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JAMB Economics 1997 Question 39

Question 39

Public Finance

One of the factors which is likely to check the growth of public debts is

  1. A.bridging the resource gap
  2. B.debt repudiation
  3. C.debt rescheduling
  4. D.debt-equity swap.
Show the answer and explanation

Answer: D (debt-equity swap.)

Explanation

In a debt-equity swap, foreign debt is exchanged for shares in local companies, so the debt is cancelled rather than growing.