Foreign debt is a subset of the financial obligations that comprise a country's international investment position. It includes all the non-equity components of the net international investment position, that is, all recorded assets and liabilities other that equity securities and direct investment equity capital, including reinvested earnings. The level of foreign debt in Australia continues to, and always will be of major concern to leading economists and politicians in our country; this level of foreign debt will be used to make political and economic decisions in the future to benefit our economy.
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Net Foreign Debt.
Net foreign debt, the net sum of debt liabilities and debt assets, consists of 2 sectors, the public sector, such as government, public financial and non financial corporations, and the private sector, such as private financial and non financial corporations. .
At the end of the 2000 financial year, the net foreign debt totalled $277804bn, the Public sector, contributed 6% ($18569bn) to the net foreign debt. The private sector, contributed 94% ($259235bn) to the net foreign debt. As you can see in the graph below, this figure has been rapidly growing throughout Australia's history, whereas the public sector remains stable in its contribution to net foreign debt.
Figure 1.
Image courtesy of Reserve Bank of Australia (August 2000).
*Note- figures below are in current AUD.
Figure 1 represents the private sector as 2 separate sectors, financial and non-financial, responsible for $195.9b* (75.6%) and $63b* (24.4%) respectively. In the last half a decade net foreign debt has been steadily increasing as shown in the table below.
Period Assets($m) Liabilities($m) Net Debt($m).
1996-1997 -94,218 302,846 208,628.
1997-1998 -119,189 346,971 227,782.
1998-1999 -129,150 359,839 230,689.
1999-2000 -143,967 421,771 277,804.
2000-2001 -185,967 498,775 313,472.
2001-2002 -193,891 523,654 329,763.
2002-2003 362,000.
