FOREIGN DEBT

The foreign debt (or external debt) is the part of total debt held by creditors of foreign countries, i.e. non-residents of the debtor's country. This entry gives the total public and private debt owed to nonresidents repayable in internationally accepted currencies, goods, or services. These figures are calculated on an exchange rate basis, i.e., not in purchasing power parity (PPP) terms. The foreign debt is the portion of a country's debt that was borrowed from foreign lenders including commercial banks, governments or international financial institutions (International Monetary Fund –IMF or World Bank).

There are different kinds of foreign debts:

-From development cooperation: they are financed by rich countries; they have very low interest rates and constitute 47% of long-term debt;

-From credit export: they are non-payment of imports by the debtor countries;

-Commercial: they include more than 80% of short-term debt;

-Multilateral: they are contracts with international financial institutions like the International Monetary Fund, the World Bank, the regional development banks.

The main locations where we discuss the foreign debt are the IMF, the World Bank, the Paris Club and the London Club.

 


Editor: Giovanni AVERSA