Final answer:
Argentina defaulted on loans in 2005 and paid off their creditors at only one-third of the value, reflecting its history of economic turmoil and difficulty in debt repayment.
Step-by-step explanation:
The Latin American country that defaulted on loans in 2005 and paid off their creditors at only one-third of the value is Argentina. Throughout its history, Argentina has experienced multiple instances of economic turmoil and debt crises. Notably, the Argentinian default in 2001 was one of the largest at the time, and it led to a protracted period of negotiation with creditors. The restructuring process in 2005, which you referred to, resulted in many of Argentina’s creditors accepting to be paid roughly 30% of the original debt value. This default is an example of the broader economic challenges faced by countries like Argentina, which have struggled with trade deficits, heavy borrowing, and the inability to sufficiently improve productivity, leading to difficulties in repaying loans under changing economic conditions.