Importance of Government Debt to a Country’s Economy University: Name: Governments borrow by issuing bills and bonds and other securities. Developing countries borrow directly from supranational organizations such as the World Bank or international financial institutions. In other cases governments create money to offset their debts as a fiscal policy to fund expenditure. Government spending is the major contributing factor to economic growth and overall gross domestic product of a nation. The source of finance to a government is mainly from taxes and external borrowing. The public debt has become important to foster economic growth especially in economies facing fiscal imbalances. The primary reason for borrowing by the government is to increase spending without necessarily increasing taxes for individuals and corporate. The government borrow to ease the tax burden on individuals and private firms. In conclusion government borrowing is crucial to economic growth. It has more benefits than disadvantages especially for citizens of a country. Public amenities like hospitals schools and transport networks are made affordable to people. During an economic downturn the best way to offset effects associated with a recession is through borrowing. Unemployment and increase in interest rates are countered to a greater extent by borrowing that increases the circulation of money in the country through government expenditure. The infrastructural development provides employment to people hence an income for consumption. Consumption of income boosts economic growth since it is a factor that determines the level of the gross domestic product of a country. [...]
"High government debt provides a strong case for fiscal austerity, especially in situations where current growth is low." Op- Ed must argue against the above statement.