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Public loans, their types and their relationship to money

 In our new economic world, public loans have become important and have many laws and conditions. They delved deeper into the world of finance and economics, and won a total demand from all parts of the world.


Public loans

 
Public loans mean the funds that the state intercepts from individuals, national and foreign private bodies, or international bodies.
Public loans are exceptional sources, and it is not permissible to resort to them except in the narrowest limits. Public loans are expressed according to thought
The current traditional and also expresses public loans that are used as an economic tool in order to revitalize the
Actual demand and cyclical reduction (in Keynesian theory) loans are relied upon in order to finance investments
The economic and social plan according to the policies of the backward country.
Standard of freedom in
For several criteria, the most important of which are the criteria for the scope of the loan, the criterion for the duration and timing of the loan, and also
Public loans are classified accordingly
Underwriting a loan, and it is classified into optional and obligatory loans in the criterion for underwriting loans. As for the criterion of the scope of the loan, it is classified
Into permanent and temporary loans, and general loans are classified
Into internal and external loans, and in the criterion of timing of the loan, it is also classified
Into short-term, medium-term and long-term loans, and that the element of choice is that
For standard loan term as well
According
It distinguishes voluntary public loans from taxes, and one of the most important reasons for the state to resort to compulsory loans
They are: the lack of public confidence in the financial capacity of the state and the state’s desire to withdraw part of the income of individuals with the intention of total demand.
The loans are divided into two parts: internal loans and external loans.
It means internal loans that are issued in the internal market and are subscribed in the national currency, as for foreign loans
It is the one that is issued outside the state’s territory and is subscribed in foreign currency, and one of the factors of the state’s resort to it is insufficient savings
In order to finance the state's economic and social projects, and the desire to remedy the imbalance in the balance of payments
The difference between external and internal loans is in several respects, as we find that external loans lead to an increase in purchasing power
The college in the country assumed by the amount of the loan value and is also a burden on the total national wealth of the borrowing country and stirring up
The risk of interference by creditor foreign countries in the internal affairs of debtor countries.
There are two types of loans: permanent loans and temporary loans.
One of the advantages of life-long loans is that it leaves the government free to choose the right time for repayment. The advantages of temporary loans are that they are
One of the disadvantages of temporary loans is that they are imposed on the state
It reduces the state's indebtedness ... and just as they have advantages, they also have disadvantages
Paying them in the period stipulated in the loan and the disadvantage of permanent loans are that they tempt successive governments not to pay,
Short-term loans are referred to as floating, floating and advancing loans, while fixed loans are called by the term
Medium and long-term loans. Short-term loans are loans with a maximum term of two years and loans
For short-term loans, they are notes
Long-term loans with a term exceeding ten years, and one of the most obvious examples
Cabinet.
The state resorts to issuing a short-term loan, and if financial conditions improve during the term of this loan, it will issue the loan the loan
Medium or long term This process is called debt stabilization.
Issuing public loans: "It is the process by which the state obtains the money that lenders subscribe to in exchange for its commitment to pay interest.
Terms of the loan contract “Public loans are usually issued in accordance with the law.
The loan amount will be refunded accordingly
The process of issuing public loans requires addressing several issues, the most important of which are: Determining the amount of the loan, determining the shape of the loan bonds, and the plinth
For the amount of the loan
The method by which the bonds are offered for subscription and the merits of the loan. Public loans are divided accordingly
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It refers to fixed-value and unlimited-value loans, and the public loan is of fixed value if the state sets a limit
Reasons why the state resorted to indefinite loans, including: Fearing that confidence in its financial ability would be undermined
Borrow it. There, too
And if her need for money continues ..
;
There are forms of public loan bonds, including nominal bonds, bearer bonds, and mixed bonds, and there is also a definition for them.
Nominal bonds: are bonds in which the name of their owner is indicated. As for bearer bonds: they are bonds in which the name of their owner is not entered.
The holder of the bond is considered its owner, and for mixed bonds, these bonds are nominal in relation to the amount subscribed for and for the bearer.
As for receiving its interest ... Subscription to public loan bonds is done by following the methods which are public subscription, sale to banks and sale
In the stock market, there are advantages of the (public offering) method as one of the methods of underwriting public loan bonds, including: Availability
The state is responsible for the sums that banks obtain if the state turns to it to exchange bonds and leads to the state imposing its supervision
The process of issuing public loans and allowing the state to treat small savers excellent treatment is one of the flaws in the public offering method
As one of the methods of underwriting public loan bonds, including: The risk of not covering the entire loan.
Among the advantages of the method of selling to banks, as one of the methods of subscribing to public loan bonds: The state immediately gets a value
The loan you need, included covering the entire assignment.
As for its shortcomings: the state is deprived of the amount of commission charged by the bank.
Among the advantages of the method of selling in the stock market as one of the methods of underwriting public loan bonds: simplicity and ease of
Scientifically, enabling the state to seize the opportunity of high bond prices to sell loan bonds.
As for its disadvantages: This method can only be used in non-large public loans.

