(1) Does your country import more than it exports? Do its export earnings appear to be quite volatile (up and down), as we predict could be that case for those reliant on primary product exports? Are its imports quite volatile, perhaps a reflection of high oil prices or of big changes in its domestic income? If its balance of trade on goods is negative, does that also result in a deficit on the current account as a whole, or are there other entries that provide an important offset to that deficit? For most countries, a CA(Current Account/GDP (Gross Domestic Product) deficit ratio greater than 4% or 5% in absolute value is unlikely to be sustainable in the long run. By that standard, did your country appear to need to reduce its deficit during this period?
(2) What allows the country to run a current account deficit? That is, how does the country finance that extra spending – does it sell assets to foreigners or borrow from them? Is the current account a good predictor of the overall balance? If so, there may be little variation in the financial account from year to year, possibly because the World Bank lends a set amount of money and few other lenders are attracted to that country.
(3) How much does the Central Bank intervene in the foreign exchange market to defend the value of its currency in the case of a deficit or keep its currency from rising in the case of a surplus? When you look at the value of the currency over time, has it changed much in value relative to the US dollar? Did your country face a crisis when it had to borrow from the IMF? Did it rely on Exceptional Financing to deal with a debt crisis?
(4) Is your country heavily indebted (Country Debt)? In establishing an initiative to deal with highly-indebted poor countries, the World Bank set a target that debt should not exceed 150% of export earnings. In terms of a related measure, how great a burden are debt service payments, and how has that ratio changed over time?
(5) What share of the debt of your country is short term (1 years or less)? If your country faced a period of financial crisis, how did that figure change? Were there large swings in the amount of capital that flowed into the country and then out of the country? Can you distinguish between foreigners taking their money out or domestic residents moving money abroad? As above, you might identify such a period by years in which the country borrowed from the IMF.
Use the Internet to obtain all the information you can to answer these questions. Here are a few websites that may be useful. You can probably find many more.