 Good afternoon, good morning, good evening, depending on where you are. I hope you have had the chance to look at a documentary, which I find quite interesting, called Life and Death, which is a story about Haiti, one of the developing countries, and how external borrowing really constitutes a constraint to economic development in that particular country. The story of Haiti applies to other developing countries which are forced to borrow from the rest of the world, and yet they depend on the rest of the world for also their exports and their imports, and that puts them in a very difficult situation. As you recall, starting from the 1980s, developing countries experienced the severe problems with debt. In fact, in 1982, Mexico had to default on its debt because they could no longer pay, and that ushered a new era of debt distress for developing countries that sent their economies in a tailspin with declining growth and rising poverty. So the problem of external borrowing is an important one when you're talking about macroeconomic performance in all countries. Even in the U.S., one of the concerns is that the government has a huge amount of debt, and that puts a strain on the policy space that policymakers have to play with in promoting economic activity. Now for developing countries in particular, external borrowing carries a number of risks. What you have seen is that many of them having accumulated a high amount of debt became unable to pay to service the debt on a regular basis, which in many cases forces them to borrow more money to service the debt. So you borrow so much that you are unable to service the debt, and you end up actually needing to borrow more so you can pay back past loans, which means that in the future the loan burden keeps increasing. What you find is that in many cases we have seen this historically, where our international financial system is plagued by what I call perverse incentives, where the lenders in fact many times have incentive on even pushing loans on unsuspecting borrowers. We saw this happen in the 70s where because of the rise, the explosion of oil prices, there was way too much money in the hands of oil exporters who put the money in banks, and banks had way too much money on their hands, and they were willing to find anybody who was willing to borrow. So developing countries found themselves in a situation where it was an easy money to obtain from lenders, but at the same time because not all of them used the money to invest wisely, eventually down the road they find themselves in a problem of debt distress. There is a linkage between external borrowing and trade, which we discussed earlier. One is that if a country is not exporting enough, which means that they are not receiving, generating enough export revenue, and yet at the same time they have to buy foreign goods, they have to import foreign goods, that means that they will have to borrow to make up the gap. In many developing countries you find that external financing makes up in some countries 40%, even half of the government budget, that part of it is external borrowing. But of course down the road the country has to repay the debt, so debt service ends up eating a big chunk of their revenue, which displaces resources from essential development expenditures like education and health. So in the movie on life and debt you were able to see the kind of development trap that Haiti finds itself in, where domestic producers are competing with cheap imported goods and they cannot manage to break into the markets. So a tomato producer from Haiti finds it difficult to sell locally produced tomatoes because foreign imported tomatoes are cheaper. This is true for textile and other products as well. I talked about the importance of the exchange rate when we talked about the issue of trade. It is also the case that here the exchange rate matters also when we deal with debt issues. It all depends especially on the denomination of the government debt, the public debt. So if for example you were to compare the US and Haiti, the US is one of the most heavily indebted governments in the world. Haiti is a heavily indebted government, a country also. But what is the difference between the two? Haiti borrows from the rest of the world primarily. They have some domestic debt but foreign debt is a huge amount. In contrast, most of the US debt is actually domestic. That's one thing. But also the US, Haiti borrows in foreign currencies and has to pay in foreign currencies. But Haiti produces its domestic goods in local which are sold, people earn their income in domestic currency. So what you have here is the imbalance between the revenue that the economy is producing and the repayment obligations which are in foreign currencies. So if then the exchange rate changes, what happens? So take again the case of Haiti. If the Haitian government has borrowed from the rest of the world, you'll find that most large part of the debt will be say in US dollars, there may be some in euros, but in any case it's in foreign currency. So what happens if the US dollar appreciates vis-à-vis the Haitian currency? That means that since normally the debt contracts are made in nominal terms. So the face value is the face value. If you borrow the hundred dollars, you pay a hundred dollars. But if the dollar appreciates, that means that Haiti will have to raise more domestic money to pay that same amount of $100 because the dollar now is worth more. That puts a lot of pressure on Haiti to produce more, to export more, to pay the same amount of foreign debt. So that's the critical difference between what you see as high debt levels in developing countries compared to say the US which has the privilege of having a currency which is an international currency that everybody is demanding for their imports. So what you end up finding then is that there is a connection between debt dependence and export dependence because if a country has built up so much debt, they will have to pay to service the debt which is in foreign currency, which means that they have to export to earn the foreign exchange and pay the loans. Whereas if a country that's not heavily indebted to vis-à-vis the rest of the world can base its growth strategy on the domestic market because they don't have to earn foreign exchange. So that's the situation where developing countries find themselves in where they have borrowed so much that they need to export as much to be able to pay to service the debt. But at the same time they have no control, they don't have full control on the exchange rate value of their national currency vis-à-vis foreign exchange. Many times you find that they don't have control over the price of the goods they're exporting and that's some of the key sources of the debt problems that we see in developing countries. So there's a close connection between debt and exchange rate, export dependence, import dependence and these have implications on growth prospects and also on the macroeconomic environment in general. Thank you.