Tied Loan

Summary of Tied Loan

A loan to a foreign nation or firm that requires the proceeds of the loan to be spent only in the creditor nation. Such an arrangement stimulates the economy of the country making the loan. The debtor nation, however, because it is constrained in spending the funds, may encounter higher prices for its purchases than it might have if it had been permitted to buy elsewhere.

(Main Author: William J. Miller)

Tied Loan and the GATT Policy Negotiations

In relation to the GATT Policy Negotiations, Christopher Mark (1993) provided the following explanation and/or definition of Tied Loan: A loan made by a government agency that requires a foreign borrower to spend the proceeds in the lender's country.