EXTERNAL DEBT Meaning and
Definition
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External debt refers to the total amount of money that a country, organization, or individual owes to foreign creditors. It represents the accumulated borrowing or indebtedness from entities located outside of the borrowing entity's borders. External debt primarily consists of loans and financial obligations that are contracted between two parties across international borders.
In the case of a country, external debt reflects the total obligations owed by the government to foreign lenders, including both public and private sector borrowings. This debt usually encompasses loans from international financial institutions, such as the International Monetary Fund or the World Bank, as well as private banks or other governments. It is an indicator of a nation's borrowing capacity and its ability to manage and service its debt obligations.
For organizations or businesses, external debt refers to the money owed to foreign entities for funding various activities and operations. This can include borrowings to finance investments, infrastructure projects, or business expansions.
External debt is denominated in foreign currencies, and its magnitude is typically measured as a percentage of the borrower's gross domestic product (GDP). It carries an interest rate that reflects the lending market conditions and the creditworthiness of the borrower. The repayment of external debt usually involves both the principal borrowed amount and the corresponding interest payments over a specified period, which can vary from short-term to long-term. Effective debt management and repayment are crucial for maintaining a sustainable financial position and avoiding the risks of default or economic instability.
Common Misspellings for EXTERNAL DEBT
- wxternal debt
- sxternal debt
- dxternal debt
- rxternal debt
- 4xternal debt
- 3xternal debt
- ezternal debt
- ecternal debt
- edternal debt
- esternal debt
- exrernal debt
- exfernal debt
- exgernal debt
- exyernal debt
- ex6ernal debt
- ex5ernal debt
- extwrnal debt
- extsrnal debt
- extdrnal debt
- extrrnal debt
Etymology of EXTERNAL DEBT
The word "external debt" is composed of two parts: "external" and "debt".
The term "external" originated from the Latin word "externus", which means "outside" or "outward". It entered English in the late 15th century, primarily referring to something originating or existing outside, or relating to foreign affairs or foreign countries.
The word "debt" traces its roots back to the Old French word "dete", which originally meant "obligation" or "duty". It further evolved from the Latin word "debitum", meaning "what is owed" or "owed money".
When combined, "external debt" refers to the financial obligations or liabilities of a country owed to foreign entities, such as other countries, international organizations, or private creditors.
