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Maintain unbalances for a long time

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Reference no: EM133124185

Question 1:

During your mission to Surfland, you met with President Kelly Medina and found out that Surfland's debt to gdp ratio went from 127 % in 2009 to 181 % in 2018, and that Surfland's central bank has been selling its foreign reserves to maintain a fixed exchange rate between the surfwax currency and the US dollar. The rumor among money changers is that Surfland foreign reserves can cover around 2 months' worth of its imports. Your boss asks for your final recommendation given all the information you gathered before and during your trip. Your answer is

A. The International Olympic Committee officially recognized surfing as an Olympic sport for the 2020 Tokyo Games. Now is the time to invest in Surfland since demand for surfing sites will expand.

B.Surfland is on the verge of a balance of payment crisis and possibly capital controls. The firm is better off not investing in the country in the short to medium run

C. Surfland can continue to maintain these unbalances for a long time. The firm should dive in Surfland and it won't be wiped out ("no pun intended")

D.President Kelly Medina gave his personal assurances that Surfland's economy is doing very well and there is no chance of a balance of payment crisis or a surfwax devaluation. The firm should invest in the country with no hesitation.

Reference no: EM133124185

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