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Unprecedented lending by commercial banks to less developed countries (LDCs) over the past decade has intertwined inextricably the fortunes of lenders and borrowers. The banks' solvency depends on the continued capacity of the LDCs to service their debt, while the LDCs' continued economic development, without which ultimate repayment of the debt may be impossible, is dependent on the extension of further credit. The vitality of the global financial system and economy in turn may depend on the stability of the relationship between banks and LDCs; even putting aside the apocalyptic danger of systemic collapse, it seems likely that global economic growth will be impossible to sustain unless the flow of private capital is maintained.

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