The massive external debt burden of sub-Sahara Africa has gained widespread attention as a serious policy issue during the past few years. These countries are particularly vulnerable because
1.they have large international borrowing requirements and the resulting external debt is denominated in different currencies;
2.most of their external debt is in obligations with variable interest rates; and
3.their trade in primary commodities is significant.

Yet a recent survey by the World Bank revealed that 70 percent of foreign borrowers in developing countries do not hedge their interest rate...