Question

Primary deficit in a government budget equals : (Choose the correct alternative)

a. Interest payments
b. Interest payments less borrowings
c. Borrowings less interest payments
d. None of the above

Answer 1

Borrowings less interest payments

Primary deficit is the difference between the fiscal deficit and interest payment. Primary deficit = Fiscal deficit − Interest payment It determines the amount of borrowing which is necessary for the government to pay for the expenses other than interest payments