Public expenditure, Managerial Economics


The accounts of the central government are centered on two funds, the Consolidated Fund, which handles the revenues form taxation and other miscellaneous receipts such as broadcasting license fees, interest and dividends, and the National Loans Fund which conducts the bulk of the governments domestic borrowing and lending.

Each government ministry works out how much money it wants to spend in the coming Financial Year which, in Kenya starts on 1st July in each year and ends on 30th June on the following year.  This is known as preparing estimates.  There are two types of estimates, -estimates of Capital Expenditure and estimates of Recurrent Expenditure.

Capital Expenditure refers to the money spent on government projects such as the construction of roads, bridges, health facilities, educational institutions and other infrastructure facilities.  Recurrent expenditure refers to money spent by the government on a regular basis throughout the Financial Year e.g. the salaries of all civil servants, or the cost of lighting a government building.

Government departments also have to prepare estimates for the next financial year for presentation to parliament.  Any department which earns revenue for sales of goods or services to the public shows this as an appropriations-in aid, which is deducted from its estimated gross expenditure to show net expenditure, that is, the actual amount required of the Exchequer.

The estimates also include Grants-in aid i.e. grants made by the central government to local authorities to supplement their revenue from their levying of rates.

Posted Date: 11/30/2012 4:13:47 AM | Location : United States

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