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Arguments in the Balanced Budget

Ideally, the budget of any level of the budgetary system of the state must be balanced. However, due to various factors (economic, political, natural, etc.) there might be a situation when budget revenues (tax and non-tax) do not cover all the expenses necessary for the appropriate level of budgetary system.

The principle of a balanced budget is one of the most important principles of the budget system of any state. It lies in the fact that the total amount of budgeted expenditures must correspond to the total volume of revenues. Inflows in the budget are not only revenues, but also other sources, such as borrowings. Thus, the mere existence of the budget deficit does not mean the imbalance in the event if there is equality between the expenses and the total value of revenues. Unbalanced budget (one where the volume of expenditure exceeds income) actually cannot be called a budget, as it can’t be implemented.

Creation of the budget surplus (revenues excess expenditures) also entails negative consequences. Budget surplus will result in a decrease of the use efficiency of budget funds and, as a consequence, the burden on the economy will increase. Therefore, a balanced budget is a fundamental requirement for bodies that prepare and approve the budget.

A balanced budget is the basis for the normal functioning of the state administration and administrative-territorial formations. If even a small part of the budget is not balanced, it can lead to delay in financing the budgetary institutions, disrupt the timing of state and municipal orders, and the emergence of non-payment problems in the national economy. The ideal situation would be a fully balanced budget, when expenditure is fully consistent with the volume of income.

A number of methods are used to achieve a balanced budget:

  • Limitation of budget expenditures.
  • Distribution of revenues between the budgets of different levels according to the distribution of their spending authority.
  • Measures to maximize budget revenues, identification of additional reserves based on the monitoring of public institutions activities.
  • Modernization of budget management in the sphere of inter-budgetary relations.
  • Planning the budget expenditures that result in a potential increase in revenues due to economic stimulus and effective solutions to social problems.
  • Following the principle of cost savings.
  • The use of such forms of budgetary borrowing, which provide the most reliable and effective inflow of funds from the financial markets.

Ideally, the budget of any level of the budgetary system of the state must be balanced. However, due to various factors (economic, political, natural, etc.) there might be a situation when budget revenues (tax and non-tax) do not cover all the expenses necessary for the appropriate level of budgetary system.

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Assignment ID
100001141
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CREATED ON
3 September 2016
COMPLETED ON
5 September 2016
Price
$34
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18 April 2018
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