what are the effects of external debt 
high levels of external debt can be risky especially for developing economies among other things it could increase the risk of default and being in another country s pocket ruin credit ratings leave little funds to invest and spur growth and expose the borrower to exchange rate risk the bottom linelike any form of debt borrowing money from foreign sources can be good or bad it may be a useful cost effective way to access much needed capital or trigger a vicious cycle of debt if it means procuring money for important investments at a cheaper rate than can be found domestically then it can ultimately be viewed as a good thing however the same cannot be said when struggling economies are effectively forced to borrow from other countries on ridiculous terms just to stay afloat 