What is a sustainable deficit?

A sustainable deficit refers to a situation where a government can maintain a budget deficit over time without leading to excessive debt accumulation that could jeopardize its financial stability. This occurs when the government's borrowing costs are manageable and its economic growth is sufficient to support ongoing deficits. Essentially, a sustainable deficit allows a government to invest in growth while ensuring that its debt remains at a level that can be serviced without compromising fiscal health.