The public debt : growth, debt financing and implications

Abstract

Public Debt is created through government borrowing from corporations, institutions and other governments. The main objectives of this study are to analyse the growth, debt financing and its consequences on the Maltese economy. The study is divided as follows. Chapters 1 and 2 give a theoretical background as to what constitutes government expenditure and economic growth, the desirability or otherwise of the public debt, aspects of debt management, justification as well as sustainability and fiscal rules of public debt. The local scene will be examined in chapter 3. A situational analysis for a period of thirty years will be carried out wherein the growth of public debt will be analysed on the major components of the Maltese economy. Apart from examining what this debt has been financing in terms of capital and recurrent expenditure, the emergence of debt as a principal method of debt financing in Malta especially during the late 1980s will also be discussed.