12/31/2023 0 Comments Drawdown debt![]() Net debt is a commonly quoted measure of a government's financial position that takes account of some of the assets held by the government. Governments, as do individuals and businesses, hold assets that can be sold to meet financial obligations. While CGS on issue provides information on the most common form of government debt, it does not take account of amounts that are owed to the government by other parties. Commonwealth Government Securities on issue is a large component of the government's total liabilities, representing around 95 per cent of interest bearing liabilities (commonly referred to as gross debt). 1, details the market value of CGS on issue over the forward estimates. The government's balance sheet, presented in Budget Paper No. Measures such as Commonwealth Government Securities (CGS) on issue, net debt, net financial worth and net worth are aggregates that can be drawn from the balance sheet to provide an indication of the government's financial position at a point in time. The government's balance sheet reports the stock of all government assets and liabilities. The paper sets out a worked example of the costing of the interest savings generated by the sale of a financial asset. This paper examines the different concepts published in the budget papers that summarise the state of the balance sheet the concepts of the cost of servicing debt and the factors affecting those costs. The size and composition of the government's balance sheet will also change where the government issues debt in order to acquire financial assets, either for policy purposes as in the case of the NBN, or in order to maintain a liquid debt market as the basis for the pricing and management of interest rate risk through the broader economy. The consequence of a change in fiscal policy - as measured by a change in the fiscal and underlying cash balances - will be a change in the government's balance sheet as the government either finances budget deficits through the issuance of debt or the sale of financial assets or it invests budget surpluses in financial assets. ![]() The Charter defines these principles to include the maintenance of debt at prudent levels, though it also provides for fiscal policy to vary to moderate cyclical fluctuations in economic activity. The Charter requires that the government's fiscal strategy be based on principles of sound fiscal management. The Charter of Budget Honesty Act 1998 ('the Charter') provides the framework in which the government conducts and reports its fiscal policy. This paper briefly describes the concepts of debt and the cost of servicing debt that are reported in the budget papers. Understanding the relationship between the budget and the balance sheet, and the impact of debt on both, is critical in assessing fiscal sustainability.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |