Short-term debt far exceeded reserves in Mexico and
Argentina just before those two countries were hit by financial crisis. The ratio of short term
foreign debt to reserves hit 1.7 in Mexico and 1.3 in Argentina in June 1994. The pattern also
held for Russia in mid-1998, when it faced intense balance of payments pressures. In the case of
Brazil, the data show that in June 1998, its reserves slightly exceeded its short-term debt.
However, by late September, Brazil=s reserves had dwindled to $45 billion, below the level of its
short-term debt, and the real was under intense attack.
Short-term debt far exceeded reserves in Mexico andArgentina just before those two countries were hit by financial crisis. The ratio of short termforeign debt to reserves hit 1.7 in Mexico and 1.3 in Argentina in June 1994. The pattern alsoheld for Russia in mid-1998, when it faced intense balance of payments pressures. In the case ofBrazil, the data show that in June 1998, its reserves slightly exceeded its short-term debt.However, by late September, Brazil=s reserves had dwindled to $45 billion, below the level of itsshort-term debt, and the real was under intense attack.
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