Use debt-to-revenue (not debt-to-GDP) for sovereign fiscal stress analysis. Revenue is the actual cash flow available to service debt. GDP matters only insofar as it generates taxable income — the ratio that matters is debt/tax_revenue.
Use debt-to-revenue (not debt-to-GDP) for sovereign fiscal stress analysis. Revenue is the actual cash flow available to service debt. GDP matters only insofar as it generates taxable income — the ratio that matters is debt/tax_revenue.