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.
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. Th ...
.
Poland
Poland, officially the Republic of Poland, , is a country in Central Europe. Poland is divided into Voivodeships of Poland, sixteen voivodeships and is the fifth most populous member state of the European Union (EU), with over 38 mill ...
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 princip ...
limit on public debt, set at 60% of
GDP; 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 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 o ...
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 Australian Greens, commonly known as The Greens, are a confederation of Green state and territory political parties in Australia. As of the 2022 federal election, the Greens are the third largest political party in Australia by vote and ...
, 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 ...
.
See also
* Natural borrowing limit
References
{{Gov-stub
Government debt