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s in 1982
The previous sections examine some possible factors that led to the eruption of debt crisis in Mexico in the eighties. The underdeveloped and vulnerable financial system of Mexico was hit by series of events, mainly the Federal Reserve's decision to increase the interest rate in order to curb its oil based inflation that slowed down the global economy and triggered the debt crisis. This also caused a sharp decline in commodity prices coupled with slump in the demand of exports. In this scenario, Mexico was derailed from investing in development/productive projects and used its loan to meet up the payments of accrued interest on the current debts which entangled it into a vicious circle of impeding debt.

The debt crisis began on August 12, 1982 when the Mexican finance Minister notified the chairman of Federal Reserve, secretary of the treasury and the managing director of IMF that the nation will be unable to meet its $80 billion debt obligations. In addition there were other 40 developing countries at that time had defaulted on their foreign loans engendering a global bankruptcy crisis by the year end of 1982. In 1983, four major counties of Latin America including Mexico, Brazil, Argentina and Venezuela proposed to restructure their loans. The rate of bank lending declined gradually from $56 billion to $44 billion (FDIC, 2010).

After the outbreak of the crisis, the nation underwent a lost decade which signifies the stagnation of economy and loss in the social welfare. The debt burden was so huge that most resources were channeled to meet interest payments to commercial banks instead of investing in productive projects that significantly hampered the already underdeveloped financial system. The labor market was also highly distorted because of the rise in informal sector as a result of uncertainty and insecurity in the labor market which signals lower contribution to the economy and overall lower productivity growth (Latin America and Caribbean Region, World Bank, August, 1986). This is when GDP per capita slipped into negative rate and the economic growth degraded, retarding the speed of recovery from the debt burden.

Recovery strategies
Two international organizations namely, World Bank and IMF, conducted new lending facilities (GRIPS, 2010):

World Bank introduced Structural Adjustment Loan (SAL) and Structural Adjustment Credit (SAC) that operated with commercial interest rate and concessional interest rate respectively.

IMF proposed structural adjustment facility (SAF) which worked on the principle of case by case approach via Bank advisory committees.

Also, Brady plan was constructed to enforce market based reductions where indebted countries could buy their own debts in secondary market at discount. Mexico made full use of this plan and continued to participate in other economic, financial and social reforms.

Conclusion
The financial crisis of Mexico of the eighties partly originated from internal state of affairs that were adversely augmented by sequence of unfavorable external events. Until 1960's Mexico projected healthy GDP growth that averaged 6% annually therefore the set off of the crisis was not perpetuated by gradual decline of output or employment over the years rather the economy was one of the rapidly growing counties in Latin America. However, continuous macroeconomic mismanagement c