Chapter 6 Section 6 6 Financing budget deficits PSAR 2

CPFM PSAR 2 (Public Sector Accounting and Reporting), Chapter 6, section 6.6: how a budget deficit is financed. The four main ways, what each gives and what each costs, the other ways to close the gap, then a pilot-paper question worked step by step. Domestic borrowing (Treasury bills and bonds), external borrowing (concessional loans, capital markets, Eurobonds), grants from development partners and monetary financing from the central bank What each way gives and what it costs: crowding out, exchange-rate and debt risk, unpredictable grants, inflation; privatisation, reserves and more domestic revenue Pilot paper, October 2025, Question 3(a): four ways to finance budget deficits, 4 marks Timestamps 0:00 Welcome 0:37 A gap that someone has to fund 1:15 Way one: domestic borrowing 2:08 Way two: external borrowing 2:52 Way three: grants from development partners 3:25 Way four: monetary financing 3:59 Beyond the four: assets, reserves and revenue 4:22 Name it, explain it, weigh it 4:38 Where deficit answers go wrong 4:58 Question 1: pilot paper, October 2025, Q3(a), 4 marks 5:22 The four ways, explained 6:21 Who pays for the gap, in three lines More at https://learnipsas.com If this helped you, please subscribe and share it with your colleagues and classmates. #IPSAS #PublicSectorAccounting #CPAYussuf