BUDGET DEFICIT OF THE REPUBLIC OF SERBIA

Abstract

According to classical economic theory, the budget balance represents the only correct rule of financing public expenditure, since each deficit causes or borrowing, or the primary issue, which further leads to the fiscal burden in the long term. However, modern economic theory budget balance replace the economic balance, increasing the rates of economic growth and full employment. In developed countries, but also in developing countries and developing countries, often there is a policy of budget deficit. In this case expenses were regularly exceed revenues, with what is formed deficit far higher in developing countries due to lack of accumulation.

In a situation of declining aggregate demand and great economic depression, the policy of budget deficit is imposed as a necessary choice and the means to launch economic activity. The above fluctuations of such magnitude, the socio-economic trends are the main reason why the current fiscal practice of the Republic of Serbia has an active approach towards budget deficit. Current problems of public finance, among other things, are not sufficiently cover the deficit higher public revenues, in terms of the current fiscal pressure.