Student Publications

Author: Ceylon Mudenda
National Debt Management
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Different countries have different sources of income. It is from these various sources of income
that countries are able to finance the many activities that governments are involved in. The
activities that need government spending are in such areas as, social, economic and political
fields. If a country is self sufficient, there will be no significant problem in terms of incurring
National debt because this country will be able to meet its expenditure from its resources.
However, the problem arises for those countries who are not self sufficient. Such countries are
not in a position to meet all the needs of its citizens from its own resources and hence it will look
to other sources of extra income to meet its obligations, hence incurring National debt. National
debt is a real problem because once this debt is incurred, it has to be serviced. The servicing of
most debts do not only require that the principal debt is serviced but in addition to servicing the
principal debt, interest has also to be paid. This means therefore that instead of meeting other
social needs of the people of a country, the money will go to the payment of interest. Because of
the complexities that go with National Debt, it therefore calls for proper management.

In trying to understand this subject well, the approach that I will use, is that of first, surveying
the historical aspects of National Debt with a view of finding solutions to this problem. I will
thereafter address the issues of costs of servicing the debt and managing a perpetual debt. After
giving the descriptive analysis, I will give my observations of the subject, discuss some issues of
interest before giving my recommendations and conclusions. Before I go into details of the
subject, let me first give some definitions of key words.


Titley, B.and Moynihan, D. (2000) P.361 have pointed out that "all the money borrowed by the
public sector over the past which has not been repaid is called the public sector debt or national

Other scholars have also contributed to the debate of ,,National debt. Bernanke, S.B. and Abel
B.A. (2001) P.579 have argued that "there is an important distinction between the government
budget deficit and the government debt (also called the national debt)..... The government debt
(a stock variable) is the total value of government bonds outstanding at any particular time.
Because the excess of government expenditures over revenues equals the amount of new
borrowing that the government must do � that is, the amount in dollar, or nominal terms) equals
the change in the debt in that year".


Before I come to the specifics of ,,national debt, let me give a scenario of ,,personal debt.
Suppose an individual earns, say, U.S. $1,000 per month. From this $1,000 this individual has
met his needs such as paying for rent, water, electricity, food, transport, school fees and any
other expense that has to be met in his social life. Suppose that this persons budget comes to


$1,200 per month. What this means is that this individuals budget is in deficit and the deficit
has to be met by borrowing from other sources thereby incurring a personal debt. By incurring
this debt, this person faces a lot of challenges because if he does not manage his debt properly,
then he runs into the risk of increasing his debt even further, eventually he may not be eligible to
borrow any more money from his creditors. To avoid reaching to such an extent, this individual
needs to look at all the possible ways of addressing this problem so that the debt remains within
manageable levels. This scenario is exactly what can happen to a country, and hence the
importance of this subject.


There are various ways in which a deficit can be caused. Deficits can occur when.

there is excess of total outlays over total receipts
there is national emergency and the government has to meet the unplanned costs
there is a drop in tax collection due to a recession.
There is a drop in revenue due to a tax cut.

Talking about some historical perspectives of the Federal deficit and National Debt, Clayton, E.
G.(2005) P. 29-30 has argued that "the most direct measure of the deficit is the excess of total
out lays over total receipts (both on-and off budget) in the federal budget. Deficits tend to occur
when expenditures balloon because of a national emergency, as during world war II, or more
recently, the additional expenditures required for homeland security in the wake of 9/11. A
deficit can also occur whenever there is a drop in tax collections due to a recession, as in 1990-
91, or whenever there is a drop in revenues due to a tax cut, as in the 1980s".

When there is a budget deficit, it means that money has to be found from somewhere in order to
meet the short fall. However, despite the associated consequences of having a budget deficit,
some scholars have seen the budget deficit as a necessary requirement in certain circumstances.
Clayton, E.G. (2005) P. 29-39 has argued that "from an historical perspective, it also seems that
deficits are becoming more acceptable. Keynesians, for example, have long argued that
temporary federal deficit spending can provide a useful stimulus if the economy is growing too
slowly or is in recession. Temporary is the key word here, because it was also expected that
deficits would turn to surpluses when the economy recovered, thereby making the debt less of a
burden . Some liberals have even argued that deficits due to government spending are socially
acceptable, especially if the spending is for social purposes. In the wake of the Reagan � Bush
deficits,... that the federal deficit was too small, and that the real deficits in society..."the run
down infrastructure of roads, bridges, waste � disposal facilities, and protection of our
environment, (and) our failure in the combat against crime and drugs".... are too large".

