Consequences of high levels of foreign debt - summary

High levels of foreign debt can cause a number of economic consequences. Countries with high levels of foreign debt may experience slower economic growth and increased government budget deficits. This can result in higher taxes, increased borrowing costs, decreased public spending, and weakened investor confidence. In the long-term, it can encourage a buildup of inflation and hinder the economy's ability to compete globally. As a result, governments will have difficulty attracting foreign investment, which can further exacerbate the effects of the high levels of foreign debt.