Budget Essay

12259 Words Sep 24th, 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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Budget preparation is the principal mechanism for achieving items (1) and (2); item (3) typically features as an element of budget preparation only in industrial countries, while item (4) is essentially an issue in budget execution and cash management (see Sections 4 and 5). Moreover, no system of budget execution or cash planning (the subjects of Sections 4 and 5) can do more than mitigate the problems caused by poor quality or unrealistic budget preparation.
To understand the budget preparation process in a given country, it is important to: * assess the basic soundness by judging the budget preparation system against certain internationally accepted standards or "budget principles"; * know where to find the rules governing the budget preparation process; and * from those rules, identify who has the responsibility for what elements of the budget preparation process. * Recognizing the usefulness of budget principles
Based on the objective macroeconomic assessment of available revenues and financing, ideally, the expenditure budget should aim to be comprehensive, transparent, realistic, policy-oriented, and allow for clear accountability in budget execution. These concepts form a standard by which the soundness of budget systems can be judged:
Box 1. Assessing the Soundness of the Budget
The soundness of budget systems can be judged by the following:
Comprehensiveness
* Is the

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