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Our Bureau

New Delhi , June 24

THE country's external debt increased 7.2 per cent to $120.9 billion at the end of December 2004, against $112.8 billion at end-December 2003.

At the end of December 2002, external debt was $105.4 billion.

A status report on the country's external debt released on Friday said that long-term debt at the end of December 2004 stood at $114.03 billion or 94.3 per cent of the total debt.

Between December 2003 and 2004, the external debt increased $8.1 billion, of which $3.1 billion was contributed by valuation effect arising from depreciation of the dollar.

Under long-term debt, multilateral and bilateral debt, representing broadly the loans raised under the external assistance programme, accounted for 41 per cent of the total external debt at end-December 2004. NRI deposits and commercial borrowings together with export credit contributed little more than one-half of total external debt.

The report highlighted that external debt indicators continued to improve over the years though the magnitude of debt had increased. For instance, the external debt-to-GDP ratio has gradually declined over the years to 17.8 per cent in 2003-04 and debt service payments as a proportion of gross current receipts (debt-service ratio) dropped to 16.2 per cent in 2003-2004 and further to 6.1 per cent during April-December 2004.

Similarly, the ratios of short-term debt to total debt and short-term debt to forex assets too have improved over the years. The country's ability to service external debt has been substantially enhanced, consequent to the improvement in the ratios of total debt service payments and interest payments to current receipts.

An official release said the debt accumulation was moderate and debt sustainability indicators had improved progressively in the recent past, mirroring essentially the sustained efforts of the Government.

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