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Public Debt refers to the loan amount a country owes to lenders like businesses, individuals, and other governments.

Public debt is the national debt of a country and can be both internal and external.

Role of Public Debt

1. Levelling tax rates
2. Stabilization
3. Funding emergency expenditure
4. Increasing productivity
5. Remunerative capital formation
6. Filling the saving-investment gap

Limitations of Public Debt

- Service charges
- Increasing inequality
- Using it unproductively

Types of Public Debt

Productive and Unproductive Debts

Productive Debts boosts the economy’s productive capacity

Unproductive Debts are neither self-liquidating nor boost the economy’s productive capacity

Voluntary and Compulsory Debts

Voluntary Debts are announced as bonds and certificates by the government.

Compulsory Debts are raised coercively especially during emergency times

Internal and External Debt

Internal Debt is raised within a country with help of institutions and citizens and is payable in domestic currencies

External Debt is raised from foreign countries and is payable in foreign currencies

Short, Medium and Long Term Debt

Short-Term Debt matures within 3- 9 months, medium-debt between short and long-term and long-term has a maturity period of 10 years or more.

Redeemable and Irredeemable Debts

Redeemable Debts are terminable with a promise to pay on a future date

Irredeemable Debts does not have a fixed final repayment date but is signed with a promise of regular interest payments

Funded and Unfunded Debts

In the Funded Debt, the borrower has to pay a fixed sum of interest with an option to repay the principal.

In Unfunded Debts, the borrower has to repay the loan on a set due date with interest.

The burden of Public Debt

The burden of Public Debt refers to the repayment of the principal amount with interest and the tax burden is passed on to the citizens

The burden of Internal Debt

The burden of Internal Debt is not a direct burden as the money is borrowed from organizations and individuals within the country

The burden of External Debt

The burden of External Debt is a direct burden as the borrowed money has to be paid to foreign citizens or country.

Shifting of Debt Burden (Public Debt and Future Generations)

- Productive and unproductive loans
- Sacrificing current investment and consumption
- Short-term and long-term goals

Management of Public Debt

Management of Public Debt refers to the strategy of managing the debt to raise the required funding

Framework for Public Debt Management

- Debt management objectives and coordination
- Accountability
- Institutional framework
- Debt management and risk management
- The efficient market for government securities


This video is on Public Debt and it has the following sub-topics.

Time Stamps

0:00 What are the Types of Public Debt?
00:39 Role of Public Debt
01:08 Limitations of Public Debt
01:21 Types of Public Debt
01:41 Productive and Unproductive Debts
02:32 Voluntary and Compulsory Debts
03:13 Internal and External Debt
04:09 Short, Medium, and Long-Term Debt
04:45 Redeemable and Irredeemable Debts
05:21 Funded and Unfunded Debts
06:00 Burden of Public Debt
06:33 Burden of Internal Debt
07: 04 Burden of External Debt
07:42 Shifting of Debt Burden (Public Debt and Future Generations)
08:54 Management of Public Debt
09:32 Framework for Public Debt Management

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