External Debt in Developing Countries in The Period of 2001 to 2020: Reality and New Manifestations

Xoan Le Thi¹, Uyen Vo Thi Le^2*

Abstract

Recently, external debt (ED) in developing countries (DCs) has increased rapidly because domestic finance is not able to meet their high capital needs. Debt has certain benefits when it comes to providing capital for economic development. However, the debt burden also creates risks for an economy. The main objective of this paper is to assess the situation of ED and determine its new manifestations in DCs in the period of 2001 to 2020 through indicators such as debt size, debt solvency as well as fluctuations in debt. The results show that the size of debt increased rapidly, but there was no sign of the unsustainability of debt during this period. The indicators, which were studied, showed a contradiction in the growth trend of debt solvency and debt size. In addition, the large share of short-term debt and private debt in total debt has also shown that debt payment pressure is growing in these DCs. Therefore, these economies are currently facing their own difficulties in financial potential along with general difficulties caused by the Covid-19 pandemic. Similar to other economic experts’ comments, the study shows that the reality of ED in DCs is going in a bad direction and therefore these economies are likely to fall into a new debt crisis.

Keywords

external debt; developing countries; reality; new manifestations of external debt

Cite This Article

Xoan, L. T., Uyen, V. T. L. (2022). External Debt in Developing Countries in The Period of 2001 to 2020: Reality and New Manifestations. International Journal of Scientific Advances (IJSCIA), Volume 3| Issue 2: Mar-Apr 2022, Pages 203-212, URL: https://www.ijscia.com/wp-content/uploads/2022/04/Volume3-Issue2-Mar-Apr-No.241-203-212.pdf

Volume 3 | Issue 2: Mar-Apr 2022