Debt service ratio

Region Debt export ratio

Debt for equity swaps Other debt for development swaps

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.

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.

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.

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

Under Chapter 11, companies with a solid underlying business generally swap debt for equity. Old equity holders are wiped out and old debt claims are transformed into equity claims in the new entity which continues operating with a new capital structure. Alternatively, the debt holders can agree to reduce the face value of debt, in exchange for some warrants.

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.

During the 1990s, large business groups of the Republic of Korea (chaebols) expanded quickly through financing from domestic banks, becoming highly leveraged (with an average debt to equity ratio of about 400 per cent in 1997).

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.

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

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

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.

How is that possible? As corporate finance experts have been saying for 30 years, having too much debt and too little equity is costly, so reducing the face value of debt can sometimes benefit not only equity holders, but also debt holders.

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.

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.

It lists already 1,000 entities that are offering debt and equity for social enterprise.

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.

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.

They may provide capital in the form of debt or equity participation via investment funds.

UNCTAD should continue its work in the area of debt, including the study of the application of debt for equity swaps for development.

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.

In paragraph 10, reference should me made to Debt for Equity in Millennium Development Goal Projects .

In addition to debt, capital is also provided to infrastructure projects in the form of equity.

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.

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.

It narrows government budget deficits by increasing tax revenues and limiting welfare spending. By raising the denominator of the debt GDP ratio, it enhances confidence in debt sustainability.

Starting from 1999, the first year of recession, fiscal deficits rose substantially, alongside the public debt to GDP ratio.

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

Owing to strong GDP growth, the debt to GDP ratio decreased from 100.2 per cent to 95.1 per cent.

Under HIPC, Mozambique s debt stock to export ratio is expected to be reduced from 466 to 200 per cent.

Concessions that the developed countries could make to Africa included meeting their official development assistance (ODA) commitments, debt cancellation and the conversion of debt into equity investments.

Debt sustainability needs to be redefined to enable the least developed countries to achieve the goals contained in the Brussels Programme of Action without an increase in debt ratio.

The first phases of that treatment, from 1982 to 1988, relied on debt reschedulings and new liquidity support, together with a market menu of options, which allowed limited amounts of voluntary debt reductions through debt securitization at a discount, debt equity swaps and debt buy backs.

In the latter, the ratio of external debt to GNP was more than twice that of other developing regions in sub Saharan Africa, the ratio was nearly double that for Africa as a whole.

Fifth, debt burdens that cannot be eased by growth, savings, or inflation must be rendered sustainable through orderly debt restructuring, debt reduction, and conversion of debt into equity. This needs to be carried out for insolvent governments, households, and financial institutions alike.

For Greece, with an overall deficit of 4.1 of GDP and a debt GDP ratio of 170 , the debt ratio would fall if the combination of inflation and real (inflation adjusted) GDP growth exceeded 2.4 . Stated differently, now that Greece has achieved a zero primary budget deficit, its debt burden will decline if its nominal growth rate exceeds the average interest that it pays on its government debt.