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- 9 Marks
Question
It is the opinion of some people that borrowing by government may be a better option in some cases than the imposition of taxes as taxes have the potential of creating resentment and upheavals during a period of economic difficulties.
i. Explain fully what Public Sector Debt is.
(5 marks)
ii. What are the objectives of Public Debt Management?
(4 marks)
Answer
i. Public Sector Debt
Public debt is the sum of public and publicly guaranteed debt. Public debt refers to the domestic and external obligations of public debtors, which include the central government and its agencies. Publicly guaranteed debt is the sum of all domestic and external obligations of the private sector that is guaranteed for repayment by a public entity.
ii. Objectives of Public Debt Management
The objectives of public debt management include:
- Minimizing borrowing costs.
- Keeping risks at an acceptable level.
- Supporting the development of domestic markets.
- Ensuring the financing needs of the government are met.
- Tags: Debt Management, Government Borrowing, International finance, Public Debt, Public Sector
- Level: Level 3
- Topic: International taxation
- Series: NOV 2015
- Uploader: Joseph