Public Sector Borrowing

Abstract

Public sector borrowing is the difference between the total receipts of central government, local authorities and public enterprises, considered in aggregate, and their total expenditure. As such it is somewhat broader in coverage than the public sector financial balance or the Federal deficit in the US which largely, though not entirely, exclude financing items. It thus encompasses the issue of short and long-dated securities not only to finance government expenditure of the conventional kind on goods and services and transfers, but also to fund investment projects carried out by public enterprises, which might yield attractive commercial rates of return. It also includes purely financial transactions such as lending to the private sector or purchases of assets, typically treated as ‘below-the-line’ items and as part of the Credit Budget in the US.

This chapter was originally published in The New Palgrave: A Dictionary of Economics, 1st edition, 1987. Edited by John Eatwell, Murray Milgate and Peter Newman