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What is the Deficit? The federal government deficit is the current gap between the money brought in as revenue and the money going out as spending. The federal government debt is the cumulative amount of money borrowed. You probably have to incur debt to cover a deficit, but a deficit can be temporary while a debt may stick around for a while.
The government covers its budget deficit by borrowing from the central bank of country in two ways . Each methods has its own implications. An estimated 6% budget deficit faced by Pakistan every year. Similarly. surplus of money supply contributes to expand imports and general price level (Mankiw. Romer. Swift population growth is attached with low economic growth in Pakistan. we discuss the main sources of financing and its effects on our economy.