Question

The Primary Deficit is always smaller than the Fiscal Deficit because:

Options

• Non-debt creating capital receipts are added to the Primary Deficit

• Interest payments are subtracted from the Fiscal Deficit

• Revenue receipts are subtracted from the Fiscal Deficit

• Capital expenditure is added to the Fiscal Deficit

Answer 1

Since \[ \text{Primary Deficit} = \text{Fiscal Deficit} - \text{Interest Payments} \], the Primary Deficit is always smaller than the Fiscal Deficit, because interest payments on past debt are subtracted from the latter.