Sovereign Debt refers to the debt that is issued by a national government. This debt is usually in the form of bonds that are sold to investors, both domestic and foreign, as a way for governments to raise money to finance their operations and public projects. The debt is usually denominated in the country's own currency, and the government is responsible for repaying the debt, with interest, over a specified period of time.Governments typically issue sovereign debt to finance deficits in their budgets, to fund public projects such as infrastructure, or to stimulate economic growth. The amount of debt a government can issue is not unlimited and is often constrained by the country's ability to generate revenue and by the creditworthiness of the country.Sovereign debt can also be categorized as internal or external debt, depending on whether the debt is held by domestic or foreign investors. In addition, sovereign debt can be classified as long-term or short-term debt, depending on the maturity of the debt.Sovereign debt can be a useful tool for governments to fund their operations and stimulate economic growth, but it can also pose significant risks if not managed properly. High levels of sovereign debt can lead to fiscal crises and affect the country's ability to borrow in the future.
