Problem:
“Analysis of public debt in developing countries has traditionally focused on external debt. But, in current years, many developing countries adopted aggressive policies aimed at retiring public external debt and substituting it with domestically issued debt.” Ugo Panizza (2008), UNCTAD.
Required:
Question 1: Using proper theoretical inputs illustrate out what constitutes “Public Debt” and clearly differentiating between ‘domestic debt’ and ‘external debt’.
Question 2: Discuss, using instances from Mauritius or any other country, as to why high public debt is basically a cause of concern.
Question 3: Drawing inputs from economic theories and your knowledge of public finance (local and/or international) illustrate out in detail as to what governments are doing to diminish the level of public debt, examining the impact of such policies on economy.