After a period of consolidation in the late 1980s, many developing countries have witnessed a significant rise in external indebtedness during the 1990s. In the aftermath of the Mexican financial crisis and amid renewed concerns about the volatility of capital flows, external debt-management practices have received greater attention. Events leading up to the recent crisis in Mexico and during its aftermath illustrate the importance of the Government’s policies for managing external debt, as well as the need for sound macroeconomic policies. The sharp appreciation of the yen in early 1995 also brings debt-management issues into focus.
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