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Questions
What is the primary deficit?
Explain following concept in your own words
Primary Deficit
Explain
Short Answer
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Solution
- Primary deficit is equal to fiscal deficit minus interest payments.
- It shows the real burden of the government and it does not include the interest burden on loans taken in the past.
- Thus, the primary deficit reflects the borrowing requirement of the government exclusive of interest payments.
Primary Deficit (PD) = Fiscal deficit (PD) – Interest Payment (IP)
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