2 Government loans

Authority — the power to borrow is conferred by law, usually on the finance ministry, with limits on the amount and the instruments. Appropriation and authorisation — borrowing, like spending, requires legislative authorisation; the budget and the finance act are the instruments. Terms — interest, maturity, currency and security; foreign borrowing adds exchange-rate and sovereign-risk dimensions. Disclosure — the state of the debt is reported to the legislature and, for external debt, to the lender.