In my opinion in certain situations of the state finances, there may be a strong correlation between the level of the state budget deficit and financial stability and the level of debt risk in the state finances. The most important factor shaping the nature and strength of this correlation is also the issue of the level of total public debt in the state finances and the specificity of this debt, its scale expressed by the Gross Domestic Product.

The main factors shaping the correlation between the level of the state budget deficit and the financial stability and level of debt risk in the state finance are:

- type of debt instruments, which are financed by the state budget deficit, ie what part constitute state treasury bonds, short-term treasury securities as well as domestic and foreign bank loans,

- issue of the relation of the issue of state treasury bonds, short-term treasury securities for foreign investors in relation to domestic investors, analogically with bank loans, i.e. whether domestic and foreign loans dominate,

- issue of the relation of State Treasury bonds issue to domestic investors, i.e. domestic individual bondholders and institutional investors, which mainly include commercial banks, investment funds and enterprises,

- the issue of owning or not having a national currency of its own country and its use for international settlements,

- specific standards for recognizing the level of budget deficit and public debt as a safe or highly risky level, the reference of these amounts of state liquidity gap in the state budget and state debt to the absolute size of the Gross Domestic Product; in many countries standards are used in this area, eg in the European Union and then the level of budget deficit is lower than 3% as safe levels. GDP and the level of safe public debt if it does not exceed 50%. GDP,

- the situation on domestic financial markets in relation to the situation on international financial markets, with particular emphasis on the market valuation of Treasury debt securities, including government bonds on securities markets,

- the level of foreign investments carried out by domestic institutional investors and by the state, eg indirectly, by the share of capital in state-owned companies,

- the production potential of the entire economy and the cyclical situation analyzed against the background of the current business cycle,

- credit ratings issued by the media issued by globally recognized rating agencies regarding financial stability issues related to public finance, including the condition and specifics of the state of public finance debt; these assessments are taken into account when making investment decisions by internationally active banks and investment funds considering investing in government bonds of a specific country,

- the issue of a change in financial stability in state public finance in the context of the situation of a strong economic downturn in the paradise economy caused by the emergence of the global financial crisis and the instruments of development, anti-crisis and counter-cyclical socio-economic policy used in a given country; I have described these issues in some of my scientific publications.

Best wishes

Financial stability means the financial system's ability to cope with unexpected shocks, But the budget deficit can be expected, What are the appropriate economic policies

Debt financing is the most common way of financing business in the world where such financing is conventional financing and based on borrowings and other instruments that give banks and other financial institutions.

Debt financing does not affect financial stability, the economic crisis caused by conventional and unconventional financing of debt