Which of the following best describes a country’s external debt?

It is the portion of the total national debt that is financed by foreign bondholders.

It is the portion of the annual fiscal deficit financed by foreign bondholders.

It is the portion of the public debt financed by foreign bondholders.

It is the portion of the public debt financed by domestic bondholders.


Answer :

It is the portion of the total national debt that is financed by foreign bondholders.

External debt is the total debt owed by the government, firms, and citizens of a country to foreign creditors. Portions of the external debt may be owed to private banks, other governments, and international financial institutions such as the International Monetary Fund (IMF) and World Bank.