The national debt refers to the total amount of money that a country owes to other countries, international organizations, and its own citizens. It is the cumulative difference between the government’s total expenditures and revenues over time. When the government spends more than it collects in tax revenue, it must borrow the difference from these entities, which results in an increase in the national debt.
Understanding the national debt is crucial for assessing a country’s financial health and economic stability. It provides insights into the government’s fiscal discipline, its ability to meet its financial obligations, and its potential impact on economic growth and inflation. Monitoring and managing the national debt are essential responsibilities of governments and central banks.