The external debt buildup of some developing countries (such as Argentina) in the 1970s was due, in part, to (legal or illegal) capital flight in the face of expected currency devaluation....

The external debt buildup of some developing countries (such as Argentina) in the 1970s was due, in part, to (legal or illegal) capital flight in the face of expected currency devaluation. (Governments and central banks borrowed foreign currencies to prop up their exchange rates, and these funds found their way into private hands and into bank accounts in New York and elsewhere.) Since capital flight leaves a government with a large debt but creates an offsetting foreign asset for citizens who take money abroad, the consolidated net debt of the country as a whole does not change. Does this mean that countries whose external government debt is largely the result of capital flight face no debt problem?