What is foreign debt?

Foreign debt refers to the total amount of foreign currency loans borrowed by its shareholders, foreign-funded financial institutions or other foreign individuals or companies. The total foreign debt cannot exceed the difference between the total investment and registered capital of foreign-invested enterprises, and shall be filed with the State Administration of Foreign Exchange. According to the definitions of the International Monetary Fund and the World Bank, foreign debt is a contractual debt that residents of a country bear to non-residents at any given time, excluding direct investment and enterprise capital. According to the definition of China's State Administration of Foreign Exchange, foreign debt refers to all debts contracted by organs, organizations, enterprises, institutions, financial institutions or other institutions in China to overseas international financial organizations, foreign governments, financial institutions, enterprises or other institutions. There are both connections and differences between foreign debt and foreign capital. As a part of foreign investment, it is essentially different from direct investment. The direct investment is repaid in the form of profit distribution. During the validity period of the contract, both parties bear the operational risks, and the foreign debt is used by the borrowing country, and the principal and interest are repaid within the prescribed time limit. The role of foreign debt A country usually borrows money from abroad for two purposes: ① to raise investment funds to promote its economic growth or make up for its fiscal deficit. Under the condition of economic openness, the total investment of a country should be equal to the foreign capital accumulated and utilized domestically. When domestic accumulation cannot meet its investment needs, it needs to borrow foreign funds. Therefore, foreign debt is caused by the difference between domestic accumulation, domestic savings and investment. (2) make up for the temporary shortage of foreign exchange. When a country has an unbalanced balance of payments, such as a current account deficit, it can make up for it with foreign capital without using foreign exchange reserves, so that its balance of payments can be rebalanced. Generally speaking, a moderate scale of foreign debt can accelerate a country's economic growth, while foreign debt exceeding the limit of national strength may cause great pressure on a country's economy, which is not only manifested in the fact that repaying foreign debt may reduce a country's available resources in the future, thus affecting economic growth; Moreover, the excessive growth of foreign debt will also affect a country's import and export and balance of payments. The criteria for measuring the appropriateness of foreign debt mainly include: ① debt service rate, that is, the percentage of annual debt service to the total foreign exchange income generated by the export of goods and services; Debt ratio refers to the percentage of a country's foreign debt balance in its annual export foreign exchange income; (3) Debt ratio refers to the proportion of a country's foreign debt balance to its gross national product; (4) Interest repayment rate refers to the percentage of total annual interest payment and export earnings. There are two kinds of world debt reporting systems to measure foreign debt: ① debtor country reporting system, that is, the world debt table formed according to the data provided by debtor countries, such as the World Bank and the International Monetary Fund; (2) Creditor reporting system, that is, the world debt table formed according to the data provided by creditors such as the Bank for International Settlements and the Organization for Economic Cooperation and Development. There may be some gaps in the data because of different angles of investigation. The former usually has more accurate long-term debt figures about the government or government guarantees, but it is often unable to effectively monitor those private debts and short-term debts; For private debt and short-term debt, creditor-based data can make up for debtor-based data. China's foreign debt statistics are based on debtors. In a broad sense, foreign debt generally refers to all debts with contractual repayment obligations undertaken by organs, organizations, enterprises, institutions, financial institutions or other institutions within China to international financial organizations, foreign governments and financial institutions, enterprises or other institutions outside China. In a narrow sense, foreign debt refers to the debts borrowed by the state from foreign countries, including public bonds issued or promoted by the state abroad, loans from other governments, international financial organizations and commercial banks. Therefore, within this definition, the government's direct borrowing from foreign countries is the main form of foreign debt. The main targets of foreign debt include: loans from international financial organizations, loans from foreign governments, loans from foreign banks and non-bank financial institutions, buyer's credit, issuance of foreign currency bonds, international financial leasing, debts that need to be paid directly in cash in compensation trade, deferred payment and other debts. The classification of external debt can be divided into state debt and non-state debt, also known as sovereign debt and non-sovereign debt. It can be divided into long-term debt and short-term debt according to time; According to the lender, it can be divided into government loans (also called bilateral loans), loans from international financial organizations (also called multilateral loans), loans from foreign commercial banks and loans from foreign securities investors; According to the interest rate, it can be divided into fixed-rate loans and floating-rate loans. In addition, it can also be classified according to the interests and currencies of borrowers. China's foreign debt: China's foreign debt comes from the Soviet Union's aid in kind in the early 1950s. However, the large-scale foreign borrowing was after 1979. China's foreign debts are mainly divided into: unified borrowing and repayment, unified borrowing and repayment, and self-borrowing and repayment. China's government loans are mainly made through the following departments: the Ministry of Foreign Trade and Economic Cooperation is responsible for government loans, the Ministry of Finance is responsible for World Bank loans and issuing bonds in the international capital market in the name of the China government, the People's Bank of China is responsible for loans from the International Monetary Fund and the Asian Development Bank, and the Ministry of Agriculture is responsible for loans from the International Fund for Agricultural Development. The foreign debts of these sectors were called national unified foreign debts at the end of 1989, and the balance of China's foreign debts was $41300 million, of which government loans were about $7 billion. China adheres to the principle of self-reliance, equality and mutual benefit, uses foreign capital to raise funds for socialist modernization, and insists on repayment at maturity or in advance, enjoying a good reputation in the world. Foreign debt scale monitoring indicators are mainly divided into three categories: (1) total foreign debt indicators, which are estimates of foreign debt affordability and reflect the relationship between foreign debt balance and national economic strength. Mainly includes: (1) debt ratio, which refers to the ratio of foreign debt balance to GDP, generally not higher than10%; (2) The borrowing ratio, also known as the debt ratio, refers to the ratio of the foreign debt balance to the foreign exchange income of export goods and services in the current year, which generally does not exceed 65,438+000%. (II) Foreign debt burden indicator It is an estimate of the ability to repay debt and interest, reflecting the relationship between the amount of debt and interest paid in the current year and economic strength. It mainly includes: (1) debt service ratio, which refers to the ratio of debt service to foreign exchange income of exported goods and services within one year, with a general reference coefficient of 20%; (2) The proportion of debt service to the fiscal expenditure of the current year shall generally not be higher than 65,438+00%. (III) Foreign debt structure indicator It is an indicator to measure the internal quality of foreign debt itself under the condition of the established foreign debt scale. It mainly reflects the cost of borrowing through various comparative relationships within the debt. It also forecasts the repayment time and repayment ability, aiming at reducing the borrowing cost, adjusting the debt structure and dispersing the debt risk. The main indicators are category structure, interest rate structure, term structure and currency structure. Using the above indicators to analyze a country's foreign debt burden, we can see whether it has the ability to repay the principal and interest.