Public debt is the amount of debt owed by a sovereign government to its creditors. There are different types of public debt, but the majority of the debt is from government-issued debt securities. Gross public debt and net public debt terms are very similar. The difference between gross public debt and net public debt is simply that the value of assets owned by the government is subtracted from the gross debt amount to arrive at the net figure.
Debt Held by the Public
When a country wants to raise money, the primary resource available is for the country to issue debt securities to the public. Public debt securities are items such as Treasury notes, Treasury bills and long-term Treasury bonds. Public debt securities issued by the government can be held by domestic or foreign interests, and the government has an obligation to repay the debt securities when they mature.
Debt held inside government accounts is intragovernmental debt. This form of debt is from a special type of debt security that is not available to the general public, but it is still debt of the Treasury that will require payment at some point in the future. The largest portion of this debt is for Social Security, military retirement pay, the disability trust fund and civil service retirement pay. Intragovernmental debt is debt that the government owes to itself.
Gross Public Debt
The total or gross public debt is a combination of debt held by the public and intragovernmental debt. This combination represents all federal debt, whether the debt issuance is by the Treasury or any other government agency. Gross public debt reports as a liability on the financial statements of the federal government.
Net Public Debt
When federal government asset values subtract from the preceding components, the remaining value is net public debt. Debt reporting varies by country but in the United States, most reports on public debt figures are gross amounts. The net public debt figure in the United States is an accounting measure that is not an accurate benchmark of the outstanding debt.