ABSTRACT
In Chapter 12 we have examined the problem of the twin deficits in developing countries and tried to come to grips with the problems that this poses for macroeconomic management. In many developing countries, however, the accumulated stock of external debt is posing an independent and even more pressing problem. Indeed the problem of high external indebtedness in some poor countries has taken serious dimensions with external debt to GDP ratios of these countries climbing to several times their GDPs and debt servicing charges amounting to well over 25 per cent of their export earnings.
