Current account imbalances and international financial relations

The first half of the present decade has been marked by significant shifts in the pattern of current account balances, intimately related to changes in international financial flows. The debt situation of developing countries has figured prominently in the trends and prospects for private financial flows, which in any event are undergoing an evolution in institutional forms that has implications for the access of different countries to private finance. Overall, there appears to be a heightened degree of international instability and uncertainty arising from financial and trade developments in response to which developing countries — indeed, most countries of the world — have been attempting to rebuild the levels of official international liquidity. As the current trends are partly the result of policies already implemented, for example, with respect to official development assistance and other official international finance, there are opportunities to improve upon the current outlook through international policy initiatives.

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