Developing Country Debt in the 1990s: Is the Crisis Over?

The paper examines the most recent data on the external debts of developing countries in order to assess whether the external debt crisis is a thing of the past, or whether there is still cause for attention and concern. The main conclusion of the paper is that while a number of middle-income countries seem to have brought their debt problems under control, most of the indebted low-income countries are still struggling with unsustainable debt burdens which threaten to undermine the development process of these countries. There are, however, considerable differences in the magnitude and character of debt problems across countries. The paper takes note of a number of important changes in the debt picture since the early 1980s, in particular the shift toward a higher official debt share, with multilateral institutions such as the IMF and the World Bank becoming leading creditors, which, together with their increased policy advisory role, has placed these institutions at the centre stage of the development process of many low-income countries.