An essential attribute of the State is the provision of services necessary for the well-being of the population (education, road, hospital and energy infrastructures, etc.) and the stabilization of the economy to limit imbalances (e.g. high unemployment, high inflation).
To finance its expenditures, the State has a first resource: revenues (taxes, VAT, indirect taxes, etc.). However, they are almost never sufficient to fully finance its expenditures. Thus, the State very often resorts to the <<debt>>, known as <<public or State debt.
Public debt represents all the commitments of a State (central and local governments and various organizations); it is the total amount of loans issued (or guaranteed) by the State in the form of bonds on the financial markets and in return for interest payments at future dates.
It can be financed by economic agents not resident in the State and is referred to as <<external debt>> or by economic agents resident in the State and is referred to as <<internal or domestic debt>>.
The State's creditors can be public such as the World Bank, the International Monetary Fund, the African Development Bank, the Central Banks, etc.... The State can also finance itself from private investors (Banks and investment funds) or from other States.
Example: In Benin, the outstanding public debt in the 1st quarter of 2020 amounts to 3857.97 billion FCFA (6.92 billion USD), or 43.92% of GDP. It includes CFAF 2161.84 billion (USD 3.88 billion) in debt denominated in foreign currency - i.e. 24.61% of GDP and CFAF 1696.13 billion (USD 3.04 billion) in debt denominated in local currency - i.e. 19.31% of GDP (Source: Caisse Autonome d'Amortissement (CAA), Benin).
CJEA