Questions that Governments need to ask when Taking on Debt

Questions for Local Debt

- Is your country ready to grow constantly with inflation (i.e., will prices of most things in your market constantly increase simultaneously, including labor costs)?

- What is the significance of your urban population (i.e., are you ready to source [and efficiently use] significant local investments, from your lower-middle-class to ultra-wealthy citizenry)?

- How strong is the social contract between your nation's government and local stakeholders outside of the government?

- How much confidence do the citizens of your country have in the local financial system, and overall business environment?

- How hopeful are your citizens about their collective future?

- How willing is your country to write-off its local debt?

Questions for Foreign Debt

- What is your country’s level of exposure to foreign exchange volatility?

- What is the interest rate and payback period for the foreign loan?

- To what extent does the foreign loan affect your nation’s political or economic sovereignty?

- What is your country’s analysis of the current geo-political situation?

- What is your country’s forecast for medium-to-long term geo-politics?

- What is the level of your international creditors’ benevolence?

NOTE: This piece represents solely my thoughts. It is not connected to any government or organization with which I may be affiliated. Additionally, it neither encourages nor discourages any country from seeking or declining bilateral or multilateral loans from any source. I'm merely highlighting the essential questions all nations should consider when taking any type of loan, whether local or foreign.