Balance of the budget

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 of the questions that interest you, related to this term.

As you know, the budget consists of two parts, which are linked together - income and expenditure. When they are equal, spending obligations do not exceed revenues, the budget can be called balanced. Income in this case refers to the volume of all funds expected for a certain period of time, including borrowing from other states, associations, etc.

The balance of the budget is the guarantee of prosperity for the country as a whole and for everyone in particular. The slightest imbalance can lead to a number of negative consequences: interruptions in the financing of budget institutions, problems with the repayment of external debts, arrears in payments in the national economy, a decline in the national currency, disruption of municipal and state orders, and much more.

If the budget was allowed to exceed the revenue side of the estimated costs, then it is considered to be a surplus. At first glance it may seem that this is a positive phenomenon. But in fact, adhering to this concept, the effectiveness of using budgetary funds is reduced, resulting in increased workload on the economy, thereby exerting pressure on the business, slowing its development or leading to bankruptcy. Excessive mobilization of the revenue side often leads to negative consequences.

If, in the budgeting process, spending obligations exceed the estimated income, then it is considered deficit. This mainly happens when the development of the country's economy lags far behind the needs and requirements of society. As a consequence, the state begins to experience an economic recession. Because of the release of unsecured money, inflation is growing. Quite popular methods in our time, allowing to balance the budget (raising taxes, utility bills, etc.), lead to the fact that much of the business goes into shadow, increasing shadow capital. As for the social side of accepting a deficit budget, the costs for health care and social security of citizens are significantly reduced, payments for education and programs to combat unemployment are reduced . The general standard of living of the population is falling.

The budget balance depending on the timeframe can be short-term (1 year), medium-term (period from 3 to 5 years) or long-term (perspective for a decade). This division helps to monitor and draw appropriate conclusions about the effectiveness of the government's robots.

In order to balance the budget, all levels of the power structure should participate in its development. The main methods used in drafting the budget can be conditionally divided into two groups. The first - the balance of the budget is achieved during its formation. That is, the target limited allocation of funds to those sectors where they are most needed, an adequate, clear allocation of funds between budgets of all levels, a balance of budgets at different levels, austerity. Finding new sources of income, reducing the volume of the public sector of the economy, in extreme cases, budgetary borrowing. All this should be calculated and recorded before the budget is approved and will come into force.

The second group - these are the methods that are used 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, an effective mechanism by which you can block costs.