# External Debt to GDP ratio



## The_Blob (Dec 24, 2008)

External debt (or foreign debt) is that part of the total debt in a country that is owed to creditors outside the country. The debtors can be the government, corporations or private households. The debt includes money owed to private commercial banks, other governments, or international financial institutions such as the International Monetary Fund (IMF) and World Bank.

Sustainable debt is the level of debt which allows a debtor country to meet its current and future debt service obligations in full, without recourse to further debt relief or rescheduling, avoiding accumulation of arrears, while allowing an acceptable level of economic growth.

External-debt-sustainability analysis is generally conducted in the context of medium-term scenarios. These scenarios are numerical evaluations that take account of expectations of the behavior of economic variables and other factors to determine the conditions under which debt and other indicators would stabilize at reasonable levels, the major risks to the economy, and the need and scope for policy adjustment. In these analysis, macroeconomic uncertainties, such as the outlook for the current account, and policy uncertainties, such as for fiscal policy, tend to dominate the medium-term outlook.

World Bank and IMF hold that "a country can be said to achieve external debt sustainability if it can meet its current and future external debt service obligations in full, without recourse to debt rescheduling or the accumulation of arrears and without compromising growth". According to these two institutions, "bringing the net present value (NPV) of external public debt down to about 150 percent of a country's exports or 250 percent of a country's revenues" would help eliminating this "critical barrier to longer-term debt sustainability". High external debt is believed to have harmful effects on an economy

World Debt Clocks

England/UK = 384%
France = 209%
Germany = 164%
Ireland = 1097% 
Italy = 136%
Portugal = 240%
Spain = 175%

makes the U.S. seem fiscally responsible by comparison  (only 99% :gaah: )

List of countries by external debt - Wikipedia, the free encyclopedia

Ireland = 3616% !!! 

does this whole monetary paradigm look like a scam to anyone else?


----------



## BillS (May 30, 2011)

Yes, it's going to be a disaster. You can tell that many of the world's governments are heading for default. The U.S. official debt doesn't include the $5.3 trillion in unfunded liabilities that we had last year and will most likely be higher this year. I'm sure the other countries have large amounts of off-budget debt too.


----------



## partdeux (Aug 3, 2011)

money laundering at it's finest

wrt 5.3T unfunded liabilities, it's a LOT LOT more then that.

There is also some undocumented money transfers between soverign nations central banks of several Trillion dollars.


----------



## Immolatus (Feb 20, 2011)

Yes, we can all agree that its waaaaay more than that, and regardless of the actual number, I think it spells doom either way.
My question is, why is debt/gdp used as a guage for anything? If our ratio is 1:1/100%, then isnt that akin to saying that a biz that grosses $1 million has a debt load of $1 million? And somehow this is an acceptable/sustainable/non problematic situation for the US? People arent freaking out over this? Sheep.
My real problem with the ratio is, why use debt to gdp? Wouldnt debt/income be a more useful measure? Why use gdp? To me, this number is absolutely worthless in and of itself, and it implies somehow that the entire gdp of a nation is somehow at its disposal, and it could 'confiscate' it. Debt/gdp is meaningless unless its viewed in this light, no? If debt/income (which is how your individual credit worthiness is measured) was used, these numbers would be astronomical, and to me would be a better measure of economic health. While obviously having income as the denominator can be changed by a million different factors, least of all the tax rate, isnt that measure much more accurate in judging how a country can balance its debt? 

Oh yeah, all these nations are screwed. It just shows how the system is just a big numbers game, because in the 'real' world, you wouldnt survive a week with debt ratios like that, no matter what the denominator. It wouldnt even be possible. At what point would your lender say, "Uh, you cant possibly pay back the debt youve already accumulated"? When your debt is equal to your yearly income? 10x? The numbers just dont add up, and dont make sense. The only way it propogates is with shady accounting tricks. How else could it? Would you loan money to any entity with a debt/whatever ratio like that? Of course not. Why does anyone? Why does China loan us money at all except to benefit themselves? For them to admit that were broke as a nation would cause theyre short term downfall as well. Maybe they are prepping for just such an occurence. Put us so far in the hole that we cant see our way out, then tear the rug out from under us. Who needs to go to war? 10 years ago I had a friend say he was worried that the Chinese were going to invade us. I said they wouldnt need to invade, all they have to do is cripple us economically and watch us crumble.


----------

