ia P'erez limited his nation's repayment of interest on foreign debt to 10 percent of Peru's export revenue to have money left for domestic economic development.
Not all nations are making progress, unfortunately. The Argentine government of President Ra'ul Alfonsin has been grappling without evident success for a year and a half with economic and other problems and finds its popular support slipping.
The situation challenges both debtor and creditor nations. Dr. Prebisch finds ``a decadence of ideas'' among economists for dealing with South America's problems at the very time when ``we have to innovate.''
Risks are attached to some of the new approaches, especially that of Peru's Garc'ia. Yet nations in or out of Latin America which make an effort to move forward in fiscally responsible ways should be accorded understanding and as much support as the developed nations can muster.