Ekonomija: teorija i praksa (Jan 2017)
The problem of budgetary deficit in modern economies
Abstract
A surplus of expenditure over revenues in the government budget is called a budgetary deficit. Budgetary deficit, in itself, is not a negative thing. If the budgetary deficit allows full employment and helps reaching economic policy goals, there is full understanding for having a budgetary deficit. Budgetary deficit of the Republic of Serbia has shown an increasing tendency in the period 2005-2016. After this period, budgetary deficit has started to decrease as a result of fiscal consolidation measures. Besides avoiding the negative consequences of a budgetary deficit, Serbia has to maintain its budgetary deficit at a level below 3% of GDP, because that is a requirement for joining the European Union. This also applies to countries which are already members of the EU, but they have the right to short term deviations during the economic crisis. The European Union uses these rules to maintain fiscal discipline. By comparing budgetary deficits of the developed and developing countries, we can see a big difference in levels of deficits. Developed countries have higher deficits in the first years of economic recession, while the developing countries' budgets show economic crisis consequences in the subsequent years. The reasons for that lie in crisis overflow channels, thanks to which the developed countries were the first to experience crisis, and only later it affected the developing countries, too.
