National debt

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National debt

Treasury bills, notes, bonds, and other debt obligations that constitute the debt owed by the federal government.

National Debt

The total of all bonds and other debt owed by a government. Most of the time, the national debt comes from bonds and other debt securities, but some countries in the developing world borrow directly from international institutions such as the World Bank. The national debt may be internal, that is, owed to bondholders and banks within the country, or external, that is, owed to foreign governments, institutions, and/or individuals. In the United States, paying the interest on the national debt is a major part of the federal budget. See also: Deficit.

National debt.

The total value of all outstanding Treasury bills, notes, and bonds that the federal government owes investors is referred to as the national debt.

The government holds some of this debt itself, in accounts such as the Social Security, Medicare, Unemployment Insurance, and Highway, Airport and Airway Trust Funds. The rest is held by individual and institutional investors, both domestic and international, or by overseas governments.

There is a debt ceiling imposed by Congress, but it is typically raised when outstanding debt approaches that level.

Interest on the national debt is a major item in the federal budget, but the national debt is not the same as the federal budget deficit. The deficit is the amount by which federal spending exceeds federal income in a fiscal year.

national debt


government debt

the money owed by central government to domestic and foreign lenders. A national debt arises as a result of the government spending more than it receives in taxation and other receipts (BUDGET DEFICIT). This may arise because of, for example, a ‘one-off’ event (the financing of a war) or reflect the government's commitment to an expansionary FISCAL POLICY.

National debt in the UK is made up of a number of financial instruments, primarily short-dated TREASURY BILLS and long-dated BONDS, together with national savings certificates. INTEREST on the national debt is paid out of current budget receipts.

Concern is sometimes expressed at the size of the national debt. In 2003, for example, the UK's net national debt stood at £375,200 million, compared to current GROSS DOMESTIC PRODUCT of £1,099,896 million. Provided that the bulk of the debt is held by domestic residents and institutions, however, there is no cause for alarm. In terms of the CIRCULAR FLOW OF NATIONAL INCOME, the interest paid on the national debt to domestic lenders is only a TRANSFER PAYMENT and does not represent a net reduction in the real resources of the economy or compromise the ability of the economy to provide goods and services. In 2003,90% of the UK's national debt was held domestically and interest payments accounted for only 5% of total GOVERNMENT EXPENDITURE.

In recent years, however, particular attention has been focused on the potentially INFLATIONARY effects of deficits financing (see PUBLIC SECTOR BORROWING REQUIREMENT) whereby deficits are financed by excessive monetary expansion. In the European Union, ‘fiscal stability’ has been written into the MAASTRICHT TREATY, with countries being under an obligation to ensure that total outstanding government debt should not exceed 60% of GDP. The UK government has gone further than this. Under the ‘sustainable-investment rule’, the government has committed itself to ensuring that total outstanding public debt should not exceed a maximum of 40% of GDP. See BUDGET ( GOVERNMENT), PUBLIC SECTOR DEBT REQUIREMENT.

References in periodicals archive ?
If a state was established today and each year, over the next 10 years, it had a budget deficit of e1/450 million at the end of the decade it would have a national debt of e1/4500 million.
Obama, the largest jump in national debt was the result of these actions and a reflection of the true accruing debt from all the previous debt.
It is another step in repairing the banks, in reducing our national debt and in getting the taxpayer s money back.
What we need to do is find a mechanism or a solution to utilise the extra money to lower the national debt," said Mr Al Maskati.
A spokesman for Barclays said: "We've been working ever since we became the trustee to change the original objects, which say the funds can be used only to pay off the entire national debt.
Sir Malcolm Bruce, the Liberal Democrat MP who obtained the details of the donations said: "The figures reported from the Treasury of voluntary payments and gifts to the Crown from members of the public in order to reduce the National Debt are intriguing.
Figures released by the National Treasury Management Authority reveal that the national debt jumped from EUR23.
Indeed, if the government fails to act, the national debt will become, in today's jargon, "unsustainable.
This anxiety is readily transferred to national debt - the debt owed by a government to its creditors.
The national debt is currently 100 percent of our gross domestic product--over $15 trillion.
On October 31 the national debt of the United States exceeded the country's gross domestic product.
Mr Balls will attempt to win back Labour's reputation for economic competence by pledging the party would display "responsibility in the national interest", by cutting the national debt instead.

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