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Points for reporting in the course "public finance", Lecture notes of Public finance

World Citi CollegesPublic finance
Prof. Juan Dela Cruz

Points for reporting in the course "public finance"

Typology: Lecture notes

2022/2023

Uploaded on 03/12/2024

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FOR REPORTING
Tools for Controlling Expenditure
A. General management tools
More comprehensive information about fiscal activities. It should consolidate fiscal accounts to the extent possible
(monitoring off-budget as well as regular budgetary operations; including in the budget the activities of any special funds, such
as trust funds for road construction and public pension programs; and maintaining estimates of tax expenditures, quasi-fiscal
operations, and contingent liabilities)
Use effective budgeting procedures and expenditure control systems. Must have formal budget procedures.
B. Rules of thumb” that can help control expenditure, fiscal space.
Governments should avoid converting discretionary spending into mandatory programs. This will help maintain
adaptability and allow outdated programs to be phased out in favor of new activities better attuned to current priorities.
Fiscal space - availability of budget resources to finance worthwhile activities without prejudicing the government’s financial
position.
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FOR REPORTING

Tools for Controlling Expenditure A. General management toolsMore comprehensive information about fiscal activities. It should consolidate fiscal accounts to the extent possible (monitoring off-budget as well as regular budgetary operations; including in the budget the activities of any special funds, such as trust funds for road construction and public pension programs; and maintaining estimates of tax expenditures, quasi-fiscal operations, and contingent liabilities)  Use effective budgeting procedures and expenditure control systems. Must have formal budget procedures. B. Rules of thumb” that can help control expenditure, fiscal space.Governments should avoid converting discretionary spending into mandatory programs. This will help maintain adaptability and allow outdated programs to be phased out in favor of new activities better attuned to current priorities.  Fiscal space - availability of budget resources to finance worthwhile activities without prejudicing the government’s financial position.

Tools for Controlling Expenditure A. General Management Tools:

1. Comprehensive Fiscal Information:What: This involves gathering detailed information about all fiscal activities.  Why: It helps consolidate fiscal accounts, including both regular budgetary operations and off-budget activities (such as special funds). o Regular Budgetary Operations : The Department of Education allocates funds for teachers’ salaries (personal services) and school maintenance (operating expenditures) to ensure smooth educational operations. o Off-Budget Activities : These refer to financial transactions that occur outside the regular budgetary process. They are not directly included in the annual budget but impact government finances. Special Purpose Funds : These are designated for specific programs (e.g., calamity funds, pension and gratuity funds).  Example (Philippine Context): The Philippine government tracks not only its regular budget but also funds allocated to specific programs like road construction or public pension schemes. By maintaining comprehensive records, it can effectively manage expenditures. 2. Effective Budgeting Procedures:What: Implementing formal budget procedures.  Why: Clear guidelines for budget preparation, execution, and monitoring ensure better financial management.  Example (Philippine Context): The Department of Budget and Management (DBM) in the Philippines issue a Budget Call , defining the budget framework, priority thrusts, guidelines, and timetable for budget preparation. These formal procedures help control spending and allocate resources efficiently. **B. Rules of thumb” that can help control expenditure, fiscal space.

  1. Avoid Converting Discretionary Spending into Mandatory Programs**  What: Governments should refrain from converting discretionary spending into mandatory programs  Why: To preserves flexibility, enabling the phasing out of outdated programs and introducing new activities aligned with current priorities.  Example in the Philippines: Instead of making all education spending mandatory, allocate some funds for innovative projects or teacher training. o Flexible Education Infrastructure Budget Allocation:Discretionary Spending (Previous Year): In the previous fiscal year, the Philippine government allocated a minimal budget for non-physical education infrastructure (such as textbooks, teacher training, and curriculum development).  Adaptability and New Priorities: The government recognizes the need to enhance education facilities and adapt to changing priorities. Instead of mandating a fixed amount for specific education programs, it allocates a flexible budget for education infrastructure.Current Year’s Allocation (Mandatory Spending): The government increases the budget for physical education infrastructure (building new classrooms, improving school facilities, and providing technology). This mandatory spending ensures that schools have adequate facilities to support an advanced education program.  Impact: By converting discretionary spending into mandatory funding for education infrastructure, the government ensures long-term adaptability and addresses current educational needs effectively. 2. Fiscal space

 What: Fiscal space refers to available budget resources without harming the government’s financial

position. (It's like contingency funds)  Why: It allows investment in critical areas while maintaining stability.  Example scenario (Philippine Context): The Philippines faces a natural disaster. By having reserves or contingency funds, the government can allocate resources for natural disasters or public health emergencies response without compromising its overall financial health.