The accumulation of capital plays an important role for the economic growth of any country. Internal sources are profit from various enterprises, the state budget, population accumulation, and so on. They are supplemented by private and public funds that are attracted from other countries, a large share of which is taken by international loans, which are a movement of loan capital occurring in the sphere of foreign economic relations. This is the provision of various resources (commodity and currency) under the conditions of their repayment, urgency.
The role of international loans
The essence of the economic category under consideration is manifested through a number of functions:
- Service turnover.
- Redistribution.
- Concentration of capital.
- Cost saving.
In the performance of the above functions, international loans ensure the continuity of the process of expanded production, and also contribute to increasing the unevenness that exists in the development of the economy. Some industries are encouraged, while others, on the contrary, are restrained, it all depends on profitability. The boundaries of such loans are determined by the sources of funds, the existing need for them, the degree of repayment in a certain period. Violation of this entails a problem called external debt and needs to be resolved.
Highlights
Let us consider each function in more detail in order to evaluate international loans, their significance for the country's economy.
- When sales turnover services are implemented, money circulation is also accelerated, but cash is crowded out. Actively introduced tools such as credit cards, bills, checks. Cashless transactions come first, it simplifies economic relations in the international and domestic markets. A special role is played by commercial loans.
- The redistribution function is that finances from certain areas are directed to others in order to make big profits.
- An important condition for stability in the development of the economy is the concentration of capital. International loans expand production, thereby providing additional income.
- Cost savings in circulation are achieved with the help of financial resources, which are temporarily released during the commercial and industrial circulation of capital. The time gap between the expenditure and the receipt of funds determines the excess or lack of finance.
Classification of loans granted at the level of different countries
For a better understanding, consider the types of international credit:
- branded;
- bank;
- on special compensation transactions;
- mixed.
A company loan is a loan that an exporter of a certain country gives to an importer of another state by deferred payment or as a commercial foreign trade loan. They are often sold through a bill or open account.
A bank loan has some advantages when compared with a corporate loan . There is a choice of suppliers, the terms are better, in addition, good volumes are given at a good price.
Compensation loan - long-term foreign trade loans (10-15 years). The importer receives funds for the purchase of equipment and machinery, paying off the debt not in foreign currency payments, but supplying products.
A kind of mixed loan is a foreign currency loan. It can be used in a broader aspect. Also its forms are: factoring, leasing, forfaiting.
Forms of international credit are classified according to various criteria.- By sources: foreign, mixed, domestic loans, foreign trade financing. They are interconnected.
- By appointment: financial, commercial and interim loans. The first are aimed at building, purchasing securities, in investment projects, as well as paying off external debts. The second are related to foreign trade operations. Third loans are designed to work with mixed forms of export of capital, services, goods. For example, contract work.
- According to the currency of the loan, they can be in the monetary unit of the debtor or creditor, and also in the equivalent of a third country.
- By timing: ultra-short-term, it can still be up to a year, from a year to five, more than 5 years.
- Warranty: blank or secured.
- On granting: financial, bonded loans, acceptance, certificates of deposit and others.
- Depending on the type of lender: interstate, government, private, mixed.
It is important to correctly use international credit in the economy for mutually beneficial cooperation of states.