What is National 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 the federal to the municipal levels can have its own debt. All these debts are included in the total national debt. There are two types of national debt: internal and external. Internal debt is funds borrowed from sources within the country. The money for this type of debt is raised by selling securities, government bonds, and bills. External debt is funds borrowed from foreign lenders. This can include private sources, other countries, and the International Monetary Fund (IMF). When a country is planning a large amount of spending or is anticipating a shortfall in revenue, it looks to borrow funds to meet the budgetary needs. Small cities and municipal governments often report on their credit rating. They are allowed to take out loans or mortgages to fund specific types of activity. The security for the loan is provided by the state, which w
