U.S. Remains World’s Top Debtor Nation

The United States maintained its position as the largest debtor nation last year as the gap widened between foreign holdings in the United States and American assets abroad.

The Commerce Department reported Wednesday that the nation’s net debtor position worsened by 24.9%--to $680.8 billion last year from a revised $545.3 billion at the end of 1993.

At the same time, the British replaced the Japanese as the largest holder of direct U.S. investments, defined as ownership of 10% or more of a company. British holdings were $102.4 billion, compared to $99.2 billion for the Japanese.

Analysts said Japanese investors have been having second thoughts recently about placing their money in the United States because of huge losses some investors have suffered.

Meanwhile, the declining value of the U.S. dollar against the currencies of Japan and Germany probably contributed to the widening debt gap.

But analysts saw a glimmer of hope in the settlement the United States and Japan reached Wednesday in trade talks.

“The weaker dollar makes it harder to buy abroad and easier for others to buy in the United States,” said Charles Renfro, an economist with the Alphametrics forecasting service in Bala-Cynwyd, Pa.

America’s trade deficit hit an all-time high of $11.37 billion in April as sales of Japanese cars in the United States surged before the threatened imposition of tariffs on Japanese luxury autos.

The United States was considered a net creditor nation as recently as 1986, with $34.6 billion more in assets overseas than foreigners owned in this country.

The United States became a net debtor country in 1987 for the first time since prior to World War I.

The new report shows that for 1994, foreigners’ holdings in America rose by $219.7 billion to $3.159 trillion, and U.S. assets abroad increased by $84.2 billion to $2.478 trillion.