Country Report Australia October 1996 Main report

Foreign trade & payments: Net foreign debt rises

Australia's net foreign debt rose by A$2.7bn during the second quarter of 1996 to stand at A$187.8bn. Net capital transactions for the quarter amounted to A$3.6bn, while higher security and share prices led to a further increase of A$573m. A stronger Australian dollar pulled A$1.6bn off the overall increase in foreign indebtedness. Net foreign debt amounted to 38.6% of GDP at the end of the second quarter, marginally below its first- quarter share and 1.3 percentage points below the level prevailing one year earlier.

The private sector's gross foreign borrowing rose by A$3.5bn during the second quarter. This was only partly offset by an increase of A$1.1bn in its lending abroad. The sector's net foreign debt increased by A$2.3bn. The increase in the public sector's gross foreign borrowing amounted to A$1.5bn during the second quarter. Most of this was offset by a rise in net lending abroad of A$1.1bn, and the sector's net foreign debt rose by A$326m.

Thanks largely to export growth, Australia's debt-service ratio (the interest payable on its net foreign debt as a percentage of its exports of goods and services) eased to 11.3% during the second quarter, from 11.9% in the first quarter.

© 1996 The Economist lntelligence Unit Ltd. All rights reserved
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