What Is a Fiscal Deficit?

The fiscal deficit is the budget deficit, which refers to the deficit that a government has in its budget arrangements at the beginning of each fiscal year. If the actual implementation results income is greater than expenditure, it is a fiscal surplus. It reflects the state of revenue and expenditure of a government. Fiscal deficit is a manifestation of the failure to balance fiscal revenue and expenditure, and is a worldwide fiscal phenomenon. Fiscal deficit is the difference between fiscal expenditure and fiscal revenue. It is called a fiscal deficit because it is treated with a red deficit in accounting.

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The fiscal deficit is

There are many reasons why a country has a fiscal deficit. Some are for stimulation

The size of the fiscal deficit is critical to determining the direction and strength of fiscal policy. Fiscal policy is important

Former U.S. President Bush Economic Advisory Board Chairman and Columbia University Business School Dean R. Glenn Hubbard said that the US fiscal deficit is as high as US $ 1 trillion per year, and it will soon reach a critical point of 90% of GDP. If the budget goes out of control, major problems will arise.

R. Glenn Hubbard warns that high debt in developed countries is mainly due to imbalances in welfare spending, a situation that is very dangerous and could have serious destructive results. "Because it deviates from the source of economic power, the software and hardware functions of the government to support economic power cannot be played." ^[2]

Lloyd Blankfein, chairman and chief executive of Goldman Sachs Group, said on the 13th that the United States still has a long way to go to reduce its deficits, and the current efforts of the two parties to reduce their fiscal deficits are not enough.

Blankfein said at a breakfast seminar hosted by the U.S. Politics on the same day that U.S. congressmen lack a spirit of compromise on fiscal issues. The U.S. Congress that resists compromise is an important factor hindering economic recovery. When facing the need to increase public debt At the ceiling, people and investors began to worry about Congress's paralysis.

Blankfein believes that the most worrying risks are different from a year ago. What worries him most now is that the United States Democracy and the Republican Party may revolve around raising the public debt ceiling and the situation in the European debt crisis. These two are the biggest threats to the US economy.

He expressed support for financial regulatory reforms, although he did not like everything in the Financial Regulatory Reform Act of 2010. Blankfein also denied rumors that he would leave in the near future, saying that Goldman's executive team has worked together for years and is very stable.

The U.S. Congressional Budget Office said in a recent forecast that, thanks to the increase in government fiscal revenue brought about by the economic recovery, the US federal fiscal deficit in fiscal 2013 is expected to be 642 billion U.S. dollars, which will be the four fiscal years of the U.S. federal government fiscal deficit. Below the $ 1 trillion threshold for the first time since. During US President Barack Obama's first term, the federal government's fiscal deficit exceeded $ 1 trillion for four consecutive fiscal years.

In 2014, China plans to arrange a fiscal deficit of 1.35 trillion yuan, an increase of 150 billion yuan over the previous year, of which the central fiscal deficit is 950 billion yuan, and the central government will issue 400 billion yuan of bonds on behalf of local governments. The fiscal deficit and the size of national debt have increased with the expansion of the economic aggregate, but the deficit rate has stabilized at 2.1%, reflecting the continuity of fiscal policy.

According to the analysis, although the scale of China's deficit in 2014 has increased from 1.2 trillion yuan in 2013, the deficit rate has stabilized at the level of 2013. This kind of arrangement with positive colors and striving for stability highlights the current complex fiscal and economic situation. . Overall, the deficit rate is still within the safe zone.

Internationally, two indicators are usually used to evaluate a country's fiscal risk: one is the deficit rate, that is, the deficit accounts for no more than 3% of GDP; the other is that the balance of national debt does not exceed 60% of GDP.

The draft budget report submitted to the Second Session of the Twelfth National People's Congress on March 5, 2014 shows that in 2014, the balance of the central government's national debt in China was 1,007.835 billion yuan. Calculations show that this scale accounts for less than 20% of GDP.

The size of the national government debts found in the comprehensive audit exceeded 20 trillion yuan, of which more than half were local government debts. The potential risks have become a hot spot of international attention.

"The downward pressure on the economy is increasing, and fiscal revenues are tight, especially local government debt risks should be given high attention." Xie Chaoying, a representative of the National People's Congress and director of the Hunan Provincial Economic and Information Commission, said that some local governments should be wary of excessive land sales and financing By means of obtaining urban construction funds, there are fewer and fewer resources available for sale in the future, and how to repay debts has become a problem. "If it is not handled well, it does not rule out that some areas will detonate." ^[4]

Fiscal policies in 2017 should be more active and effective. The deficit rate is planned to be arranged at 3%. The fiscal deficit is 2.38 trillion yuan, an increase of 200 billion yuan over 2016. Among them, the central fiscal deficit was 1.55 trillion yuan, and the local fiscal deficit was 830 billion yuan. Arrange 800 billion yuan of special local bonds and continue to issue local government replacement bonds. ^[5]

In April 2017, data released by the Ministry of Finance showed that in the first quarter of 2017, the national general public budget revenue was 4,463.6 billion yuan, and the national general public budget expenditure was 451.7 billion yuan. The fiscal deficit was 155.1 billion yuan. ^[1]

According to data from the Ministry of Finance, among the main expenditure items in the first quarter, social security and employment expenditures were 818.3 billion yuan, an increase of 22.9%, education expenditures were 691.3 billion yuan, an increase of 18.7%, and medical and family planning expenditures were 410.6 billion yuan, an increase of 29.4%.

The expenditure of urban and rural communities reflecting infrastructure construction also reached 462.2 billion yuan, an increase of 21.2%, and housing security expenditure was 135.3 billion yuan, an increase of 46.8%.

Minister of Finance Xiao Jie: With the large-scale tax and fee reduction policy implemented from April, the active fiscal policy in the second quarter may be even greater.

The State Council executive meeting on April 19, 2017 announced six tax reduction measures including the reduction of VAT rates, which is expected to reduce the burden of various market entities by 380 billion yuan throughout the year. ^[1]