Find out what's the difference between deficit and debt and where Australia stands in comparison to other European countries.
BUDGET DEFICIT
A federal budget deficit is the amount the government borrows each year.
An accumulated governmental deficit over several years, or decades, is referred to as the government debt.
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Government debt is usually financed by borrowing.
If a government's debt is denominated in its own currency it can print new currency to pay debts. Monetising debts, however, can cause rapid inflation if done on a large scale. Governments can also sell assets to pay off debt.
Most governments finance their debts by issuing long-term government bonds or shorter term notes and bills.
Greece: -10.70 per cent of GDP (2010)
Portugal: -8.30 per cent of GDP (2010)
Spain: -9.80 per cent of GDP (2010)
Ireland: -12 per cent of GDP (2010)
Italy: -4.30 per cent of GDP (2010)
Australia: -4.9 per cent (2009)
GOVERNMENT DEBT
Governemnt debt, known also as public debt, is money owed by any level of government; either central government, federal government or local government.
As the government draws its income from much of the population, government debt is an indirect debt of the taxpayers.
Government debt can be categorised as internal debt, owed to lenders within the country, and external debt, owed to foreign lenders.
Governments usually borrow by issuing securities, government bonds and bills. Less creditworthy countries sometimes borrow directly from supranational institutions.
Greece: 125,70 per cent (2010)
Portugal: 86,20% (2010)
Spain: 66,10 % (2010)
Ireland: 79,80% (2010)
Italy: 121,40 % (2010)
Australia: 18.6 per cent (2009)
