Government Budget: Definition, Features & Problems of National Budget

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What is Government Budget?

Government Budget is a detailed statement indicating estimates and sizes of anticipated revenue and proposed expenditures for a period of time, usually a year.

When a government decides to spend more than its revenue, it is said to have a Deficit Budget and when it plans to spend less than its revenue, it is said to operate a Surplus Budget.

Government Budget
Government Budget

On the other hand, if a government plans to spend exactly the size of its anticipated revenue, it is said to have a Balanced Budget or a Zero budget.

A deficit budget is normally financed through borrowing either domestically or from abroad. Surplus budget on the other hand can be used to retire part of the national debt. Domestic borrowing is done through the sales of treasury bills and development stocks by the Central Bank, while debt retiring can be done through the purchase of these financial instruments.

Problems of National Budget

  • Unfaithful implementation by all concerned.
  • Late approval of the budgets by the National Assembly.
  • Capacity issues there are some people who may not have the capacity to implement the budget as much as would be expected of them.
  • Issues pertaining to implementors who do not really understand the public procurement guidelines.
  • Weather issue in tenns of the seasonality for agriculture and road projects, which cannot be executed at inclement seasons.

The bottom line for any budget is to improve the quality of life of the people. It is therefore the responsibility of government to ensure that this objective is achieved through faithful implementation of nation’s budget.

Structure of Public Expenditure

The expenditure side of the budget normally has two components recurrent and capital expenditure.

  • Recurrent expenditure: This constitutes government spending on wages and salaries of civil servants and the general maintenance of public services and property. It is recurrent because they occur every year.
  • Capital expenditure: This constitutes the investment made in acquiring things like machinery and equipment and structures like office accommodation, roads, bridges, power stations and port facilities, etc.
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