Essay: Insufficiency Based Funding

Sample Essay

A funding strategy based on deficit is more than often implemented by using bond issuance procedures. This allows the generation of interest for a period of time depending upon the nature of the bonds issued. However, a state may end up becoming a defaulter if the payment of the its debts if the repayments are too large to handle.

Surplus utilization

When a surplus is observed, the state often chooses to save up the attained surplus to bring into use in case it becomes the requirement of a future scenario in which the state finds itself. Surplus saved through this technique has usually been observed to be brought into use when income rolling in from taxes and other similar channels falls short than the required amount. If a saving has not been previously made, the state can run into a deficit unless the state reduces spending accordingly.

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