External (foreign) debt stock is defined as a country’s entire debt that is payable to international debtors and also includes internal liabilities from domestic debtors. The International Monetary Fund defines a country’s foreign debt stock with such key elements as principal and interest, outstanding and actual current liabilities, residence (centers of economic interest), and current and not contingent (which differs by definition across countries). A country’s external debt stocks relative to its gross national income is the foreign debt that a country owes to a foreign creditor compared to its total gross domestic product including its foreign residents incomes but less the incomes of non-residents in its domestic economy.
Analyzing the Data
The World Bank collects information about a country’s external debt by utilizing its Debtor Reporting System (DRS). Long term debt data on a country’s external debt are obtained from reports on public and private loans guaranteed and non-guaranteed of that particular country and is also augmented by information from lending institutions of the creditor countries. In addition, the World Bank and the International Monetary Fund also gets information about short term external debt information from its Quarterly External Debt Statistics (QEDS) report which is augmented by data from the Bank for International Settlements. Foreign external debt is repayable in goods, services or currency.
Highest External Debt Stocks Relative To GNI By Country
The following developing countries have the highest external debt stocks in 2014, relative to their gross national incomes (GNI) in US dollars.
- At the top of the list is Mongolia with its external debt stocks rising to 186.2% relative to its Gross National Income (GNI) Purchasing Power Parity (PPP) of US$32,070,586,788.00.
- Second on the list is Bhutan with its external debt stocks rising to 105.1% relative to its GNI per capita of $2,370.00.
- Third is Kyrgyzstan with its external debt stocks rising to 101.1% relative to its GNI PPP amounting to US $18,937,042,358.00.
- Fourth is Ukraine with its external debt stocks rising to 100.3% relative to its GNI PPP being US $368,278,833,192.00.
- Fifth is Laos with its external debt stocks rising to 95.9% relative to its GNI PPP being US $33,944,689,337.00.
- Sixth is Mauritius with its external debt stocks rising to 90.9% relative to its GNI PPP amounting to US $23,195,252,282.00.
- Seventh is Bulgaria with its external debt stocks rising to 90.1% relative to its GNI PPP recorded at US $121,431,951,347.00.
- Eighth is Nicaragua with its external debt stocks rising to 88.8% relative to its GNI PPP being US$28,990,227,773.00.
- Ninth is Cape Verde with its external debt stocks rising to 86.4% relative to its GNI PPP standing at US $3,195,283,936.00.
- Tenth is Georgia with its external debt stocks rising to 85.0% relative to its GNI PPP being US $33,989,172,800.00.
Sustainable External Debt Indicators
Experts and economists have no consensus opinion as to a single indicator for deciding what the acceptable level of foreign debt is to a developing country. The use of ratios as in a country’s solvency and that country’s ability to yield resources in paying back its owed external debt balance is one such measure. Other debt burden indicators are debt-to-GDP ratio, foreign debt to exports ratio, and the government debt to current fiscal revenue ratio. Some more indicators used as well are the share of foreign debt, the short-term debt, and the proportion of concessional debt as part of the total debt stock.