Dozens of countries that owe the US money hold that debt through U.S. government credit programs, primarily the Export-Import Bank’s roughly $34.2 billion in exposure across more than 150 countries and the U.S. International Development Finance Corporation’s $40 billion portfolio across 112 countries. On top of that, a handful of World War I and World War II balances remain on the federal books, though most are either paid, forgiven, or effectively uncollectible. The critical caveat: most U.S. foreign assistance today is grant money, not loans, so many countries commonly assumed to be major debtors owe nothing at all.
Most Foreign Aid Is Not a Loan
From 1962 to 1988, loans made up about 28 percent of total U.S. economic foreign assistance. Since then, the mix has shifted heavily toward grants, which create no repayment obligation. Israel and Egypt are the clearest example. Both receive billions in U.S. military aid, but that aid is almost entirely grants. Israel’s military financing converted from loans to grants in 1985.
A trade deficit is not a debt either. When the United States imports more from a country than it exports, that reflects transactions between private businesses, not a sovereign obligation. The question of who owes the U.S. money is a narrower question about formal government-to-government credit.
Repayable loans still exist. The Foreign Assistance Act of 1961 sets minimum interest rates of 2 percent during an initial grace period of up to ten years, rising to at least 3 percent afterward, deliberately below market to keep repayment feasible for borrowing nations.1GovInfo. Foreign Assistance Act of 1961
Who Currently Owes the U.S. Money
The Treasury Department’s Foreign Credit Reporting System tracks every outstanding foreign credit balance across all lending agencies, but country-by-country totals are not widely publicized.2Treasury. Foreign Credit Reporting System (FCRS) Privacy and Civil Liberties Impact Assessment What is public comes from individual agency reports.
Export-Import Bank
The Export-Import Bank reported total exposure of $34.2 billion as of December 2024, spread across more than 150 countries. It provides loans, guarantees, and insurance to foreign buyers of American-made goods, backed by the full faith and credit of the United States.3EXIM Export-Import Bank of the United States. About EXIM Of the portfolio, $670.5 million in required payments were overdue, producing a default rate of roughly 1 percent. India was flagged specifically, with an elevated default rate of about 2.3 percent driven by three defaults that occurred before 2021.4EXIM Export-Import Bank of the United States. Default Rate Report December 2024
Development Finance Corporation
The DFC’s portfolio surpassed $40 billion as of September 2023. The largest regional exposures are Sub-Saharan Africa at $10.5 billion, the Western Hemisphere at $9.6 billion, and the Indo-Pacific at $8.5 billion. India is the DFC’s single largest market. Ecuador, at $1.8 billion, is the largest in the Western Hemisphere.5U.S. International Development Finance Corporation. DFC FY23 Annual Report Not all of this is sovereign government debt. Much involves private-sector borrowers, but it reflects the scale of U.S. government-backed credit abroad.
Other Categories
Development loans issued under the Foreign Assistance Act fund infrastructure, healthcare, and energy projects in emerging markets, with repayment stretched over decades.1GovInfo. Foreign Assistance Act of 1961 The Arms Export Control Act permits direct loans and loan guarantees for eligible countries buying U.S. defense equipment, though most Foreign Military Financing is now grant-based.6Defense Security Cooperation Agency. Foreign Military Financing USAID manages additional development credit tied to governance and transparency benchmarks.7Grants.gov. U.S. Agency for International Development (USAID)
World War I Debts Still on the Books
The oldest foreign debts owed to the United States date to World War I. The Liberty Loan Act of 1917 authorized the Treasury to lend money to Allied nations, with the ceiling raised repeatedly through the Victory Liberty Loan Act of 1919.8Office of the Historian. Foreign Relations of the United States, Diplomatic Papers, 1936, General, British Commonwealth, Volume I Document 464
The borrowers included the United Kingdom, France, Italy, Belgium, Poland, Estonia, Latvia, Lithuania, Finland, Hungary, Romania, and Yugoslavia. Most made payments during the 1920s. Then the Great Depression hit, and by 1934 virtually all of the European debtors except Finland had stopped paying. Finland kept up its payments.
