Here is the list of countries that owe the most to foreign creditors in 2017. The United States leads, followed by the Euro area and the United Kingdom.
Having high external debt can fast become an economic crisis for a country. If financial markets consider that the country's ability to pay back its debt is not sufficient or too uncertain, it will find further borrowings to be be impossible or extremely expensive. Eventually, the economy may find itself strangled by a lack of credit.
External debt (also called “foreign debt”) is the portion of total country debt that is owed to creditors outside of the country. The debtors can be the government, corporations or private households. The creditors include private commercial banks, other governments and international financial institutions (such as the IMF and the World Bank).
A sustainable external debt, therefore, would be one that allowed the country to service its obligations in full without accumulating any arrears, having recourse to rescheduling or to debt cancellation, while allowing for an acceptable level of economic growth. To help low income countries attain this goal, the IMF and the World Bank created the Debt Sustainability Framework in 2005 to periodically assess the situation and provide recommendations to address any potential risks.
The most commonly used indicator to express and compare external debt is the Gross External Debt. The IMF, the BIS, the OECD and the World Bank share a common definition for it as “the outstanding amount of actual, current, and not contingent, liabilities that require payment(s) of interest and/or principal by the debtor at some point(s) in the future and that are owed to nonresidents by residents of an economy”.
Note that the definition refers to residency and not to nationality, and that the indicator includes both principal and interest of the debt. The loans included in external debt have to be repaid in the currency in which they were signed, which for most countries is a foreign currency. If that is the case, to be able to repay the debt, the country may produce and sell goods or services to buyers who pay in that foreign currency, use their foreign currency reserves or recur to new credit.
The last review was conducted in 2012 and a new one is ongoing and to be discussed by the IMF and WB boards this summer.
Countries with the most external debt
|Country Name||Extwernal debt in 2016, last trimestre (USD millions)|
|Hong Kong SAR, China||1,330,055|
|Egypt, Arab Rep.||67,323|
|West Bank and Gaza||1,749|
Countries With The Most External Debt in 2015
October 11, 2015
The International Monetary Fund (IMF) defines external debt as the outstanding amount of actual, current, and not contingent, liabilities that require payment(s) of interest and/or principal by the debtor at some point(s) in the future and that are owed to nonresidents by residents of an economy (determined by where one is located, not one’s nationality). The debt includes both principal and interest payments due.
For some countries, particularly developing ones, debt incurred by governments can exceed those governments’ ability to pay (based on tax revenues and on the nation’s gross domestic product). Government funds spent on poverty reduction, job creation, infrastructure improvement, education and the like, foster longer-term growth, possibly leading to lower levels of borrowing in the future. However, the burden of loan repayments can make these beneficial expenditures impossible. In addition, sometimes the debts were incurred by regimes that are no longer in power, but the burden to pay down the loan falls to a subsequent administration. Loans are sometimes restructured, allowing longer time-periods for repayment. And debt cancellation for developing nations is a topic that is hotly debated.