Net Foreign Debt Flashcards
NFD and NFE
Together Net Foreign Debt and Net Foreign Equity are essentially our net assets and liabilities to the rest of the world (Net International Investment Position)
Net Foreign Debt
The total (stock) value of loans Australians owes to overseas countries after accounting for the total value of loans overseas countries owe Australians.
Australia is currently a net lender.
Net Foreign Equity
The total value of Assets owned by overseas countries in Australia, minus the total value of Assets owned by Australians in overseas countries.
Australia owns more overseas assets than overseas nations own of ours.
Causes of our (Negative) Net Foreign Equity
The main cause of a negative NFE figure is Australia’s large pool of superannuation funds.
There is over $3T of superannuation assets in Australia, lots of which is invested overseas (adding to NFE) in their stock markets and property.