Foreign debtin Australia

Foreign Debt

Foreign debt is a subset of the financial obligations that compromise a countries international investment position. It includes all the non-equity components of the net international investment positions, all recorded assets + liabilities other than equity securities + direct investment equity capital including reinvested earnings. Put simply it is the international debt owed by a nation to the rest of the world.

As at March 2002, Australia’s net foreign debt was AUS $332 billion owed mainly to countries more developed than itself, for example the United States and Japan. Australia borrows money from other countries to cover any deficit in the Current Account. Australia’s foreign debt is increasing every year because the negative balance on the current account is increasing, (more in debt to itself) Australia is borrowing to cover this and is therefore unable to pay any of it back. The federal government will also borrow if there are insufficient funds in Austra...