ABSTRACT
This chapter discusses the implications of various patterns of capital inflow and debt service for net aid transfers, the measurement of debt-servicing capacity and its significance for foreign public lending, and the economic issues relating to the employment of soft loans. Debt service reaches a peak of 2,780 in the fiftieth year, while annual net borrowing reaches a peak of 788 in the thirty-third year. Most of the debt service of developing countries represents obligations either to public international lending agencies or to foreign suppliers and financial agencies providing credits for imports. Alternative loan programs which provide the required pattern of net resource flows may be determined by means of capital-inflow and debt-servicing models which reflect varying loan terms. Soft-loan agencies, while perhaps not primarily concerned with the security of their loan investments, take careful account of the debt-servicing capacity of a prospective borrower for two reasons.
