In the Ethiopian context, three methods that the government can use to finance a national budget deficit are:
1. Borrowing from foreign sources: The government can obtain loans from international financial institutions or foreign governments to bridge the budget deficit. This can be done through issuing sovereign bonds, obtaining concessional loans, or accessing funds from global development organizations like the World Bank or the International Monetary Fund.
2. Domestic borrowing: The government can also raise funds domestically by issuing treasury bills, bonds, or other debt securities. These can be purchased by local banks, institutional investors, or the general public. The government may also borrow directly from the central bank or commercial banks by issuing short-term securities or overdraft facilities.
3. Revenue generation: The government can increase its revenue through various means to finance the budget deficit. This can involve raising taxes or introducing new tax policies to increase tax collection. Additionally, the government can explore alternative sources of revenue such as privatization of state-owned enterprises, licensing fees, or imposing levies on particular sectors or industries.
It is important to note that the methods chosen by the Ethiopian government to finance a budget deficit should be carefully balanced to avoid excessive debt burdens or negative impacts on the overall economy.
identify three methods that the government can use to finance national budget deficit ( Ehoipian context )
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