Question

What is the role and importance of debt in an economy?

Answer 1

The debt market allows governments to raise money to finance the government's development activities. It plays an important part in efficient economic mobilization and resource allocation.
Since government securities are issued to meet the government's short-term and long-term financial needs, they have emerged as key instruments for internal debt management, monetary management, and short-term liquidity management, not only as instruments for debt raising.

The debt market also provides greater funding opportunities for projects in the public and private sectors, and reduces the pressure on institutional funding. It also strengthens capital mobilization by releasing illiquid retail assets such as gold.