Government budget deficit

Budget balance is in the Finance Group at the cameralistic balance from the comparison of the costs and revenue of a public budget.

General

The budget is the summary of public finance, in terms of income and expenditure. Due to the output recovery principle, but also for legal reasons (Article 110 paragraph 1 sentence 2 of the Basic Law, § 8 BHO) are household executive bodies at the federal level is required to prepare a balanced budget. In Article 109, paragraph 3 of the Basic Law is explained what is meant in federal and state budgets under balanced budget. After that are balance without revenue from loans usually these households. The outputs are - to fully cover by regular income - even for scheduled repayments. At the municipal level, the aim of balance the budget is anchored in the municipal regulations ( eg § 75 para 2 GemO NRW). The budget is balanced if the revenue ( in the double-entry accounting: income) achieve the expenditure (expense) or exceed. He is also considered balanced when the shortfall in earnings plan and the shortfall can be covered in the income statement by taking compensatory reserve.

Formal and material balance the budget

A balanced budget without ending balance ( more precisely, the balance is zero). In the formal sense can be no balance because households formally must always be balanced. It is important, however, as the compensation has been brought about. A material balance the budget is when the revenue can also cover interest and scheduled repayment for borrowing. A material balance the budget is difficult, because the income tax is based on estimates, while the majority of expenditure is already determined by law. Coverage problems thus arise when implementing the budget, if the actual revenue flow less than the planned. In Article 109, paragraph 3 of the Basic Law stipulates that the budgets of federal and state governments are basically without compensating revenue from loans. However, since the state may contract debts, the demand for a balanced budget in Article 110 paragraph 1 sentence 2 of the Basic Law can therefore be meant only in a formal sense prevailing opinion. If in addition to the state budget deficit and a current account deficit, then one speaks of a twin deficit. The municipal budget is balanced out when the supply from the office staff to the capital budget at least equal to the scheduled principal payments equal. If the feed amount of the capital budget is higher, has budgetary management authority for a " free tip ", he will be less, has the budget to a budget deficit. The budget balancing part of the principle of budget accuracy and thus the budgetary principles.

Positive and negative budget balance

If the balance is positive, from a surplus (also called budget surplus or positive balance ) spoken with a negative budget balance is a deficit (including budget deficit or negative balance ). Tells about the municipal administrative budget a surplus, this is to be transferred to the capital budget, deficits are offset by releasing reserves or sales in the capital budget. These transfers to and from the capital budget in any case lead to a sharing of the operating budget. "Free tip " is budget law, the positive balance of the administrative budget, net of scheduled principal payments on debt, which is paid to the capital budget. So the balance is the normalized result expressed in budget deficit or surplus ( " free tip "). Most states have for decades almost always budget deficits, leading to an ever-increasing worldwide public debt. This can lead to crises, such as the sovereign debt crisis in the euro area.

A budget deficit must - in order to formally required for balancing budgets - by reserves and / or borrowings are compensated. Reserves are used in accordance with § 103 HessGemO to compensate for revenue fluctuations and to secure the payment ability. Is it not a reserve available borrowings remain as the only compensation option. This is generally the case at the federal level, so there is a budget deficit equivalent to a borrowing. A deficit reveals that expenses can not be covered by current revenue and therefore new loans to finance the shortfall must be included. At the federal level of government balance budgetary terms, the difference between revenue and expenditure, adjusted for special financing transactions ( credit market transactions in reserves, settlements funds excessive surpluses and deficits and Münzeinnahmen ), which are taken out of the income and expenditure ( § 13 para 4 BHO).

Budget surplus

In case of a surplus, the state made ​​a surplus of income over expenditure. One does not speak of ' profit ', as the state is not for profit. It is used as a reserve for future expenses. In practice, a budget surplus in the Federal Republic of Germany since the 1950s (see Julius Tower ) not occurred. Balancing the budget and later a budget deficit were the rule. 1969 remained for a long time last year with a balanced budget in Germany. It was not until 2007 - almost 40 years later - was achieved in Germany again, a balanced federal budget.

Gross and net borrowing

These two concepts are the focus of public debate on the federal budget, however, affect all public budgets. A gross borrowing is when for the purpose of balancing budgets, loans must be included. Net borrowing results from the gross borrowing minus repayments on old loans. If the net borrowing is zero, the gross borrowing is used only to finance repayments on old loans.

Related to the budget deficit is the term of the borrowing. The debt is the difference of the public debt stands between two points in time (usually deficit amount per calendar year).

Follow a budget deficit

To enforce the postulate of a balanced budget, legal sanctions in the event of budget deficit are provided. However, this does not engage in a unique and low budget deficit, but only when permanent and high deficits. In Article 109, paragraph 3 of the Basic Law provides that the federal and state budgets are offset rule, without income from loans ( " debt brake "). This requirement shall be deemed met if the budget deficit of 0.35% of nominal gross domestic product does not exceed (Art. 115 paragraph 2 sentence 2 of the Basic Law ). In order for a material balance the budget is meant. According to Article 126 TFEU excessive deficits are to be avoided, so that budget deficits are not under European law generally prohibited. Exceeds the federal budget deficit, however, 3% of gross domestic product, so threaten the penalties set out in Article 126 paragraph 11 TFEU. Since the national allowable budget deficit is much lower than the European law, compliance with which automatically leads also to comply with the European law deficit limit.

At the municipal level, the misconduct of the objective of a balanced budget is also connected with legal consequences. If it can not be submitted to a balanced budget, attacks the household fuse so-called concept with the aim in future to achieve a balanced budget again ( § 76 GemO NRW). There must one-third of the reserve will be needed to enable a balanced budget. If this threshold is exceeded, the financial assurance concept is triggered. Then, it is believed that a reduction in the reserve indicating structural budget deficits in two consecutive financial years. It acts by way of authorization and supervision with the municipal supervision.

The importance of budget deficits is controversial in economics, see the main article sovereign debt.

Others

The Profizit is a term used in Russia for a term positive budgetary balance of the treasury. A Profizit is when the income of the state are higher than the expenses. If a state such as Norway, due to its rich natural resources, how a company can act, it can not even keep his debt incurred with the excess revenue or even break down.

A State that wishes to reduce its relative public debt ( criteria), must take more than spend, which can be feared that this aggregate demand, economic activity and GDP decline, which in turn determines the (relative ) increase public debt ratio. Some people speak of Totsparen.

A policy to reduce the budget deficit is often euphemistically called save in politics, austerity or austerity called, even if the household (his continuous new and higher debt "only" brakes ) remains in deficit, and the state while saving on his expenditure, nevertheless debt continues to build.