where A is the foreign exchange reserves expressed in foreign currency, e is the real
exchange rate of domestic currency, K is the government net value, while the
superscripts f and d next to B indicate the foreign, i.e. domestic component of
public debt. All the values in the above expressions are stated in present values,
which are obtained by discounting, where interest rate decreased by GDP long-term
growth rate is used as the discount rate (Guidotti and Kumar, 1991)