What is external debt? »Its Definition and Meaning [2019]

The external debt refers to all those debts that a certain country has in relation to public finances to different banking institutions worldwide , that is to say, it talks about the debts that a country accumulates with respect to foreign entities.In many occasions this debt is equivalent to difficult periods facing the debtor country or different problems that cannot be solved due to the lack of resources by the public sector, which then generates countries , especially third world countries such as Latin countries, resort to obtaining loans or different types of agreements from foreign territories or, for example from other entities such as the World Bank in order to solve certain needs within its territory.

External debt is a type of debt in which a given person, bank, entity, institution, etc.provides a loan to another party, but said loan Tamo comes from abroad, that is, it is not part of the same territory, so that the loan is usually made in foreign currency. The national government of each country is the one that mostly borrows through the external debt, although in a country the different entities that are in it, can also incur debts of an external nature in an independent way, but often they are financially backed by the State.

Most of the time, the entities or institutions that provide loans to countries, companies or others, are international organizations such as IMF or International Monetary Fund, the aforementioned, World Bank , the Bank Inter-American Reconstruction and Development or IBRD, the Inter-American Development Bank (IDB), governments of other countries, private banks, etc.

External debt can be of two types: publishes so it is contracted by the same E state; or of type private , contracted by the individuals of a nation.