Lower government bond yields can certainly support sovereign creditworthiness since they reduce the interest
service burden which, relative to government revenue, is an input into our Sovereign Rating Model.
It is also incorrect to state that Rwanda has a debt
service burden because its Debt Service to Exports Ratio and Debt Service to Revenue Ratio are well below the thresholds, indicated in the table below.
An interest rate cut remains a necessity to support growth momentum and reduce high debt
service burden, according to Beltone Financial.
The DSR has consistently remained at single digit levels, said the BSP, and explained that the DSR which relates principal and interest payments or debt
service burden to exports of goods and receipts from services and primary income, is a measure of adequacy of the country's foreign exchange earnings to meet maturing obligations.
The debt service ratio relates principal and interest payments (the debt
service burden) to exports of goods and receipts from services and primary income.
'However, we take the view that it is not just the technical matter of the debt to GDP ratio alone that we should be focusing on, more importantly, we should be focusing on debt
service burden.
Fitch also views positively the city's new debt policy of attracting long-term loan from EIB, thus limiting the debt
service burden on the city's budget.
RAM Ratings added this is also a step in the right direction towards alleviating the overall debt
service burden in the long run, since the government's cost of financing is cheaper than government-guaranteed debts.
External debts
service burden reached 13.2 billion dollars during 2017-2018 fiscal year, adding that the ratio of the balance of external debts to GDP amounted to 37 percent, which is still safe according to international standards.
It, however, added that as IMF financing carries an annual interest rate of 3 percent that is significantly below market rates (for example, the authorities are paying 6 percent on the 2017 Eurobond), the loan helps to reduce Tunisia's debt
service burden.
These factors, it noted, would have resulted in higher debt
service burden for Chinese residents borrowing in foreign currency.
This is hoped to reduce the household and corporate debt
service burden immediately since 50 per cent of mortgages and 80 per cent of bank loans to firms have floating rates, which are linked to short and long-term benchmark rates.