Debt service ratio

Although Mexico s traditional debt indicators appeared sustainable, with moderate ratios of debt service, debt stock to exports and interest payments to exports (a ratio similar to the debt service ratio), the ratio of short term debt to reserves amounted to 131 per cent in 1997 (the ratio was much higher in 1996).

36. Africa s external debt burden is the highest among developing countries in terms of the ratio of external debt to GDP and its debt service ratio.

1 It is generally recognized that a ratio of debt to exports exceeding 200 per cent and a ratio of debt service to exports exceeding 20 per cent would signal serious debt problems.

The debt indicators show what would be expected to be a sustainable debt position.1 The debt service ratio measured 13 per cent, the debt stock to exports ratio 114 per cent, the debt stock to GNP ratio 31 per cent, and short term debt to foreign exchange reserves ratio 53 per cent as noted, however, those figures obscure diverse trends at the country level.

Region Debt export ratio

Three factors had been taken into account debt service to export ratio (in the range of 20 25 per cent), the ratio of the current value of debt to export (200 250 per cent) and vulnerability.

The ratio of debt service to exports for these countries has declined to an average of 10 per cent.

Latin American debt indicators generally indicated a sustainable debt position for the region as a whole, with a debt service ratio of 12 per cent, debt stock to exports and to GNP ratios of 103 per cent and 43 per cent respectively, and a short term debt to reserves ratio of 71 per cent.

40. In considering this element of the scale, the Committee had before it information obtained from the World Bank on debt stock, principal repayments, the ratio of debt to national income and the ratio of debt service to export earnings for a number of Member States.

Target ranges for sustainable debt levels have initially been defined by the Bretton Woods institutions as 200 to 250 per cent for the debt to exports ratio expressed in present value terms, and as 20 to 25 per cent for the debt service to exports ratio.

The increase in exports of goods and services and the decline in debt service for developing countries as a group resulted in a significant decline in the debt service to exports ratio, from 17.2 per cent in 2003 to 12.5 per cent in 2004, marking the largest decline in this ratio in the last 20 years.

This sharp devaluation increased further the cost of debt servicing and the debt to GDP ratio.

One such operation, during 1987 1990, significantly reduced Morocco apos s debt service ratio, from 36 per cent in 1986 to 23.7 per cent in 1992.

(e) Debt service coverage

Level annual debt service

Debt service current revenue

Overall, short term debt and total debt service also declined.

However, because of improved economic performance in the debtor countries, the overall ratio of debt to exports and the ratio of external debt to gross domestic product had declined to their lowest levels since the onset of the debt crisis.

A public debt crisis in Japan (as the combination of recession, deflation, and high deficits drove up the debt GDP ratio).

Debt service coverage and bond interest

Debt service exports goods and services

The ratio of short term debt to reserves indicated no short term liquidity difficulty.

To address the debt burden problem, many African countries at first resorted to repeated debt rescheduling which focused on debt service flows, resulting in steadily increasing debt stocks and related service payments.

As a group, those countries debt burden remains severe, with a debt stock to export ratio of well over 300 per cent (far above the 200 per cent threshold used to indicate a debt overhang) and a debt stock to GNP ratio of 127 per cent in 1996 after several years of improvement.

For Argentina, the ratio of interest payments to exports was 21 per cent and the ratio of external debt to exports 313 per cent in 1997.

Lower interest rates on loans are available in capital markets to borrowers who have ample debt service coverage , which is defined as total revenues available for debt service as a percentage of the required debt service.

Uganda is estimated to receive 1.95 billion in nominal debt service relief.12 However, the net present value of its debt to exports ratio was estimated to reach 258 per cent by the end of 2003, a level significantly above the HIPC sustainable threshold.14

The debt service ratio for those countries has generally remained below the 20 per cent threshold that warns of debt servicing difficulty, but that has often been the result of important accumulation of arrears, which has itself developed into a problem in some cases.

The advantage of such bonds is that in the event of a decline in the world price of the underlying commodity, the debt to export ratio need not rise. The cost of debt service adjusts automatically, without the severe disruption that results from loss of confidence, crisis, debt restructuring, and so forth.

The ECLAC region's debt to export ratio is higher than that of any other developing region.

In 2004 the ratio of debt servicing to exports was 10.0 per cent (see figure below).

By 1995, SSA had the highest debt to exports ratio of any developing region (table 2).

It is estimated that the debt export ratio in net present value terms is high (187 per cent), suggesting that Haiti's debt is unsustainable.

Although the government s stimulus policies have increased the national debt, the debt GDP ratio remains relatively low, at roughly 37 . Public debt in Japan, by contrast, exceeds 220 of GDP.

Even with the latest deal, Greece s debt ratio remains at 120 of last year s GDP. With a projected drop in GDP of 7 this year and a sustained deficit, the debt ratio would exceed 130 before stabilizing at 120 in 2020.

The estimated nominal debt service relief committed to Burkina Faso amounts to 930 million.12 By the end of 2003, the net present value of Burkina Faso's debt to exports ratio had risen to 199 per cent, from 150 per cent at the end of 2001.

Third, though China s public debt GDP ratio is officially still under 20 , since the onset of the global financial crisis in 2008, its fiscal position has deteriorated. If the government s contingent liabilities are included, China s debt GDP ratio may be closer to 50 .

The ratio of debt to exports was 83.4 per cent, likewise one of the lowest in the region.

4. Debt indicators improved for developing countries overall during the year, with marginal declines in the ratios of debt service to exports and debt stock to gross national product (GNP) and a larger fall in the ratio of the stock of debt outstanding to total exports (see table 1), largely reflecting the rapid growth of developing country exports, which rose by six per cent during the year.

The portion of the assessment due for plan debt service, or assessed plan debt service , would be 10 per cent of 52 million, or 5.2 million.

In Brazil, the ratio of interest payments to exports was also 21 per cent, and the debt stock as a percentage of exports was 289 per cent in 1997, while the ratio of short term debt to reserves did not signal immediate liquidity problems.

39. In 1997, four low income countries concluded debt and debt service reduction agreements with commercial banks.

Therefore, a ratio of four General Service staff members for each Professional staff member could constitute a best practice standard in centralized procurement services at Headquarters since the ratio would likely tilt significantly towards more General Service staff in field locations.

Haiti Stock of arrears and projected debt service, 2000 2005