Glossary:Net lending net borrowing
Net lending (+)/ net borrowing (-) is a national accounts balancing item. It is the last balancing item of the non-financial accounts - namely the balancing item of the capital account.
It can be used in the context of the domestic economy as a whole, but is most frequently used in the context of the Excessive deficit procedure (EDP) and government finance statistics; i.e. in the context of the net lending (+)/ net borrowing (-) of the general government sector. When the balancing item is positive, a surplus is said to exist, when it is negative, there is a deficit.
It can be derived as follows:
Net lending (+)/ net borrowing (-)
=Government surplus / deficit (net lending/ borrowing under EDP)
= gross saving (defined as gross disposable income less final consumption expenditure) less net capital transfers less gross acquisitions less disposals of non-financial assets
= total revenue less total expenditure
= (conceptually) net acquisition of financial assets less net incurrence of liabilities, called net financial transactions.