Question

Mandovia is a developing country which has access to limited resources. the total national expenditure of mandovia amounts to $200 billion annually. however, the country only generates $150 billion from taxes annually. in this scenario, mandovia is facing:

Answer 1

I would say that if Mandovia is spending $200 billion annually and only taking in $150 billion in taxes if that is its' only source of income ie the government then it would be facing bankruptcy or else financing the other $50 billion with loans from another country or institution which would mean extra interest costs. This could be withstood for awhile if it was known that renewed income would come in shortly in the form of higher say commodity prices for industries which could result in higher tax income in the near future, say.