Introduction

In the last few years, a large number of developing countries, as well as some of newly industrialized ones, have been struggling to adjust to the sharp drop in their growth rates. In some cases, they have also had to contend with high inflation. A subset of these countries, because they combined inadequate macro policies and easy external financing, have run unsustainable large current account deficits for a number of years and have accumulated substantial external debt. For these countries, the drop in growth rate has resulted from the forced reduction in their current account deficits.