Public Debt:

Public debt refers to the total outstanding debt obligations or accumulated borrowing of the government. Public debt is usually divided into two: domestic public debt that which is owed by the government to its citizens, and external public debt the total money owed by the government to overseas government and residents. A government will resort to borrowing to finance its fiscal deficits.

Sources of Public Debt

Public debt may be contracted through the following sources:

a. Internal sources: Public debt can be procured within the country through the purchase of government securities by commercial and merchant banks, central bank, and non-bank private individuals and financial institutions who subscribe to instruments such as treasury securities bonds and development stocks.