Government Debt Law and Legal Definition

Government Debt is the money owed by any level of government; either central government, federal government, municipal government or local government. It considers all government liabilities, including future pension payments and payments for goods and services the government has contracted but not yet paid.

As the government draws its income from much of the population, government debt is an indirect debt of the taxpayers. Government debt can be categorized as internal debt, owed to lenders within the country, and external debt, owed to foreign lenders. Governments usually borrow by issuing securities, government bonds and bills. By contrast, annual government deficit refers to the difference between government receipts and spending in a single year.