While debt, resulting from borrowing to cover the deficit has its own challenges, as we will see
later during this study, other scholars, do not see any problem with running a budget deficit if the
expenditure caused by this deficit is justifiable. Clayton, E.G. (2005) P.29-39 has argued that


"even some conservatives, who traditionally opposed deficits for largely fiscal reasons, now
argue that deficits matter less than we think. For example, when Wesbury and Forres (2003)
defended the recent Bush tax cuts, they used cost-benefit logic to argue that "deficits are not a
problem for any economy as long as the returns from running those deficits outweigh the costs.
Boosting spending to fight terrorism is a necessary expenditure.....the use of U.S. military might
in the Middle East has the potential to spread democracy to hundreds of millions of people. The
potential positive impact is immeasurable".


It is important to understand the relationship between national debt and income receipts in the
budget. Of course if income receipts are more than the outlays, then there will be a budget
surplus. However, if the outlays are more than the receipts, then, there will be a budget deficit,
hence the nation resorts to borrowing and thereby incurring national debt.


There are various sources of income receipts in the government budget. According to Bernanke,
S.B. and Abel, B.A. (2001) P.566 "on the revenue side of the governments budget are tax
receipts. There are four principal categories of tax receipts: personal taxes, contributions for
social insurance, indirect business taxes, and corporate taxes....the largest category of tax
receipts in the United States is personal taxes, which are primarily personal income taxes and
property taxes".

It suffices to mention here, that the total receipts from the above categories of income sources
should be enough to pay for its current purchases of goods and services and its current social
programs. If these total receipts are insufficient for the government to pay for its current
purchases of goods and services and its current social programs, the government will be forced to
borrow money in order to meet its obligations, hence incurring a national debt. An example of
the Federal, state and Local receipts of the budget is shown below as provided by Bernanke,
S.B. and Abel, B.A. (2001)P.568



State and Local

Percentage Billions

of dollars
of Receipts of Dollars
of Receipts

Personal Taxes

Contributions for
Social insurance

Indirect Business Taxes
5.2 559.4
Corporate Taxes

Grants in aid

Total receipts
1844.2 100.0 1148.1 100.0
Current deficit
- 72.8 - 150.2
(Current expenditures
Less receipts; negative
If surplus)
Primary current deficit
(negative if surplus) - 298.9


Having given examples of the sources of income for the U.S. government, I want also to
demonstrate how the income received is used. We will again use the example of the U.S.A.

There are various items of expenditure in the U.S. budget as there are in any other government
budget. Bernanke, S.B. and Abel, B.A. (2001)P.568 have provided the U.S. Federal, state and
local expenditure for 1998 as shown in the table below.


Government Receipts and current expenditure, 1998.


State and Local

Billions of
Percentage of

Current of Dollars
of Current
Expenditure Expenditure

Current expenditures
Consumption expenditures
National defense

Non defense

Transfer payments

Grants in aid

Net interest paid

- 8.3
Subsidies less surpluses
Of government enterprises
And less dividends received
- 2.6
Total current expenditures 1771.4 100.0

From the two tables above we have seen that the current expenditure has to be financed from the
income received on the revenue side of the budget. If, therefore, the income received cannot
adequately meet the expenditure obligations of government, then the government has to resort to
borrowing so as to finance the shortfall of the budget deficit, hence national debt.

Since we know how the national debt comes about, I now want to attempt to tackle the subject of
national debt management in more specific terms.


The staffs of the International Monetary Fund and the World Bank, (2001) P.1 pointed out that
"sovereign debt management is the process of establishing and executing a strategy for managing
the governments debt in order to raise the required amount of funding, achieve its risk and cost
objectives, and to meet any other sovereign debt management goals the government may have
set, such as developing and maintaining an efficient market for government securities".

