Do Any Countries Owe the US Money? Active Loans and War Debts

Dozens of countries currently owe money to the U.S. government through active loans and credit guarantees, and a smaller group still carries unpaid balances from World War I and World War II. The Export-Import Bank alone reported $34.2 billion in exposure across more than 150 countries at the end of 2024, and the U.S. International Development Finance Corporation’s portfolio surpassed $40 billion in 2023. On top of that, several European nations technically remain in default on WWI loans nearly a century old.¹²

Foreign Aid Is Mostly Grants, Not Loans

Before naming debtor countries, one distinction matters. Most U.S. foreign assistance is not lent; it is given. From 1962 to 1988, loans made up roughly 28 percent of total U.S. economic foreign assistance, and the balance has shifted further toward grants since. Countries commonly assumed to be major U.S. debtors because they receive billions in aid — Israel and Egypt are the usual examples — get that aid almost entirely as grants. Israeli 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 private commercial activity, not a sovereign obligation to repay. The list of countries that actually owe the federal government money is narrower than the list of countries the U.S. runs trade deficits with, and narrower than the list of aid recipients.

Repayable loans do still exist. The Foreign Assistance Act of 1961 authorizes the President to provide both grant and loan assistance to developing countries, with minimum interest rates of 2 percent during an initial grace period of up to ten years and at least 3 percent afterward — deliberately below market to keep repayment feasible.³ The FY 2026 budget request signals a shift back toward lending, proposing sovereign loan authority under a new America First Opportunity Fund and requesting up to $8 billion in direct loans and loan guarantees through Foreign Military Financing alongside $5.15 billion in grants.⁴

Active Loan Balances Today

The U.S. government does not publish a single public roster of every country’s outstanding loan balance. Treasury’s Foreign Credit Reporting System collects that data internally, but country-by-country breakdowns come mainly from individual agency reports.

Export-Import Bank

EXIM reported $34.2 billion in total exposure as of December 2024, with active financing in more than 150 countries. Overdue required payments totaled $670.5 million, a default rate of about 1 percent. India carried an elevated default rate of roughly 2.3 percent, driven by three defaults that occurred before 2021.¹

Development Finance Corporation

The DFC’s portfolio topped $40 billion as of September 2023. The largest regional exposures were 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. Not all of that exposure is sovereign debt — much of it involves private borrowers in those countries — but it is U.S. government-backed credit at risk.²

Who Lends and Under What Authority

Several federal entities issue and hold foreign credit:

Development loans under the Foreign Assistance Act fund infrastructure, healthcare, and energy projects in emerging markets, with below-market rates and long repayment terms.³
Foreign Military Financing loans, authorized by the Arms Export Control Act, finance foreign purchases of U.S. defense equipment. Most FMF is now grant-based, but the law still permits direct loans and loan guarantees.⁵
Export credit through EXIM covers loans, guarantees, and insurance for foreign buyers of American goods when private lenders will not take the risk.⁶
Development finance through the DFC provides direct loans, guarantees, equity, and political risk insurance in 112 countries, and holds sovereign loans transferred from USAID when the DFC was created.²

Unpaid World War I Debts

The oldest foreign debts owed to the United States date to World War I. The Liberty Loan Act of 1917 authorized Treasury to lend money to Allied governments fighting alongside the U.S., initially capped at $4 billion, later raised to $7 billion and expanded further through the Victory Liberty Loan Act of 1919.⁷

Borrowers included the United Kingdom, France, Italy, Belgium, Poland, Estonia, Latvia, Lithuania, Finland, Hungary, Romania, and Yugoslavia. Most made some payments in the 1920s, but the Great Depression triggered widespread default. By 1934, virtually every European debtor had stopped paying. Finland was the exception and continued honoring its obligations.

These debts were never formally canceled. They sit on the federal books as delinquent accounts with accrued interest. The legal obligation persists, but no serious collection effort has been made in decades, and several of the original borrowers no longer exist in their wartime form.

World War II Lend-Lease Balances

World War II produced a different kind of obligation through Lend-Lease, which delivered over $50 billion in supplies to Allied nations. The program assumed goods would be returned, destroyed in combat, or settled through post-war negotiation rather than repaid in full.

