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Government budget balance
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The government budget balance, also referred to as the general government balance,[1] public budget balance, or public fiscal balance, is the difference between government revenues and spending. For a government that uses accrual accounting (rather than cash accounting) the budget balance is calculated using only spending on current operations, with expenditure on new capital assets excluded.[2]: 114–116 A positive balance is called a government budget surplus, and a negative balance is a government budget deficit. A government budget presents the government's proposed revenues and spending for a financial year.
The government budget balance can be broken down into the primary balance and interest payments on accumulated government debt; the two together give the budget balance. Furthermore, the budget balance can be broken down into the structural balance (also known as cyclically-adjusted balance) and the cyclical component: the structural budget balance attempts to adjust for the impact of cyclical changes in real GDP, in order to indicate the longer-run budgetary situation.
The government budget surplus or deficit is a flow variable, since it is an amount per unit of time (typically, per year). Thus it is distinct from government debt, which is a stock variable since it is measured at a specific point in time. The cumulative flow of deficits equals the stock of debt when a government employs cash accounting (though not under accrual accounting).
- ^ "IMF database". Imf.org. 14 September 2006. Retrieved 1 February 2013.
- ^ Blöndal, Jón (2004). "Issues in Accrual Budgeting" (PDF). OECD Journal on Budgeting. 4 (1): 103–119. doi:10.1787/budget-v4-art5-en. ISSN 1608-7143.
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