Definition of Sovereign Debt



Sovereign debt is the amount a country’s government has borrowed. The sovereign debt can be issued internally or externally. There are international organizations that issue debt to outside governments for development and growth purposes. One of the external sources of external sovereign debt provider institutions is The World Bank.

 


The governments issue treasury bills that can be purchased by individual investors, the general public, and even banks. The interest rates offered on the treasury bills is less as the government backs these bills to pay them back. Some believe that sovereign debt is the aggregate of all the spending that is in access of funds raised.


View More Corporate Finance Definitions