Debt Service Ratio measures what share of a country's export earnings?

Debt Service Ratio measures what share of a country's export earnings?

• A. The share used for domestic investment
• B. The share spent on current expenditures
• C. The percentage of export earnings used to repay debt
• D. The percentage of government revenue used to repay debt

Answer: (C)

Debt Service Ratio measures the portion of a country's export earnings that must be used to repay external debt. Debt service includes the payments on interest and the principal for debts owed to foreign lenders. Export earnings are the money earned from selling goods and services abroad. So the ratio is calculated as debt service payments divided by export earnings, shown as a percentage. This shows how heavy the burden of debt is on the country’s export income. It’s not about domestic investments, current government expenditures, or government revenue used for debt payments. For example, if a country earns $100 in exports and pays $10 to service its debt, the debt service ratio is 10%.

Debt Service Ratio measures the portion of a country's export earnings that must be used to repay external debt. Debt service includes the payments on interest and the principal for debts owed to foreign lenders. Export earnings are the money earned from selling goods and services abroad. So the ratio is calculated as debt service payments divided by export earnings, shown as a percentage. This shows how heavy the burden of debt is on the country’s export income. It’s not about domestic investments, current government expenditures, or government revenue used for debt payments. For example, if a country earns $100 in exports and pays $10 to service its debt, the debt service ratio is 10%.