Government borrowing is primarily constrained by which of the following?

Government borrowing is primarily constrained by constitutions and statutes, bond covenants, and debt policies because these frameworks establish legal and procedural guidelines that limit how much debt a government can incur.

Constitutions often set debt limits or require certain approvals for borrowing, ensuring that fiscal discipline is maintained and preventing excessive borrowing that might threaten the government’s financial stability. Statutory laws further elaborate on these provisions, specifying the conditions and limits under which borrowing can occur.

Additionally, bond covenants are agreements made when issuing bonds, which can impose additional restrictions to protect investors by ensuring that the government adheres to specific financial practices. Debt policies, which may be developed by governmental entities, also serve to delineate how debt should be managed, ensuring that borrowing is conducted prudently and transparently.

While economic forecasts and market conditions do affect the desirability and cost of borrowing, the mechanisms that fundamentally constrain a government's ability to borrow are rooted in legal and regulatory frameworks. Political affiliations and party agendas, as well as public opinion and media coverage, may influence the discussions around borrowing and fiscal policy, but they do not serve as binding constraints like the legal documents and policies do.