Part I: The dislike for fiscal deficits and the reality of their role in the economyBy Jesus Felipe and Mariel Monice SaulerTHERE APPEARS to be a broad consensus across the different sectors of our society that fiscal deficits are to be avoided. But it is important to understand that running a fiscal deficit is not tantamount to being corrupt or inefficient. As noted above, the three sectoral balances, government, domestic private sector, and foreign sector, add up to zero by construction. We hope the reader starts thinking about what this means and why looking at the fiscal deficit in isolation is dangerous. In most quarters, the Philippines runs a current account deficit (bars above zero in the graph), a fiscal deficit, and a domestic private sector surplus.