Hi! I was looking up the statistics about the national debt of my country and the negative implications thereof. I assumed it must be owed to other countries. Pertinently, every major economy I came across has a very high national debt, including the developed countries. Who is this national debt owed to? If it’s owed to each other, why is that a major problem? If it’s owed to the citizens of it’s own country, why is that a major problem?
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Most countries owe the money to their citizens or corporations owned by their citizens. In some cases, the loans are mandatory, usually presented as a retirement fund or pension scheme.
Otherwise, they sell things called treasury bonds, which anyone can buy. Though they often only allow a portion to be sold to people in other countries.
Countries also provide loans. Some countries lend more than they borrow. Rather than having to spend money servicing debt they get paid money. For example, Singapore is a net creditor, and in the publicly reported budget incoming money from interest is in the list along side income taxes and such as where the government gets its money.
These loans may be something like a negotiated thing between the leaders, or it might be them just buying treasury bonds like everyone else.
Finally, there are stuff like the International Monetary Fund. That’s an international organization to act like a big bank countries can borrow money. Countries become members and pay what amounts to be a subscription, and the IMF also makes money on the loans it gives out like a bank.
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