Why does Brunei have no external debt? What does it mean to have no external debt?

Question:

Why does Brunei have no external debt? What does it mean to have no external debt?

External Debt FInancing:

This question deals with the concept of debt, which is essentially borrowed money. Debt represents a loan made by an investor to a borrower (also called an issuer), in exchange for interest on the amount borrowed. All kinds of parties utilize debt, including governments, corporations, not-for-profit organizations, and households.

Answer and Explanation:

To answer this question, we must first define "external debt." Essentially, it is the portion of a nation's debt that was borrowed from foreign lenders, which can include banks, governments, or international monetary funds/institutions. Based on this definition, we can surmise Brunei has no external debt, because it has not borrowed any funds from foreign lenders. Presumably, any funds the country has borrowed came from domestic sources, including banks and institutional and retail investors.


Learn more about this topic:

Loading...
Long-Term Debt: Definition, Cost & Formula

from Financial Accounting: Help and Review

Chapter 8 / Lesson 7
36K

Related to this Question

Explore our homework questions and answers library