What is a debt ceiling?
Some countries have a debt ceiling. Find out what this means, and what happens if a country reaches its debt ceiling.
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MCAN Wealth
A debt ceiling is the maximum amount of debt a country can have outstanding. Only two democratic countries have a debt ceiling, the U.S. and Denmark. The number is a dollar amount set by lawmakers.
When a country reaches its debt ceiling, lawmakers must either raise or suspend the ceiling. Otherwise, the country will not be able to meet its financial obligations.
Example: “Although Canada has a legally defined limit on borrowing, it’s not technically a debt ceiling, because the Governor in Council has the power to unilaterally approve additional spending under certain conditions.”
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