As will be demonstrated shortly, debt management requires a combined effort from all stake
holders to ensure that all risky areas are addressed in order to remain within manageable debt
levels. The staff of the International Monetary Fund and the world Bank, (2001) P.4 have argued


that "pubic debt management problems often find their origins in the lack of attention paid by
policy markers to the benefits of having a prudent debt management strategy and the cost of
weak macroeconomic management. In the first case, authorities should pay greater attention to
the benefits of having a prudent debt management strategy, framework and policies that are
coordinated with a sound macro policy framework. In the second, inappropriate fiscal, monetary
or exchange rate policies generate uncertainty in financial markets regarding the future returns
available on local currency � denominated investments, thereby inducing investors to demand
higher risk premiums".


We know that once a debt is incurred, it has to be repaid. Hence therefore, the first objective of
national debt management is to see to it that the financing and payment obligations of
government are carried out at the lowest possible cost; that is by taking care of the risks that are
involved in borrowing and repayment.

It is important at this point to look at the risks that may be encountered in public debt
management. Some of these risks are; market, rollover, liquidity, credit, settlement and
operational risks. Let us look at these risks individually. According to the staffs of the
International Monetary Fund and the world Bank, (2001) P. 8 "Market risk refers to the risks
associated with changes in market prices, such as interest rates, exchange rates, commodity
prices on the cost of the governments debt servicing.

Rollover risk is the risk that debt will have to be rolled over at an unusually high cost
or, in extreme cases, cannot be rolled over at all.
Liquidity risk: One refers to the cost or penalty investors face in trying to exit a
position when the number of transactions have markedly decreased or because of the
lack of depth of a particular market.... Particularly relevant in cases where debt
management includes the management of liquid assets or the use of derivatives
contracts. The second type refers to a situation where the volume of liquid assets can
diminish quickly in the face of unanticipated cash flow obligations.
Credit risk is the risk of non performance by borrowers on loans or other financial
assets or by a counterparty on financial contracts.
Settlement risk refers to the potential loss that the government, as a counterparty,
could suffer as a result of failure to settle by another counterparty.
Operational risk includes a range of different types of risks, including transaction
errors, inadequacies or failures in internal controls, or in systems and services;
reputation risk; legal."

Control: In national debt management, one of the key areas that needs to be looked into, is the
,,control aspect of the debt obligations. In order for me to give a clear explanation, let me first
give an example of an individual who owes money to somebody. In this scenario of the
individual, it is the borrower who should know how to repay the debt. At the time of borrowing,


the borrower and the lender should have entered into an agreement, clearely specifying the terms
that are involved in the borrowing and lending arrangement. Once these arrangements have been
entered into, it is the responsibility of the debtor to be in control of his debt by ensuring that the
terms of the loans are adhered to. Such responsibilities cannot be left to any other individual
because it is the borrower who is supposed to be accountable for all actions that are taken in the
management of his debt. In like manner, the national government is supposed to take control of
all financial obligations that are related to national debt. In this way, the government will be in a
position to monitor the status of its debt obligations and be in a strong position to make decisions
as concerns its national debt.

Coordination with monetary and fiscal policies

In discussing the above item, the Staffs of the International Monetary Fund and the World Bank.
(2001)P.9 argued that "Debt managers, fiscal policy advisers, and central bankers should share
an understanding of the objectives of debt management, fiscal, and monetary policies given the
interdependencies between their different policy instruments. Debt managers should convey to
fiscal authorities their views on the costs and risks associated with government financing
requirements and debt levels."

Since management of national debt involves coordination with monetary and fiscal policies, we
need to understand what monetary and fiscal policy are all about. Monetary policy are the actions
taken by government to try and control either the supply of money in the economy or the price of
money. Interest rates become the price of money for the borrowers and the same interest rates
are the reward of money to the lenders of money.

Fiscal policy addresses the management of public spending and taxation and how these affect the
levels of aggregate demand.

From the above, we can see that public debt management needs to be in close contact with
monetary and fiscal policies so that as national debt is being demolished, it does not bring
conflict to the management of fiscal and monetary policies.

