A budget deficit occurs when a government spends more money than it receives in revenue.
This means the government has to borrow money to cover the gap.
For example, if a government collects $100 billion in taxes but spends $120 billion on public services, it has a budget deficit of $20 billion.
While deficits can help stimulate the economy during tough times, long-term deficits can lead to higher debt and interest payments.