ABSTRACT

Introduction Today the total external debt of a country is measured adding the debts as incurred by the country’s residents. This is fundamentally wrong because the true criterion concerns the country as a whole and not merely its residents of the private or public sector. The question therefore belongs to macroeconomics, as does the law of international trade balance between each country’s earnings (exports) and expenditures. In macroeconomics, where the measure of external debts is scientifically accurate, only the foreign currencies that are both received and spent by the country as a whole matter. The correct criterion is therefore consistent with the balance of payments: external debt increases by the exact value of the difference between international expenditures of foreign currencies and their gain.