What is the state debt?

National debt, or government debt, is the total amount of money that the government has borrowed from any source. Every level of government, from federal to municipal level, can have its own debt. All these debts are included in the total state debt.

There are two types of state debts: internal and external. The internal debt is the means borrowed from the country's resources. Money for this type of debt is obtained by selling securities, government bonds and accounts. External debt is the funds borrowed from foreign creditors. This may include private sources, other countries and the International Monetary Fund (IMF). Small cities and city governments often report on their credit rating. It is allowed to take loans or mortgages to finance specific types of activity. The loan provision provides a tstat that will honor the debt if the city was not able to pay as expected. Governments cannot go bankrupt because they would have to stop providing services and other government would have to take these obligations. PlaceHe must report him to his expenditure and lending to the Federal Government. They have the right to refuse to sign loans, cancel debts and remove the government management from the office.

Anyone who owns government bonds or securities lends money to the government. These financial tools are issued as an investment with a fixed interest payment. The interest rate of government bonds is usually lower than the private sector but are guaranteed.

Foreign investors have two options: buy government bonds or buy ruling ernment. Purchase of government bonds by foreign investors have specific rules and instructions. This type of activity is a combination of rich individuals, investment groups and foreign governments.

Purchase of government debt is usually limited to other governments. In this type of financing, a foreign investor checks details of debt and conditions. Have resources to buy a large debt amount and to provide flow pRoma to the issuing country. As with all debt, the risk is too strongly relying on the debt that you will commit a significant part of the future income to repay this state debt. The only methods that have the government to raise money is to raise tax or sale of assets.