What does the debt-service ratio represent?

Show Answers

The proportion of a country's long-term debt relative to its annual GDPThe ratio of interest and principal repayments to the value of exports of goods and servicesThe comparison of debt after subtracting portfolio investment and foreign direct investmentThe difference between defaulted or rescheduled debt and the yearly export income allocated to interest payments

Explanation

The debt-service ratio measures the burden of debt repayments by comparing the total interest and principal payments to the country's export earnings. This ratio helps assess a country's ability to meet its external debt obligations from its export revenues.