- 10 Marks
PSAF – May 2021 – L2 – Q5b – Fiscal Policy and Public Finance
Analysis of debt burden through key ratios and explanation of sources for external debt
Question
External debt does not constitute a burden when contracted loans are optimally deployed and the return on investment is sufficient to meet maturing obligations, as and when due, while servicing of the domestic economy is not undermined. The magnitude and severity of debt burden cannot be determined on the basis of debt volume only, rather, the debt volume should be viewed in combination with certain debt ratios for better appreciation of the debt problem.
Required:
Discuss THREE ratios commonly used to analyze the degree of indebtedness of a country and explain TWO sources of external debts.
Find Related Questions by Tags, levels, etc.
- Tags: Debt Analysis, Debt Ratios, External Debt, Fiscal Responsibility, Public Finance
- Level: Level 2
- Topic: Fiscal Policy and Public Finance
- Series: MAY 2021
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