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External Debt
Gross external, or foreign debt is the amount, at any specific time, of disbursed and outstanding contractual liabilities of residents of a country to repay principal with or without interest, or to pay interest, with or without principal, to non-residents.
An useful indicator of the impact of external debt on a nation's economy is provided by two ratios:
  • External debt to exports – This ratio is a trend indicator closely related to the repayment capacity of a country. The higher the ratio, the wider the gap between the debt and the country's ability to generate revenue by selling goods and services to foreign countries, and vice-versa.
  • External debt to GDP – This ratio relates debt to the country's resource base. The higher the ratio, the narrower the country's margin for shifting production to exports so as to enhance repayment capacity, and vice-versa.
Data on external debt used by areppim relate to:
  • total debt owed to non residents repayable in foreign currency, goods, or services;
  • total external debt is the sum of:
    • long-term public debt, publicly guaranteed, and private nonguaranteed debt,
    • use of IMF (International monetary fund) credit,
    • short-term debt, which includes all debt having an original maturity of one year or less and interest in arrears on long-term debt.

Source: External Debt: Definition, Statistical Coverage, and Methodology, 1988, by the IMF, WB, OECD, and BIS)