External Debt

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Export

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

    An older set of standards stating how particular types of transactions ...
  3. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  4. International Financial Reporting ...

    A set of international accounting standards stating how particular ...
  5. International Currency Exchange ...

    The rate at which two currencies in the market can be exchanged. ...
  6. Global Recession

    An extended period of economic decline around the world. The ...
Related Articles
  1. What Causes A Currency Crisis?
    Forex Fundamentals

    What Causes A Currency Crisis?

  2. 6 Factors That Influence Exchange Rates
    Bonds & Fixed Income

    6 Factors That Influence Exchange Rates

  3. In Praise Of Trade Deficits
    Economics

    In Praise Of Trade Deficits

  4. Overseas Investing No Protection Against ...
    Economics

    Overseas Investing No Protection Against ...

Hot Definitions
  1. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  4. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  5. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  6. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
Trading Center