Does the deficit have any impact on the economy?

Fiscal deficit refers to the fact that fiscal expenditure exceeds fiscal revenue, which has both positive and negative impacts, and needs to be analyzed on a case-by-case basis.

1.The economic deficit is the difference between fiscal expenditure and revenue in a fiscal year, and it is customary to use red letters in accounting.

2.In China, fiscal revenue and expenditure are balanced through the state budget, and the fiscal deficit is usually manifested as the difference between the expenditure and the revenue as a result of budget implementation, so it is also called the budget deficit. A year's fiscal revenue represents a part of the social products that can be used by the state for the centralized control and disposal of the current year, and the fiscal expenditure is greater than the income, and the deficit occurs, which means that the social purchasing power formed by this part of the expenditure does not have the corresponding social products as a material guarantee.

In order to make up for the fiscal deficit, the state had no choice but to issue more paper money, that is, to increase the issuance of currency without material guarantees. If the fiscal deficit is too large, the issuance of fiscal money is excessive, and the materials cannot meet the needs for a long time, inflation will occur, resulting in commodity prices, and the living standards of residents will decline. Therefore, fiscal expenditures should be arranged in accordance with the principle of keeping revenue within the limits of expenditure, so as to maintain a balance between fiscal revenue and expenditure.

However, due to mistakes in work or accidents such as wars and serious natural disasters, fiscal revenues are often short-collected or over-spent, resulting in deficits.

3.Under normal circumstances, the finances of a socialist country should persist in balancing revenue and expenditure, with a slight surplus, and no deficit. To uphold the balance between fiscal revenue and expenditure, we should not only focus on fiscal revenue and expenditure itself, but also link fiscal revenue and expenditure with the distribution of national income as a whole, so as to prevent false balances and hidden deficits.

For example, the balance created by the unrealistic income targets set in the plan, the implementation of the income target by crowding out other sources, the inadequate arrangement of the costs payable, the shortfall in expenditure, etc., is not a real and reliable balance, but a false balance on the surface. If an enterprise falsely reports its output value and profits, or if it develops, produces and sells out of balance, it will make a part of its fiscal revenue false, and the fiscal revenue and expenditure may be balanced, but in fact there will be a hidden deficit. If the expenditure is greater than the revenue and there is a slight deficit, this is also a favorable situation, indicating that the state fiscal revenue has been effectively and fully utilized.

It's not an economic deficit, it's a fiscal deficit, right? To give a very simple example, you earned 1 million this year, but you spent 1.2 million on buying a house today, and your income is not enough for you to spend and you borrow 200,000, and this 200,000 is called a deficit. relative to the surplus.

Deficit is an economic term that refers to the figure of spending more than income in economic activities. Because it is customary to write with a red pen in accounting bookkeeping, it is called deficit.

The deficit is mostly used for finance, which means losing money. The difference between fiscal expenditure and revenue during the fiscal year.

In China, fiscal revenue and expenditure are balanced through the state budget, and the fiscal deficit is usually manifested as the difference between expenditure and revenue as a result of budget implementation, so it is also called budget deficit.

The impact of the fiscal deficit on our economy.

China's fiscal deficit began in 1979, when the reform and opening up began, when the deficit was relatively small. Since the implementation of the proactive fiscal policy in 1998, the scale of the fiscal deficit has increased sharply, from about 60 billion yuan per year from 1994 to 1997 to 146 billion yuan in 1998, 180.3 billion yuan in 1999, 253.3 billion yuan in 2000, 259.8 billion yuan in 2001, and 309.8 billion yuan in 2002 (budget). The fiscal deficit as a percentage of GDP is close to the international warning threshold of 3%.

According to the general logic, fiscal revenue and expenditure are a comprehensive indicator of economic development, and the economic improvement should lead to an improvement in the fiscal situation. However, as of 1997, China's finances have been in deficit for nearly 20 consecutive years since the reform, and it is still unknown when the deficit will be eliminated. On the one hand, this is the result of the effects of old problems and certain new mistakes, and on the other hand, it is a factor that has to be delayed in the course of institutional changes, economic adjustment and development.

So, we can't simply link the fiscal deficit to poor economic conditions.

After 1980, it is undeniable that the negative impact of the annual deficit in the budget is undeniable, and it has directly or indirectly led to the softening of budget constraints, excessive functions, low economic efficiency, inflation, and hindering the stable and coordinated development of the economy. Generally speaking, however, the fiscal deficit has played a tremendous positive role in maintaining sustained and stable growth of the national economy. If this is not the case, it will be difficult to introduce a series of concrete reform measures and measures for economic adjustment, stability, and development.

For example, since 1998, the implementation of the active fiscal policy is to expand the scale of expenditure with a deficit, first of all, the vast majority of China's deficit expenditure is used to provide infrastructure investment for the production and operation activities of the private sector, which is different from the general situation in most countries. Second, China's current economic turmoil is at a low point, and the cyclical deficit caused by the economic recession will not crowd out private investment, but will help stimulate private investment, stimulate domestic demand, and enable the economy to recover as soon as possible.