Problem

External debt

Other Names:
External national budget deficit
Foreign debt
Dependence of countries on budget deficit financing through external borrowing
Nature:

Foreign debt is a problem which generates other problems. Thus internal debt (augmented by the transfer of resources to the export sectors, including subsidies and incentives for exports), inflation, economic stagnation, increasing levels of unemployment and underemployment, declining real salaries and levels of nutrition, health etc., can originate in the austerity imposed by the foreign debt.

Incidence:

[Industrialized countries] In the USA in the 1980, the total federal debt was $914 billion. In 1990 it is $3 trillion and rising. The annual net interest payments on that debt were $52 billion in 1980. In 1990 they are nearing $200 billion, accounting for 15% of the annual budget. A balanced budget according to the Gramm-Rudman balanced-budget law would limit the deficit to $64 billion. A succession of large trade deficits over the previous years, means that by 1994, the UK's net assets position, worth £110 billion in 1987, would be wiped out. It was predicted that the current account deficit would reach £25 billion by 1997.

 

Related UN Sustainable Development Goals:
GOAL 16: Peace and Justice Strong Institutions
Problem Type:
D: Detailed problems
Date of last update
03.09.2020 – 16:13 CEST