(1)   According to the source it may either  be internal or  external. It is internal government borrows from the private individuals and financial  institutions within the economy. A debt  is external when the government borrows from outside sources IMF EEC, World Bank etc.

(2)   According to the way in which  borrowed money is to be used.

(a)    Productive  debt: This is when the borrowed money  is invested in economic activities that can  enable such investments  to repay the debt e.g. debt for establishing a sugar factory.

(b)   Unproductive ( Dead weight ) Debt: This is when borrowed  funds is spent  in activities that cannot generate more wealth to enable  repaying  of the debt e.g. purchase  of military hardware.

3)     According to the  repayment period.

(a)   short term debt. This is intended  to be paid within a given period of time e.g. one year.

(b)   Long term debt. This is  meant to be  paid over a long period of time e.g. 10 years.

4)     Funded  and floating  or unfunded debt: A funded  debt is a long term  debt  which  has  no contracted repayment date. While a floating debt is a short  term debt by the  government.