Theoretical and practical aspects of government debt assessment in context of the EU member states
Journal Title: Ekonomika ir Vadyba: Aktualijos ir Perspektyvos - Year 2013, Vol 29, Issue 1
Abstract
The global economic recession, which spillovers are still spreading across the world affected many countries. Even though main economic indicators, such as GDP, unemployment rate, inflation, etc., show signs of recovery, the crisis emphasized problems of public sector finance. One of the most complicated situations developed in the European Union, where numerous countries are suffering from fiscal instability determined by huge public debt levels. Consequently, it led to unrest in the financial markets across the world. Credit is one the most relevant determinants of economic development. Governments play an important role in global credit markets. They distribute borrowed assets for social needs of the citizens, financing projects of strategic importance. Governmental credit combines all the credit forms and keeps financial system together. The main indicators that influence government borrowing can be defined as three determinants: budget deficit; re-lending assets to governmental institutions and enterprises; refinancing government debt. Despite all the positive effects of public borrowing, governments should evaluate countries potential of fulfilling financial obligations in the future carefully – debt levels must be sustainable. However, defining optimal and sustainable debt level is still a matter of research without unanimous opinion. Key words: government debt, debt crisis, economic recession, public sector borrowing.
Authors and Affiliations
Tadas Vaicekauskas , Evaldas Račickas
Keywords
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