Eelarvepuudujääkide

Eelarvepuudujääkide is an Estonian term referring to budget deficits. A budget deficit occurs when government expenditures exceed government revenues in a fiscal period. This can happen at national, regional, or local levels. When a government spends more than it collects in taxes and other income, it must borrow money to cover the difference. This borrowing can lead to an increase in national debt.

There are several reasons why budget deficits might arise. Economic downturns can reduce tax revenues as incomes fall and unemployment rises. Increased spending on social programs or infrastructure projects can also contribute to a deficit. Unexpected events, such as natural disasters or wars, may necessitate significant government spending, potentially leading to a deficit if revenues are not simultaneously increased.

Governments can address budget deficits through various measures. Raising taxes or increasing fees for government services can boost revenue. Conversely, reducing government spending on programs and services can lower expenditures. Borrowing from domestic or international sources is another common method to finance a deficit, though this increases the national debt. The management of budget deficits is a key aspect of fiscal policy, with different economic schools of thought offering various perspectives on the optimal approach. Persistent and large deficits can have long-term economic consequences, including higher interest payments on debt and potential inflation.