Methods of Debt Servicing and Debt Redemption.

The government can use a surplus budget. Also through debt conversion i.e. the ability of a government to borrow low interest  cleans  for repaying high interest  loans. It can do the same through disinvestments. i.e. selling  of government owned enterprises  to the private sector either a broad  or home.

Apart from use of foreign reserves , there is also Debt cancellation i.e. LDCs may appeal to developed countries  to write  off the debt.

Debt rescheduling. Here the LDCs  can negotiate for post- ponement  of repayment  period.

Use of grants and gifts.

Debts repudiation. A country can totally refuse to pay the debt.

Through taxation.  e.g.   capital levy to fund the debt.

Use  of profits from enterprises that received the loan ( debt).