Central government is deemed to be financially sustainable when it can pursue its ongoing public benefit missions while fulfilling its financial obligations when they are due in time and amount. This financial capacity depends on both tax revenues and public debt management.
In this context, governmental debt capacity consists in placing sovereign debt - for sake of debt issuance and refinancing – with governmental entities, resident and foreign debt-holding investors, monetary financial institutions and central banking. The latter two placements relate to the monetary base management. Financial markets may facilitate some of these transactions on sovereign debt.
Therefore, fiscal policies, welfare policies and public debt management are linked, while governmental debt capacity constitutes an integral part of its financial sustainability.