Moreover, since the interest rate by definition is the price one has to pay to bring future resources into the present, the borrowings and the increase in debt of this scale is not possible without a corresponding increase in interest rates. The continuation of these trends is fueling expectations of inflation and, resultantly, in interest rates remaining high.
“For all these reasons, a symbiosis exists between both current and capital account liberalization and the contribution made by the presence of foreign financial enterprises in the economy. This is a second reason for aspiring to capital account liberalization”. (p.286)…………… “For all these reasons, therefore, the elimination of controls on capital movement is a desirable objective.