What is the difference between a budget surplus and a budget deficit?

A budget surplus occurs when a government’s revenues exceed its expenditures over a specific period, meaning that the government has extra money left after fulfilling its financial obligations. This surplus can be used to pay down existing debt or saved for future use. In contrast, a budget deficit happens when a government’s expenditures surpass its revenues, leading to a shortfall that needs to be covered by borrowing or increasing taxes. While a budget surplus is generally seen as a positive sign of fiscal health, a budget deficit may indicate that a government is overspending or facing economic challenges.