Since foreign credit dries up in crises when it is most needed, developing countries can protect themselves from default by

Question

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Accumulating high levels of international reserves can help developing countries protect themselves from default during crises when foreign credit dries up. This allows them to have a buffer of funds to use for imports and to pay off any debts. The other options may not be feasible or effective in preventing default.

Since Foreign Credit Dries Up in Crises When It Is