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Soft budget constraint

A limit to spending by some public body where those supposed to be subject to it believe that the consequences of breaching it will not be serious. For example, the managers of state-owned firms may believe that if they run at a loss, or make smaller profits than they have been instructed to, the state will meet the firm’s losses, and not sack them. See also hard budget constraint.

Reference: Oxford Press Dictonary of Economics, 5th edt.