Import ratio, in

economics Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interac ...

and government finance, is the ratio of total

imports An importer is the receiving country in an export from the sending country. Importation and exportation are the defining financial transactions of international trade. Import is part of the International Trade which involves buying and receivin ...

of a country to that country’s total

foreign exchange The foreign exchange market (forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. By trading volume, it i ...

(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 colloquial, ordinary language, an average is a single number or value that best represents a set of data. The type of average taken as most typically representative of a list of numbers is the arithmetic mean the sum of the numbers divided by ...

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 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 (law), 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 ...

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

probability Probability is a branch of mathematics and statistics concerning events and numerical descriptions of how likely they are to occur. The probability of an event is a number between 0 and 1; the larger the probability, the more likely an e ...

of debt rescheduling.

References

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