Budget.

Budget System

Key terms: budget, special and general budget funds, budget revenue, seigniorage,
budget revenues, budget expenditures, budget payments, current budget expenditures and
capital expenditures, budget assignments budget sequester, budget system organization,
unified budget, state budget, budget transfer payments, budget process, budget planning
Questions for discussion:
1. The economic essence of budget and its functions.
2. What are the sources of budget revenues?
3. Budget expenditures classifications.
4. What is the difference between budget expenditures and budget payments?
5. What is the difference between current budget expenditures and capital
expenditures?
1. What does budget sequester mean?
2. What is the specific of Ukrainian budget system organization?
3. What is the difference between unified budget and state budget?
4. Describe the types of budget transfer payments in intergovernmental relations.
5. What is the essence of budget process and its stages?
6. Current models of interbudgetary relations.

Featured sources:
Basic: 1, 12, 15
Additional: 5

Classification[edit]
A budget can be of 3 types:

 Balanced Budget: When government receipts are equal to the government

expenditure, it is called a balanced budget.
 Deficit Budget: When government expenditure exceeds government receipts, the
budget is said to be deficit. A deficit can be of 3 types, Revenue, Fiscal and Primary
deficit.
 Surplus: When government receipts are more than expenditure.
A budget can be classified in 3 categories which are:

 according to Function
 according to Flexibility
 according to Time

Need and importance of a government budget[edit]

