DETERMINANTS OF THE TREND AND SUSTAINABILITY OF FOREIGN DEBT

Camelia Milea

Journal of Financial and Monetary Economics, 2023, vol. 11, issue 1, 176-181

Abstract: In the article, the author aims to highlight the factors that influence the evolution of foreign debt starting from macroeconomic equations. Thus, the external debt depends directly on the interest rate and the trade deficit, on the difference between domestic investment needs and domestic savings, and on the gap between budget expenditures and revenues. Also, the article shows the determining factors of the evolution of the external debt to GDP ratio, considered one of the most important indicators of debt sustainability, as well as of the external debt in exports ratio. A correct management of the external debt, accompanied by a rational economic policy, can change a debtor country into a net creditor, in a certain period of time, provided that exports grow faster than imports. In the article, analytical and descriptive methods are used.

Keywords: external debt; factors of influence; interest rate; trade deficit; net expenses (search for similar items in EconPapers)
JEL-codes: F21 F34 F43 (search for similar items in EconPapers)
Date: 2023
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