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Published byNoah Parks Modified over 9 years ago
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Public Debt - When government borrows from the public. -Sources of public debt/ internal or external. -In modern economics public debt is justified for the following situation: -During war period -In time of depression To meet unprecedented expenses -To curb inflation -Development finance
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Forms of public debt -Internal and external debt -Productive and unproductive debt -Compulsory and voluntary debt -Redeemable and Irredeemable debt on the criterion of maturity -Short term- medium term and long term debts. -Funded and unfunded
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Measurement of the burden of external debt -Debt service ratio= External debt service /National Income (at current prices) -Debt service-Saving Ratio = External debt Service/saving at Current prices -Debt-National Income Ratio = Total external debt/ National Income (at current prices) -Debt Service tax Revenue (DS-TR) Ratio= External debt service/Total Tax Revenue
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The measurement of burden of internal debt -Income Debt Ratio = Size of Public Debt/National Income -Debt service Ratio= The Annual Interest Payment on the Public Debt/ the National Income (current prices) -Interest Cost Revenue Ratio= interest Cost/Aggregate Tax Revenue -Interest cost profit ratio = Interest payments of public loans/ Profit of Public Sector Enterprises
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Redemption of Public debt - Refunding -Conversion -Surplus Budget -Sinking fund -Terminal annuities -Additional taxation -Capital levy -Surplus Balance of Payment
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