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Describe the various purposes, as discussed in the literature, of budgeting for national governments. Discuss the relative importance of these purposes and the ways in which some of the purpose may conflict.
Finance & Accounting
Pages 16 (4016 words)
The purposes on which the budgeting for national governments is based are critically reviewed in this paper. Particular emphasis is given on the conflicts that can possibly appear between these purposes. Two different perspectives are presented: a Micro-perspective and a macro-perspective…
In the case of micro-perspective reference is made to the criteria on which government budgets are based and the methods involved for developing the relevant process. The macro-perspective focuses on all aspects of the distribution of the relevant benefits among the stakeholders. It seems that, when referring to budgeting for national governments, conflicts are unavoidable. Still, measures can be taken so that the effects of these conflicts on public interests are minimized. Moreover, it has been proved that each government tends to use different techniques for managing conflicts related to budgeting at national level. The social and political framework of each country and the strength of the economy are the key factors influencing governmental decisions related to national budget.
The use of national budget, as a tool for controlling the national economy, is related to a series of purposes. In order to understand these purposes, in terms of their role and their content, it would be necessary to review primarily the characteristics of national budget, the rules on which its operation is based and the mechanisms, if any, of its monitoring. Budget, as a term, can be used for describing the categorization of costs and income related to a particular economic activity so that the financing of the specific activity to be appropriately arranged. The term budget can be related not only to the economic life of a nation but also to the activities of enterprises; reference is made to the company budget, as opposed to the national budget.
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