Statsgjeld

Statsgjeld, or government debt, is the total amount of money a state government owes to lenders. It includes all borrowings used to finance past deficits and any accrued interest. Government debt is commonly divided into gross debt, the full stock of liabilities, and net debt, which subtracts financial assets held by the government. Debt can be held by domestic residents, foreign investors, or the central bank.

Debt is typically issued as securities such as bonds, notes, and bills, and is managed through regular auctions and maturities. Central banks may hold government debt as part of monetary operations, influencing measured debt levels.

Governments borrow to smooth spending over time, finance large investments, respond to recessions, or cope with emergencies. When used prudently to fund productive investments and strengthen the economy, debt can support growth; when deficits persist and growth is weak, debt burdens may rise and borrowing costs can increase, potentially limiting policy space.

Debt sustainability is commonly assessed by the debt-to-GDP ratio, which compares the stock of debt to the size of the economy. Other factors include the debt’s interest rate, maturity profile, currency denomination, and the government’s fiscal credibility. Higher debt levels are not inherently unsustainable if growth and inflation reduce the real burden, and if creditors maintain confidence. Credit ratings and market yields influence borrowing costs, and crises can lead to debt restructuring or defaults, though such events are relatively rare for large, diversified economies.

Examples often cited include Japan, with a very high debt-to-GDP ratio; Greece, which experienced a sovereign debt crisis; and other countries where debt is high but financeable under stable institutions. Policy responses focus on prudent debt management, credible fiscal rules, and coordination between fiscal and monetary authorities.