deficit financing

(redirected from compensatory finance)
Also found in: Dictionary.

deficit financing

The sale of debt securities in order to finance expenditures that are in excess of income. Generally, deficit financing is applied to government finance because income, represented by tax revenues and fees, is often unavailable to pay expenses. As with monetizing the debt, deficit financing puts upward pressure on interest rates because government debt securities compete with private securities for limited capital.

deficit financing

see BUDGET DEFICIT, PUBLIC SECTOR BORROWING REQUIREMENT.