Public debt, also known as government debt or sovereign debt, refers to the financial liabilities of the government sector. It is the total amount of outstanding borrowing by a government accumulated over its history. Public debt can be raised both externally and internally, where external debt is the debt owed to lenders outside the country and internal debt represents the governments obligations to domestic lenders. Public debt is typically measured as the gross debt of the general government sector that is in the form of liabilities that are debt instruments, such as debt securities (such as bonds and bills), loans, and government employee pension obligations.

The ability of a government to issue debt has been central to state formation and to state building. Public debt has been linked to the rise of democracy, private financial markets, and modern economic growth. Public debt can be used to finance public spending and fill holes in the budget. However, the level of public debt varies from country to country, from less than 10 percent of the gross national product (GNP) to more than double the GNP.

It is important to note that public debt is different from private debt, which consists of the obligations of individuals, business firms, and nongovernmental organizations. Public debt is an obligation of a government. When a government borrows money, it is charged interest for the use of lenders money, in the same way that lenders charge an individual interest for a car loan or mortgage. The amount of interest the government pays depends on the total national debt and the various securities interest rates.

In the United States, the national debt is the total amount of outstanding borrowing by the U.S. Federal Government accumulated over the nations history. The Debt Held by the Public is all federal debt held by individuals, corporations, state or local governments, Federal Reserve Banks, foreign governments, and other entities outside the United States Government less Federal Financing Bank securities. The Public Debt Subject to Limit is the maximum amount of money the Government is allowed to borrow without receiving additional authority from Congress.

In summary, public debt is the financial liabilities of the government sector, and it can be raised both externally and internally. Public debt is used to finance public spending and fill holes in the budget. The level of public debt varies from country to country, and it is different from private debt.