Question

What is the relationship between net borrower, net lender, debtor nation, and creditor nation?

Answer 1

Answer : Relationship between net borrower, net lender,Debtor nation and creditor nation

Net borrower and Net lending is balancing item in the capital account.

Net borrower means country has borrowing more money from other countries in the world as compare to its lending to other countries where as

Net lender means a country has lending more money to other countries as compare to their borrowing with other countries

Debtor nation means that in entire life time of the country has borrowed more from the rest of the world

Creditor nation means that in entire life time of the country has invested more than borrowed

• In the capital account the balancing item is either net lending or net borrowing. They both show capital account balance.
• If the country has net borrower than it is known as Debtor nation where as if country has net lender is know as creditor nation.
• Balance of payment has been shown either surplus or deficit. Debtor nation and Net borrower country show budget deficit where as creditor nation and Net lender shows budget surplus
• Net investment balance has been shown by Debtor nation as well as creditor nation. Positive balance shown by creditor nation where as negative balance shown by Debtor nation