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Treatment of State General Budget Depletion
Paper  Presented byThe Board of Supreme Audit/Republic of IraqToThe International Consortium on Governmental,Financial Management's Annual ConferenceTo be held in Florida/USAFrom May 18 – 22, 2009
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The role of public budget within economic activity:
Public budget can be defined as an anticipatory process and permission for state revenues and expenditures, usually for a period of one year,reflecting state economical and social goals. The public budget is seenfrom two main aspects: the first one is in terms of accounting where futureexpenditures and revenues are estimated and legislated. The second one isconsidered as a state device to achieve its economical and social goals. Inother terms it is an expectation of the amounts that can be collected, andthose amounts to be spent by the state to fulfill its political, economic andsocial goals for the coming year, conditioned by people consent throughthe parliament. Currently, the public budget is of great importance as itincludes political, economic and social dimensions in the developed anddeveloping countries despite the variations of its political systems and it became indispensable mean and a governmental device to achieve itsgoals. The importance of state budget can be illustrated by:
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In terms of political aspect, the budget is of great importance,especially in countries that adopt democratic and parliamentarysystem as this system obliges the executive authority to get annualapproval from legislative authority in order the that the parliamentarians authorize disbursement and collecting revenues.This means that the budget is subject to permanent control by the parliament in addition to granting the legislative authority theopportunity to discuss government program and make the necessaryamendments and changes.
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In terms of economic aspect, this aspect is not less important thanthe political one, as the state adopt expenditure and revenues policyresulted by state budget effects upon economic activity. The desiredobjective is to increase national income and to raise the standard of living to the members of the community, in addition to the role of redistribution of national income through the deduction of part of the individuals' income through taxes and fees, and to be distributedagain by public expenditures whereas their importance is enhancedwhenever the role of the state economic activity is increased.Through this intervention the following can achieved:
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Achieve economic stabilization.
 b-
Reduce or increase aggregate demand.
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Stop the continued expansion of inflation and restrain it.
d-
Address the economic cycle.
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In terms of social aspect, where it is considered as a tactic of socialguidance. The goods that the state does not desire them to beconsumed by the citizens then it imposes taxes on them, while incase state desire to increase the proportion of the population
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growth, it can reduce the taxes on the tax payer according to thenumber of his family members.4- In terms of financial aspect, the public budget is regarded as a mirror that reflects the financial state activity, since it illustrates the stateresources that have been procured during the next year, as well as itclarifies the method of spending and identifies the sectors,ministries and offices that will be spent on, and all that wouldenable the state to realize its actual financial position and find proper solutions in case that it suffers from financial deficit or surplus.Amid the world financial crisis, any economist can not bet that there isone country apart from what is going on in the world economy and thecollapse that results from this crisis.The world is a small territory, and there are no secrets at all among thecountries. All papers are exposed and no one has a safety card. Therefore,what has occurred in the United States of America did start today, but it isa result of a financial manner adopted for years, synchronizes with thewrongful pump of money and budget depletion.Yet, the developed countries have huge budgets that are not affected by thecrisis; therefore, these countries are able to deal with the financial crisis, program their economy and correct certain methods that have beenadopted previously in a bid to recover gradually and be saved from thecrisis.In respect to developing countries, the various administrations should pursue an accurate system adhering the principle of accountability andresponsibility in funds disposal with the ability to mobilize the humanresources and available material possibilities to achieve the specificobjectives for each governmental unit within certain mechanism, and toachieve the maximum efficiency in rendering the inputs to services and products within specific time framework and accepted specifications as aminimum level to increase the revenues and economic production and tocompensate the community for lost opportunities and wasted capacities inthe past, that resulted from the actual and diagnosed factors concerning thefinancial and administrative corruption without exploiting the humanrecourses in optimal way , beside the absence of clear frameworks todetermine the responsibility and the lack of mechanisms acted accordingto law in order to question the officials about achievement rates in their offices in pursuant to the standards of the efficient administration processand the prudent decision for linking the spending with results and services.In addition to that, finding added values that achieve real growth andmaintain the public assets from misuse, abuse and loss and avoidingdepletion of public budget in new assets, which would not be in need if the existing assets are reformed and used properly. Undoubtedly, these policies will decrease the pressure on budget and assist in shrinking the
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