Government budget value is a macroeconomic indicator that reflects the deficit or surplus of the state budget and is calculated as the difference between budget revenues and expenditures. Accordingly, if budget expenditures exceed its revenues, then one speaks of its deficit. If budget revenues, on the contrary, exceed its expenditures, then this indicates a budget surplus.
The main reasons for the budget deficit are an increase in budget expenditures, a decrease in the level of government revenues due to the economic downturn, and an ineffective tax policy. The budget surplus, in turn, arises due to the tough economic policy pursued by the state and leads to a lack of free funds in the country’s economy.
Government budget value is an absolute indicator, the data on which are published by national statistical offices, central banks, ministries of finance, and treasuries on a monthly basis (for example, in the USA, Austria, China, Russia, and Poland), quarterly (in the Netherlands, Norway, Japan, Lithuania, and Hong Kong), and annually (for example, in Switzerland, Saudi Arabia, Indonesia, Eswatini, and Qatar). In most countries of the world, this indicator is calculated and published in national currency (as, for example, in Brazil, Bulgaria, and Canada).
In order to assess and analyze the deficit/surplus of the state budget and compare it with other countries, an indicator such as the government budget balance to GDP is used. This indicator is calculated as a percentage of the budget deficit/surplus to the gross domestic product. In most countries, the government budget balance to GDP is calculated and published on an annual basis.
As of the end of 2019, the largest values of the budget surplus to GDP are observed in Norway, the Faroe Islands, the Cayman Islands, Bosnia and Herzegovina, and Chad. The graph below shows the dynamics of the values of the government budget balance to GDP in these countries, starting from 2015.
Libya, Maldives, Seychelles, Iraq, and Lebanon can be cited as examples of strong budget deficits to GDP as of the end of 2020. The graph below shows the dynamics of the values of this indicator in these countries.
In the countries represented, an increase in the deficit in 2020 was noticeable, which was caused by the global economic crisis. Most countries responded to the crisis with an increase in spending, while a decrease in economic activity led to a drop in GDP and budget revenues.
In a number of countries around the world, the maximum permissible values of the government budget balance to GDP have been established. Thus, in the European Union, according to the Maastricht Treaty, signed in 1992, the state budget deficit should not exceed 3% of GDP.
When planning the budget, the state can set the planned values of the budget deficit to GDP. For example, in Russia in 2021, the budget deficit is planned at the level of 2.4% of GDP, in 2022 - at the level of 1% of GDP, in 2023 - 1.1% of GDP.