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1360.0 - Measuring Australia's Economy, 2003  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 03/02/2003   
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Over the last 10 years Australia's net foreign debt has more than doubled from $130.8b at 30 June 1990 to $329.8b at 30 June 2002. The ratio of net foreign debt to GDP was 47.0% at 30 June 2002, up on the results of recent years. Net interest income payable on net foreign debt as a percentage of goods and services credits was 9.2% in 2001-2002, a slight decrease on previous years.


LEVELS OF FOREIGN DEBT AT END OF PERIOD AND SELECTED RATIOS
Period
Debt liabilities(a)

$m
Reserve assets

$m
Other debt assets

$m
Net foreign
debt(a)(b)

$m
Ratio of
net foreign
debt to GDP(c)

%
Ratio of
net interest to goods
and services credits(d)

%

ANNUAL
1996–1997
302,846
-22,791
-71,427
208,628
39.4
-11.2
1997–1998
346,971
-24,260
-94,929
227,782
40.6
-9.7
1998–1999
359,839
-23,954
-105,196
230,689
39.0
-9.4
1999–2000
421,771
-27,948
-116,019
277,804
44.2
-10.6
2000-2001
498,775
-37,951
-147,352
313,472
46.6
-9.6
2001-2002
523,654
-37,435
-156,456
329,763
47.0
-9.2

QUARTERLY
2000-2001
March
529,552
-35,306
-163,051
331,195
50.0
-9.8
June
498,775
-37,951
-147,352
313,472
46.6
-9.6
2001-2002
September
520,394
-39,216
-158,169
323,009
47.5
-9.5
December
507,016
-36,549
-149,190
321,277
46.4
-9.4
March
508,948
-33,117
-148,398
327,433
46.6
-9.2
June
523,654
-37,435
-156,456
329,763
47.0
-9.2

(a) Levels from December quarter 1991 are not strictly comparable with levels from earlier periods, due to changes in methodology.
(b) Equals debt liabilities less reserve assets and other debt assets.
(c) Ratio derived by expressing net debt at a particular date as a percentage of current price original GDP for the year preceding this date.
(d) Ratio derived by expressing net interest on debt as a percentage of exports of goods and services for the year preceding this date.

Source: Balance of Payments and International Investment Position (5302.0).


Explanatory Notes

Foreign debt is the amount borrowed from non-residents by residents of a country. It is distinguished from equity investment by the obligation to pay interest and/or repay principal.

Gross foreign debt is the total amount borrowed from non-residents. Net foreign debt is equal to gross foreign debt minus lending by residents of Australia to non-residents, including reserve assets.

The level of debt is often expressed as a percentage of Gross Domestic Product (GDP). This is done to place the extent of foreign debt in context and to enable valid comparisons over time and between countries. Movements in this ratio are an indication of the changing significance of foreign debt.

An economy's capacity to pay the costs associated with debt are portrayed by its debt service ratio. The debt service ratio shows the percentage of goods and services credits (export earnings) being used to meet interest obligations on debt.

There are two important relationships between the level of foreign debt and the balance of payments. First, the financial account entries reflect how much Australia has had to borrow to finance the net acquisition of real resources (goods, services and income) and other financial resources (net equity). Secondly, the interest obligations on debt owing to non-residents add directly to the current account deficit.

While foreign debt is an important indicator in its own right, a comprehensive analysis of Australia's economic situation should also take account of equity assets and liabilities, as well as non-financial assets. All of Australia's assets and liabilities are recorded in the national balance sheet.

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