Question:
The Primary Balance of the budget is the difference between
(1) total expenditure and total recurrent expenditure of the government.
(2) budget deficit and debt service payments of the government.
(3) total revenue and total expenditure including interest payment on its debt.
(4) total revenue including grants and total capital expenditure including interest payments on its debt.
(5) total revenue including grants and total recurrent expenditure including interest payments on its debt.
Correct Answer:
(2)
Answer Explanation:
The Primary Balance measures a government’s current fiscal effort. It is calculated by taking the overall Budget Deficit and subtracting the interest payments (debt service) on past accumulated debt. It shows if current revenues can cover current non-interest spending.
Topic: Public Finance Year: 2021
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