Question

Primary deficit in a government budget equals : (Choose the correct alternative)

• A. Interest payments
• B. Interest payments less borrowings
• C. Borrowings less interest payments
• D. None of the above

Answer 1

The correct option is C Borrowings less interest payments

Primary deficit in a government budget is the difference between the fiscal deficit and the interest payments. As fiscal deficit implies the borrowing requirement of a country, primary deficit indicates the amount of borrowings required by the government to meet the expenditure other than interest payments.
Hence, the correct answer is option (c).