When a government’s spending exceeds its tax revenue during a given period, the result is a budget deficit.
A budget deficit is a flow measured over a period such as a fiscal year. Governments can cover the shortfall by borrowing, commonly through issuing bonds. The deficit is therefore not the same as public debt: debt is the accumulated stock of past borrowing, while a deficit is the amount added during a particular period. Repeated deficits can increase debt, although economic growth and interest rates affect the debt-to-GDP ratio.
The opposite condition is a budget surplus, when revenue exceeds spending. A trade deficit is different again: it concerns a country’s imports and exports, not the government’s finances. “Fiscal gap” usually refers to a longer-term mismatch between projected public spending and revenues, including future commitments, so it is not the ordinary label for one period’s shortfall.
Economists also distinguish the primary deficit, which excludes interest payments, from the total or overall deficit, which includes them. Deficits may arise from deliberate stimulus spending, weak tax collections during a recession, structural spending pressures, or combinations of these factors.