A debt limit or debt ceiling is a legislative mechanism restricting the total amount that a country can borrow or how much debt it can be permitted to take on. Several countries have debt limitation restrictions.
Description
A debt limit is a legislative mechanism restricting the total amount that a country can borrow or how much debt it can be permitted to take on. Usually this is measured as percentage of
GDP
Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is ofte ...
.
Use
Several countries have debt limitation laws in place, including the
United States debt ceiling
The United States debt ceiling or debt limit is a legislative limit on the amount of national debt that can be incurred by the U.S. Treasury, thus limiting how much money the federal government may pay on the debt they already borrowed. The ...
.
Poland
Poland, officially the Republic of Poland, is a country in Central Europe. It is divided into 16 administrative provinces called voivodeships, covering an area of . Poland has a population of over 38 million and is the fifth-most populou ...
is the only nation with a
constitutional
A constitution is the aggregate of fundamental principles or established precedents that constitute the legal basis of a polity, organisation or other type of entity and commonly determine how that entity is to be governed.
When these prin ...
limit on public debt, set at 60% of
GDP
Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is ofte ...
; by law, a budget cannot pass with a breach in place.
Between 2007 and 2013,
Australia had debt ceiling, which limited how much the Australian government could borrow. The debt ceiling was contained in section 5(1) of the ''Commonwealth Inscribed Stock Act 1911'' until its repeal on 10 December 2013. The statutory limit was created in 2007 by the
Rudd Government
Rudd Government may refer to the following Australian governments:
* Rudd government (2007–10)
Rudd Government may refer to the following Australian governments:
* Rudd government (2007–10)
* Rudd government (2013)
{{Dab ...
* Rudd gov ...
and set at $75 billion. It was increased in 2009 to $200 billion, $250 billion in 2011 and $300 billion in May 2012. In November 2013,
Treasurer
A treasurer is the person responsible for running the treasury of an organization. The significant core functions of a corporate treasurer include cash and liquidity management, risk management, and corporate finance.
Government
The treasury ...
Joe Hockey requested Parliament's approval for an increase in the debt limit from $300 billion to $500 billion, saying that the limit will be exhausted by mid-December 2013.
The Age, 14 November 2013.
/ref> With the support of the Australian Greens, the Abbott Government repealed the debt ceiling over the opposition of the Australian Labor Party
The Australian Labor Party (ALP), also simply known as Labor, is the major centre-left political party in Australia, one of two major parties in Australian politics, along with the centre-right Liberal Party of Australia. The party forms t ...
.
See also
* Natural borrowing limit
A borrowing limit is the amount of money that individuals could borrow from other individuals, firms, banks or governments.
There are many types of borrowing limits, and a natural borrowing limit is one specific type of borrowing limit among those. ...
References
{{Gov-stub
Government debt