Definition of public deficit

The deficit it is that negative amount that results when the expenses or the debit are greater than the income or credits, while, public, when associated with the public administration, as in the case that will occupy us below, refers to what is proper to the state or its institutions, or failing that, it is controlled by one of them.

So, it is called public deficit, also know as budgetary and fiscal, to situation in which the expenses made by the state in question or other public entities in a certain period, which is generally one year, exceed their income.

It should be noted that when we talk about public deficit, we are referring to the deficit presented by the set of the public institutions of a country, that is, it is the balance of the accounts of all the public administrations of a nation, including the national state, communities, municipalities, provinces and autonomous regions, among others.

When the economy of a nation is closed, that is, in which the

government no longer have access to direct indebtedness with the public and not even within or outside the country and its reserves abroad have been exhausted, so the only alternative to the deficit is to borrow the central bank.

The quantitative measurement of the public deficit is carried out through the accounting which is the one that will offer us the most exact measure of the deficit. Meanwhile, to measure its impact on the economy, the ratio that represents the deficit over the Gross Domestic Product (GDP) is used, which will give us an idea of ​​its significance.

On your side, the balance of payments or the balance It is an accounting document that records commercial operations, services and capital movements made by residents of a country with respect to the rest of the world, over a period of time determined; meanwhile, the difference between the income and payments of a given sub-balance it will be called balance. When the difference is negative it is called trade deficit but if the difference is positive, we will talk about surplus.

Issues in Public Deficit