In economics and government finance, a country’s debt service ratio is the ratio of its debt service payments (principal + interest) to its export earnings. A country’s international finances are healthier when this ratio is low. For most countries the ratio is between 0 and 20%.
In contrast to the debt service coverage ratio, which is calculated as income divided by debt, this ratio is inverse and calculated as debt service divided by country’s income from international trade, i.e., exports.
- ^Glossary of Statistical Terms, Debt service ratio, OECD, Sep 25, 2001.
Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder TBIL.co STATX Fund.