As international oil prices rose in the late 1970s and coffee, banana and sugar prices plummeted, worldwide growth came to a sudden halt and Costa Rica’s creditors all came knocking, propelling the country into complete economic collapse.
Between 1980 and 1982 GDP dropped by 11%, real salaries and therefore per capita spending power fell by 40%, unemployment levels rose to 10% and annual inflation increased rampantly from 18% to 82%. In September 1981, with a foreign debt of 3.8 billion dollars – the servicing of which consumed 44% of the total value of exports – Costa Rica became the first ever country to default on its loans; causing a banking crisis throughout the Americas. By 1989, with foreign debt increased to 5 billion dollars, it had also achieved the dubious title of the world’s largest per capita debtor.
In essence the country was bankrupt.
