The foreign debt is the name of a set of loans that are provided by one country to the other country. The foreign debt is a combination of the short term as well as long-term liabilities. The most important resources to provide the foreign debt to the different countries are the World Bank and Asian Development Bank. Another name of the foreign debt is an external debt. There are four broad categories of availing the foreign debt. The first category is known as the private or non-guaranteed debt. The second category is known as the public guaranteed debt. The third category is known as the central bank deposits, and the last category is known as the IMF loans. There is a lot of positive as well as some negative impact of this foreign debt on economic growth of a country. If you are not able to analyze the impacts of foreign debt on the economic growth, then you can get help from the dissertation writing services.
Positive impacts of the foreign debt on economic growth
The positive impacts of the foreign debt on economic growth of a country are given below;
- Sometimes, there is a possibility that a particular country is not able to run the smaller business with the help of its internal resources. Under such a situation, the external or the foreign debt is very helpful for them. This external or the foreign debt provides an opportunity for a specific country to run the small businesses at the higher speed.
- As we know that this is an era of Science and technology. Due to this reason, there is a lot of competition in the field of the business and each organization needs new technology in order to meet the competitive needs. There are some organizations that are not able to manage the best needs of technology. Due to this reason, the external debt is helpful for them to fulfil these needs.
- Sometimes, there is a possibility that you are not able to run an organization with the help of your own resources. Under such a situation, the external loan provides a chance to the organization members to preserve their own resources.
Negative impacts of the foreign debt on economic growth
Along with some positive impacts, there are also some negative impacts of the foreign debt on economic growth. These negative impacts of the foreign debt are given below;
- When you will get the foreign debt, then you will have to follow the guidelines of those firms that are providing the debt. Due to this reason, you will be able to lose your ownership.
- As we know that we will have to pay the instalments of the debt that we have gotten from the foreign agencies. Due to this reason, to control the cost of the different products and services is a major challenge for an organization.
- It is a fact that the future of any kind of the organization depends upon the working capital. With the help of the foreign debt, there occurs a lot of issues regarding the cash flow.