What does the Debt Affordability Analysis evaluate?

The Debt Affordability Analysis evaluates the capacity of tax and revenue to support debt. This analysis is crucial for understanding a government's fiscal health and its ability to take on additional debt without jeopardizing its financial status. It assesses not only current revenue streams but also future projections to ensure that the government can meet its debt obligations comfortably.

This process typically involves examining available revenue sources, potential future growth, existing debt burdens, and determining how much additional debt can be handled without compromising budgetary balance. The aim is to ensure that debt remains within a manageable level relative to income, thereby preventing over-leverage and maintaining financial stability.

Other aspects, such as the repayment schedules of existing debts, the total amount of outstanding debts, and interest rates on fixed income securities, while related to debt management, do not directly address the core issue of evaluating capacity and affordability in terms of revenue and taxes, which is the essence of a Debt Affordability Analysis.