A. A key instrument for the expression and execution of government economic policy

The external finance of nationalized industries and public corporations also has to be financed by the government from taxation or borrowing. One of the most important tasks of any government is to manage the public money efficiently. All governments have budgets, the major instruments of any financial system, which are plans for raising and spending funds and comprise the amounts of revenue, or money income, as well as the sources from which this revenue will be collected. The budget also lists the expenditures, or money to be spent, for various public purposes.

A government budget is the forecast by a government of its expenditures and revenues for a specific period of time. In national finance, the period covered by a budget is usually a year, known as a financial (BrE) or fiscal (AmE) year, which may not correspond with the calendar year. Usually financial or fiscal year is the 12-month period used by government departments for calculating budgets, accounts, etc. In Britain, it ends on April 5, but many British companies have the end of March or the end of December as the end of their financial year. The word budget is derived from the Old French boudgette ("little bag"). When the British Chancellor of the Exchequer makes his annual financial statement, he is said to "open" his budget.

In a market - oriented economy, the budget is the most significant tool for achieving priorities and goals through the allocation and distribution of resources, and the maintenance of a stable macroeconomic environment. The government budget usually performs its accounting function in the economy, which is called budgetary accounting. Traditionally the budget is presented to allow scrutiny(by taxpayers, voters and legislature) of the resources raised by a government and the uses to which these resources will be put. The publications of the budget thus perform the role of generating accountability for the action of the government at various levels.

Historically, the focus of budgets has been to ensure that expenditures and revenues are properly authorized; more recently, the budget has been developed as a framework within which complex decisions on the allocations of recourses can be made effectively. The budget is a key instrument for the expression and execution of government economic policy. Government budgets have wide implications for the national economy. By their very nature they effect a redistribution of income; by their scale they may promote or retard economic growth in general or in certain areas of economy. They are, therefore, political as well as economic documents and are products of the overt and covert political processes by which competing interests in any nation achieve agreement.

The budgetary process is the means by which the executive and legislative branches together formulate a coherent set of taxing and spending proposals. The mechanics of this process, and the relative roles of the two parts of government, differ considerably among countries.

Date: 2015-12-17; view: 922