Close this search box.

Table of Contents

Net Foreign Assets (NFA)


Net Foreign Assets (NFA) refers to the value of overseas assets owned by a nation, minus the value of domestic assets held by foreigners. It includes foreign direct investments, securities, currency, and balances held by a country and its capital investments in other countries. If NFA is positive, the nation is a creditor nation, and if it’s negative, the nation is a debtor nation.


The phonetic pronunciation for Net Foreign Assets (NFA) is: Net – /nɛt/Foreign – /ˈfɔːrɪn/Assets – /ˈæsɛts/(NFA) – /ˌɛnˌɛfˈeɪ/

Key Takeaways

Sure, here you go:

  1. Net Foreign Assets (NFA) represent the net worth of a country’s external assets and liabilities. It is calculated by subtracting the total value of the foreign liabilities from the total value of foreign assets. A positive NFA signifies a nation is a creditor nation, meaning other countries owe it money, while a negative NFA suggests a nation is a debtor nation, indicating it owes money to other nations.

  2. NFA plays a pivotal role in determining the financial health of a country. It can deliver insights into a country’s solvency and its ability to meet its international financial obligations. A nation with high NFA usually has a more substantial reserve of foreign currency, gold, and other assets, which can be vital in times of financial crisis or downturns and signify better prospects for economic growth. Conversely, a country with low or negative NFA might face credit risk and economic instability.

  3. NFA is a central concept in international monetary economics, particularly in the balance of payments and exchange rate dynamics. Changes in NFA are driven by a country’s current account deficits or surpluses, and by shifts in its capital and financial account. Therefore, it’s closely monitored by economists, policymakers, investors, and analysts for macroeconomic management and investment decisions.


Net Foreign Assets (NFA) are a critical measure in business and finance as they indicate a nation’s total value of overseas assets after deducting its liabilities. It is a key indicator of a nation’s international economic position, reflecting the balance of the country’s external wealth or indebtedness. Understanding NFA is important in developing investment strategies and economic policy, as it suggests future trade flow trends and potential investment risks. Countries with significant NFA are typically seen as creditors to the rest of the world, and thus, more economically stable. Conversely, nations with sizable Net Foreign Liabilities may face increased financial risk and potential economic instability. Thus, having a strong understanding of NFA is crucial in business and finance in terms of gauging a nation’s economic health and making informed investment and policy decisions.


Net Foreign Assets (NFA) serve a pivotal role in providing insights into a country’s external wealth and its global economic positioning. Precisely, NFA is the total value of assets that a nation owns overseas, minus the liabilities it owes to foreign entities. Positive NFA indicates that a nation has invested more resources abroad than foreign entities have invested within its jurisdiction, while negative NFA suggests the contrary, highlighting the country’s debtor status. The measurement of NFA helps evaluate the national economic stability, ability to sustain external shocks, and indicates international investment position.Besides, NFA plays a crucial role in central bank’s balance sheet. Its composition fundamentally influences the country’s external balance and currency value. By reflecting the level of foreign reserves, direct investments, and portfolio investments, NFA provides a comprehensive picture of a country’s competitiveness and its ability to maintain a strong external position. Such information is vital for policymakers while making strategic decisions regarding economic policies and investment strategies to control credit expansion, manage inflation, and regulate currency exchange rates. Thus, an understanding of NFA is essential for tracking a nation’s financial health and solidifying the potential for international trade and investment opportunities.


1. Japan’s NFA: As of 2018, Japan was the country with the highest net foreign assets worldwide. It held over $3 trillion in net foreign assets. These assets included foreign investments, overseas operations of Japanese companies like Sony and Toyota, and overseas bonds and securities. The nation’s status as a primary exporter has significantly helped in accumulating its high NFA value, as companies often receive payments in foreign currencies which they then invest abroad.2. Germany’s NFA: As of 2017, Germany held the second highest amount of net foreign assets in the world, roughly around $2 trillion. This is primarily due to Germany’s strong export industry, mainly automobiles, machinery, and chemicals, resulting in trade surpluses over years. 3. USA’s Negative NFA: Conversely, the United States has often seen negative NFA. This is due to the country’s large external debt and high level of foreign direct investment. The US imports more than it exports, creating a trade deficit, which affects the NFA. Despite this, the United States remains financially strong because it serves as a major destination for foreign investment. The US Dollar, being the world’s primary reserve currency, plays a huge role in this dynamic.

Frequently Asked Questions(FAQ)

What are Net Foreign Assets (NFA)?

Net Foreign Assets refer to the value of overseas assets owned by a nation, minus the value of domestic assets owned by foreigners. It represents the total assets that a country has invested in other nations after subtracting the foreign investments in its domestic market.

How are Net Foreign Assets calculated?

NFA is calculated by subtracting a nation’s external liabilities (foreign-owned domestic assets) from its foreign assets. If a country’s foreign assets exceed its external liabilities, it has positive NFA.

What do positive and negative NFA values mean?

A positive NFA value indicates that a nation is a creditor nation, meaning it owns more foreign assets than the number of domestic assets owned by foreigners. A negative value indicates a debtor nation, i.e., foreigners own more of its domestic assets than the assets it owns in foreign countries.

Can Net Foreign Assets impact the value of a nation’s currency?

Yes, NFA can impact a nation’s currency value based on the supply and demand dynamics of the global financial markets. A country with high net foreign assets is often seen as financially secure, which can enhance its currency’s desirability and value.

What role does NFA play in a nation’s economy?

NFA helps in showing a country’s solvency in international investment. A country with higher net foreign assets is more solvent because it suggests that the nation is less reliant on foreign investors to meet its financial obligations.

How do Net Foreign Assets differ from Gross Foreign Assets?

Gross foreign assets are the total foreign assets owned by a nation without taking into account the foreign-owned domestic assets. NFA, on the other hand, is the net value after deducting the foreign-owned domestic assets from the foreign assets.

Is high NFA always beneficial for a nation?

Not necessarily. While higher NFAs indicate the financial strength of a country, they may also reflect an economic imbalance if a nation consistently exports more than it imports or does not reinvest enough domestically.

How does a nation increase its Net Foreign Assets?

A nation can increase its NFAs primarily through positive trade balances, foreign direct investment, and by receiving more money from abroad than it sends in remittances or aid.

Related Finance Terms

  • Balance of Payments (BOP)
  • Foreign Currency Reserves
  • International Investment Position (IIP)
  • Net Foreign Direct Investment (FDI)
  • Foreign Exchange Rate

Sources for More Information

About Our Editorial Process

At Due, we are dedicated to providing simple money and retirement advice that can make a big impact in your life. Our team closely follows market shifts and deeply understands how to build REAL wealth. All of our articles undergo thorough editing and review by financial experts, ensuring you get reliable and credible money advice.

We partner with leading publications, such as Nasdaq, The Globe and Mail, Entrepreneur, and more, to provide insights on retirement, current markets, and more.

We also host a financial glossary of over 7000 money/investing terms to help you learn more about how to take control of your finances.

View our editorial process

About Our Journalists

Our journalists are not just trusted, certified financial advisers. They are experienced and leading influencers in the financial realm, trusted by millions to provide advice about money. We handpick the best of the best, so you get advice from real experts. Our goal is to educate and inform, NOT to be a ‘stock-picker’ or ‘market-caller.’ 

Why listen to what we have to say?

While Due does not know how to predict the market in the short-term, our team of experts DOES know how you can make smart financial decisions to plan for retirement in the long-term.

View our expert review board

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More