# Financial deficit

## Basic introduction

fiscal deficit rate = financial deficit / GDPX100%

= (financial expenditure - fiscal revenue) / GDPX100%

EU EU The fiscal deficit rate safety warning line is 3%;

deficit ratio deficit is a financial term, which is an important indicator for measuring fiscal risks. The fiscal deficit refers to the financial expenditure exceeds the financial revenue, meaning "flower" money exceeds the money of "earning". According to the "Budget Law" in my country, the deficit is not established in the local fiscal, so the financial deficit that is usually known is the central financial deficit.

## The effect is an important indicator for measuring the risk of fiscal risks. It refers to the proportion of the fiscal deficit accounting for the gross domestic product. The deficit rate is expressed in the proportional relationship between the fiscal deficit and the total national product of the same period.

For a country's fiscal, national debt is to make up for the main source of the fiscal deficit. The growth of the deficit will increase the scale of the national debt, and the national debt is to pay attention to the payment. In turn, it will increase Financial deficit. Finance has fallen into the predicament of "deficit-national debt-deficit" to promote growth, if financial revenue has not significantly improved, with the increase of deficit and national debt, will have a negative effect on future economic development.

## Calculation method

### Calculation formula

deficinity rate = (government expenditure - government revenue) / GDP × 100%

### calculation example < / h3>

Calculated in 2007, the central government's total financial expenditure is 305.8949 billion yuan (central financial expenditure 295.749 billion yuan, and arranged 103.2 billion central budget stable adjustment fund), central financial revenue is 285.8949 billion yuan The two mean that the money to be "flowers" is more than 200 billion than "earning" money, that is, the central financial deficit is 200 billion yuan, the gross domestic product is 24.66 trillion yuan, the ratio (deficit) The rate) is about 0.81% (= 2000/246600 × 100%).

According to the International Mastricht Treaty Standard, the deficit rate is 3% generally set as an international security line. my country's deficit rate is 2.9% in 2000, 2.7% in 2001, 2.6% in 2002, 2.6% in 2003, 2% in 2004, 2005 is 1.6%, 2006 is 1.3%.

## Features

The high deficit ratio indicates that the government mobilize social resources during a certain period of time reflects the impact of financial configuration tools on economic operation.

## Using the

high deficit ratio will disturb the normal economic operation and form a heavy debt burden, affecting the normal operation of the national economy.

If the fiscal deficit ratio is too high, the government should reduce the deficit ratio from the following two aspects:

one is to cut the fiscal deficit;

2 is to adjust the economic structure. Improve economic efficiency and accelerate economic growth.

## Analysis

1991-1995, the most developed industrialized state [including the United States, Canada, France, Germany and the United Kingdom), the deficit ratio is relatively high, with an average of 3.8%; deficit scale A relatively large developing country (including India, Brazil, Pakistan and Turkey), the deficit ratio is 6%; my country's deficit ratio is 2%. In a comparison, my country's deficit ratio is lower than that of industrialized countries, although there are many countries with high deficit ratio than developing countries, but higher than the average of other developing countries. This shows that my country's deficit ratio is more moderate. However, if our interpretation is facing difficulties compared to the sympathization of emerging industrialization Asian countries (including South Korea, Indonesia, Malaysia and Thailand). These countries have not only deficit in the same period, but there are 1.2% of the fiscal surplus ratio. In fact, this is exactly the results of these countries just completed industrialization. If compared, perhaps it is more appropriate to compare the deficit ratio in the industrial process. In 1968-1986 (the key period of industrialization process), the deficit ratio of these countries was 3.2%, which is much higher than the deficit ratio of our country.

International comparison, my country's deficit ratio is lower than that of industrialized countries, and there are still a lot of deficit ratio than national deficit ratio than developing countries.

Deficit Dependence

The world's economic connotation reflected in the deficit rate and deficit reliability is different. The use of these two indicators provides different basis for government policy choices.
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