A deficit (from the Latin deficere , which can be translated as "missing") is the scarcity, impairment or deficiency of something that is needed or is considered essential. The term can be applied to different products or goods, from food to money. It is used mainly in a commercial context, in the field of companies and States.
For example: "The government is concerned about the oil deficit" , "The company has a significant liquidity deficit that makes it difficult for us to pay salaries" , "The lack of qualified teachers is the main deficit of this town" .
The notion of budget deficit, which is associated with the Public Administration, occurs when the expenditures made by the State exceed its income during a certain period of time. The public deficit, therefore, is the balance of the accounts of the various public administrations of a country, from the national to the municipal.
That said, it should be noted that whenever the term deficit is used, one is thinking of the lack of an important good for subsistence, because there is not enough money to acquire it, and above all it is state goods, or a deficiency in the supply of goods, from the State to the society in question; When the balance is made and in the absence of a good distribution of the budget in the acquisition of goods and services, a negative balance is reached. In any case, the term may also appear to refer to mishandling that a person makes your economy and that prevents you from accessing certain goods or services that could be essential (such as health or food, among others).
If the government does not manage to incur more debt (that is, they do not lend it more money) and it no longer has reserves to cover its expenses, it will only be able to attack the deficit by borrowing from the country's own central bank.
It should be noted that it is said that a State has a fiscal deficit, when over a certain cycle of time it has spent more money than it has collected in a certain sector of the public administration. On the other hand, if we speak of public deficit, we are referring to a deficiency in the balance of all sectors of the Public Administration.
The balance of payments (or balance of payments) is the accounting report that is responsible for keeping track of the movement of capital and trade operations carried out by citizens of a country abroad. The balance is known as the difference that arises between the income obtained from abroad and the payments made outside the national territory.
When that difference is negative, we speak of a trade deficit. On the other hand, if the difference is positive, we are in a surplus situation.
Finally, it is worth mentioning a term that is related to deficit, trade balance, and is also very important. It refers to the registry of imports and exports that a State has and the economic balance as far as these negotiations are concerned. In other words, the difference in the balance of both types of transactions. If the quantity of goods that the State exported is higher than the quantity it imported, it is in front of a trade surplus.
To combat the deficit, the States carry out plans in the economy that include adjustments in the public sector, such as a reduction in the salaries of employees in this sector or elimination of expenses that are considered superfluous, among other implementations.