What is the national debt

The national debt in finance refers to the total amount of money that a government owes to its creditors, including both domestic and foreign lenders. This debt is accumulated over time as a result of government borrowing to finance budget deficits, infrastructure projects, and other expenditures. The national debt is a key indicator of a country's fiscal health and is closely monitored by policymakers, economists, and investors. A high level of national debt can be a cause for concern as it may indicate that a government is overspending and may struggle to meet its debt obligations in the future. Governments typically issue bonds and other debt securities to raise funds, and these are purchased by investors such as banks, pension funds, and foreign governments. The national debt is typically expressed as a percentage of a country's gross domestic product (GDP), which provides a measure of the government's ability to service its debt. Countries with high levels of national debt may face challenges such as higher interest payments, reduced flexibility in fiscal policy, and potential downgrades in credit ratings. However, low or moderate levels of national debt can also be beneficial as they allow governments to invest in infrastructure and other projects that can stimulate economic growth. Overall, managing the national debt is a critical aspect of fiscal policy, and governments must balance the need for investment and economic growth with the importance of maintaining sustainable levels of debt.