What are common forms of government budgeting debt? What types of debt should be avoided?

Expert Solution

Followings are the common forms of government budgeting debt;

1. Bonds

2. Debentures

3. Treasury bills

4. Municipal bonds

5. State & Provincial bonds

6. Public deposits

7. Borrowings from central banks

8. Secured debts

9. Short-term borrowings

10. Long-term borrowings etc.

What types of debt should be avoided?

As we know that debt is a burden on the government. So government should try to minimize its debts or should try to use less amount of debts because higher use of debts will result into higher payment of interest. That is why we can say that government should not use a debt which carry higher amount of interest or government should use debts as per period requirement because higher the period of debt will result into higher payment of interest.

Thus government should skip such debts which required higher securities or required higher interest payment. Government also should skip such debts which have higher legal & financial restrictions on the government so that government can not feel higher legal & financial burden.

jeff jeffy answered 2 years ago

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