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Pe5e chapter 16 v1.0
1.
2. • Define public debt
• Describe salient characteristics of the size, composition,
and nature of public debt in South Africa
• Explain and compare different theories of public debt and
evaluate them critically
• Argue the relative merits of debt and tax financing of
government expenditure
• Define public debt management
• Identify and describe the different types of public debt
cost
• Identify the goals of public debt management and discuss
their pursuance, with special reference to South Africa.
3. • Treasury bill
• Government bonds
• Zero-coupon bonds.
Public debt may be defined as the sum of all the outstanding financial
liabilities of the public sector in respect of which there is a primary legal
responsibility to repay the original amount borrowed (sometimes
called the principal of debt) and to pay interest (sometimes called debt
servicing).
4. Period Public debt (year-end) as % of
GDP, period average
1960 – 69 44.7
1970 – 79 39.7
1980 – 89 32.4
1990 – 94 41.1
1994 – 1999 49.0
2000 – 2004 40.9
2005 – 2009 29.0
2010* 33.5
* Preliminary figure Source: South African Reserve Bank, Quarterly Bulletin
5. • Debt trap
• Ownership distribution
• Current expenditure
• Capital expenditure
• Net worth
• Net indebtedness
• Consul.
6. • Inter-temporal burden
• Domestic or internal debt
• Foreign or external debt
• Internal vs external debt and the burden on future
generations
• Inter-temporal burden
• Fiscal neutrality and Ricardian equivalence
• Fiscal activism and Keynsian demand management
• The crowding-out phenomenon
• The public choice view.
