Debt servicing expenditure refers mainly to government payments for:
Correct answer: A. Interest and repayment obligations on public debt
- A. Interest and repayment obligations on public debt
- B. Salaries paid to civil servants in government offices
- C. Construction of new roads and public hospitals
- D. Subsidies paid to consumers of basic commodities
Explanation
Debt servicing covers the financial obligations arising from government borrowing, especially interest payments and repayment of principal. It is distinct from routine administration, development projects and subsidies.
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About Public Finance
Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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