Preparing a government budget is not a simple task. There are several complex issues involved in it that have to be taken care of.
Many experts have given some important cannons of budget that have to be remembered when preparing a budget of any kind.
Countries especially have to be very careful because too much is on the line. To understand the procedure better, given below are a few good traits of a good government budget.
The budget should always be elastic. Understandably, there comes times when one needs to rethink strategies and change figures. If the budget does not allow any changes, it will not be a good budget.
Based on the country, the budget document has to pass several acid tests before it reaches the president for the final approval. Legislature and experts make many changes to the budget so that it suits the requirements, which is why the budget has to be elastic and easily changeable.
A budget should only be made by those who are sanctioned to do so. Additionally, those sanctioned to make the budget must be competent and experienced enough to handle such a huge task.
Making a small mistake in the preparation of a budget plan can cause a heavy damage to the government and the country as a whole. Many countries have actually fallen due to poor budgeting. They end up in heavy debt and find it difficult to strive.
The budget should be planned carefully. When making a federal budget, experts have to make sure that they do not end up doing any injustice to states or sectors. The budget has to be divided carefully so that all the sectors of the economy can flourish.
Many countries make the mistake of concentrating on one pillar and neglecting others. This is a big blunder that can cost heavy. It is important that one concentrates on all the points and divide the revenues properly.
A budget should always be prepared after doing a good amount of research. Since a budget in most cases is based on expected numbers, it is important that the number (revenue and expenditure) are reached with a lot of care so that the closest possible estimates are achieved.
One of the most important qualities of a good budget is that it should be in surplus. Unfortunately, most countries have deficit budgets these days mainly due to the poor general economy, falling revenues, and unnecessary expenditure.
Countries have to resort to various means to balance their BOP that results in them going under debt. It is important for every country to recount history’s lessons when preparing a budget and not to make the same mistake again.
In addition to the above mentioned points, all the budgets should be transparent and available to those who will be affected by it. Lastly, for a budget to be effective, it must be fully adapted and followed as closely as possible.