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11.21. Within the balance of payments and international investment position statistics, the instrument of investment may be assigned to either equity or debt. Debt instruments are defined as those other than equity instruments. A country’s external debt is therefore a subset of the financial liabilities in its international investment position. To present a complete understanding of a nation’s foreign debt situation, it is necessary to show its foreign debt assets (its debt claims on the rest of the world), its foreign debt liabilities (gross debt liabilities to the rest of the world), and its net foreign debt (the net sum of debt liabilities and debt assets).
11.22. Table 11.4 shows Australia’s international investment position and the split into foreign equity and debt for 1996-97. The levels of international investment at the beginning and end of the period are included, as well as the transactions and other changes (price changes, market value changes and other adjustments). At the end of 1996-97, Australia’s net international investment position was $312 billion, consisting of net equity of $98 billion and net debt of $213 billion. The table also shows the gross asset and liability components of the international investment position, and of net equity and net debt.
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11.4 INTERNATIONAL INVESTMENT POSITION: ASSETS AND LIABILITIES, 1996-97 | | |
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| | Position at beginning | Trans- | Other | Position at end | |
| | | of period | actions | changes | of period | | |
| | | ($m) | ($m) | ($m) | ($m) | | |
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| INTERNATIONAL INVESTMENT POSITION (NET) | 287,921 | 17,451 | 6,271 | 311,642 | | |
| | Assets | -178,402 | -19,027 | -10,378 | -207,808 | | |
| | Liabilities | 466,322 | 36,478 | 16,651 | 519,450 | | |
| Foreign equity (net) | 93,190 | 3,371 | 1,603 | 98,163 | | |
| | Assets | -96,642 | -10,669 | -8,831 | -116,142 | | |
| | Liabilities | 189,831 | 14,040 | 10,434 | 214,305 | | |
| Foreign debt (net) | 194,731 | 14,080 | 4,669 | 213,479 | | |
| | Assets | -81,760 | -8,359 | -1,547 | -91,666 | | |
| | Liabilities | 276,491 | 22,439 | 6,215 | 305,145 | | |
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Source: Various tables from Balance of Payments and International Investment Position, Australia, March quarter 1998 (Cat. no. 5302.0). | | |
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11.23. Foreign debt data can be further classified in terms of any of a number of classifications. In Australia’s quarterly balance of payments and international investment publication (Cat. no. 5302.0) debt is classified by institutional sector. Table 11.5 shows the classification used to present foreign debt transactions and levels in Cat. no. 5302.0.
11.24. Measurement of external debt is useful for economic analyses. The ABS publishes the ratios of the levels of net foreign debt and net foreign equity to Gross Domestic Product, net investment income on net foreign debt and net foreign equity to goods and services credit (in Cat. no. 5302.0). Such ratios provide an indication of the impact of external debt and equity financing on the economy.
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11.5 FOREIGN DEBT TRANSACTIONS AND LEVELS: STANDARD COMPONENTS
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| ASSETS/ LIABILITIES/ NET FOREIGN DEBT | |
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Public sector | |
| General government | |
| | Commonwealth (a) | |
| | State (a) | |
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Financial corporations | |
| | Reserve Bank (a) | |
| | Other financial corporations (a) | |
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Non-financial corporations (a) | |
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Private sector | |
| Financial corporations | |
| Non-financial corporations | |
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(a) For liabilities, separated into debt domiciled abroad and debt domiciled in Australia.
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