Solutions: The Baker Plan
Baker Plan – 1985
- In contrast to IMF plan of austerity, proposed infusion of $29billion of new money ($20b from commercial banks and $9b from IMF) to induce growth of Latin economies.
- Proposed structural adjustment to existing loan terms to better align them with the repayment sources, i.e., long term loans for long term capital and infrastructure projects.
- Baker Plan was not well received by the banking community. “Why throw good money after bad?”