Net present value of debt

Pages16

Page 16

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 that is lower than the prevailing market rate.

The net present value of debt, which takes into account the degree of concessionality, is the sum of all future debtservice obligations (interest and principal) on existing debt, discounted at the market interest rate.Whenever the interest rate on...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT