View source for Fiscal Surplus

A '''fiscal surplus''' (also called a '''budget surplus''') occurs when a government's total revenues exceed its total expenditures in a given period, usually a fiscal year. It is the opposite of a [[Fiscal Deficit|fiscal deficit]]. A surplus allows a government to reduce its outstanding [[National Debt|debt]] or to increase its financial reserves.<ref name="wiki">Wikipedia contributors, "Government budget balance".</ref>

== Definition ==

A fiscal surplus arises when government revenue from [[taxation]] and other sources exceeds government spending. Like the deficit, the surplus is normally measured as a percentage of [[gross domestic product]] to facilitate comparison across countries and over time.<ref name="wiki"/>

== Causes ==

A fiscal surplus may arise from:

* Strong economic growth, which raises tax revenue automatically.
* Higher tax rates or a broadening of the tax base.
* Reductions in government spending.
* Windfall revenues, such as those from natural resources.

== Uses and consequences ==

{| class="wikitable"
! Use
! Effect
|-
| Repay debt
| Reduces the national debt and future interest costs.
|-
| Build reserves
| Provides a buffer for future downturns.
|-
| Increase spending or cut taxes
| May stimulate the economy, but may reduce the surplus.
|}

== Considerations ==

While a fiscal surplus reduces debt and can strengthen a government's fiscal position, it is not always desirable. A surplus achieved during a [[recession]] by cutting spending may deepen the downturn. Conversely, a surplus during a boom may help prevent overheating. The appropriate fiscal stance depends on the state of the [[Business Cycle|business cycle]] and the economy's long-term needs.<ref name="wiki"/>

== See also ==

* [[Fiscal Deficit]]
* [[National Debt]]
* [[Fiscal Policy]]
* [[Taxation]]

== References ==

<references />

[[Category:Economics]]
[[Category:Public economics]]
[[Category:Fiscal policy]]