Foreign debt, otherwise known as external debt, is the part of total debt held by creditors of foreign countries, i.e. non-residents of the debtor's country.

According to BUSINESS DICTIONARY, Foreign Debt is an amount a country owes to other countries either directly as a result of government –to-government loans or indirectly because of negative balance of trade

Foreign debt is placed within four broad categories:

• Private non-guaranteed debt
• Public and publicly guaranteed debt
• Central bank deposits
• Loans due to the World Bank and IMF

A generally applied benchmark for an acceptable level of external debt is that the net present value (NPV) of a country's external public debt should be less than 150% of its exports or 250% of its revenues.