Understanding the budget structure, planning, preparation, and execution is essential not only for deriving expenditure projections but also for advising policymakers on the desirability and feasibility of certain budget proposals from a microeconomic and macroeconomic perspective. It is important and viable to control the government budget at the point of preparation than later at the point of execution of the budget. Budget planning should be at the center of public expenditure management. To attain such, public expenditure management should control the overall expenditure for affordability and consistency with various macroeconomic contains. Furthermore, proper budget management is essential for the proper allocation of resources, efficient and effective delivery of public services, and proper execution of the budget, cash, and debt management. Budget preparation is a process guided by a legal framework. In essence, a process with designated individuals and organizations that have defined duties and responsibilities should be accomplished within a given timeframe. A legal and regulatory framework governs the whole process. Budgets are based on a macroeconomic assessment of the available finances and revenues, meaning that the objective of any budget should ensure comprehensiveness, transparency, clear accountability, and orientation towards the prescribed policies and regulatory frameworks. Various legal frameworks that include the constitution, organic law, and financial regulations regulate the budgeting process of the federal government. The process of budgetary management assigns different powers to the executive and the legislative (Congress and Senate) arms of government. The branches have different powers. The legislative has the power to propose spending and the power of the budgetary amendment. The sources of finances for the activities in the budget include borrowed resources, revenue accounts, multiple funding, special funds, contingency funds, and extra-budgetary mechanism. The legislative understanding and undertaking within the budget are done through discussions where the necessary amendments are made. Nevertheless, the executive, in conjunction with the legislature, normally forms part of the budgetary negotiations. It is worth noting that the treasury is responsible for the preparation of the budget in collaboration with smaller spending agencies. The central budget department within the treasury or the ministry of finance oversees the whole process. The reading made me understand certain aspects of the budgetary process. The first step in the process of budgetary preparation should encompass the establishment of the macroeconomic framework for a specific budget year. The macroeconomic projections are essential since they determine the permissible level of expenditure based on the level of revenue and the projected deficit that will guard against adverse economic effects. Using the legal framework to limit recurrent and total spending is essential in determining acceptable levels of expenditure. It is imperative to note that the principles are standard, but the practice may fall short of the set guidelines based on the prevailing conditions. For instance, certain ministries tend to use the bottom-up approach, which means that they may overstate the estimates and their needs, thereby exerting pressure on the overall spending. It is imperative to note that budget systems are not perfect since they have weaknesses in the preparation systems that may include their scale and nature. Therefore, the budgetary structures should consider the fact that the federal or central government is not unified. It is essentially a dual-budget system with separate capital and recurrent budget. The budget stems from inconsistent assumptions, accounting rules, and budget classifications. A comprehensive macroeconomic analysis is essential to ensure a comprehensive and relevant budget that meets the expenditure and financial requirements of a country. The objective is to carry out and subsequently refer to a macroeconomic prognosis between the government and those undertaking the budget planning.
References
Chapter 11: Public Budgeting in Context: Structure, Law, Reform, and Results
Chapter 12: Financial Management for Public, Health, and Not-for-Profit Organizations
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