Import ratio, in

economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics anal ...

and government finance, is the ratio of total

imports An import is the receiving country in an export from the sending country. Importation and exportation are the defining financial transactions of international trade. In international trade, the importation and exportation of goods are limited ...

of a country to that country’s total foreign exchange (FX) reserves. The

ratio In mathematics, a ratio shows how many times one number contains another. For example, if there are eight oranges and six lemons in a bowl of fruit, then the ratio of oranges to lemons is eight to six (that is, 8:6, which is equivalent to the ...

can be inverted and is referred to as the reserves to imports ratio. This ratio divides a country's

average In ordinary language, an average is a single number taken as representative of a list of numbers, usually the sum of the numbers divided by how many numbers are in the list (the arithmetic mean). For example, the average of the numbers 2, 3, 4, 7 ...

foreign exchange reserve by a country's average monthly level of imports.http://www.adelaide.edu.au/cies/papers/0302.pdf Exchange Rate Policy and Foreign Exchange Reserves Management in Indonesia in the Context of East Asian Monetary Regionalism

Relation to sovereign risk

Credit restructuring is made more likely by a higher amount of imports relative to FX reserves. A

less developed country A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreem ...

will pay for imports with its foreign exchange reserves. The more it imports, the faster these reserves are used up. Since satisfying a country's needs is considered more important than repaying foreign

creditors A creditor or lender is a party (e.g., person, organization, company, or government) that has a claim on the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property ...

the more a country imports relative to its foreign exchange reserves the greater the

probability Probability is the branch of mathematics concerning numerical descriptions of how likely an event is to occur, or how likely it is that a proposition is true. The probability of an event is a number between 0 and 1, where, roughly speaking, ...

of debt rescheduling.

References

{{DEFAULTSORT:Import Ratio International macroeconomics Financial ratios Foreign exchange reserves Import