Indebtness: Interest payment and public debt
(2012) The Return of the deficit — ISBN: [978-90-5867-923-9], published
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- Authors
- Abstract
- (en) Belgium’s public debt steadily fell from 1993 to 2007. Unfortunately, the financial crisis erupted and led to an increase in the debt-to-GDP ratio from 2008. Nowadays, both academic literature and public debt managers pay attention not only to the public debt level but also to its composition. Actually, a large strand of literature has been devoted to the public debt structure. Nevertheless, as these theoretical models cannot easily be implemented, modern Debt Agencies are mainly based on operational goals aiming at minimising the financing cost of the debt within the framework of appropriate risk management. Moreover, recent trends in the type of public debt instruments issued by several OECD countries, namely the issue of very long term bonds or of inflation- linked bonds, showed that the need of some investors may also influence the public debt structure. Belgium indeed participated in this trend with the issue of very long term nominal bonds. Finally, from the point of view of the interest rates paid on the debt instruments which make up Belgium’s public debt, it is important to bear in mind that the launch of the euro was a very significant event which took place just before the period under review in this book. Public debt ownership,the implicit interest rate and the spread against the German benchmark were markedly influenced by this major change.
- Affiliations
Louvain School of Management Accounting & Finance Louvain School of Management Accounting & Finance Louvain School of Management Accounting & Finance
Citations
Gilson, N., & Deboutte, J. (2012). Indebtness: Interest payment and public debt. In Etienne de Calattaÿ & Françoise Thys-Clément (ed.), The Return of the deficit. Leuven University Press. https://hdl.handle.net/2078.5/202725