The Latin American debt crisis began in August 1982 when Mexico announced it could not service its foreign debt, triggering a cascade of defaults across the region, including in Brazil, Argentina, and Venezuela. The crisis was caused by a combination of excessive borrowing, rising global interest rates, and falling commodity prices. The event threatened the stability of the international banking system and led to a 'lost decade' of economic stagnation in Latin America.

The debt crisis inspired a rich body of Latin American literature, including the 'crisis novels' and poetry of writers like Gabriel García Márquez and Pablo Neruda, who explored the social and political consequences of economic dependency. The crisis also influenced the 'testimonio' genre, as poets and writers documented the human costs of austerity and structural adjustment.