THE international demand conditions that countries exporting primary products faced during 1964 and the early part of 1965 were, on the whole, more favorable than they had been for a number of years. The prices of most basic commodities rose late in 1963 and early in 1964 and then remained at, or close to, the levels reached at that time. These relatively high prices reflected generally strong international demand. Consequently, the export receipts of primary product exporting countries tended to rise in the early part of 1964 and to remain relatively stable. Capital flows and grants to the developing countries continued on the same scale, so that the total exchange receipts of these countries were high; as a group, these countries achieved a small increase in international reserves. Most of their increased foreign receipts, however, were directed toward an expansion of imports. This reflected the strong need for these countries to raise their living standards, both directly through higher present consumption and indirectly by more rapid capital investment for future increases in domestic output. In some countries, however, the demand for imports was stimulated by excessive monetary expansion.