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Meaning / Definition of

Guaranteed External Debt

Categories: Economics,

The provision by one institutional unit of a guarantee to make future debt-service payments to a nonresident creditor if certain conditions are met, such as a default by the debtor, does not negate the claim the creditor has on the debtor. Thus, the debtor on whom the non-resident creditor has a claim, and not the guarantor, should record an external debt liability, unless and until the guarantor assumes the external debt.

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