2 income), middle income ($581 - $5,999) and low income (less than $580). Hong Kong, Singapore, and Taiwan fall in the high income country and are excluded from the 'developing country' group as the term is applied 3nly to low and middle income countries.

This paper focusses on four sub-groups of Asian developing countries: (a) the ASEAN-4(lndonesia, Malaysia, Philippines and Thailand); (b) South Asia (c) China and (d) Korea. The ASEAN-4 and Korea are middle income countries while South Asia and China belong to the low income category.

The data for Asia shown in this paper therefore refer to this sample of ten countries, which accounts for 98% of the GNP and 97% of total debt, and 94% of the popullation of the region.Lack of reliable data on Afghanistan, Myanmar, Kampuchea, Lao P.D.R.,and Vietnam forced the exclusion of these countries from the present study. Nepal, Bhutan, Maldives and the Pacific Island economies are relatively free from pressures of a debt burden and have also been excluded.

An objective measurement of the severity of debt burden when applied to developing countries in Asia, indicates that the Philippines and Myanmar are the only two countries in Asia which are severely indebted (out of 46 developing countries) while Indonesia, Bangladesh, Sri Lanka and Pakistan are moderately indebted 4.

How has the debt burden evolved in the Asian countries in comparison with that of Latin America? The total external debt of these ten Asian countries in 1990 was $307 billion. India and Indonesia were the largest debtors owing debt in excess of $50 billion each, followed by China, the Philippines, Thailand and Pakistan. Debt service ratios of only three countries--Indonesia, India and Philippines--exceeded 30 percent. Latin American debt outstanding in 1990 was $429 billion. Brazil, Mexico, Argentina and Venezuela were the largest debtors and twelve out of twenty severely indebted middle income countries belonged to this region.

It is interesting to note that the average annual growth rate in debt of East Asian countries during the sub-periods 1973-80 and 1980-87 has been higher than that of Latin America (see Table 1). Despite the more rapid accumulation of debt, all other key debt indicators except Debt/GNP remained stable or declined for Asia, while those in Latin America worserted despite repeated reschedulings and arrears accumulation (see Table 2). The improved debt indicators of Asia in fact reflect the underlying strong economic performance of the countries in this region.

How has the economic performance of the two groups of countries varied? Table 3 presents the comparative picture for three sub-periods 1965-73, 1973-80, and 1980-87. The first sub-period which is **rhrarntpri7PA** hv qtpssdv snd stable economic conditions showq thst th 1 diffprinrq-e in thb nerfennA nee of the two groups were not that large. The second sub-period captures the effects of the exogenous shocks and turbulence suffered by the developing countries, while the third sub-period depicts the differentiated response and adjustment to these shocks. In the 1980s, Asian incomes grew more than twice as fast as in the rest of the world, and exports expanded at about twice the rate of North America and Europe.

Management of external debt can be influenced by the international economic environment, domestic economic policies and portfolio management decisions. It would be useful to recapitulate, as a backdrop, the intemational economic enviroinment in which the developing countries had to manage their external debt.

4World Debt Tables 1989-90presents the classification of the countries and the definitions of the severe and moderate indebtedness. Severely indebted countries are defined as countries in which three of the four key ratios are above critical levels: debt to GNP (50 percent), debt to exports of goods and services (275 perccnt) scheduled debt service to exports (30 percent) and accrued interest to exports (20 percent).