Government debt

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Detail from the mural "Government" by Elihu Vedder in the Library of Congress
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Not to be confused with external debt (or foreign debt), a country's liabilities owed to nonresidents by residents.

A country's gross government debt (also called public debt or sovereign debt[1]) is the financial liabilities of the government sector.[2]: 81  Changes in government debt over time reflect primarily borrowing due to past government deficits.[3] A deficit occurs when a government's expenditures exceed revenues.[4][2]: 79–82  Government debt may be owed to domestic residents, as well as to foreign residents. If owed to foreign residents, that quantity is included in the country's external debt.[5]

In 2020, the value of government debt worldwide was $87.4 US trillion, or 99% measured as a share of gross domestic product (GDP).[6] Government debt accounted for almost 40% of all debt (which includes corporate and household debt), the highest share since the 1960s.[6] The rise in government debt since 2007 is largely attributable to stimulus measures during the Great Recession, and the COVID-19 recession.[6]

The ability of government to issue debt has been central to state formation and to state building.[7][8] Public debt has been linked to the rise of democracy, private financial markets, and modern economic growth.[7][8]

  1. ^ "FT Lexicon" – The Financial Times
  2. ^ a b Cite error: The named reference gfsm was invoked but never defined (see the help page).
  3. ^ OECD Data. "OECD General government debt". OECD.org.
  4. ^ OECD Data. "General government deficit". OECD.org.
  5. ^ International Monetary Fund. "External Debt Statistics: Guide for Compilers and Users". pp. 41–43.
  6. ^ a b c Gaspar, Vitor; Medas, Paulo; Perrelli, Roberto (15 December 2021). "Global Debt Reaches a Record $226 Trillion". IMF Blog.
  7. ^ a b Cite error: The named reference Eichengreen-2021 was invoked but never defined (see the help page).
  8. ^ a b Cite error: The named reference Stasavage-2003 was invoked but never defined (see the help page).