External Debt


DEFINITION of 'External Debt'

The portion of a country's debt that was borrowed from foreign lenders including commercial banks, governments or international financial institutions. These loans, including interest, must usually be paid in the currency in which the loan was made. In order to earn the needed currency, the borowing country may sell and export goods to the lender's country.

BREAKING DOWN 'External Debt'

A debt crisis can occur if a country with a weak economy is not able to repay external debt due to the inability to produce and sell goods and make a profitable return. The International Monetary Fund (IMF) is one of the agencies that keep track of the country's external debt.

  1. International Financial Reporting ...

    A set of international accounting standards stating how particular ...
  2. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  3. International Currency Exchange ...

    The rate at which two currencies in the market can be exchanged. ...
  4. Export

    A function of international trade whereby goods produced in one ...
  5. International Accounting Standards ...

    An older set of standards stating how particular types of transactions ...
  6. European Sovereign Debt Crisis

    A period of time in which several European countries faced the ...
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