Among the most important advantages that the state provides to the public to encourage them to subscribe to its loans: The loan interest is close to the interest prevailing in
Financial market, issuance of bonds without the breakeven price, payment bonuses and share prizes, exemption from taxes, acceptance of bonds in
Paying some taxes, the inability of bonds to be seized, preserving the value of the subscribed capital.
The most important points that the state takes into account in determining the interest rate of the loan: financial market conditions, the amount of confidence in the state, the value of the loan
And term; other benefits of the loan.
The nominal interest rate means: the ratio of the annual interest amount paid by the state to the nominal value of the bond.
The real interest rate means: the ratio of the annual interest amount paid by the state to the amount of capital obtained by the state
Actually from the lender.
When comparing the nominal interest rate with the real interest rate: they are equal if the country sells its bonds at the breakeven rate.

Advantages of issuing bonds 
without the breakeven rate:


 Encouraging the public to underwrite the lender, allowing low interest rates to be given.
As for its disadvantages: the state bears a large financial burden when the loan is due.
Repayment bonuses mean: the amounts paid to subscribers upon payment that are in excess of the face value for which they subscribed.
The meaning of the lottery prizes: the amounts that are given by lot to some of the holders of the bonds.
One of the disadvantages of lottery prizes: It spreads gambling, does not succeed in attracting major creditors.
What is meant by tax exemption: an increase in the real rate of interest over its nominal rate.
Among the disadvantages of applying tax exemptions to public bonds: the state is deprived of the tax revenue that could come from this.
Bonds are inconsistent with the principle of fairness or equality in distributing tax burdens on all citizens.
Among the disadvantages of the method of accepting bonds in paying some taxes: They reduce the monetary proceeds of taxes, and lead to depreciation
The public loan prematurely.
The advantages of public loans depend in their nature and number on the international center, as: The stronger the financial position we all, the less these benefits.
One of the methods used by the state during periods of inflation in order to pledge to preserve the value of the subscribed capital is to give back a value
On the date of subscription, the value of the loan is linked to the value of a foreign currency that is relatively stable, the value of the loan is linked
The loan is equivalent to gold
Price Index Numbers.
Among the restrictions set by tax legislation in order to pay some taxes with public bonds:
Bonds being limited to paying a specific type of taxes, specifying the amount that may be paid with bonds, requiring the elapse of a certain period
That the bond owner possesses it so that it is permissible for him to use it in settling the tax debt.
The replacement of the public loan means: the replacement of a new low-interest public loan with an old, high-interest public loan.
Among the forms of loan exchange:
, (
Parity switching (the simplest and most common form
Parallel switching, switching with differential push.
Among the conditions for a successful loan exchange process:
The need for confidence in the state, for there to be a general decrease in the interest rate from the rate extended in the loan, and for the period not to be
The proposed switch is long so that the financial market conditions do not change during it.
What is meant by switching on parity: the state is choosing bondholders between paying their face value and receiving bonds from the new debt
With the same face value, but with less interest.
To market value with the pledge
What is meant by the exchange without equivalence: the state resorts to replacing the first loan with the bonds of the second, according to
Refund of face value.
Its market value should be
What is meant by the exchange with the payment of a difference: the state resorts to replacing the first loan with the bonds of the second loan, in accordance with
The exchanger pays the difference between the two values ​​to the state.
One of the consequences of applying the switch-on parity method: a reduction in the debt service burden represented by the payment of its interest with survival