Information sharing

National debt management, fiscal and monetary authorities need to share information on the
governments current and future liquidity needs. Monetary policy deals with the question of
money supply and interest rates in the economy whereas fiscal policy deals with government
spending and taxation. Information sharing by the managers of national debt, monetary policy
and fiscal policy in such areas as, policy issues and governments current and future liquidity
needs, is necessary. It is also important for these three sections to coordinate their market
operations to avoid operating in the same market arena at the same time. However, let it be
mentioned here that achieving total separation of functions between debt management and
monetary policy is not easy especially in countries with less developed financial markets.
Contributing to the debate of information sharing, the staff of the International Monetary Fund


and the World Bank, (2001)P.10 have argued that "since monetary operations are often
conducted using government debt instruments and markets, the choice of monetary instruments
and operating procedures can have an impact on the functioning of government debt markets,
and potentially on the financial condition of dealers in these markets. By the same token, the
efficient conduct of monetary policy requires a solid understanding of the governments short
and longer term financial flows. As a result, debt management and fiscal and monetary officials
often meet to discuss a wide range of policy issues. At the operational level, debt management,
fiscal, and monetary authorities generally share information on the governments current and
future liquidity needs. They often coordinate their market operations so as to ensure that they are
not both operating in the same market segment at the same time".


One attribute that each debt manager should have is, integrity. It is therefore important that there
should be a code of conduct for all debt managers if debt management has to be done
professionally. There are so many vices that may surface if those who are charged with the
responsibility of debt management have no integrity. Some of the possible vices that may come
up are, unnecessarily committing the nation by borrowing without making necessary analysis.
The other thing that can also come up if debt managers have no integrity is that borrowed money
can be misused to the detriment of the government.


Another important area in national debt management is, audit. Government debt activities
should be audited annually, since national debt management is a public activity. Annual audits
of debt management activities are needed in order to ensure that system procedures in debt
management activities are followed. This is a good practice because it is a deterrent tool on its

Availability of information

The significance of availability of public information cannot be overemphasized. If information
that is for public consumption is not available, the public will lose confidence and will not
support the idea or project whose information is kept private. We know that one of the major
sources of government revenue is taxation. If the tax payers are not educated on debt
management activities, they will not appreciate the fact that their money is being taxed. The
staffs of the International Monetary Fund and the World Bank, (2001)P.12 have argued that "the
public should be provided with information on the past, current and projected budgetary activity,
including its financing and the consolidated financial position of the government. Disclosure of
information on the flow and stock of government debt (if possible on a cash and accrual basis) is


Legal framework

Governance issues in national debt management matter a lot. The legal framework should be set
in such a way as to clearly state authority levels of borrowing for new debt and disbursements of
borrowed funds. A sound legal framework also gives confidence to partners that those debt
managers are true representatives of government and that government is behind any debt
transaction the debt managers enter into. The legal framework plays an important role in sound
debt management especially where pieces of legislation exist which spell out the debt ceilings in
terms of new borrowings.

Disclosure of information

It is a good practice to ensure that the financial position of any public sector is disclosed.
Transparency in pubic activities is very necessary and this includes activities in debt
management. The staffs of the International Monetary Fund and the world Bank (2001)P.12
argued that "the government should regularly publish information on the stock and composition
of its debt and financial assets, including their currency, maturity and interest rate structure. It is
vital that such information is disclosed in the public accounts for public consumption.

Management information system

The importance of a good record system in any organization cannot be over emphasized. Having
a good information system in debt management activities is of great necessity because it makes
the Job of monitoring the debt activities easy. Having such a system will provide debt managers
an opportunity to retrieve data easily, report correctly and add to the credibility of the
transparency of government financial accounts. The staffs of the International Monetary fund
and the world Bank, (2001)P.14 have argued that "debt management activities should be
supported by an accurate and comprehensive management information system with proper
safeguards. Countries who are beginning the process of building capacity in government debt
management need to give a high priority to developing accurate debt recording and reporting
systems. This is required not only for producing debt data and ensuring timely payment of debt
service, but also for improving the quality of budgetary reporting and the transparency of
government financial accounts. The management information system should capture all relevant
cash flows, and should be fully integrated into the governments accounting system."


