Debt problems cannot be considered in isolation from the underlying balance of payments conditions: they are a manifestation of an imbalance between resource availability and demand, reflected in current account deficits. Faced with such difficulties, some countries have undertaken adjustment policies aimed at increasing supply and curbing demand. Others have sought to suppress the imbalance through the use of import and payments restrictions or have resorted to foreign borrowing. Where corrective measures were not taken, the situation deteriorated further, resulting in the exhaustion of external reserves and, often, the accumulation of payments arrears.
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