RECENTLY, the old debate concerning the transfer burden of debt has been revived in the perspective of huge debt pressures on less developed countries (LDCs). It originated after the first world war when Germany was directed to pay a huge amount as reparations. At that time. Keynes [1929] argued that such a unilateral transfer could give rise to a double burden on the transferring country: the mobilisation and transfer of funds (budget burden) and a deterioration in the terms of trade in order to effect the corresponding real transfer