Question

Distinguish between short-term and long-term debt.

Answer 1

	Short-term debt	Long-term debt
1.	Short-term debt is the debt which is raised for a short period of three to nine months.	Long-term debt is that debt which is repayable after a long period, say five years or more.
2.	Used for meeting temporary deficits or managing cash flow.	Used for funding large infrastructure or development projects.
3.	Money market instruments.	Capital market instruments.
4.	Usually has a maturity of less than 12 months.	Has a maturity of more than 12 months, often extending to decades.
5.	Example: Has a maturity of more than 12 months, often extending to decades.	Example: loans from the World Bank, long-term bonds or infrastructure loans.