The debt of a country’s government. This may be owed to residents (internal debt) or foreign lenders (external debt). If national debt is held by foreigners, the whole of the interest and redemption payments are claims on national resources. Where the debt is held domestically, the real burden of debt is only the deadweight losses due to the taxes needed to service it. The government budget deficit is the difference between receipts and expenditures in a given year, and is equal to the increase in national debt.