Debt administration is the management of government borrowing and of
servicing of the outstanding debt. In general, local governments may be
permitted to borrow for legitimate infrastructure purposes if they have the
32 John L. Mikesell
capacity to service their debt without requiring assistance from higher
governments.23 The key to borrowing is to convince prospective lenders
that they will be repaid on schedule. The fundamental objectives of debt
management are effectiveness (the ability to meet the medium- and long-term
needs for the finance of infrastructure development); efficiency (borrowing at
lowest possible net cost); equity (distribution of infrastructure cost fairly
across generations); and accountability (adequate disclosure of debt and debt
service program to officials, citizenry, and relevant third parties). Debt
management avoids imprudent debt structures and strategies that might
threaten fiscal sustainability and future access to debt markets.