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Definition

An economics concept which refers to an excess of government revenue over expenses. Surpluses are very rare among the governments of the world. Most governments regularly spend more than they bring in in tax and other revenue with the balance being made up by borrowing from the private sector in the bond market. So governents issue and sell government bonds to finance their budget deficits. The key metric is the deficit expressed as a percentage of government revenue or as a percentage of annual gross domestic product (GDP). A deficit of more than 6% of GDP is generally reckoned to be excessive. Following COVID-19, the then Minister of Finance in South Africa, Tito Mboweni, in his supplementary budget projected a deficit which would rise to 15,7% of GDP in the 2020/21 financial year. The greater the budget deficit the more of government's revenue is spent on servicing that debt and the less is available for other uses. Budget surpluses are almost unheard of.

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