Most Lend-Lease accounts were resolved through bilateral agreements after the war. A few ran much longer. 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 the legal successor to the Soviet Union, also finished its Lend-Lease payments in 2006. The original Soviet debt had been partly settled through a 1972 agreement in which the USSR paid $48 million up front and pledged to complete repayment once it received Most Favored Nation trade status. MFN was not extended until 1992, and Russia signed a formal repayment agreement in 1993.⁸

Some accounts remain open. The U.S. government has continued working toward resolution with Taiwan over wartime loans originally extended to China. Other balances are frozen or indefinitely suspended because the borrowing sovereign no longer exists.

Debt Forgiveness and Restructuring

Not every balance sits and waits. The United States participates in international frameworks that reschedule or cancel debts owed by poorer countries.

The Paris Club

The U.S. is one of 22 permanent members of the Paris Club, an informal group of creditor governments that negotiates debt restructuring for developing nations. State leads the U.S. delegation and Treasury sets policy. Through the Paris Club, the United States has rescheduled loans and guarantees issued by USAID, EXIM, the Commodity Credit Corporation, the Department of Defense, and the Department of Agriculture.⁹

Standard rescheduling changes the timeline but not the amount owed. For the poorest debtors, the Paris Club combines rescheduling with actual debt reduction, forgiving 50 to 67 percent of eligible debt under “Naples terms” or up to 80 percent under “Lyon terms.” Those reductions cost the U.S. government real money, because forgiven debt is written off permanently. Debtor countries must have an active International Monetary Fund program to qualify for any Paris Club treatment.⁹¹⁰

The Heavily Indebted Poor Countries Initiative

The HIPC Initiative, launched in the 1990s, goes further. Under this multilateral program, the world’s poorest and most indebted countries can receive comprehensive debt cancellation from all their creditors, including the United States, if they commit to poverty reduction strategies, governance and anti-corruption reforms, and directing the savings toward basic services.¹¹

Of 39 eligible countries, 36 have completed the program and received full debt relief, including Afghanistan, Bolivia, Cameroon, Ethiopia, Haiti, Honduras, Mozambique, Nicaragua, Rwanda, Tanzania, Uganda, and Zambia. Somalia and Sudan are partway through. Eritrea has not started.¹²

What Happens When a Country Defaults

Federal law imposes real consequences when a foreign government falls behind. Under the Foreign Assistance Act, no assistance can be provided to any country in default for more than six months on principal or interest under an Act loan, unless the President determines after consulting the relevant congressional committees that continued assistance is in the national interest.¹³

The Brooke Amendment raises the stakes. A country in default for more than one calendar year on principal or interest on any U.S. government loan — not just Foreign Assistance Act loans — becomes ineligible for aid under multiple programs, including Foreign Military Financing, Peace Corps programs, the Millennium Challenge Act, and, under the BUILD Act, the Development Finance Corporation. The President can waive the restriction with a national interest determination and congressional consultation.¹³

The waiver authority means a default does not automatically end aid, but it does force a formal determination and notice to Congress before the money keeps moving.

1
EXIM Export-Import Bank of the United States. Default Rate Report December 2024
2
U.S. International Development Finance Corporation. DFC FY23 Annual Report
3
GovInfo. Foreign Assistance Act of 1961
4
U.S. Department of State. FY 2026 Congressional Budget Justification
5
Defense Security Cooperation Agency. Foreign Military Financing
6
EXIM Export-Import Bank of the United States. About EXIM
7
Office of the Historian. Foreign Relations of the United States, Diplomatic Papers, 1936, General, British Commonwealth, Volume I Document 464
8
U.S. Department of State. War-Related Debts of Other Countries to the U.S. Government
9
U.S. Department of State. The Paris Club
10
Club de Paris. Frequently Asked Questions
11
Office of the Law Revision Counsel. Improvement of the Heavily Indebted Poor Countries Initiative
12
International Monetary Fund. Debt Relief Under the Heavily Indebted Poor Countries Initiative
13
Office of the Law Revision Counsel. 22 U.S. Code 2370 – Prohibitions Against Furnishing Assistance