because of political and social pressures, the brunt of the cuts fell on capital expenditure, with serious implications for the development of productive capacity. 33. That part of the gap which could not be covered through such cuts was in most instance financed through domestic borrowing. Unlike cuts in expenditure, such borrowing affects the present operation of the economy much mere than the future. Because capital ant money markets either do not exist or at best are very backward and limited, government borrowing has often meant call­ ing on the central bank to finance the fiscal deficit not­ withstanding legal provisions limitin[ the extent of credit. The immeciate effect of such financing is to increase the money sup­ ply, with consequent1al pressure on prices, which has to be relieved by additional policy measures. The effort to maintain price stability often took the form of freezes. Needless to say they not only fai lea to keep prices constant but actually aug­ mented the pressure en them, by fuelling consumers' inflationary expectations, and favourinf the emergence of black markets with adverse consequences for production. 34. Efforts on the external front to mobilize resources to sup­ plement domestic income and pay for imports of goods and services were eoually arduous. Due to the recession in the t1·aCitional donor countries, the industrial world was.concerned to attend to its own interests releasinf resources to others. Most c~eveloping African countries were unsuccessful in ll!obilizing resources from the international capital and money markets as their proverty made them poor risks. 35. In these circumstances, cevelopinf Africa was obliged to resort to potent domestic policies to bring about external equi­ librium. A wide variety of policies was selected for their short-run and lone-run impacts, with the particular aim of nar­ rowing the payments gap in the short run. 
**Analysis**
The text discusses the economic challenges faced by a developing African country, including the impact of fiscal deficits, borrowing, and economic pressures on the economy. It highlights the difficulties in mobilizing resources from external sources and the need for domestic policies to address the payments gap. The text does not mention specific sectors such as agriculture, industry, or education, but focuses on the overall economic development and management of the country.

**Category**
Economic development, International trade