ABSTRACT
In relative terms external capital flows provide only a small proportion of the foreign exchange needs of this group of countries. As the most important source of external finance in developing countries, exports face a serious threat from the mood of protectionism so prevalent in the industrial countries. In assessing the International Monetary Fund’s (IMF) role as a source of finance to developing countries, it is important to note the objectives which, over the years, have remained largely intact. The role of the IMF in the international monetary system thus depends on whether the trend of larger numbers of borrowers continues. Loans are available from the institution’s own resources at interest rates subsidised by the Community, for project-finance purposes, mostly on a shared basis with other external lenders. Prospects for an increased role for bond-market financing in the developing countries have been hit by the uncertainty which prevails over fixed-rate financing given rising inflation and interest rates.
