This situation reached a crisis in August 1982 when the government of Mexico announced a moratorium on the payment of capital totaling approximately $20 billion dollars scheduled for 1982 and 1983. This resulted in a complete suspension of new loans to indebted nations, placing a heavy burden on those countries in Latin America where almost 50 percent of worldwide debt was concentrated. The closure of international financing sources obliged the debtor nations, including Venezuela, to adopt adjustment policies that had a severe recessionary impact. Against this background, the Venezuelan government and the central bank agreed, in February 1983, on the establishment of a foreign exchange control system based on differential exchange rates. This allowed the granting of foreign exchange for basic imports and debt servicing at a preferential exchange rate, while the other transactions were directed toward the free market where the exchange rate was progressively devalued. The goal of these measures was to protect international reserves and to decrease aggregate demand, reduce consumption and investment expenses, while generating exchange savings that would permit servicing the foreign debt. These policies, however, affected the potential earnings and future possible consumption by the population.
Therefore, it was necessary to arrive at an agreement with international creditor banks regarding the refinancing of public-sector foreign debt, to achieve an important reduction in the servicing burden. The Venezuelan government began contacts with the banking community in 1983, and in 1986 a restructuring agreement was signed. This had to be modified in 1987 due to the fall of oil prices, but this proved to be only a transitory solution until a new restructuring agreement was designed in 1990 in accordance with the Brady Plan mechanism.
In this regard, it should be pointed out that 1988 ended for Venezuela with mounting pressures in the foreign exchange market and an increasingly adverse economic outlook. The presence of negative real interest rates gave rise to the inefficient allocation of resources and an accelerated capital flight. As a result, and in spite of existing exchange controls, net international reserves fell steadily and in amounts that fluctuated between $926 million and $4,900 billion between 1986 and 1988.
Additionally, in 1988, the fiscal deficit as a percentage of GNP reached 7.4 percent and the inflation rate surpassed 30 percent, which was the highest level reached in Venezuela until that time. Unfortunately, the inflation rate became even worse in 1989, when it reached 80.1 percent, the highest registered until now.
The 1990 Restructuring Agreement
For the purpose of guaranteeing the viability of the economic adjustment and reform program adopted in 1989, it was essential to resolve the problem of servicing the public-sector foreign debt. The servicing of such debt on average represented almost 40 percent of the value of oil exports between 1982 and 1988, while the interest payments represented slightly more than 20 percent of the total fiscal expenses between 1987 and