Municipal debt represents money borrowed by local governments, primarily to finance capital projects like infrastructure, buildings, and major equipment. Unlike individuals who might borrow for various purposes, municipalities in Canada are typically restricted to borrowing only for capital expenditures (not operating costs) and face provincial oversight of their debt levels. Debt is incurred through debentures, loans from provincial financing authorities, or other borrowing mechanisms. While some view government debt negatively, strategic borrowing allows municipalities to build infrastructure that benefits multiple generations while spreading costs appropriately over time. Key debt indicators include total debt outstanding, debt per capita, debt-to-revenue ratio, and annual debt servicing costs. Municipalities must balance infrastructure investment needs against maintaining sustainable debt levels.