ABSTRACT
Professor Lessard gives an excellent description of the alternative modes of foreign financing available to a country. From that perspective, the work is a useful reference piece in designing the financial structure of new investment projects. But Professor Lessard’s paper also tries to examine ways out of the current debt crisis. He argues, and I think correctly, that the solution of Latin America’s debt problem must include some recontracting of prevailing senior sovereign external debt for more commercially oriented modes of financing, such as direct and portfolio foreign investment, quasi equity, suppliers credit, etc. The main thesis can be summarized as follows: a developing country—in fact any country—will have less trouble adhering to contractual financial terms if it uses a wide range of financial instruments to better align the servicing of its international obligations with its ability to pay over time and across circumstances.