Clarity of roles

This is also an important aspect in public debt management. The roles, responsibilities and
objectives of financial institutions responsible for debt management should be clearly specified.
The roles of financial agencies such as the central bank, ministry of finance and the debt
management section in debt management issues should be as clear as possible. The staffs of the
International Monetary Fund and the World Bank, (2001) P.11 noted that "the allocation of
responsibilities among the ministry of finance, the central bank or a separate debt management
agency, for debt management policy advice and for undertaking primary debt issues, secondary
market arrangements, depository facilities and clearing and settlement arrangements for trade in
government securities should be publicly disclosed. Transparency in the mandates and clear
rules and procedures in the operations of the central bank and ministry of finance can help
resolve conflicts between monetary and debt management policies and operations".

Internal management controls

This is a necessary tool in public debt management because if this is exercised diligently,
pilferages of government funds can be minimized. Management controls that can be put in place
include the establishment of good business practices, monitoring policies and reporting systems.
In any organization, when the employees know that their actions are being monitored, they will
tend to be more responsible and accountable for their actions. The other advantage of having
proper management controls is that should there be a pilferage in an organization, it will quickly
be detected and thereby deter the occurrence of a similar scourge which could lead to huge
losses. Contributing to this debate, the staffs of the International monetary Fund and the World
Bank, (2001) P.13 have argued that "risks of government loses from inadequate operational
controls should be managed according to sound business practices, including well-articulated
responsibilities for staff, and clear monitoring and control policies and reporting arrangements.
Operational risk, due to inadequate controls and policy breaches, can entail large losses to the
government and tarnish the reputation of debt managers. Sound risk monitoring and control
practices are essential to reduce operational risk".

Managing risk in public debt management is crucial. Let us mention here that the management
of this risk calls for careful planning. To this effect, let us take a specific example and see what
exactly happened in the case of France at one particular time. Public sector debt and risk
management in France was discussed during the budget bill for 2006.Browa,M.and Chambers,
A.(2005)p.1 indicated that "proposals in the French budget bill for 2006 and discussions in
parliament could lead to significant changes in Frances public debt and risk management.
Agency France Tresor is being lined up to manage the risks incurred by government ministries,
while the French parliament is discussing whether to consolidate the countrys different
government borrowers". As has been seen, because national debt is of a public nature, the
example that we have provided called for a public debate in parliament which is good
information sharing in debt management.



National debt management poses a lot of challenges as seen in this paper, However, my major
observation is that, which ever way one looks at this problem, future generations will feel the
impact of the debt experienced by the nation. However, different sections of the community will
react differently to the fact that the country has huge debt.


There are implications that go with national debt. In order to discuss this issue, let us take a
specific example. Turner, S. (2005) P. 1 pointed out that "according to the congressional Budget
Office, the national deficit reached $317 billion at the end of FY 2005; a figure that does not
take into account the money being borrowed, from social security Trust, the cost of fighting the
war on terrorism, tax reform proposals, or recent emergency spending in response to the
hurricanes. Add it all up and the total national debt is more than $575 billion! Regardless of
which sum you consider, the national debt amounts to an enormous pile of money.
Unfortunately, this large pile of money doesnt seem to bother many people. Some dont worry
about it because it has little bearing on their daily lives, their communities and the people with
whom they work and serve. Others are overwhelmed by the shear size of the deficit and feel that
there is little that they can do about it. Still others think that the national debt is a Washington,
D.C. problem that will be fixed in the future. But to the career and technical education
community, the increasing national debt is an enormous problem... a problem that, if ignored,
has dire consequences for the future of career and technical education, CTE students and

My thoughts on this issue are that regardless of the feelings of the different sections of the
community, national debt affects every citizen of the nation concerned. Somebody may feel that
he/she is not directly affected by the debt that the nation is carrying, but he/she is affected
indirectly. Take for instance, if the government repays the debt at whatever time, what this
means is that one social program has been foregone, may be a bridge would have been
constructed with that money that has gone to pay for the debt.

