BUDGET DEFICIT AND ITS IMPACT IN THE MACRO FISCAL STABILITY

Abstract

This paper represents an analysis of the impact of the budget deficit in the macro fiscal stability in the study case of Kosovo in order to see what development level Kosovo is in, compared to region countries. It’s clear that in the study case of Kosovo, the government ambitions to accommodate spending politics with the purpose of long term political profits caused that the increase of the budget deficit and as a result to influence in the level increase of the public budget. The implementation of the fiscal expansive politics has an impact on the increase of available revenues for family economics and businesses, which influences the increase of consumption and investments, which also affects the trade balance. The budget deficit affects in the increase of budget’s stock and consequently in the increase of norm’s interest which has an impact on the increase of financing’s cost. An increase of norm’s interest influences the decrease of investments in economy, and as a consequence there’s a slowdown of the economical increase that is reflected in budget revenues and also in available revenues for family and business economics. Considering the economical structure of Kosovo, it is essential that the implementation of government politics is done in harmony with economical development’s trends and not within political points by going beyond real budget capacities.