Quite often, we hear such a thing as “budget balance,” but not everyone knows what it is. In this article you will find answers to many questions of interest to you related to this term.
As you know, the budget consists of two parts that are interconnected - revenue and expenditure. When they are equal, spending obligations do not exceed revenues, the budget can be called balanced. Income in this case includes the volume of all funds expected for a certain period of time, including borrowing from other states, associations, etc.
Balancing the budget is the key to the prosperity of the country as a whole and each person in particular. The slightest imbalance can lead to a number of negative consequences: interruptions in the financing of budgetary institutions, problems with the repayment of external debts, arrears in payments to the national economy, the decline in the national currency, the disruption of municipal and state orders, and much more.
If during the preparation of the budget an excess of the revenue part over the estimated expenses was allowed, then this is considered a surplus. At first glance, it may seem that this is a positive phenomenon. But in fact, adhering to such a concept, the efficiency of the use of budgetary funds decreases, as a result of which the burden on the economy increases, thereby putting pressure on the business, slowing down its development or leading to bankruptcy. Excessive mobilization of the revenue side often leads to negative consequences.
If, in the process of budgeting, expenditure obligations exceed the estimated amount of income, then it is considered to be in deficit. This mainly happens when the development of the country's economy lags far behind the needs and requirements of society. As a result, the state begins to experience an economic downturn. Due to the issue of unsecured money, inflation is increasing. Methods that are quite popular in our time, which allow balancing the budget (raising taxes, utility bills, etc.), lead to the fact that a significant part of the business goes into the shadows, increasing shadow capital. As for the social side of adopting a deficit budget, the costs of healthcare and social security of citizens are significantly reduced, and payments for education and programs to combat unemployment are reduced . The general standard of living of the population is falling.
Balancing the budget depending on the time frame can be short-term (1 year), medium-term (period from 3 to 5 years) or long-term (perspective for a decade). Such a division helps to monitor and draw appropriate conclusions about the effectiveness of government robots.
In order to balance the budget, all levels of government should take part in its development. The main methods used in budgeting can be conditionally divided into two groups. The first - a balanced budget is achieved during its formation. That is, targeted limited flow of funds to those sectors where they are most needed, adequate, clear distribution of funds between budgets of all levels, balanced budgets at different levels, austerity. Searching for new sources of income, reducing the volume of the public sector of the economy, in extreme cases, budget borrowing. All this must be calculated and written down before the budget is approved and enters into force.
The second group is those methods that are resorted to in the process of budget execution. These include strict adherence to the limits approved in the budget, a clear definition of the timing for spending, the current mechanism by which you can block costs.