However, these indigenous institutions may not always have sufficient amount of resources to fulfill all the requirements of the country. In that case, it is forced to resort to international commercial banks or international lending institutions like the IMF of the World Bank. It can also request for financial aid from the Government of its ally nations. The debtors of a country can include the national Government, the private corporations or even the individual households. Usually, external debt is borrowed in two ways: by taking loans from the lending institutions or by selling the country’s securities to acquire the required amount of funds. After the country accomplishes its projects with the help of the borrowed resources, it is required to repay the external debt along with its interest payments. Thus, external debt is actually a liability of the nation. For this reason, it is recorded under the Debit Account in the Balance of Payments (BOP) of the country. The BOP is a statement of accounts of the nation including its assets and liabilities and the outstanding credit and debit of the economy. The BOP gives an indication of the country’s position with respect to the international market. If the country has borrowed a large amount of financial resources from abroad, this will automatically add to the Debit account of the BOP. A huge burden of external debt does not reflect a good financial position of the domestic nation. Instead it indicates that financial resources generated within the economy are not sufficient to fulfill the requirements of the national Government, the private firms and the individual households. That is why; the country has to depend on external sources to finance its multifarious requirements. Economists and financial experts always advise countries to keep their external debt burden down to a minimum. Nations are expected not to borrow extra resources unless and until it becomes absolutely necessary (The World Bank, 2012). Indicators of a Country’s External Debt Burden Apart from the Balance of Payments Statement, there are other variables which give an indication of the external debt burden of a particular country. These are: a. The Ratio of External Debt to GDP: A high value of this ratio reflects a high external debt burden of the nation. This shows that the country’s external borrowings are greater than the value of its Gross Domestic Product produced within its geographical boundaries. The financial resources generated in turn from the GDP are not being able to meet all the financial requirements within the economy. Therefore, the country has to borrow extra resources from external creditors b. The Foreign Debt to Exports Ratio: When an economy has a high ratio of foreign debt to exports, this also indicates a high external debt burden of the country. It exhibits that the nation’s borrowing from external sources is more than the value of the goods exported by the country. This may also reflect that the nation’s external debt liabilities are greater than its external credit earnings. The
Problems and Prospects of External Debt Management When a country requires financial resources in excess of what it already has, it is compelled to borrow finances from other sources. These creditors can be financial institutions located within the domestic country or situated outside the geographical boundaries of the nation…
US Rising Debt Level and Current Economic Problems
In the United States, the soaring budget deficit has resulted in an increase in the overall government debt. Budget deficit is expressed as a percentage of GDP. There are various reasons for having a budget deficit.
From this research it is clear that if government exists at the domestic level, global governance has been generally pursued at the international level. Literatures mention that global governance has not been defined properly. However, the term is used to refer to regulation that tends to subsist over and above the level of the national state, whether at the transnational, supranational or international level.
t bonds loses value. Banks typically seek to earn income on funds that they are required to keep as capital reserves on loans through low risk investments such as U.S. Treasury Bonds and other sovereign debt instruments. In Europe, it is expected that the major banks may have excessive exposure to Greek, Spanish, Italian, Portuguese, and other bonds from countries who face an increasing risk of defaulting on their debt.
A diverse empirical literature is provided by research based on industry level-data [Rajan and Zingales 1998; Wurgler 2000], time-series research [Neusser and Kugler 1998; Rousseau and Wachtel 1998, 2000], and econometric investigations that use panel techniques [Beck, Levine, and Loayza, 2000] supports the view that financial systems are essential for economic growth.
is is on the management of relations with the external resources or management of the external resources with in a project.
The management of the external resources has turned these days extremely important, if this section would be overlooked in a particular project than there are several negative outcomes such as the supplier and subcontractors would look for their benefits, they would save extra costs and make their own gains, they would provide relatively cheap and poor quality material for the manufacturing or completion of the project and they would fill their pockets from the remaining money which they got from the company to finish the job at a good standard, so these might be the ou
Kanter (1995:71) on his work of "Mastering Change" argues that success in the present day business is not for those companies that re-engineer the way they do things, or for those fixing the past. According to Kanter (1995) such an action will not constitute an adequate response.
osure systems influence financial development and hence economic growth, as shown by researches done on cross-country level [King and Levine 1993a,b; Levine and Zervos 1998; LaPorta, Lopez-de-Silanes, and Shleifer 2000], as well as by firm-level studies [Demirguc-Kunt and
First, governments have been running on budget deficits for longer than two decades. Secondly, prospects for global growth have been deteriorating over the past few months. Third, there is a growing sense of unease among many sensible people about government’s
For example, I had to take a college loan in order to get my degree, failure to which I would not have been educated. Prior to having a debt repayment plan I thought I would be abler to pay all the debts on time without a