India Markets open in 4 hrs 39 mins

Nations with budget surpluses and deficits

A budget surplus arises when the government’s income from various sources, including tax revenues, exceeds outlays or expenditure. A deficit is just the opposite.

Singapore is one nation that just announced an impressive budget surplus which equalled 2.1 percent of gross domestic products (GDP). It was on the back of rising property transactions that resulted in increased stamp duty collections and contributions from statutory boards. Apart from investing the money in infrastructure development and welfare projects, the government might also provide cash handouts to its citizens.

Such largesse, while being a regular feature of budgets in many developed nations, are a distant dream for others. War ravaged or corruption ridden, or simply affected by macro-fundamentals, such nations have seen their sources of income dwindle and expenditure rise. This has resulted in massive deficits which in turn is threatening their macro-economic stability.

Following is the list of some of the prominent nations running a surplus and those mired in considerable deficits.

Macau (surplus)

The gambling hotspot has been doling out cash – about US$1,117 per person – since 2008 on account of budget surpluses. Money earned through tourism and casinos coupled with judicious spending has helped it pile cash. As per rating agency Fitch’s, Macau’s fiscal surplus rose to 10 percent of GDP in 2017 but this year it may come down to 7.2 percent owing to lesser revenue pulled in from the gambling industry.

Hong Kong (surplus)

Macau’s next door neighbour, Hong Kong too has had budget surplus – almost 10 years in a row on account of a booming property market that has helped to rake in billions through stamp duty revenues and land sales. And in November last year, it breached all estimates to rack up a cumulative surplus for the year of HK$57.2 billion, four times the initial estimate of HK$16.3 billion for fiscal year 2017-18. This year, the nation is set to see even greater surplus. However, unlike Macau, its government may not go for cash handouts. Instead, it would funnel the money into long term development and short term rebates and relief measures, especially towards elderly care, medical services, research and creative industries.

Norway (surplus)

Norway is flush with funds on account of its oil fund – a fund that invests revenues from petroleum in financial assets abroad – that has grown at a dizzying pace. The fund’s assets has risen 13-fold since 2002. This has enabled its government to announce sizable annual budget surpluses.

Sweden (surplus)

In 2016 Sweden held the second spot in the Eurozone for a budget surplus (1.1 percent of the GDP) and even though revenues earned the next year were lesser, the surplus continued. The Nordic country’s tight fiscal policies, cost control and greater number of jobs translating into more income tax has mainly helped it to earn a surplus.

Germany (surplus)

For four consecutive years, Germany has achieved a budget surplus. This is mainly owing to the rise in tax revenue due to economic growth. Apart from that, low yields on public bonds due to ultra-loose monetary policy of the European Central Bank (ECB) 2015 onwards, have also allowed the authorities to decrease their financial liabilities.

Timor Leste (deficit)

Also known as East Timor, a tiny dot on the map, it tops the list of nations with the largest budget deficits. One of Southeast Asia’s poorest nations, its economy has taken a major blow on account of falling oil prices, which along with gas is its key resource. Almost 78 percent of the state budget for 2017 was funded with oil and gas revenues, but the bad news is the nation’s sole operational gas field is expected to run dry by 2020. And with extreme poverty, little employment and alternative sources of revenue generation such as coffee and tourism hardy helping, the government’s budget deficit may widen further.

South Sudan (deficit)

A civil war that broke out in 2013 left the nation high and dry on account of most oilfields shutting down in the oil-rich in Northern region. It severely dented its main source of revenue – oil exports which contributes almost 98 percent. As the nation struggles to find other sources of revenue, it has increased borrowing through Treasury Bills and gone for tougher financial regulations to fund salaries, transfers, peace initiatives and agriculture.

 Libya (deficit)

Conflict hit the nation hard and its economy plunged on account of depleting oil revenues which is a primary source of income for the nation. The budget deficit ballooned to over 20 percent. However, with oil revenues increasing again, notwithstanding the continued political and economic crisis, deficit nearly halved last year. Majority of its spending is on salaries and on subsidies.

Venezuela (deficit)

Decline in oil prices coupled with the mismanagement of the dominant public oil company resulted in its earnings going for a toss and thus brought about an alarming budget deficit. The nation is also plagued with hyperinflation on account of it.

Afghanistan (deficit)

Yet another war-torn nation with high spends on military and its earnings reduced dramatically with plunging oil prices witnessed a massive budget deficit that has continued till date because of dismal economic growth.