The national debt is the sum of previous government spending or budget deficits?

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2018-04-28 17:00:33

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People are familiar with the concept of property debt: loans from banks installment in stores, etc. the national debt is the sum of preceding

And who is the state and why? Is it profitable to lend to the government? What is the meaning of "public debt"? This is the sum of previous loans or expenses? We will try to look into this further.

The concept of the budget

The national debt – is the sum of prior budget deficits.

the national debt is the sum of preceding

This is one of the definitions. A key concept in it – budget. This is the sum of all expenditures and revenues of the state. The sources of its recharge are:

  • Direct taxes: personal income tax, income, Unified agricultural, etc.
  • Indirect – excise taxes when buying different goods: cigarettes, alcoholic beverages, foreign cars. Tomorrow the list may be extended with a variety of sodas, energy drinks, chips, as the authorities at the highest levels to discuss it.
  • License fees.
  • Fines, penalties, etc.

Budget

This money will be transferred to the state budget, and then, depending on the amount of planned internal and external expenses.

the national debt is the sum of the previous state costs the success of the policy the budget can be:

  • Surplus-revenues exceed expenses.
  • Balanced – equal performance.
  • Scarce – revenues are less than expenses.

It is believed that the ideal is a balanced budget that speaks to the balanced policy of the state and proper management.

Causes of budget deficit

Hence the concept of public debt – is the sum of the preceding costs and revenues.  the national debt is the sum of previous budget deficitsThe Reasons can be different:

  • Changing market situations, for example, falling oil twice.
  • The Change of power in the country, and as a result, mismanagement of finances.
  • Increased financial social obligations relating, for example, with a demographic boom of the population.

As we have said, the national debt – is the sum of previous budget deficits. But it may increase and upcoming expenses. What does it mean? The budget of the country for a very long time, it is planned for the next years. In Russia it is accepted for several years. The government already knows how much it has to spend tomorrow: pensions, public sector wages, public contracts, etc.

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That means today's public debt-is the sum of the previous state costs, which should be higher than the income over the previous period. We must not forget that due to certain reasons, he may rise in the coming years. To understand the mechanisms of how the government balances this situation, we turn to the concept of "Federal bonds" (OFZ). More about this below.

Federal loan Bonds (OFZ)

Federal loan Bonds-are securities that are traded on the Moscow exchange. In fact, it is ious that the government issues a certain percentage. During the various procedures they get to the exchange, where, through the mediation of traders and stock brokers an investor to buy them. The purpose – increase of capital with minimal risk under the guarantee of the state. Of course, it can also deceive, who lived in 1998 know such a thing as a default - failure to pay its obligations. Despite this authorities are trusted more than commercial companies which can be bankrupt any day now.the national debt is the sum of preceding

Federal loan Bonds represent a kind of receipts to bearer. For their honesty watching the exchange. Investors today are buying debts for which after a certain time you can earn income. There are OFZs on which payments must be made in 20-30 years. Their owners typically receive annual bonuses (coupons).

We said above that the public debt is the sum of the preceding costs. But where did the money come from? Who is the state? One of the sources – OFZ. That is, the budget is already scheduled for the payment of the obligations in the following years, but the forecast has deteriorated. In this case, the Ministry of Finance on the rights of the Issuer with the Central Bank trying to prolong that is to delay debt payments. It offers more lucrative coupons (interest) on the bonds and increases their nominal value (the sum of the applicable obligations at the end of the billing period).

So the national debt is the sum of previous budget deficits.

Government debt

Depending on the sources of cash loans, the public debt is divided into:

  • Internal;
  • Exterior.

The Internal is formed by Federal loan bonds on the Moscow exchange. the national debt is the sum ofAbout what bonds we have already said. External debt can be generated from different sources. The main ones are:

  • The international Monetary Fund - the largestthe lender States on the planet. The organization was founded by private sponsors, but actively cooperates with the UN and the European Union.
  • International banks.
  • Other States.
  • Bonds on the international trading platforms.

Any public debt in foreign currency is automatically considered to be external, as the authorities and the Central Bank can't cut various financial tools like devaluation, inflation, denomination, etc.

Government debt today

We have said that the national debt – is the sum of previous budget deficits, but what is its value today.the national debt is the sum of the preceding fiscal deficits

In October 2015, the Government needs 7.4 trillion rubles in domestic debt, and by the middle of 2016, this amount increased to 7.9 trillion rubles.

The External debt amounts to $ 7 billion, which is negligible compared to the country's GDP. However, the authorities declared active borrowing on international exchanges, as well as in the domestic market.

For example, the US debt – 19 trillion dollars. The amount seems impressive, but it amounts to 109% of GDP. If Russia had such a duty, given the macroeconomic indicators, we would have paid it for several generations.

Will not Default?

Before you argue about the default of a particular country, it is necessary to correlate the level of GDP, the amount of debt and service it.

The Situation on the Russian market, exacerbating the debts of large corporations. Formally, these figures are not included in the debt of the state budget, but in fact the authorities sponsor these companies, and many of them directly affect our well-being. At the beginning of 2016, the debt of corporations amounted to 599 billion dollars, which is much more tangible 7 billion Given the sectoral sanctions of the West, we can say that these companies can't borrow from foreign banks, and, therefore, to refinance, to defer their debts. If the situation does not change soon, companies will start to default one by one. This will lead to a deterioration of the rating of trust in the country, as no one wants to invest in companies that can simply disappear.

Conclusion

Now, the national debt – this is the amount that has the government to investors to cover budget deficits over the past years. I hope the article was useful and informative.


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BE: https://tostpost.com/be/zakon/13172-dzyarzha-ny-do-g---geta-suma-papyaredn-h-dzyarzha-nyh-rashoda-abo-byud.html

DE: https://tostpost.com/de/das-gesetz/13178-staatsverschuldung-ist-die-summe-der-vorangegangenen-ffentlichen-ausga.html

ES: https://tostpost.com/es/la-ley/13190-de-la-deuda-p-blica-es-la-suma-de-los-anteriores-los-gastos-p-blicos-o.html

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PT: https://tostpost.com/pt/a-lei/13164-a-d-vida-p-blica-o-montante-anteriores-de-gastos-do-governo-ou-d-ficit.html

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ZH: https://tostpost.com/zh/the-law/8018-the-national-debt-is-the-sum-of-previous-government-spending-or-budget.html






Alin Trodden - author of the article, editor
"Hi, I'm Alin Trodden. I write texts, read books, and look for impressions. And I'm not bad at telling you about it. I am always happy to participate in interesting projects."

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