Government debt refers to the money owed at any given time by any government. This may include public debt owed by the federal government, the state government, or the municipal and local government. Public debt increases when government spends more money than it collects in taxation. This leads to "government deficit" which refers to the difference between government receipts and spending in a single year, that is, the increase of debt over a particular year.
Government debt is also called public debt, national debt or sovereign debt. Government debt can be categorized as internal debt (owed to lenders within the country) and external debt (owed to foreign lenders). Another common division of government debt is by duration until repayment is due. Short term debt is generally considered to be for one year or less, long term is for more than ten years. Medium term debt falls between these two boundaries.
A broader definition of government debt considers all government liabilities, including future pension payments and payments for goods and services the government has contracted but not yet paid.
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