Government Debt Management

Introduction To Government Debt Management

With the second wave of the global recession starting to effect economies world wide, and many financial institutions and governments still reeling from the first round, government debt management has become a hot topic. How does the government manage its debt, who is keeping an eye on the parliamentarians and how does this sort of thing impact on the general public?

Who Looks After The Money

The UK Debt Management Office (DMO), was established on 1 April 1998, and took over from the Bank of England. This is the government arm that is meant to minimise financial costs, taking account of risk, and managing the cash needs of the Government. The Cabinet minister who is responsible for all economic and financial matters, is the Chancellor of the Exchequer. He makes the monetary and fiscal policies, and once a year he delivers the budget to the nation, and then the Chief Executive handles the day to day expenses and petty cash issues.

So What’s The Plan In The UK?

The people losing out the most, due to unchecked spending and government management of its debts and loans, according to the 2010 budget delivered by Chancellor George Osborn, are families, public sector workers and those on housing and disability benefits.

A 2 year pay freeze for the public sector workers earning more then L21,000 will be implemented, and the lowest earners will get only a L250.00 flat increase.

Families earning less than L50 000 per year used to be able to claim child benefits, now this is only applicable to families earning less than L40 000 per year, and will be frozen for 3 years. Housing benefits are to be restricted to L400.00 per week.

There are a wide variety of decisions the government made not to impact on peoples lives too much, like withholding the planned 10p tax increase for cider, and not putting any increase on tobacco and fuel.

The average family will benefit, to the tune of approximately L170.00 per year due to the personal tax allowance being raised by L1000.00 a year.

How Does This Affect You?

With credit being extremely easy to get to in the United Kingdom, and personal debt soaring high, many ordinary families have found themselves in situations where they are bankrupt or very close to it! Government debt management services, although not really related to the government at all, and all manner of personal finance advisors have sprung up like mushrooms over night. These firms assist individuals in creating Informal Voluntary Agreements (IVA’s) with the people they owe money to, in order to control the interest charged on outstanding amounts.

The only government involvement here, is that the government regulates how the debt should be paid back. This was done to ensure that already indebted people do not end up homeless and starving because they are trying to pay off debt at exorbitant interest rates. All in all, the government has made attempts to address their previous lack of management, and we hope that this time, their plans will work.

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Government Debt management