Budget Surplus Vs Budget Deficit?
Is deficit or surplus all the time good or bad?
Very interesting question! Thank you. The budget surplus does not always reflect a good situation of the national economy. It is rather a consequence of a healthy economy and not its cause. Similarly, the budget deficit does not always mean a bad situation. Indeed, the existence of a deficit in public expenditure may indicate good signs, especially when these expenditures stimulate economic activity and contribute to the country's development and when this deficit does not adversely affect the government's ability to repay its debt service charge. A budget surplus can be positive in that it allows the government to build reserve funds and/or honor its commitments. Conversely, it could be negative when retaining cash generates less liquidity in the market and does not contribute to the economic growth of the country.
Persistent budget deficits create issues for a country or organization‘s economic situation, resulting in lack of invester confidence. Budget surplus may show poor management.
Before answer the question, we must know the question in the planning area or execution area. In the planning, surplus and deficit depends on the government policy. If Government take expansive policy so the budget usually deficit, otherwise Government take contractive policy so budget set in surplus. Howewer, in the execution, surplus is better than deficit.
Many countries or companies are high indebted so deficit budgets are dominating business environment.
A surplus is not the good thing it might appear to be as that itself can discourage development. The process of burrowing oils, or can oil, a country's economy moving it forward. Stagnation can and will occur with continued surplus. Deficits can and will stimulate an economy.
Very interesting question! Thank you. The budget surplus does not always reflect a good situation of the national economy. It is rather a consequence of a healthy economy and not its cause. Similarly, the budget deficit does not always mean a bad situation. Indeed, the existence of a deficit in public expenditure may indicate good signs, especially when these expenditures stimulate economic activity and contribute to the country's development and when this deficit does not adversely affect the government's ability to repay its debt service charge. A budget surplus can be positive in that it allows the government to build reserve funds and/or honor its commitments. Conversely, it could be negative when retaining cash generates less liquidity in the market and does not contribute to the economic growth of the country.
I believe both surplus and deficit are fine. However, it is not a good idea to have huge surplus because it should be used for productive purpose.
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