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Government Deficit or Surplus

Government deficit or surplus is calculated for a given fiscal year by the fomula:

[ deficit or surplus = revenue + grants received - expenditure + (lending - repayments) ]

Deficit or surplus is also equal, with the opposite sign, to the sum of the net borrowing by the government plus the net decrease in government cash, deposits, and securities held for liquidity purposes.

Government deficits and surpluses build the yearly flows that feed the government debt. Government deficit, as well as debt, are two key indicators of the European Monetary Union convergence criteria.

Source: IMF - International Monetary Fund)