What is the debtor?

The debtor is a country that leaks more dollars than the country. When the country records its records of all monetary transactions between IT and other countries, the negative payment balance (BOP) suggests that the country is a debtor nation. In general, negative BOPs occur due to commercial deficits, limited foreign investment in domestic businesses or excessive investments of the nation in foreign companies. A key element of BOP is the business balance (shoe), which reflects the difference between the money paid for imports and money received for exports. Business deficits, when the import of the nation exceeds its exports, may result in the devaluation of the debtor's currency if foreign nations holding a large part of the currency as a result of trade start selling it.

nations classify BOP transactions as debit or credits, while the outflow is debit and tide. BOP will also be divided into a financial account, a current account and a capital account. The current account records current income, goods, services and one -sided overthe waters of the nation. The net outflow of the current account is characterized by the debtor's nation. The debtor may decide to invest money abroad in promoting economic growth and productivity, leading to a current account deficit, but such a nation develops a deficit burden if it uses its debts instead of strengthening its gross domestic product (GDP).

For example, the debtor nation can deliberately carry out a deficit for the purchase of imports that provide raw materials for finished products that the nation will export. In this situation, the nation will arise a temporary debt to strengthen exports in the end, whose sale will pay off debt and increase the national income. In addition, the nation can invest crosses to generate future investment benefits. Deficities can also result from increasing dividends as a result of foreign investors. In these situations, the operation of the deficit indicates a strong economy in a nation that follows the aggressive RMOINT strategy.

When a nation involved in poor financial planning, the debtor's government can spend more than it receives. Uncontrolled military expenses or expenses for claims will move sources from economic production. The population can spend money on expensive imports while the national GDP decreases. In such circumstances, the deficit of the current account is a harm to the problem economy.