How does effective public debt management influence a country's debt-to-GDP ratio in the context of deficit financing?

Effective public debt management is crucial for a country's financial health, especially when it comes to managing its debt-to-GDP ratio during deficit financing. When a government spends more money than it collects in revenue, it may borrow to cover the difference, leading to increased public debt. Proper management involves making smart choices about when and how to borrow, ensuring that the debt remains sustainable and does not grow too quickly compared to the economy's size, which is measured by GDP. For example, if a government borrows money at low-interest rates and invests it in projects that boost economic growth, the GDP can increase, helping to keep the debt-to-GDP ratio stable or even lower it over time. Thus, effective management helps balance the need for funding with the goal of maintaining a healthy economy.