Theory question 105
Public FinanceSection B: answer three questions only from this section.
(a) Explain the term national debt
(b) State any four instruments of government borrowing in Nigeria.
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(a) National (public) debt is the total amount a government owes to lenders at home and abroad
It arises when government borrows to finance a budget deficit or development projects
Internal debt is owed to citizens and institutions in the country; external debt is owed to foreign governments, institutions or lenders
(b) Any four instruments: Treasury bills
Treasury certificates
Development stocks / government bonds
Ways and means advances from the Central Bank
Loans from foreign governments and international institutions (e.g. World Bank, IMF)
Savings certificates / premium bonds
Define national debt clearly, then list four named instruments.