Debt servicing cost is the total annual expenditure required to meet all debt obligations, combining principal repayments and interest payments across all outstanding loans and debentures. This figure represents a fixed commitment in the municipal budget—payments that must be made regardless of economic conditions or competing priorities. Monitoring debt servicing costs is essential for financial planning, as high levels reduce budget flexibility and limit ability to respond to emergencies or new priorities. The debt servicing cost ratio (annual debt servicing as a percentage of total revenues) is a key metric: most provincial regulations cap this at 25%, and credit rating agencies closely monitor this indicator. Prudent financial management aims to keep debt servicing costs stable and predictable through careful borrowing decisions and timing.