The size of the debt remains unchanged.
Among the consequences of applying the method of unequal exchange: the state increases the size of its public debt in exchange for a decrease in annual interest
That you pay.
Among the consequences of applying the method of exchange with the payment of the difference: The state obtains additional funds, i.e., does not reduce the debt burden.
And in the event of its bankruptcy or in
It is meant by denying the public debt: the state stops paying the interest owed to it from the debt, its principal, or both together
Completely following the collapse of her criticism as a result
In the event of revolutions and civil wars ... which is a method used by the state to get rid of its debts
Expansion in the new monetary issue and as a result of rapid inflation.
Amortization of public debt means meeting the value of loans and repaying them to subscribers.
Some forms of public loan depreciation: compulsory depreciation, in the case of temporary loans, and voluntary depreciation in the case of
Life Loans.
Among the most important methods used by the state in order to consume public loans: using budget savings, allocating proceeds
Some public revenues, depreciation using compound interest method, an exceptional capital tax, compulsory loan contract, fixation
Short-term debt, amortization of public loans by reducing the value of money.
Among the methods of amortization of public loans: consumption in one go, depreciation in fixed annual installments, depreciation by lot,
Depreciation by purchasing from the stock market.
.
The one-off depreciation method is used if the overall loan amount is small
In the method of depreciation in specific secondary installments, the state pays annual installments to subscribers. One installment includes: a part of
Capital and annual interest.
The effect of public loans on the overall economic activity depends on the source of these loans, as it is possible to distinguish between the source

To: Borrowing from Individuals - Borrowing from Financial Institutions.


With regard to borrowing from individuals' money:
Borrowing from individuals hoarded money》》 Expanding the circle of economic activity.
Borrowing from individuals ’money invested in private investments》 The occurrence of deflationary effects on private investment.
Among the disadvantages of the method of allocating the proceeds of some public revenues: lack of confidence in the finances of the state and its capabilities to pay in
In the future, the government's hand in adjusting taxes according to the needs of the national economy.
Among the disadvantages of the compound interest method of depreciation: Buying public bonds without writing them off does not reduce the burden of loans
And the burden of its interest, the state’s going to the market to buy public bonds leads to higher prices, which constitutes a burden on the public budget.
The effects of public loans on consumption and savings. The issuance of public loans in periods of crisis leads to an increase in the tendency
To save, in periods of inflation it increases propensity to consume.
The effect of public loans in redistributing the national income depends on several things, the most important of which are: The source of financing the interest of the loan, the entity that
You get interest, technical regulation of the public loan.
With regard to the effect of public loans in redistributing national income, we find that these loans lead to an increase in the inequality between
Social classes in the case: the interest of the loan is financed by a tax system based on proportional taxes, if they are a majority
Public loan bonds are owned by the rich, if public loan bonds are issued at a high value.
According to the opinion of traditional financial thought (it is considered the most suitable for different countries with regard to resorting to public loans): the public loan
It is nothing but a deferred tax, and it is an immaterial resource that cannot be resorted to except to cover extraordinary expenses and expenses raised
National productivity.
As for modern financial thinking: the public loan is not just a deferred tax, but rather a real source of public revenue.
According to Keynesian financial thought: public loans are a tool of fiscal policy and work to achieve full employment.
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