3. How about national debt?

1.Concept

National debt actually comes from the spending needs of the government. When the government's
spending is greater than the collected taxes, fees and charges, the State is forced to borrow (can borrow
at home or abroad) to spend and cover the budget deficit. Most governments use debt financing to
finance budget spending.

To have money to repay the principal and interest when the loans are due, the State will have to collect
increased taxes to compensate. Public debt and taxation are interdependent and proportional to each
other. Therefore, public debt is essentially a gradual taxation. Public debt represents the transfer of
wealth from the next generation to the present generation, ie from the generation that has to pay high
taxes to the generation with tax reduction.

In national debt there is also government debt

Government debt, which is a part of National Debt, is the sum of money borrowed by governments of all
levels from central to local levels.

This borrowing is intended to finance budget deficits, so in other words, government debt is the budget
deficit that has accumulated up to a point in time. To make it easier to imagine the size of government
debt, it is often measured how much of a debt this debt is to gross domestic product (GDP).

2. National Debt type

Domestic debt (Loans from domestic lenders)

Foreign debt (loans from foreign lenders).

3. How to borrow national debt

I. Raising capital from the people.

II. Borrowing money directly from international organizations such as the International Monetary
Fund (IMF) or the World Bank (WB).
III. Release Stock.
 Issuance of bonds in local currency (low risk)
 Issuance of foreign currency bonds (high risk)

4. Term of national debt

Short-term debt (from 1 year or less)

Medium-term debt (from over 1 year to 10 years)

Long-term debt (over 10 years).

5. The impact of national debt on the economy

The benefits of national debt

  The national debt will have a certain influence to increase resources for the state. At this time,
when the capital is enhanced, the state has better conditions for infrastructure development,
synchronous investment….
 National debt is also a form of mobilizing idle financial resources of the people. These idle
money will be used for legitimate purposes to invest and develop for the country.
 With respect to loans from foreign organizations, the State can take advantage of the
preferential capital of international organizations in the form of bilateral or multilateral
economic cooperation.

The harm of national debt

 The state will increase the pressure on the responsibility to repay the national debt and it can
become bad debt if the financial management capacity of the country is weak.
 Without proper management of loans, corruption, wasteful losses will occur.
 If the loans are not used properly, invested in the right place, it will easily cause budget deficit,
debt stacking, domino effect ...