External Debt Video Lecture | Business Economics for CA Foundation

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FAQs on External Debt Video Lecture - Business Economics for CA Foundation

1. What is external debt?
Ans. External debt refers to the total amount of money that a country owes to foreign lenders or governments. It includes both public and private debt and can be in the form of loans, bonds, or other financial obligations.
2. How is external debt calculated?
Ans. External debt is calculated by adding up all the financial obligations that a country has to non-residents. This includes both short-term and long-term debt, as well as interest payments and principal repayments. The calculation is usually done by the central bank or the ministry of finance.
3. Why is external debt important for a country?
Ans. External debt is important for a country as it allows governments, businesses, and individuals to finance investments, infrastructure projects, and other economic activities. However, excessive external debt can also pose risks, such as currency depreciation, high interest payments, and vulnerability to economic shocks.
4. How does external debt affect a country's economy?
Ans. The impact of external debt on a country's economy can be both positive and negative. On one hand, external debt can provide much-needed capital for investment and economic growth. On the other hand, high levels of external debt can lead to debt servicing difficulties, reduced government spending on social programs, and macroeconomic instability.
5. Can external debt lead to a debt crisis?
Ans. Yes, excessive external debt can lead to a debt crisis. When a country is unable to meet its debt obligations, it may default on its payments or seek debt restructuring. This can have severe consequences for the country's economy, including a decrease in investor confidence, currency depreciation, and a decline in economic growth.
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