ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -External debt is the portion of a country’s debt that is borrowed from foreign lenders, including commercial banks, governments, or international financial institutions. If a country cannot repay its external debt, it is said to be in sovereign debt and faces a debt crisis.

Detailed explanation-2: -← External Debt. Gross external debt, at any given time, is the outstanding amount of those 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.

Detailed explanation-3: -(1) public and publicly guaranteed debt; (2) private non-guaranteed credits; (3) central bank deposits; and. (4) loans due to the IMF.

Detailed explanation-4: -The external debt comprises the outstanding amount of those actual current and not contingent liabilities owed to non-residents by residents of the country, which require the debtor to pay principal and/or interest at some point(s) in the future. External debt is also referred to as foreign debt.

Detailed explanation-5: -Definition: It refers to money borrowed from a source outside the country. External debt has to be paid back in the currency in which it is borrowed.