State budget surplus is ... deficit and budget surplus
The balance of the state budget is an ideal and very theoretical phenomenon, since in modern practice either the country's income exceeds expenses, or vice versa. Well, we will try to figure out what the consequences and causes of the situation.
What is a budget surplus: definition and essence
Few enterprises have an absolute balance between expenditures and revenues, let alone the whole state. As a rule, it is only in economic theory that this equilibrium is often encountered, but not in practice.
What is a budget surplus? The definition of this concept in general form is contained in the translation of the term from the Latin language. Literally - growth and increase. Anything can rise: the level of microelements in the body, the amount of goods on the store shelves. But in our case we are talking about the government treasurytherefore, it is not hard to guess that the state budget surplus is a phenomenon in which the level of state revenues to some extent exceeds expenditures in its quantitative ratio.
Good or bad, definitely can not be said. Politicians and economists argue tirelessly about this: someone says that the population can only keep in reverse the phenomenon of surplus from the surplus - the deficit, someone also claims the opposite. One thing can be said with complete certainty: it is much better if everything is balanced, but this, alas, is rarely encountered in practice.
Reasons for the surplus
The state budget surplus is not at all universal harmonious economy of local citizens, but the result of an excessive level of taxation, although this is also a controversial issue. It is just that the state does not have time to spend all the money received from payers, which is why there are surpluses, settling in income.
That is, the funds received are more than enough to finance non-profit organizations, various social projects, and also to pay interest arising on debts from external partners.Well, where do these funds go next? Ultimately, the surplus of the state budget is the amount by which the volume of external loans will decrease in a year minus the planned repaid funds and budgets spent on raising new loans. But this, of course, is somewhat generalized, but where will the sum of surplus go from the treasury of the Russian Federation, we will find out a little later.
This is our mentality that the concept of budget surplus is often associated with something good. Well, how could it be otherwise, because the extra income is much better than it is not at all. Undoubtedly, the positive aspects in this phenomenon are present:
- when drafting a budget plan for the next year, a reserve for unforeseen expenses in the form of emerging emergencies and uncontrolled natural phenomena is always left;
- profitable surpluses do not settle anywhere in reserves for further depreciation, but “patch up” the gaps and problem areas of government regulation: this could be the above-mentioned repayment of foreign debt, optimization of the investment portfolio and much more;
- the surplus economy inspires confidence in everyone around.And this means that the value of securities is growing, and this applies not only to state-owned shares, but also to private companies representing the country;
- the level of liberalism is growing: tax policy is weakening, local business has more chances for successful development.
You will be surprised, but the state budget surplus is not always as good as it may seem at first glance.So, this phenomenon has a number of negative consequences:
- if there is more income in the country than expenses, then this directly indicates that part of the money is simply withdrawn from national circulation, and all this entails a decrease in their natural competitiveness;
- there are such cases when, due to an imbalance of borrowed funds, there is an excessive budget entailing a surplus, and this directly indicates an increase in the credit burden on the country as a whole, which is also not a positive dynamic;
- sometimes the negative side of the ugliness is trivial: imbalances in public funds may arise due to inept domestic policies;
- the tax burden is really too high, and entrepreneurs are forced to overpay to pay off the external debts of the state.
Difference of deficit from surplus
Do not confuse or identify such concepts as the deficit and budget surplus. They are absolutely opposite to each other and arise for different reasons.They are connected only by the fact that they both talk about the imbalance of domestic economic policy, and the deficit may occur in the following cases:
- in recent times a crisis has arisen in the national economy;
- the current government does not have the capacity to regulate the internal financial flows of the state;
- within the country wars, revolutions, natural disasters occur;
- too much national resources are allocated to strengthening the defense system in peacetime;
- the growth rates of social expenditures exceed the growth rates of the gross income of the state;
- there is a restructuring of the production grid of the country as a whole.
At first glance, it may seem that the situation in which expenditures exceed revenues is simply catastrophic and much better when the opposite is true.But in fact, the budget deficit and surplus equally have both positive impact and negative. Moreover, many countries exist with a glaring imbalance of income and expenditure, with a clear margin of the latter.
Deficit and budget surplus in different countries
We will not talk now about the countries of South Africa and we will not even remember Cuba with its planned economy, but consider the balance of budgets in the most developed countries of our planet.
The deficit, the budget surplus in different countries, according to international statistics, is observed in the following percentage. Of the three dozen countries with developed economies over the past decade, 51% of representatives had a deficit, and 49% had a surplus, and not a single domestic policy could boast a balance of income and expenditure in general.
So, the leader of the surplus countries invariably remains Norway with a surplus of 10%, followed by Denmark, Sweden, Estonia and Belgium.
The deficit economies can be attributed to Japan with an indicator of 5-7% of GDP in recent years, and the United States with a relentlessly growing external debt.
How is the budget balanced?
Probably many of you have wondered whether any measures should be taken to balance income and expenses.Undoubtedly, in the economic theory a list of such procedures exists, but we all need to understand that in practice everything is much more complicated and a number of factors are simply impossible to predict.
Each new year, the government signs a financial plan, which is based on two concepts (but we all understand that these are just theoretical foundations):
- There must be a balance in the budget. It would seem, about this we are the whole article and we repeat! But not everything is so simple. In practice, it can be assumed that unemployment has been observed in the country for a long time, respectively, the amount of revenues to the treasury has fallen. Of course, the government can increase tax rates to achieve a balance, but if the situation on the labor market worsens, then the state will not be able to raise the level of obligations indefinitely.
- The balance of the budget should be respected within the framework of a business cycle, not a calendar year. So, for example, in the country inflation, and the government raises the level of obligations.During the period of economic growth, the state can repay external debts, but this does not mean that this phenomenon will last for a year, most likely, the duration of this period will be several years. But the problem is that the ups and downs differ in their length and depth, and this does not mean that the tax rate will change with each fluctuation.
Russian budget surplus
The federal financial planning annually takes into account such an unstable and significant factor as the price of oil, which makes it possible to put reserve funds in the treasury and avoid overspending them. Therefore, the budget surplus of the Russian Federation is a stable and long-term phenomenon.
Accumulated surplus income largely goes to pay off foreign debt, and the rest of it is used in the country's social development programs.