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Glossary · PSX term

Fiscal deficit.

A fiscal deficit is when a government spends more than it collects in revenue.

Definition

Pakistan funds its fiscal deficit through borrowing, which can crowd out private credit and add to debt servicing costs. A large deficit can pressure inflation, rates, and investor confidence.

Worked example

If the government spends far more than it raises in tax, the gap is the fiscal deficit, covered by borrowing.

Related on PSX Clarity

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Policy rate
Term
Inflation
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Treasury bills (T-bills)
Term
IMF programme

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