Those debts were never formally canceled. They sit on the federal books as delinquent accounts with accrued interest. No serious collection effort has been made in decades, and several of the original debtor nations no longer exist in their wartime form.
World War II Lend-Lease Balances
The Lend-Lease program supplied more than $50 billion in equipment to Allied nations during World War II. It was designed so that goods would be returned, destroyed in combat, or settled through post-war negotiation rather than straight cash repayment.
Most Lend-Lease accounts were settled by bilateral agreement after the war, though a few ran long. The United Kingdom made its final Lend-Lease payment of $83.25 million on December 31, 2006, more than 60 years after the war ended. Russia, as legal successor to the Soviet Union, also completed its Lend-Lease payments in 2006. The original Soviet debt was partially settled through a 1972 agreement calling for $48 million in initial payments and the remainder once the USSR received Most Favored Nation trade status, which was not extended until 1992. Russia signed a formal repayment agreement in 1993.9U.S. Department of State. War-Related Debts of Other Countries to the U.S. Government
Some WWII-era accounts remain unresolved. The U.S. government has continued working with Taiwan on debts from wartime loans originally extended to China. Other accounts are frozen or indefinitely suspended because the original sovereign entities no longer exist.
Debts That Were Forgiven or Restructured
Some balances that would otherwise show up on any list of debtor countries have been reduced or wiped out through international debt-relief frameworks.
The Paris Club
The United States is one of 22 permanent members of the Paris Club, which negotiates debt restructuring with developing nations. The State Department leads the U.S. delegation; Treasury sets the positions. Through the Paris Club, the U.S. has rescheduled loans and guarantees from USAID, EXIM, the Commodity Credit Corporation, the Department of Defense, and the Department of Agriculture.10U.S. Department of State. The Paris Club
A standard rescheduling changes the payment timeline without reducing the total owed. For the poorest debtors, though, the Paris Club combines rescheduling with outright reduction, forgiving 50 to 67 percent of eligible debt under “Naples terms” or up to 80 percent under “Lyon terms.” Forgiven debt is written off permanently, at real cost to the U.S. government. Debtor countries must have an active program with the International Monetary Fund to qualify.11Club de Paris. Frequently Asked Questions
The Heavily Indebted Poor Countries Initiative
The HIPC Initiative offers comprehensive debt cancellation to the world’s poorest and most indebted countries if they commit to poverty reduction, governance reforms, and directing the freed-up funds toward basic services.12Office of the Law Revision Counsel. Improvement of the Heavily Indebted Poor Countries Initiative
Of the 39 eligible countries, 36 have completed the program and received full relief. The list includes Afghanistan, Bolivia, Cameroon, Ethiopia, Haiti, Honduras, Mozambique, Nicaragua, Rwanda, Tanzania, Uganda, Zambia, and two dozen others across Africa, Asia, and Latin America. Somalia and Sudan are partway through; Eritrea has not yet begun.13International Monetary Fund. Debt Relief Under the Heavily Indebted Poor Countries Initiative
What Happens When a Country Defaults
Federal law attaches real consequences to missed payments. Under the Foreign Assistance Act, no assistance can go to any country in default for more than six months on principal or interest on a loan made under the Act, unless the President determines that continued assistance is in the national interest and consults the relevant congressional committees.14Office of the Law Revision Counsel. 22 U.S. Code 2370 – Prohibitions Against Furnishing Assistance
The Brooke Amendment goes further. If a country is in default for more than one calendar year on any U.S. government loan, not just Foreign Assistance Act loans, it becomes ineligible for Foreign Military Financing, Peace Corps programs, Millennium Challenge Act assistance, and DFC support under the BUILD Act. The President can waive the restriction with a national interest determination and congressional consultation.14Office of the Law Revision Counsel. 22 U.S. Code 2370 – Prohibitions Against Furnishing Assistance
The waiver mechanism means default does not automatically shut off aid, but it does force a formal determination and congressional notification, which creates political accountability for any decision to keep money moving.