3 How to calculate primary surplus and debt reduction?

To calculate primary surplus and debt reduction, you need to know a government's revenue, expenditure, interest payments, and debt. The formulas are:

Primary surplus = Revenue - Non-interest expenditure

Debt reduction = Debt (end of period) - Debt (start of period)

You can also express these indicators as a percentage of GDP, which is the total value of goods and services produced in a country or region. To do this, you need to divide the indicators by GDP and multiply by 100. The formulas are:

Primary surplus (% of GDP) = (Revenue - Non-interest expenditure) / GDP * 100

Debt reduction (% of GDP) = (Debt (end of period) - Debt (start of period)) / GDP * 100

4 How to interpret primary surplus and debt reduction?

Primary surplus and debt reduction can help you assess a government's fiscal position and performance. A high primary surplus indicates that a government has more fiscal space and flexibility to invest, save, or reduce taxes. A low or negative primary surplus indicates that a government has less fiscal space and may face fiscal pressures or constraints. A high debt reduction indicates that a government is improving its debt sustainability and reducing its interest burden. A low or negative debt reduction indicates that a government is worsening its debt sustainability and increasing its interest burden.

5 How to compare and benchmark primary surplus and debt reduction?

To compare and benchmark your primary surplus and debt reduction performance, you can use data from international organizations, such as the International Monetary Fund (IMF), the World Bank, or the Organisation for Economic Co-operation and Development (OECD). These organizations collect and publish data on fiscal indicators for different countries and regions, and often provide analysis and recommendations. You can use their data to see how your indicators compare with the average, the median, or the best performers in your region or income group. You can also use their data to see how your indicators relate to other factors, such as economic growth, inflation, or exchange rates.

6 How to improve primary surplus and debt reduction?

To improve your primary surplus and debt reduction performance, you need to adopt sound fiscal policies and practices. This could involve broadening the tax base, improving tax administration, or introducing new taxes or fees to increase revenue. You could also reduce expenditure by prioritizing spending, eliminating waste, or reforming entitlements or subsidies. Additionally, you could manage debt by borrowing at favorable terms, refinancing existing debt, or reducing contingent liabilities. Lastly, you could enhance fiscal transparency and accountability by publishing fiscal reports, auditing public accounts, or engaging with stakeholders.