Module 5 Flashcards
Types of Government Expenditures
Current Expenditure
Capital Expenditure
Transfer Payments
Exhausted Expenditure
It is a recurring expense. Such type of expenses are used in the terms of providing goods and services. It includes wage, salaries, and so on. It is also called regular expenditure
Current Expenditures
It is the expenditures in the assets such as in the purchase of items that last for the long period. For example, building hospital, constructing roads, etc.
Capital Expenditure
is a payment done for no goods and services. It includes the thing like pensions, allowances, benefits, lottery payments
Transfer Payments
Importance of Government Expenditure
- To maintain law and order
- To invest on social and economic overheads
is the main function of government. Without this, government are misplaced with their activities. To maintain this, government needs a huge amount of budget every year
To maintain law and order
for economic progress, firstly, there must be the development of socio-economic infrastructure like road, electricity, transportation, school, hospital, etc. It is possible with the public expenditure because to develop such infrastructures, here be huge
To invest on social and economic overheads
such type of expenditure is related to day to day activities. It constitutes the expenditure made on the following government organization:
Regular or Administrative Expenditure
It includes expenditure of Council of Ministers, Various Ministers, District Administrative Office Police Force, Jail Administration, etc.
General Administration
it consists of expenditure made on a collection of land revenue, custom office, inland tax department etc.
Revenue Administration
for the development of agricultural sector such as irrigation and power, seed farms, fertilizer factories,nwarehouses, etc. the government has to incur a lot of expenditure. To establish a larger industry, it requires a huge amount of capital. This is possible through government
expenditure.
Development of agricultural and industrial sector
natural resources e the essential for the economic development of a country which needs a huge amount of capital. This is not
possible by e private sector. So, public expenditure helps to explore and utilize the natural resources for the development of a country.
Utilization of natural resources
government expenditures provides subsides, free education and healthcare
facilities to the poor people. So government expenditure is used a powerful fiscal instrument to bring about an equitable distribution of income and wealth.
redistribution of income
the government needs to allocate its budget to carry out administrative service
of different agencies, department, ministries, and concerned offices. The government provides various types of services to
its citizens.
provide administrative services
- it consists the expenditure of the National Planning Commission, Center Bureau of Statistics and Department of Metric Measurement, etc.
ECONOMIC ADMINISTRATION AND PLANNING
it comprise the
expenditure of Court and Juridical commission.
juridical administration
it consists the expenditure on defense through national security organizations. The cost of the Nepal Army also comes under regular expenditure heading.
defense
it includes the expenditure on
agriculture, irrigation, land reform, forest, industry, mining,
communication, transport, electricity, etc.
economic service
it include the expenditure on education, drinking water, health local development and caher social services.
social service
it includes expenditure on payment of principle and interest on loan borrowed from a different organization, like public organization, international organization, etc.
loan repayment and interest
it includes the expenditure on travelling expenses of dignitaries and government delegation, hospitality,
pension, allowance, etc.
miscellaneous
it is related to the expenditure on development activities of the government. It consists of the following heads:
development or capital expenditure
government expenditure exceeds government revenue.
fiscal deficit
government revenue exceeds government expenditure
fiscal surplus
This policy is to revive economic
growth, usually during a recession. Higher spending leads to increased demand for goods and services in the economy.
expansionary fiscal policy
This policy aims to contract or
weaken economic growth. The government pursued this policy
during the late-expansion period when inflationary pressures were too high and the economy overheated. If not prevented, it could lead to hyperinflation, threatening economic stability.
contractionary fiscal policy
is when a rising government deficit reduces private investment. The net effect on the economy depends on which one has a more significant effect on aggregate demand?
crowding-out effect
appropriations spent for the purchase of goods and services,
the benefits of which extend beyond the fiscal year and which add to the assets of government, including investments in the capital stock of government-owned or controlled corporations
and their subsidiaries.
capital outlays of the national government
refer to the disbursement of
funds for the construction of various basic public works of the country, such as roads, ports, airports, water supply, irrigation, and other capital investments, the benefits of which extend to the general public. e national budget, infrastructure
infrastructure expenditure
to the national government investments in the authorized capital stock of government-owned or controlled corporations.
equity contributions to government corporations
cost of borrowed funds which
form part and parcel of the cost of the items financed. by the
loan.
interest payments
categorizes government expenditures into
10 sectors according to their function, purpose, and
contribution to society. The sub-sectors are considered under two basic types: sectors that benefit society in general, and sectors that directly benefit individual persons.
COFOG
are those which require productive resources (land, labor, and capital) to be diverted from private use by individuals and corporations so they can be used by the government
exhausted expenditures
is based on various functions of the government. This is has been
used in Nepalese budget document. It is classifies into two categories.
functional classification of expenditure
Function of Classfication
- General Administration
- Development or capital expenditure
3.
-it consists the expenditure of the National Planning Commission, Center Bureau of Statistics and Department of Metric Measurement, etc
economic administration and planning
it includes expenditure on
payment of principle and interest on loan Borrowed from a different organization, like public organization, international
organization, etc
loan repayment and interest
