Analysis of the Foreign and Public Debts' Repayment in Asian Countries

—Using the Quantitative Models—

Abstract

This paper constructed operational quantitative models to analyze the situations of external outstanding debts and debt-service ratio and applied to economic fundamentals of four Asian countries: China, Indonesia, Thailand, and the Philippines. The quantitative models can simulate when these countries can complete repayment of the debts. We obtained two policy implications as follows:

1. We can justify correctness of policies taken by the IMF after the Asian Currency Crisis in 1997. The policies were to reduce fiscal expenditures and promote exports together with control of imports, and resulted in surplus of external current account of balance of payment.

2. The devaluation of currencies of the countries except Indonesia will not cause a serious damage to their macro economies.