External pubic borrowings have become the norm for most third world countries. This is attributable to the inabilities of their government to mobilise enough debts from within their countries. what account for this situation?

The reliance on external public borrowings by many developing countries can be attributed to several interlinked factors:

**Limited Domestic Savings**: Many third-world countries struggle with low levels of domestic savings. A lack of a robust financial system and low income levels mean that individuals and businesses do not save enough capital for investment. Consequently, governments find it difficult to raise funds from domestic markets.

**Underdeveloped Financial Markets**: In many developing nations, financial markets might be underdeveloped or lack depth. This can lead to limited institutional investor participation and can cause governments to find it challenging to issue bonds or obtain loans from domestic sources at reasonable interest rates.

**High Interest Rates**: When domestic borrowing is possible, it can come with high interest rates that make it costly for governments to finance their deficits. This can push governments to seek cheaper financing options through external borrowing.

**Currency Risk**: External borrowing is often denominated in foreign currencies, which can introduce significant risks related to exchange rate fluctuations. However, governments may still prefer this option if the foreign loans offer lower interest rates or favorable terms compared to domestic borrowing.

**Infrastructure Needs**: Developing countries often face enormous infrastructure deficits—such as roads, schools, and hospitals—that require significant investment. External borrowing can provide the necessary funds to address these needs when domestic financial resources are insufficient.

**Donor Conditions and Aid**: Many developing countries receive external assistance in the form of loans or grants from international financial institutions (like the World Bank or IMF), which often come with conditions that encourage external borrowing and spending in specific areas, such as health or education.

**Political Challenges and Governance Issues**: Poor governance, corruption, and unstable political environments can deter domestic and foreign investments, exacerbating the reliance on external debts. Investors may have more confidence in lending to a government with a stable and well-managed economy than in a domestic lending market characterized by risk.

**Dependency on Commodity Exports**: Many developing nations rely heavily on exports of specific commodities. Fluctuations in global commodity prices can lead to unstable revenues, forcing governments to look for external borrowing to maintain fiscal stability during downturns.

**Global Economic Environment**: Favorable financial conditions in developed countries, such as low-interest rates and an abundance of capital, can create an attractive environment for developing countries to issue external debt rather than tapping into limited domestic resources.

In summary, the reliance on external public borrowing by third-world countries often arises from a combination of economic, financial, and political factors that hinder effective domestic resource mobilization. Addressing these underlying issues could help to mitigate dependency on external debts in the long term.