top of page

Foreign Investment

Foreign Liabilities

Topic Menu
Content Contributors
Christian Bien Portrait_edited.jpg

Christian Bien

Learning Objectives

tutorial.png

one.png
What are Foreign Liabilities?
Slide1.jpeg

Foreign liabilities are the stock of domestic assets owned by overseas residents (foreign equity) and the total amount of money Australia owes to overseas residents (foreign debt). 

Put it simply: 

Foreign liabilities = Total Foreign Debt + Total Foreign Equity

two.png
What is Foreign Debt?
Slide2.jpeg

Foreign Debt is Australia's level of borrowings from overseas residents. For example, if an Australian company, such as Telstra, takes a loan from a foreign bank, such as HSBC, this would be classified as a foreign debt transaction. In other words, foreign debt is the amount of money Australians owe to other people and institutions around the world.

two.png
What is Foreign Equity?
Slide2.jpeg

Foreign Equity is the level of foreign ownership of domestic assets. For example, if an overseas resident purchases shares in an Australian company, such as Telstra, then the overseas resident retains an ownership stake in domestic assets and hence this is classified as foreign equity. Australians tend to have a negative attitude towards foreign equity over fears that Australia is selling too much of its domestic assets and that future generations could be pushed aside by high levels of foreign ownership. The fact is that Australians actually own more overseas equity than foreigners own of Australian equity. In the March 2021 quarter, the ABS reported that net foreign equity was -$264.2M, meaning that Australia owns an $264.2M more of overseas equity than foreigners own of domestic equity.

two.png
What are Foreign Assets?
Slide2.jpeg

Foreign assets are the reverse of foreign liabilities and are the value of Australian ownership of domestic assets and level of borrowings to overseas residents. Put it simply, foreign assets are simply Australia's investment abroad in terms of debt and equity.

two.png
What is Net Foreign Liabilities?
Slide2.jpeg

Net foreign liabilities is the value foreign liabilities minus, the value of foreign assets. 

E.g. Net Foreign Liabilities = Foreign Liabilities - Foreign Assets 


This shows the net position that foreigners own domestic assets less Australia's ownership of foreign assets.

two.png
Slide2.jpeg
two.png
Slide2.jpeg
two.png
Slide2.jpeg
Introduction to Foreign Investment
Foreign Liabilities
Current Account and Foreign Liabilities
Foreign Direct Investment
Foreign Debt
Benefits and Costs of Foreign Investment
bottom of page