Question:
How is the government’s Gross Financing Needs calculated?
(1) Government total revenue and grants – recurrent expenditure without interest payments – capital expenditure
(2) Government total revenue and grants – total government expenditure + amortisation payments
(3) Government total revenue and grants – (recurrent expenditure + capital expenditure + interest payments)
(4) Government total revenue and grants – (total government expenditure – net lending)
(5) Government total revenue and grants – (recurrent expenditure + amortisation payments)
Correct Answer:
(2)
Answer Explanation:
Gross Financing Needs represent the total amount a government must borrow. It equals the budget deficit (Total Revenue – Total Expenditure) plus the debt amortisation (principal repayments) due during that period.
Topic: Public Finance Year: 2023
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