The right priorities

Even if domestic revenue is inadequate, the government needs to pay for recurrent expenses, including salaries to its employees, at any cost. Also, the peoples’ demands for development cannot be ignored even at the time of revenue crunch, which means that the government is always in need of cash. In such times, the government normally goes for the option of raising funds through domestic and international borrowing. In short term, such loans work as a source of deficit financing, but if the borrowed fund cannot be utilized properly, the country might enter a debt trap.