External Debt — Prelims Strategy

Prelims Strategy

Apply the residence test before looking at denomination. A rupee liability can be external when a resident owes a non-resident, while a resident-to-resident dollar loan does not satisfy that test. Then check whether the instrument is debt rather than equity or an undisbursed commitment.

For maturity, write two time intervals: the original contractual term and the time left from the reporting date. A five-year loan with six months remaining belongs in different categories under those measures. For debt service, add the principal and interest due during the stated period, not the whole outstanding stock plus interest.

In exchange-rate questions, identify the quotation. More rupees per dollar raises the rupee cost of an unchanged dollar principal. Do not infer that the dollar debt itself rose. Finally, attach stock figures to their measurement dates and keep a report's publication date separate. A government publisher can report non-government liabilities, and a debt ratio needs its denominator before it can be interpreted.