What is Internal Debt?
Internal debt can be defined as money borrowed by the government from inside the country. Sources for internal debts can include citizens, the country’s banks, the country’s financial institutions, business houses, etc. Internal debts are voluntary and/or compulsory in nature. Internal debts are mostly used by the government for the betterment of education and health within the country.
Key Takeaways from Internal Debts:
- Internal debts are the debts the government needs to borrow from internal sources to fund its operations.
- Internal debts are less complex as it does not undertake the concept of foreign currency.
Difference between External Debt and Internal Debt
As people and businesses sometimes need to borrow money to pay their expenses, the same goes for the government of any country. The government sometimes may need to borrow money from either inside the country or outside the country. The borrowed money is known as Debt, and the modes of borrowing money can be classified into two categories – External Debt and Internal Debt. External Debt can be defined as money borrowed from outside the country, and Internal Debt can be defined as money borrowed from inside the country.