This article defines budget deficit simply as the difference between what the government spends and what it collects in taxes in a given period. It is a common, albeit rebuked knowledge, that the Philippine government has, for quite sometime, been spending more than what it has been earning. The outcome is that the deficit has to be financed either through local or foreign borrowing. Either way, government borrowing has its consequences, foremost of which is the increase in interest rates.
