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Government debt (also known
as public debt or national debt) is money (or credit) owed by any level of
government; either central government, federal government, municipal
government or local government.
As the government represents
the people, government debt can be seen as an indirect debt of the
taxpayers. The government accumulates debt over time by running a deficit:
that is, by spending more than it taxes.
Government debt can be categorized as internal debt, owed to lenders within
the country, and external debt, owed to foreign lenders. Governments usually
borrow by issuing securities such as government bonds and bills. Less credit
worthy countries sometimes borrow directly from commercial banks or
supranational institutions. Some consider all government liabilities,
including future pension payments and payments for goods and services the
government has contracted for but not yet paid, as government debt.
Another common division of government debt is by duration. Short term debt
is generally considered to be one year or less, long term is more than ten
years. Medium term debt falls between these two boundaries.
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