Net present value of debt

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The face value of the external debt stock is not a good measure of a country's debt burden if a significant part of the external debt is contracted on concessional terms with an interest rate below the prevailing market rate. The net present value of debt takes into account the degree of concessionality.

It is defined as the sum of all future debt-service obligations (interest and principal) on existing debt, discounted at the market interest rate.Whenever the interest rate on a...

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