What is the difference between public debt and external debt?

Difference between Public and External Debt? What is the difference between public debt and private debt?


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  1. 1 External debt is owed to foreign countries

    External debt is an amount of money owed to foreign countries or governments. If a country borrows money from another country, this will be considered external debt.

  2. 2 Public debt is owed to citizens

    Public debt is an amount of money usually owed to citizens and institutions who lent the government money by buying governmental bonds, for example.

  3. 3 External debt is usually in foreign currency

    A country's external debt will usually be in foreign currency, whereas the public debt will be in the country's own currency. Countries can thus print more money to repay public debt.

  4. 4 External debt is more dangerous

    An internal debt can be dealt with by a government by printing money because it will have to repay it in local currency. External debt usually represents a bigger problem, as it usually has to be repaid in a foreign currency. 

  5. 5 Public debt can be owed to foreigners (special case)

    Some governments allow foreigners and foreign institutions to buy their government bonds in local currency. In such a case, some of the public debt will be owed to those foreigners.

  6. 6 High debt isn't always bad

    The debt alone can't tell whether a country is doing well or bad. If the economy is going well, the debt to GDP ratio might not be a problem even if it is relatively high. On the other hand, bad economy in addition to a high debt constitute a serious problem.


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