Another set of objectives may be to distort production as little as possible. A government that wants to provide a great deal of goods and services to its people while not having the immediate tax revenue to fund that expenditure can turn to the capital markets to borrow the necessary money. They do this primarily by issuing securities, either Treasury Bills or Treasury Bonds. All levels of government will borrow money at some point. These securities are obligations compelling the government to repay the borrowed amount at maturity and also to pay interest in the form of coupons at specific points in time.
Borrowing has a number of effects.
If a country borrows too much money, it has to pay a great deal of interest every year in order to service that debt. This represents money that could have been used to pay for program spending instead. By borrowing money, the government has placed a greater emphasis on spending in the present than in the future. It has discounted the value of future expenditure. Depending on how much money the citizens of that country or that province save out of their own incomes, the borrowing government must sell its obligations to foreigners.