What term describes the interest and repayments made on debt each year?

What term describes the interest and repayments made on debt each year?

• A. Debt
• B. Debt Service
• C. Debt Relief
• D. HIPC Initiative

Answer: (B)

Debt service is the annual cost of carrying borrowing, made up of interest payments plus repayments of the principal. This is the cash you pay each year to keep the loan active. It’s different from the total amount owed (debt) or programs that reduce debt (debt relief) or international initiatives like HIPC, which aim to lower or restructure debt rather than describe yearly payments. In development terms, the size of debt service can affect a country’s ability to spend on essential services, since money going to lenders isn’t available for health, education, or infrastructure.

Debt service is the annual cost of carrying borrowing, made up of interest payments plus repayments of the principal. This is the cash you pay each year to keep the loan active. It’s different from the total amount owed (debt) or programs that reduce debt (debt relief) or international initiatives like HIPC, which aim to lower or restructure debt rather than describe yearly payments. In development terms, the size of debt service can affect a country’s ability to spend on essential services, since money going to lenders isn’t available for health, education, or infrastructure.