External Debt Sustainability Law and Legal Definition

External Debt Sustainability is a situation which a debtor country has reached so that it can maintain its external debt in a positive way, not causing any harm to its economy. Sustainable debt is the level of debt which allows a debtor country to meet its current and future debt service obligations in full, without recourse to further debt relief or rescheduling, avoiding accumulation of arrears, while allowing an acceptable level of economic growth. There are various indicators for determining a sustainable level of external debt.

A country may be said to achieve external debt sustainability if it can fulfill its current and future external debt obligations completely, without availing a debt rescheduling. In addition, the state of external debt sustainability is preventing accumulation of arrears without any hindrance to the economic growth of the country.