Budget Deficits
When spending on public services such as health and education
exceeds revenue (mostly taxes), governments borrow to cover
the shortfall.
Infrastructure Investment
Large-scale projects such as railways and power plants have
high upfront costs but generate long-term economic growth.
Borrowing spreads these costs over many years.
Economic Stabilization
During recessions or unexpected events such as pandemics or
natural disasters, tax revenues may decline. Governments borrow
to increase spending and stabilize the economy.
Managing Cash Flow & Debt Service
Governments may borrow to manage temporary revenue shortfalls
during the fiscal year, as well as to refinance or prefinance
existing debt obligations.
