debt sustainability analysis

Debt sustainability analysis evaluates whether a country can manage its debts without risking default or economic instability. It examines factors like the country's income, economic growth, existing debt levels, and interest rates. The goal is to determine if future revenues will be sufficient to cover current and future debt obligations. If a country can meet its financial commitments without excessive borrowing or economic strain, its debt is considered sustainable. Conversely, if debts grow faster than the economy, it raises concerns about solvency and fiscal health. This analysis helps policymakers ensure fiscal responsibility and economic stability.