The trouble associating to the raising and repayment of public loans is studied beneath this sub-division. Borrowing by the government from the public is termed as public debt. In current world, it is not possible for the government to convene all its expenditure via revenue. Therefore public revenue drops short of public expenditure. As a result, governments are forced to borrow from internal & external sources. In the situation of internal debt, Government borrows from the people, commercial banks and the central bank. Exterior debt comprises borrowing from international monetary institutions such as IMF and World Bank and as well from foreign countries. The soundness of the borrowing policy of the governments and sign of the healthy direction of spending are inspected under this sub-division.
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