What does a government's debt rollover risk mainly refer to?
Correct answer: B. The risk of refinancing maturing debt
- A. The risk of collecting too much tax revenue
- B. The risk of refinancing maturing debt
- C. The risk of reducing public investment
- D. The risk of increasing export earnings
Explanation
Rollover risk is the possibility that a government cannot refinance debt when it matures, or can do so only at much higher interest rates. It is especially serious when maturities are short or investor confidence is weak.
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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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