national debt

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national debt:

see debt, publicdebt, public,
indebtedness of a central government expressed in money terms, often referred to as national debt. The debt is computed differently by nearly every nation.
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National Debt

 

the total indebtedness of the state in outstanding loans and unpaid interest. Based on the sphere in which loans have been floated, national debt is divided into internal and external. According to the term of repayment, a distinction is made between capital debt (indebtedness on which the term of payment has not expired) and current debt (the term of payment expires in the given or following fiscal year).

Under capitalism, the occurrence and growth of the national debt are engendered by the mode of production itself. V. I. Lenin pointed out that national debts, like taxes, are objectively necessary for the maintenance of a bourgeois state (see Poln. sobr. soch., 5th ed., vol. 33, p. 12). The indebtedness of the world’s capitalist states attains huge amounts. In the USA by 1970 it totaled $485 billion (including the indebtedness of state and local government bodies), and in Great Britain,£44 billion. In many capitalist countries the national debt increases more rapidly than national income, so that the ratio of the total national debt to national income increases. Whereas in the USA in 1914 the national debt amounted to 3.3 percent of national income, in 1969 it was 63 percent; in Great Britain the corresponding figures are 31.2 and 126.1 percent, respectively. The direct cause of the increase in the national debt is budget deficits. In addition the growth of the national debt entails a direct increase in the state’s obligations because debt obligations are presented annually to the treasury for payment.

In developing countries, the national debt consists primarily of external loans. In 1970 the indebtedness of developing countries had reached $60 billion. In the 1960’s the growth rate of external indebtedness was approximately double that of these countries’ export revenues. The growth of payments on external debts is a heavy burden on the economies of developing countries. For example, the Latin American countries spend about 35 percent of their currency revenues from exports on repayment of external indebtedness

In prerevolutionary Russia, the systematic growth of the national debt was based on the issue of numerous state loans and treasury-guaranteed private loans. As of Jan. 1, 1914, it totaled 8,811,200,000 rubles. After the October Socialist Revolution, in accordance with a decree of the All-Russian Central Executive Committee on Jan. 21 (Feb. 3), 1918, all national debts of the tsarist and Provisional governments were annulled, while the rights of small-scale holders of state securities were preserved.

In socialist countries, the national debt is caused by the necessity of using loans as one of the methods of attracting the population’s monetary resources for net socialist investment and the improvement of the people’s well-being. As of Apr. 1, 1957, when the issue of state loans to the population by subscription was ended and their repayment was deferred for 20 years, the USSR national debt amounted to about 26 billion rubles. The Twenty-fourth Congress of the CPSU (1971), taking into account the country’s increased economic potential, adopted a decision to redeem ahead of schedule (by six years) the loan bonds remaining in the public’s possession. In 1974–75, 2 billion rubles’ worth of bonds will be redeemed, and in subsequent years the size of payments on bonds will be increased; all bonds will be redeemed by 1990.

R. D. VINOKUR and T. V. GUIDA

national debt

the total outstanding borrowings of a nation's central government
References in periodicals archive ?
Except in the special case of a small open economy with perfect substitutability between domestic and foreign assets, the national debt influences the rate of return on capital through the mechanism of crowding out.
These must have their role in combination with any policy towards the national debt.
However, as was noted earlier the national debt has implications for the transfer of resources between generations as well as for the national capital stock.
The presence of welfare costs from the distorting taxation needed to finance the national debt makes such a debt less desirable than its impact on the capital stock alone would suggest.
In order to assess whether the effects are of practical importance, some effort should be made to quantify the social cost of the national debt.
The costs of the national debt arise from its crowding out effects and from the effects of the distortionary taxation which is needed to finance it.
Estimates are presented in Box C and they indicate that a national debt equal to output will result in a loss of 1.
Nevertheless, the figure of 5 per cent per annum probably represents a lower limit to the total burden imposed by a national debt financed from abroad.
To these consequences of the national debt must be added the fact that it is likely to effect a transfer of resources between generations.
Contrasting this with the advantages of reasonably constant expected tax rates provide an argument for not placing too much emphasis on achieving any particular target value of the national debt.
The setting of fiscal policy with reference to the national debt is frequently believed to be an alternative to the use of fiscal policy for demand management purposes.
With n countries there are only n - 1 values of net external wealth, while there are n values of national debt and national wealth.

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