Debt Service Crises: Sukuk Bond, A Potential Panacea

Debt Service
Debt servicing means making payments to satisfy a debt obligation, including principal, interest, and applicable late payment fees. Countries with solid financial positions will want a low ratio of debt service payments, relative to revenue. The ideal debt service ratio is somewhere between 0 and 20%. This typically indicates available cash flow to pay current and possible future debt obligations. Conversely, a high national debt service ratio may indicate a country’s potential difficulty in servicing its debt obligations with existing
revenue streams.