Dependence of national economies on a single source of finance

The pattern of borrowing by developing countries on international capital markets in the 1970s revealed the danger of heavy reliance on a single source of credit, especially in the context of fast-changing capital markets. Bank lending has so far transferred most risks to the borrower, including the exchange rate risk, the interest rate risk, and especially the risk of mismatch between foreign exchange earnings and debt service obligations.

1. Inadequate economic policy-making
2. Inadequate diversification of loans to vulnerable countries

1. Policy cross-conditionality restrictions in multilateral development aid

1. Dependence of countries on export of limited range of raw materials

1. Undiversified
2. Independence
3. Discredit
4. Dependence
5. Credit
6. Abuse