THE PECULIARITIES OF CONTEMPORARY MANAGEMENT OF FOREIGN DEBT IN A SMALL OPEN ECONOMY

Abstract

Raising foreign funds by borrowing is one of the ways to get the necessary amount of money for the country’s needs. As borrowing can be considered as getting indebted, countries with small open economies should be particularly cautious of ways to mitigate probable increase of the foreign debt in case of unfavourable changes in international financial markets. Considering high vulnerability towards sudden changes in international market and, therefore, high financial risk, sustainable management of foreign debt of small open economy is much more complex than in countries with large open economy.
The objective of the paper is to present the peculiarities of contemporary management of foreign debt in a small open economy.
The main finding of the paper is that countries with small open economy should use such compound of methods of management of their foreign debt that enhance prevention against sudden unfavourable changes of economy and increase flexibility to make necessary and timely adjustments of management of the foreign debt.

DOI: http://dx.doi.org/10.5755/j01.em.17.3.2116