International Debt Definition

by Marquis Codjia ; Updated September 26, 2017

A country's public officials engage in debt transactions on securities exchanges to pay for social programs or balance annual budgets. Investment bankers and other financial market players help governments borrow on securities exchanges.

Definition

International debt is otherwise known as foreign debt or sovereign debt. Foreign debt is a liability that a country must repay over a period of time. Buyers of international debt, also called sovereign debt holders, are generally not citizens of the borrowing country.

Significance

International debt plays a key role in modern economies. Governments borrow from foreign investors to balance periodic budgets, pay for social programs and invest in long-term infrastructure projects, such as road or bridge construction. If a country cannot borrow in international financial markets, it may have to cut spending levels in social programs, such as education and health services.

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Debt Issuance

Investment bankers and a country's finance ministry, or treasury department, help government officials raise funds in global stock exchanges. The country's central bank also may assist in issuing debt products in the short and long terms.

About the Author

Marquis Codjia is a New York-based freelance writer, investor and banker. He has authored articles since 2000, covering topics such as politics, technology and business. A certified public accountant and certified financial manager, Codjia received a Master of Business Administration from Rutgers University, majoring in investment analysis and financial management.

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