Which statement below is incorrect regarding external debt?

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External debt builds up due to deficits in the international balance of goods, services, and income.The rise in the U.S. dollar's value during the 1990s increased the expense of servicing dollar-denominated debts.During the 1990s, Less Developed Countries (LDCs) became more dependent on aid from Developed Countries (DCs).International creditors demanded that LDC governments provide guarantees for private sector loans.

Explanation

External debt grows as a result of deficits in the international balance of payments related to goods, services, and income. When debts are denominated in U.S. dollars, the dollar's appreciation in the 1990s made servicing these debts more costly. International lenders often required LDC governments to guarantee private debts. However, it is incorrect to say that LDCs relied more heavily on aid from DCs during the 1990s.