There is yet another area that needs discussion in our subject of national debt management and
this is the area of government debt projections. It is a normal practice for a government to
project the amount of debt that it should incur in a given period. Such projections are based on
certain variables, eg.the average surplus on the current budget, or indeed the deficit on the
current budget. The projections also depend on the economic indicators at the time a government
is making some projections of the future national debt. It is important to mention here that there
are some uncertainties involved in making such projections. Riley, R. and Hurst, I. (2006)P.1
have argued that "since 1998, fiscal policy in the UK has been guided by two rules: the golden
rule to borrow over the economic cycle only to invest, such that the average annual surplus on
the public sector current budget as a share GDP is greater or equal to zero; and the sustainable


investment rule that public sector net debt should not exceed 40 per cent of GDP over the
economic cycle. The Treasury publishes forecasts of its fiscal target variables on a regular basis
in its budget and pre-budget reports. The uncertainty associated with evaluating fiscal policy
against the golden rule is twofold, in the sense that not only is there uncertainty with respect to
the future course of the target variable (the average surplus on the current budget), but there is
also uncertainty about the dating of the economic cycle and hence the period over which the
target variable should be measured."

Others have argued that debt is a positive phenomenon to a nation. Alen, T.J. (2000)P.1 has
argued that "for one, the debt helped make America the worlds financial hub. Because they are
risk free and in ample supply, Treasury bonds have attracted needed foreign capital while
becoming the global benchmark for pricing financial transactions".

Let me just discuss the above assertion that the debt made America to be the worlds financial
hub. This assertion should not be taken to be the gospel truth for all countries. Each country has
different prevailing economic conditions at any particular time. Because of the different
economic conditions prevailing at any particular time in a given country, national debt can have
various impacts on a nation. In addition to the above, we need to take into consideration the
different national debt management styles that prevail in various countries which will shape the
direction of the impact of the debt.

At this moment, I would like to look at yet another interesting issue in national debt
management. This is the issue of the actual paying off of the debt. There are so many things that
go with paying off the debt and one of them is the issue of interest. When money is borrowed, it
has to be repaid with interest. Depending on the prevailing interest rates, repaying the debt can
be such a taxing issue. Bergmann, R.B. (2001) P.2 has argued that "even if one were to accept
the "crowding out" theory of investment as gospel truth, it does not follow that paying down the
debt is necessarily a good idea. The public program we could finance with the surplus would
produce a healthier and more productive labor force and would therefore do far more to improve
the nations future economic condition than any increase in our capacity to produce still more
consumer goodies for the well off".

The subject of national debt management is an interesting one because so many arguments have
come up regarding this subject. One argument that is worthy noting is the one that says that
,,some debt is good. This argument states that borrowing to accomplish some social programs is
good because through debt, the economy will be efficient. Jenkins, K. Jr. (1997) P.1 has argued
that "many economists believe chronic surpluses can be almost as threatening as chronic debt,
since they take some purchasing power out of an economy and can cause recession. Because the
governments debt is financed mostly by American citizens who earn interest on their loans
(Treasury Bills) and because borrowing to pay for roads and infrastructure makes the economy
more efficient.... Economists say some debt is good."


My view on this argument is that while some debt may be good because it would improve
infrastructure, one of the most important issues is the management of this debt. A debt can be
obtained for a good reason, but if the personnel charged with the management of that debt has no
integrity, then the borrowed money will just be a waste. National debt management needs
people of high integrity who put national interest above personal gains.

The subject of national debt management has attracted attention to many scholars. Some of these
scholars are for the national debt while others are against the accumulation of national debt.
Buckley, F.W JR. (2000) P.1 contributing to the debate of national debt management, argued that
"if a country needs to borrow in order to sustain, or to magnify, the deficit incurred by its fiscal
practices, then it has to find someone who will lend it the money." The above implies that
borrowing in order to magnify the economy, is good and money has to be found from

At this point, I want to bring out the issue of ,,surplus budget. While ,,surplus budget is good, I
think this should be advocated for, with careful scrutiny. In most instances, surplus budgets are
achieved with the bulk of the money contributing to this ,,surplus budget coming from over
taxing the tax payers. I think that a budget surplus achieved in this manner will leave the
taxpayers more impoverished than they were. This argument has been supported by Buckley, F.
W.(2000) P.1 when he said "surveying the problem of debt reduction bit by bit. Suppose we
were talking about a $100 billion surplus and confronted the alternatives of applying it to debt
reduction, or returning the money to the taxpayer. Self �evidently, we are talking about the
overtaxed taxpayer, since that is why we have a surplus. Tax rates arent supposed to be
motivated by a desire to generate a surplus".

