How to Stabilize Debt while Running Deficit

Abstract

Main aim of the paper is to discuss the relation between government deficit and debt and the importace of the aggregate known as stock-flow adjustments. The development of Czech government´s debt confronted with deficits in the last years gave raise to a number of questions which are dealt with in the following text, mainly the way how debt can be stabilized or even decreased if budget balance ends up regularly in huge deficits. The second task addressed in the text is the case of the net debt concept. Net debt is presented primarily not as alternative to EDP debt, but rather as supplementary indicator making the picture on fiscal situation more complete. In the last part, the characteristics of EDP debt and net debt are discussed; the development of both indicators is then compared using the figures published for the Czech Republic.

Keywords

• Government
• deficit
• debt
• stock-flow adjustment