Municipal debt refers to money municipalities have borrowed and must repay, typically used to finance capital infrastructure projects. Unlike senior governments that can run operating deficits, municipalities must balance operating budgets but may borrow for capital investments. Debt allows current residents to share infrastructure costs with future residents who will also benefit. Provincial legislation limits municipal borrowing, often expressed as a percentage of revenues or per-capita amounts. Prudent debt management ensures municipalities can meet repayment obligations without sacrificing services or dramatically increasing taxes. Debt levels, interest rates, and repayment schedules significantly affect long-term municipal financial planning.