Financing of the external payments deficit, Macroeconomics

Assignment Help:

Financing of the external payments deficit:

The trend  in India's widening CAD during the second half of  the eighties, both in absolute terms and also as a proportion of the GDP, increased the need for securing  an adequate flow of external finances. This was crucial to prevent the country from being forced to accept further cuts in the flow of imports from abroad. The situation  needs to be viewed in terms ofthe  prevailing state of  the country's external indebtedness and the potential of her future borrowings by the end of the eighties. The table below presents the scenario obtained in this regard.  

External finance could in principle be  availed of from multilateral official sources brimarily IMF), external commercial borrowings including supplier credit, NRI deposits on a short-term basis and, finally, by preventing herself  from further depletions,  from the  country's foreign exchange reserves. Of these, the net flows of finance from the IMF had already become negative'  by  1985-86. The other sources of external finance (including both corporate borrowings and NRIs  at  commercial  terms), began  to acquire significance only by the early nineties.

Notwithstanding the steady rise in gross authorisations of ECBs since the beginning of the eighties, net disbursements was slow to  follow during the period  1985-86 to  1988-89. In  the meantime, debt servicing on ECBs moved  up  steadily, and the  authorised ECB credit maintained an upward trend over the period. In sum therefore, the situation  by the  end  of  1980s was one in which the debt charges  (interest  and arnartisations) increased at a faster rate than gross disbursements of external loans.  

 


Related Discussions:- Financing of the external payments deficit

Majority of the citizenry pays, Can democracy survive if a majority of the ...

Can democracy survive if a majority of the citizenry pays little or nothing in taxes while benefiting directly from a higher level of government spending? Why or why not?

Explain about penicillic acid, Q. Explain about Penicillic Acid? This m...

Q. Explain about Penicillic Acid? This mycotoxin has biological properties similar to patulin. It is produced by a large number of fungi, including many Penicillia as well as m

Determine optimum output and price levels, Given the demand and cost data y...

Given the demand and cost data you will have available (see information below), briefly describe the process you would use to determine optimum output and price levels in the devel

Stan garner resides in illinois, Stan Garner resides in Illinois and promot...

Stan Garner resides in Illinois and promotes boxing matches for Super sports, INC. an Illinois corporation. Garner created the connect of "ages" promotion- a three fight series of

Rapid growth of the national debt, He rapid growth of the national debt ala...

He rapid growth of the national debt alarmed some politicians and created pressure for restricting Congress's unlimited ability to spend. Efforts to Reduce the Deficit, discuss the

Estimate the value of wacc method, You can work on this assignment individu...

You can work on this assignment individually or in a group of up to 4 people.  If you choose to work as a group, your group should hand in one assignment and you will all receive t

How we can determine the macroeconomic performance, Macroeconomic performan...

Macroeconomic performance The UK's future macroeconomic performance must be judged on how average living standards improve, inflation is kept under control, economy grows and

International trade and Economic growth, If real GDP was $13.1 trillion in ...

If real GDP was $13.1 trillion in 2013 and $13.3 in 2014, what is the growth rate? (b) How many years would it take for GDP (gross domestic product) to double (using your answer fr

Using algebra find the equilibrium price, The demand equation for champagne...

The demand equation for champagne is given by P = 10 - Q. The supply schedule for champagne is given by P = Q. Note that P denotes price per bottle in dollars, and Q is quantity me

Equal payment amortization schedule, Assume a 5 year equal payment amortiza...

Assume a 5 year equal payment amortization schedule with an annual interest rate of 12% and annual payments. If the beginning is 8,000 then the first interest payment will be how l

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd