[PDF] Government debt reduction strategies in the euro area

How much debt is held by the public?

Debt held by the public grew from 79.2 percent of Gross Domestic Product (GDP) at the end of 2019 to 100.1 per- cent of GDP at the end of 2020. The deficit is estimated to increase to $3,669 billion in 2021, and then to fall to $1,837 billion in 2022.

What is the effect of debt held by government accounts?

The effect of debt held by Government accounts on the total debt subject to limit can be seen in the second part of Table 4–2. The change in debt held by Government accounts is equal to 5 percent of the estimated total 2021 increase in debt subject to limit. The Budget is composed of two groups of funds, Federal funds and trust funds.

Is debt issued by the government a current transaction?

Issuing debt to a Government account is not a current transaction of the Government with the public; it is not financed by private savings and does not compete with the private sector for available funds in the credit market.

What determines the path of the debt?

The following formulas related to debt dynamics are based on the assumption that changes in liabilities are the result of above-the-line budgetary operations. This means that the debt path is determined by the path of overall fiscal balances (or primary balances and interest bill).