The bogey of external debt has dogged all nations -- poor, rich, developed or developing.
But what is external debt? And how does it impact a nation?
Read on to also find out which are the nations with the highest external debt in the world.
What is external debt?
External debt of a country is calculated as the total public and private debt owed to nonresidents repayable in foreign currency, goods, or services. In other words, external debt is the part of a country's debt owed to creditors outside the country.
This includes debt-owed to private commercial banks, governments, or international financial institutions such as the IMF and World Bank. It is an important economic indicator to gauge a country's financial condition. To know more about external debt, which country owes how much, starting with India, and what its implication is, read on..
India
A depreciating dollar has pushed up India's external debt to $155 billion (or $0.155 trillion) at the close of 2006-07, an increase of $28.6 billion over the previous year.
Among the various components of the external debt, India's external commercial borrowings stood at $42.8 billion recording an increase of 59.2 per cent followed by trade credit and NRI deposits. Multilateral and bilateral debts also witnessed moderate increase during 2006-07.
Referring to debt sustainability, the Reserve Bank of India said external debt to GDP ratio at the end of March 2006-07 increased to 16.4 per cent from 15.8 per cent in 2005-06.
