Budget Essay

12272 Words Oct 7th, 2012 50 Pages
Budget:
An estimate of income and expenditure for a set period of time.
Budget (from french bougette) generally refers to a list of all planned expenses and revenues.
A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods. In other terms, a budget is an organizational plan stated in monetary terms.
The budget of a government is a summary or plan of the intended revenues and expenditures of that government.
Budget Preparation
A full understanding of the budget planning and preparation system is essential, not just to derive expenditure projections but to be able to advise policymakers on the feasibility and desirability of specific budget proposals, from
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Are there separate economic and functional classifications that meet international standards? * Is it easy to connect policies and expenditures through a program structure?
Realism
* Is the budget based on a realistic macroeconomic framework? * Are estimates based on reasonable revenue projections? How are these made, and by whom? * Are the financing provisions realistic? * Is there a realistic costing of policies and programs and hence expenditures (e.g., assumptions about inflation, exchange rates, etc.) * How are future cost implications taken into account? * Is there a clear separation between present and new policies?
How far are spending priorities determined and agreed under the budget process?

In most Organization for Economic Cooperation and Development (OECD) countries, comprehensiveness and transparency are achieved by designing a budget system with three key characteristics.
Annuality. A budget is prepared every year, covering only one year; voted every year; and executed over one year. While maintaining the core concept of annual authorization, this principle has been modified at the preparation stage, such that most OECD countries now develop the annual budget within a multiyear perspective, through the preparation of medium-term revenue and expenditure frameworks. A very few are moving toward determining budget appropriations for more than one year at a

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