The Impact of Privatization on the Latin American Debt Problem

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Abstract
This Study will explore the extent to which state-owned enterprises (SOEs) were responsible for creating the Latin American debt problem and, more importantly, the extent to which the present privatization of those enterprises may help to resolve that problem. In some quarters, privatization has been viewed as an essential reform needed to restore creditworthiness and growth in the region after the “lost decade” of the 1980s. Other quarters have been more skeptical, viewing it more as the latest fad to strike the region. The conclusion that will be expressed here falls somewhere in between: privatization can indeed play a part in solving the debt crisis and restoring growth, but, like all solutions, it may also create unintended problems down the road if not used carefully.

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