Revista del CEI - Centro de Economía Internacional

3. Balance of Payments and Foreign DebtThe results of international trade in goods and services and monetary transfers –current account– togetherwith factor remittances determine external savings over time and, therefore, the level of net foreign claimsor liabilities. A positive result will determine an increase in gold and currency holdings and of the nationalassets abroad, or a decrease in nationals’ liabilities to foreigners. On the contrary, a negative result willgive rise to an increase in the country’s net liabilities or to a decrease in nationals’ claims over foreigners.It is worth highlighting that the level of net foreign assets or liabilities also has an impact on factorremittance flows, which, aggregated with the balance of goods and services and transfers, make up theautonomous balance of payments.A common feature between Argentina and Australia has been the persistence of an autonomous balanceof payments deficit between 1980 and 2001. Over that 22-year period, Argentina showed a surplus of3.2% of GDP only in 1990. The average annual deficit was equivalent to 2.4% of GDP. Australia, whichdid not show surplus in any of the years of the aforesaid period, presented an average annual deficit of4.4% of GDP (Table 9).Table 9Autonomous Balance of Payments or Current AccountAs a percentage of GDPAustraliaArgentinaYearGoods andServices BalanceFactorRemittancesBalanceGoods andServices BalanceFactorRemittancesBalance1980 -0.8 -1.7 -2.8 -1.6 -0.7 -2.31985 -2.6 -2.6 -5.3 4.9 -6.0 -1.11990 -1.0 4.1 -5.1 6.1 -3.1 3.21995 -1.4 -3.8 -5.2 -0.4 -1.8 -2.02000 -1.1 -2.8 -3.9 -0.6 -2.7 -3.22005 -2.1 -3.8 -6.0 6.2 -3.4 3.0Source: Reserve Bank of Australia and National Institute of Statistics and Censuses of Argentina.After the crisis at the end of 2001, there was a reversal of the situation in Argentina. During the 2002-2005period, the autonomous balance of payments has shown persistent surpluses, coming to an annualaverage of 4.5% of GDP. It is worth mentioning that the significant trade surplus of over 10% of GDP afterthe crisis, reaching 6% in 2005, has had an impact on this result. The economic policy change has led toan increase in the internal savings ratio, which has positively influenced the evolution of the foreign sector.At the same time, the restructuring and extension of payback periods mitigated the burden of factorremittances on account of interest payments. At the end of 2005, the public debt stock, which hadrepresented about 130% of GDP after the crisis, was at 62.5%.In Australia, unlike in Argentina, the autonomous balance of payments deficit has tended to increase withrespect to the 1980-2002 average, reaching an annual average of 5.7% of GDP during the last four years.The incidence on the country’s net foreign debt position, the private one in this case, since governmentindebtedness is at a very low level, can be observed both in the debt coefficient and in the net foreignliabilities coefficient. These two coefficients, representing 5.6% and 17.1% of GDP in 1980, have graduallyincreased reaching 51.0% and 60.4% of GDP in 2005, respectively.The previous data show a noteworthy parallelism between the two countries regarding the evolution oftheir net foreign liabilities and debt from 1980 until 2001. They reveal that the generation of domesticsavings has not been enough to finance investment demand during that period.