Definition: Transfer risk
External debt - IMF
The risk that a borrower will not be able to convert local currency into foreign exchange, and so be unable to make debt-service payments in foreign currency.
The risk normally arises from exchange restrictions imposed by the government in the borrower’s country.
This is a particular kind of political risk.
Source:
International Monetary Fund (IMF), "External Debt Statistics: Guide for Compilers and Users; Appendix III. Glossary of External Debt Terms", Washington D.C., 2003
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