Question 13

Does the Executive’s Budget Proposal or any supporting budget documentation present three estimates related to government borrowing and debt: the amount of net new borrowing required during the budget year; the total debt outstanding at the end of the budget year; and interest payments on the debt for the budget year?
 * a. Yes, all three estimates related to government borrowing and debt are presented
 * b. Yes, two of the three estimates related to government borrowing and debt are presented.
 * c. Yes, one of the three estimates related to government borrowing and debt are presented.
 * d. No, none of the three estimates related to government borrowing and debt are not presented.
 * e. Not applicable/other (please comment).

Guidelines
Question 13 asks about three key estimates related to borrowing and debt that the budget should include:
 * the amount of net new borrowing required during the budget year;
 * the central government’s total debt burden at the end of the budget year; and
 * the interest payments on the outstanding debt for the budget year.

Debt is the accumulated amount of money that the government borrows. The government can borrow from its citizens and banks and businesses within the country (domestic debt) or from creditors outside the country (external debt). External debt is typically owed to private commercial banks, other governments, or international financial institutions such as the World Bank and the IMF.

Net new borrowing is the additional amount of new borrowing that is required for the budget year to finance expenditures in the budget that exceed available revenues. Net new borrowing adds to the accumulated debt. It is distinct from gross borrowing, which also includes borrowing needed to repay existing debt that matured during the budget year; debt that is replaced (or rolled over) does not add to the total of accumulated debt. For the purposes of this question, the deficit may be accepted as a proxy for net new borrowing.

Interest payments on the debt (or debt service costs) are typically made at regular intervals, and these payments must be made on a timely basis in order to avoid defaulting on the debt obligation. Interest payments are separate from the repayment of principal, which occurs only when the loan has matured and must be paid back in full.

To answer “a,” the Executive’s Budget Proposal or its supporting documentation must present all three estimates of borrowing and debt. For a “b” answer, the Executive’s Budget Proposal or its supporting documentation must present two of those three estimates. For a “c” answer, the Executive’s Budget Proposal or its supporting documentation must present one of the three estimates. Answer “d” applies no information on borrowing and debt is presented for the budget year.

1) Can we use a deficit figure as a proxy for net new borrowing?
Yes, we can use a deficit figure as a proxy for net new borrowing as long as there is an item named “deficit”.

2) What counts as total debt outstanding?
In Croatia in OBS 2019, there was a graph providing details on the total debt outstanding at the end of the budget year (see Grafikon 1: Javni dug u razdoblju 2015. – 2021. on the last page of the document). According to the researcher, the debt of central, local, and regional units was included in this figure. She originally did not count this figure as a figure for the total debt outstanding at the end of the year because it did not disaggregate central government debt. However, we do accept this as a figure for total debt outstanding, as the inclusion of the debt of local and regional units in this figure would actually give us a better picture of the country’s debt burden, and moreover it is unclear from the graph itself whether the debt of local and regional units was included in this figure (it is simply titled “Debt”).