TAILIEUCHUNG - DEBT SUSTAINABILITY FRAMEWORK FOR LOW INCOME COUNTRIES : POLICY AND RESOURCE IMPLICATIONS - Part 9

Liquidity Monitoring Ratios a) The Debt Service Ratio is the proportion of exports of goods and non factor services that is absorbed for debt service payments, ., interest, principal and other payments. The basic ratio refers only to long and medium-term debt which covers all loans with an original maturity of one year and above. b) The Interest Service Ratio is the ratio of interest payments to exports of goods and non-factor services. | DEBT SUSTAINABILITY FRAMEWORK FOR LOW INCOME COUNTRIES POLICY AND RESOURCE IMPLICATIONS Paper submitted for the G-24 Technical Group Meeting Washington . September 27-28 2004 Part 9 Nihal Kappagoda Research Associate The North-South Institute Nancy C. Alexander Director Citizen s Network on Essential Services 1 Annex 1 Debt Indicators Liquidity Monitoring Ratios a The Debt Service Ratio is the proportion of exports of goods and non factor services that is absorbed for debt service payments . interest principal and other payments. The basic ratio refers only to long and medium-term debt which covers all loans with an original maturity of one year and above. b The Interest Service Ratio is the ratio of interest payments to exports of goods and non-factor services. c The Short-Term Debt ratio measures the proportion of exports of goods and non factor services that will be absorbed if all debt outstanding with an original maturity of one year at the end of the preceding year is paid without roll over. 2 d Total Debt Service Ratio is the proportion of exports of goods and non- factor services that are absorbed for debt service payments on both long and short-term debt. Debt Burden Ratios a The total debt outstanding to GDP or GNI ratio compares the amount of disbursed debt outstanding to the size of the economy. b The total debt outstanding to exports of goods and non-factor services ratio measures the ability of the country to repay its debt in a single year from its earnings from goods and non-factor services. c Public debt outstanding to GDP or GNI ratio compares the total of domestic and external outstanding to the size of the economy. Present Value Indicators a The Present Value of Debt Service to GDP or GNI ratio compares the current cost of future debt service obligations to the overall level of economic activity in the country. Only the current year s PV is

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