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Government budgets are designed to analyze policies of a country regarding fiscal, military, monetary, trade and spending issues. For a new budget to be designed and put into motion, previous policies have to be taken into account. This reduces the risks of repeating previous mistakes that have caused harm to the economy along with providing chances for better growth and revenues.

Compliance to a fixed budget is necessary for countries, organizations and even small businesses because it determines their rate of profit and growth. An ideal budget is basically designed in way to bring maximum revenue to a country or organization whilst reducing the chances of deficits. The aim is to generate enough revenue that could be used to aid people or the industry in times of financial downturn.

Government budgets are comprised of the following policies:

Fiscal Policies

These involve the analysis of policies associated with

• Tax
• Revenue
• Spending
• Debts
• Surplus values
• Funding of the ministry of finance

Monetary Policies

Monetary policies involve a careful analysis of

• Supply of money within and outside the country
• Interest rates
• Bank reserves- for attaining information on the aspects of spending and loaning
• Gold reserves- which are used for international monetary exchanges for countries not trading with the Dollar
• The state bank

Trade Policies

Trade policies involve

• The balance of trade- imports and exports having the same levels of trade
• Creating trade opportunities
• Keeping up with the trade bloc of the region
• The limits on free trade
• Diversion of trade
• Protection of trade rights- this includes exporters and importers

Spending and Cash flow

This involves analysis of the cash flow taking place within and outside the country. Determining the validation of spending money can give an idea of which spending is necessary and which is avoidable.

Further reading: Corporate Governance | Audit | Performance Improvement