Over Consumption

Question:

Why does the government have to borrow from abroad if it consumes beyond its means?

Answer:

A government, like any of us, has expenses (called government expenditure) and it has income (it generates revenues). If a government overspends, it means it committed to spend more than it earned which means it is running a deficit. A deficit is a budgetary shortfall that can be made up by borrowing. A government can borrow from its own residents (aka public debt) or it may borrow from foreigners (foreign debt). There is no necessity that a government must borrow from foreigners. Sometimes, it is cheaper that way, though.