Lesson Plan

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Lesson Plan
Grade: Date: 18/01/2026
Subject: Economics
Lesson Topic: external debt: causes of debt
Learning Objective/s:
  • Describe the main causes of external debt in developing economies.
  • Analyse how current‑account and fiscal deficits contribute to external borrowing.
  • Evaluate the impact of external shocks, structural weaknesses, and currency mismatches on debt sustainability.
  • Apply the debt‑sustainability framework to assess risk when interest rates exceed growth rates.
  • Propose policy measures to mitigate unsustainable external debt.
Materials Needed:
  • Projector and screen for slides/diagram
  • Whiteboard and markers
  • Handout with causes table and debt‑sustainability formula
  • Calculator or spreadsheet software
  • Sample data sheets for a case‑study country
  • Sticky notes for group brainstorming
 Introduction:
Begin with a quick poll: how many students have heard of a country struggling with external debt? Connect this to prior learning on balance of payments and fiscal policy, and explain that today they will identify why such debt builds up and how to assess its sustainability. Success will be demonstrated by accurately explaining each cause and applying the debt‑sustainability equation to a brief case.
Lesson Structure:
  1. Do‑now (5') – Students list factors they think lead to a country borrowing abroad; share on board.
  2. Mini‑lecture (10') – Define external debt and present the six key causes with illustrative indicators (using handout).
  3. Guided analysis (12') – In pairs, examine the provided table and calculate a simple debt‑to‑GDP ratio using the formula; discuss the effect of r > g.
  4. Group activity (10') – Each group creates a short policy brief recommending two measures to improve debt sustainability for a given country scenario.
  5. Whole‑class debrief (8') – Groups present recommendations; teacher highlights connections to earlier causes.
  6. Check for understanding (5') – Exit ticket: write one cause and one policy response.
Conclusion:
Summarise that external debt arises from persistent deficits, shocks, and structural issues, and that sustainability hinges on the relationship between interest rates and growth. For the exit ticket, students note the most critical cause for their case study and one policy to address it. Assign homework to research a real developing country’s external debt profile and prepare a brief report.