What Is a Debt Service Fund?

A debt fund refers to a special fund that raises financial resources to repay the principal and interest of a debt in accordance with statutory or agreed terms.

Debt fund

Right!

A debt fund refers to a special fund that raises financial resources to repay the principal and interest of a debt in accordance with statutory or agreed terms.

Government borrowing methods are mostly public debt, so the type of debt fund is also the type of government debt. There are three types of government bonds listed in the debt foundation: fixed-term bonds, public installments and promissory notes.

(1) Fixed-term bonds or sinking fund bonds are public bonds whose principal is paid by the sinking fund in a lump sum, so they are also called sinking fund bonds.

(2) Instalment repayment of public debt is a type of public debt in which principal is repaid in installments during the life of the bond.

(3) A promissory note is a debt with a small amount and a short period (mostly within one year).

Table 1. Statement of financial position (balance sheet)

A statement that reflects the financial position and balance of all assets and liabilities of a debt fund on a certain date. Generally, a statement of changes in financial position is prepared for each debt fund; if it is to comprehensively reflect the financial position of the government debt fund, a joint statement of financial position may also be prepared. The general format is listed in the following table:

1 Liu Jianwen. The Rule of Finance in the Perspective of Democracy. Peking University Press, 2006.5.

2 Xiang Huaicheng, Huang Kehua. Finance Book of Contemporary Chinese Economic Dictionary. China Economic Press, December 1993. ^[1]