Most of the national needs are financed from the funds received by the state in the form of mandatory payments and taxes. In conditions when government revenues are sharply reduced, there is a need to cover their expenses with financial resources received from other sources. Thus, public debt is formed, which means the totality of credit relations between the borrower (state) and creditors (legal entities or individuals). In the field of public relations, the state can be both a borrower and a creditor at the same time.
Currently, there are such types of government debt of the Russian Federation as internal and external. It should be noted that in Russia such a separation has a slightly different approach than in other countries. According to the law of the Russian Federation “On the State Internal Debt of the Russian Federation”, which was adopted in 1992, the division of state debt into external and internal is carried out according to the currency criterion. Consequently, all Russian borrowings are divided into external and internal, in view of the currency of liabilities arising. Simply put, domestic government debt is ruble debt, and foreign debt is foreign currency debt. In world practice, domestic public debt is defined as the debt of the state to its population. Based on the same world practice, forms of state domestic debt can be such as loans received by the government , government loans through securities, budget loans and budget loans, as well as some other debt obligations.
Internal debt liabilities can be conditionally divided into market (existing in the form of equity securities) and non-market (formed as a result of the performance of the federal debt and issued to repay the resulting debt).
Domestic public debt carries much less danger than domestic public debt. There is no leakage of services and goods during its repayment, although at the same time it is almost impossible to do without certain changes in economic life, which in most cases have very significant consequences. And the higher the domestic public debt, the greater the negative consequences. For example, the payment of interest on debt leads to income inequality, since the largest part of government obligations is concentrated in the wealthiest part of the population. As a result, repayment of domestic debt leads to the fact that money received from the least protected strata of the population is moving to more wealthy ones. As a result, those who own bonds are enriched even more.
Internal public debt, in comparison with external, is much less, therefore, the transformation of the latter into the former has been observed recently. External government debt is repaid from those funds that are borrowed in the domestic market. In this regard, since 2002, the state began to increase the volume of domestic public debt. It should be noted that this substitution is still ongoing.
Domestic public debt is not only the positive, or only the negative side of the economy. Based on the current state of the economy, it most likely takes a neutral position. It is hardly worth expecting that in a few years there will be no need for domestic public debt, but trying to minimize its volume is a direct responsibility of the state.