Miscellaneous Topics

Financing Budget Deficit

• A budget deficit occurs when a governments expenditure is greater than
the income it generates.
• There are different ways in which a government can fund its budget deficit.
These are:
• Cutting/Decreasing government expenditures
• Cutting subsidy
• Increasing tax revenue (increasing number of tax payers, increasing tax rate etc.,
bringing more products under the VAT policy)
• Increasing non-tax revenue (fees, service charge etc.)
• Borrowing from domestic market (Sanchaypatra, treasury bill, bank loans)
• Borrowing from international market (multilateral loans, bilateral loans etc.)
• Foreign grants and aids
Impact of LDC graduation
LDC overview