What is the debt target?

Taking into account that the debt is a mandatory payment commitment between two entities (which can be the Public administration or a natural or legal person) the objective of debt is a type of financing that consists of borrowing money through the issuance of a series of financial instruments in the form of debt. That is to say, "placing" the debt between the different investors offering a yield determined by the possession of said titles.

Investors will be able to acquire public debt(debts maintained by the Public Administration with national or international investors) or private debt (debts maintained by natural or legal persons that do not belong to the State) through a financial intermediary.

What is the purpose of the debt target?

Regardless of whether public or private debt is acquired, what seems clear is that any financial entity that decides to place this type of debt is really looking to finance itself to face its payments and the investment projects it has in the future.

If we are dealing with a financial institution of a public nature, its objective will be to safeguard the social welfare system; that is, paying for the goods and services of certain Suppliers in order to improve the public services of the citizens of a State. As soon as the debt objectives and budget stability objectives are approved, the Ministry of Finance and Public Administration is in charge of formulating the public debt objectives and the individual budget stability objectives for each of the Autonomous Communities.

If, on the contrary, we are talking about a private natural or legal person, the main purpose of its debt objective will be to meet the most immediate payment commitments, as well as to make the necessary investments to continue growing in the future.

Leave a Comment