In our survey of national debt management, we continue looking at various arguments from
various scholars. Evans, M. (1999) P.1 argues that "now Bill Clinton says he is going to end the
entire national debt by 2015." From this, we can see that some members of society would like to
see the national debt disappear as evidenced by the above quotation. However, the above is a
wish and translating such a wish into reality is something else, as they say that it is easier said
than done. Of course we know that ending the deficit requires that the country records a surplus
budget. The question that comes to mind is that if a ,,surplus is achieved, does it necessarily
follow that this surplus is going to be used to pay off the debt. Others have questioned
government spending in times when a surplus is achieved. Glassman, K. J. (1997) P.1 pointed
out that "instead of a cause for rejoicing, an imminent budget surplus is deeply worrisome to
some Republicans. They see big government spending, not big deficits, as the real danger to the
economy. Without fear of a deficit to deter them, politicians will spend freely again."

As mentioned elsewhere, availability of information about national debt to citizens is important
If people do not have correct information about something, they will not appreciate even when
they are supposed to, or they will appreciate something when they are not supposed to. U.S.
News and world Report (1996) P.1 has pointed out that "its not what people dont know thats
dangerous; its what they do know that just isnt so. That old saying is especially apt when it


comes to economics and, in particular to government finances. In a recent poll by the
Washington Post and the Henry J. Kaiser Family Foundation, 70 percent of those surveyed
thought the Federal deficit was larger than five years ago, while 17 percent thought it had stayed
about the same. Only 12 percent picked the right answer. That the deficit has fallen.... From 4.7
percent of gross domestic product in fiscal 1991 to around 1.5 percent in 1996, the lowest level
in 22 years".


From the study of national debt management, I recommend the following:

National debt managers should be people of high integrity so that they manage the
public debt professionally.
Management controls in public debt management should be introduced so as to
provide checks and balances.
The public should be informed about the happenings in debt management. A well
informed citizen is a better citizen.
Risk analysis in debt management should be done with care to take into account all
issues that can make national debt management a success
Roles should be clearly spelt out between government financial institutions so that the
institution that deals with national debt management is clearly identifiable.


The subject of national debt management is of great concern and therefore there is need that all
interested parties are provided with the necessary information they need in order to make
constructive contributions to the subject.



Allen, T.J. (2000). Paying off the debt will have it's costs
U.S. News And World Report 128 No 7 27F 21

Browa, M. and Chambers, A. (2005). France considers Debt Management changes
Euro money 36 16D

Buckley JR, F: W. (2000). Reduce the debt?
National Review 52 no5 62 Mr 20

Bernanke, S.B. and Abel, B.A. (2001). Macroeconomics
Pearson Education, Inc, India

Bergmann, R.B. (2001). Debt and Taxes
American Prospect 12 no5 14 � 16 Mr. 12-26

Delusions about deficits and debt
U.S. News and World Report V121 P59 N496

Evans, M. (1999). Do we want Zero National Debt
Industry Week 248 no 14 72 J1 19

Glassmann, K.J. (1997). Time to Pay off the Debt
U.S. News and World Report V 123 P & 9 September 8

Harvey, J. (1998). Modern Economics
Pal grave, New York

10. Increased National Debt: Serious Implications for CTE
Techniques (Association for Career and Technical Education)
80 no 8 12 N/D 2005

11. Jenkins Jr, K. (1997). A quixotic drive to pay back the National Debt
U.S. News and World Report vv123 p61 Ag 11

Moynihan, D. and Titley, B. (2000). Economics.
A complete Course.
Oxford University Press. U.K.

13. Riley, R. and Hurst, I. (2006). The Uncertainty of Government Debt projections
National Institute Economic Review no 195 58-9 ja

14. The staffs of the International Monetary Fund and the World Bank, (2001).
Guidelines for Public Debt Management, March 21


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