Where does a country gets money to fund its deficit?
In: Economics
Countries sell bonds that guarantee a return in value after a specific period (typically 10 to 30 years). The bonds cannot be cashed early. The interest rate they pay is typically very low (assuming you’re in good economic standing), but it is pretty much guaranteed, and is thus, a safe investment for at least some portion of a large portfolios funds.
Quite often, investors will buy back more bonds as their bonds mature. This more or less would be an interest payment on the debt from the countries point of view.
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