If you are looking for public finance consulting services, it is important to know more about budget preparation. A full understanding of the system of planning and preparing the budget is essential. It doesn’t just derive the projects of the expenditure but also advises policymakers on the desirability and feasibility of the specific budget proposals from the microeconomic or macroeconomic perspectives. It is easier to control the expenditure of the government at the top point of budget preparation than afterwards during the budget execution process.

General budget advisors and fiscal economists should know the framework in which decisions concerning the budget are made, the people responsible for planning the budget and preparing it, the basic steps involved, the typical weakness in procedures and ways to overcome them and how a change in budget plans can be programmed.

Answers to the above questions

The budget planning and preparation processes are at the heart of excellent public expenditure management. Public expenditure management systems need four forms of financial and fiscal discipline to be fully effective. These four forms of financial and fiscal discipline include effective means for a resource allocation achievement that reflects the expenditure policy priorities, control of aggregate expenditure for affordability, efficient delivery of public services and reducing the financial costs of budgetary management.

The framework in which the budget decisions are made

Preparing the budget is a process with designated individuals and organizations having defined responsibilities that should be carried out within a specific timeline. The process is normally controlled by a regulatory and legal framework. Budget preparation systems exhibit differences depending on their origin but they share broadly common procedures that a professional public finance consultant should be aware of. Given a lot of countries’ common heritage, it is possible to identify some main patterns – Latin American, francophone, transition economies and commonwealth.

It is important to assess the basic soundness, know where to find the budget governing rules and identify who has the responsibilities to do what in the government preparation process. These things are necessary when it comes to understanding the process of preparing the budget.

The usefulness of the key budget principles

Based on the available financing and revenues objective macroeconomic assessment, the expenditure budget is supposed to aim to be transparent, comprehensive, policy-oriented, realistic and allow for accountability in the execution of the budget.

Assessing the budget’s soundness

The budget’s soundness systems can be judged by comprehensiveness, realism and transparency.

Comprehensiveness

It is important to know if the coverage of government operations is complete and whether the estimates netting or gross take place.

Transparency

It is important to know the usefulness of the budget classification and whether there are separate functional classification and separate economic classifications that meet the international standards.

Realism

Public finance consulting firms should ensure that the budget is based on realistic macroeconomic frameworks. The budget should also be estimated based on revenue projections. The financing provisions should also be realistic. It is also important to know how the future implications costs are taken into account.