Government Budget is a subject of immense importance for a variety of reasons

1. Planned approach to Government's activities

2. Integrated Approach to fiscal operations
3. Affecting economic Activities
4. Instrument of Economics policy
5. Index of Government's functioning
6. Public Accountability
7. Allocation of Resources
8. GDP Growth
 Public expenditures are a set of financial relations with regard to
use of state funds funds in order to finance
socio-economic development of the state.
The functioning of public expenditures is a continuous process of re-
distribution of funds and creation of new funds with a more general target
appointment Thus, the object of state expenditures is monetary
which are formed in the process of distribution and redistribution of the gross
the domestic product and are directed to the needs of social development.
The Budget Code of Ukraine delimits the notion of costs
budget and budget expenditures.
Budget expenditures are funds for implementation
programs and measures provided for by the relevant budget, with the exception of
for repayment of the principal amount and repayment of surplus payments
to the sum budget.
Budget expenditures are budget expenditures and repayment funds
the principal amount of the debt.
State expenditures depend on a number of factors: state functions, levels
socio-economic development, administrative-territorial
her swarm and so on.
In accordance with the budget classification of budget expenditures are divided
into:
1) functions, from which costs are related (functional
classification of expenditures);
2) the economic characteristics of operations, in the course of which
These expenses are expounded (economic classification of expenditures);
3) a sign of the main spending unit manager (departmental cluster
costing);
4) on budget programs (program classification of expenditures).
The functional structure includes the costs incurred
for economic activity, public administration, science, social protection
population, socio-cultural sphere, national defense, law enforcement
Well, activities and guarantees of state security, housing and communal services
the protection of the natural environment, the costs of the
funds, public debt servicing costs and other expenses.
According to the economic content of budget expenditures are combined: current
types
 capital expenditures (development expenditures) and lending for deductible
repayment fees. Their composition is determined by the Minister of Finance of
Ukraine.
Current expenditures are the costs of retaining enterprises, institutions,
organizations of production and social infrastructure.
Capital expenditures are budget expenditures for creating new ones and for
expansion of activity of existing enterprises, institutions and organizations.
According to the budget classification, current expenditures include:
1. Expenses for goods and services, including:
 remuneration for employees of budget institutions;
 accrual to wages;
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 purchase of supplies and materials;
 travel expenses;
 payment of services for the maintenance of budgetary institutions;
 payment of utilities and energy resources;
 research and development, state programs.
2. Expense for payment of interest, including:
 banking institutions;
- for domestic loans;
 by the external state god.
3. Transfers.
Capital expenditures include:
1. Costs of acquisition of fixed capital, including:
 purchase of equipment and items of long-term use;
 capital construction;
 major repairs.
2. Creation of state reserves and reserves.
3. Capital transfers.
4. Unallocated costs.
5. Lending less repayment.
The departmental classification of budget expenditures determines the list of the
main ones
Managers of budget funds. It is based on the State Treasury
Ukraine and local financial institutions keep a register of all budget managers-
cash funds.
 The software classification of budget expenditures is applied at
budgeting by program-target method. Allocation of funds to
Individual target programs allow you to concentrate budget resources on
priority directions of state policy. This grouping is budget
expenditures clearly reflects the role of the state in solving the most important
common problems.
Taking into account the administrative-territorial division of the country costs
the budget in unitary states is divided into expenditures of state budgets-
local budgets, and in federal states, for the
federal budget, federal budget expenditures and expenditures
local budgets. Direct use of budget funds
Reduces the stage of allocating relevant resources to specific recipients. This
the process is called budget financing, that is, the provision of cash
For the sake of legal and physical persons to carry out the measures envisaged
the budget
According to the forms of budget financing, there are the following types of
expenditures:
- project financing - financing from the budget of investments
projects;
- budget loans - providing financial assistance from the budget
subjects of entrepreneurial activity on a turning basis;
- budget financing - allocation of budget finance
on the basis of the estimate;
- state transfers - government subsidies, subventions and grants.
Секвестр (економіка) (від лат. seqvestro — ставлю зовні, віддаляю) —
скорочення витрат при виконанні окремих статей або всього державного
бюджету. Обумовлюється різними причинами: прорахунками при
складанні бюджету, виникненням форс-мажорних обставин тощо. Серед
загальноприйнятих у світовій практиці методів боротьби з бюджетним
дефіцитом існує і такий метод як механізм секвестру видатків бюджету.
Секвестр-заборона, обмеження видатків, яке встановлюється державною
владою; пропорційне скорочення державного бюджету у процентах, яке
здійснюється щомісячно до кінця поточного фінансового року у випадку
невиконання дохідної частини бюджету.
 Секвестр –пропорційне скорочення видатків з усіх статтей бюджету (крім
захищених) протягом часу, що залишається до закінчення поточного бюджетного
року.
Різке зростання дефіциту державного бюджету призводить до наростання
інфляційних процесів, росту цін і зниження життєвого рівня населення.
Вкрай негативні наслідки ( фінансові, економічні, соціальні) значного розміру
бюджетного дефіциту потребують використання загальноприйнятих у світовій
практиці методів боротьби з дефіцитом. Якщо в процесі виконання бюджету має
місце перевищення граничного рівня дефіциту або значне скорочення
надходжень дохідних джерел бюджету, то вводиться механізм секвестру видатків.
Секвестр полягає у пропорційному зниженні бюджетних видатків ( на 5, 10, 15 і т.
д. відсотків) щомісячно по всіх статтях бюджету протягом того часу, який
залишився до кінця фінансового року. Секвестру не підлягають захищені статті,
склад яких визначає ВРУ(зарплата, стипендіїмедикаменти).
Секвестр бюджету — корекція видатків бюджету з причин відхилення між
сумою поточних доходів бюджету та сумою видатків затвердженого бюджету.

Sequestration (economy) (from the Latin seqvestro - I put the outside, I delete it) -
reduction of expenses in the performance of individual articles or the entire state budget.
It is caused by various reasons: miscalculations in drafting the budget, the occurrence of
force majeure, etc. Among the commonly used methods of combating budget deficits in
the world, there is also such a method as the mechanism for the sequestration of budget
expenditures.

Sequestration-Prohibition, Expenditures Restriction, which is established by the state

authorities; proportional reduction of the state budget in percent, which is carried out
monthly until the end of the current fiscal year in case of non-fulfillment of the revenue
part of the budget.

Sequestration -proportional reduction of expenditures from all budget items (except

protected) for the time remaining until the end of the current fiscal year.

The sharp increase in the state budget deficit leads to an increase in inflationary
processes, rising prices and a decline in the living standard of the population.

Extremely negative consequences (financial, economic, social) of a significant size of the

budget deficit require the use of generally accepted in the world practice of methods for
combating deficits. If in the course of budget execution there is an excess of the marginal
level of the deficit or a significant reduction in the revenues of revenue sources, the
mechanism of sequestration of expenditures is introduced. Sequestration is a proportional
reduction of budget expenditures (at 5, 10, 15, etc.) monthly on all budget items during the
time remaining until the end of the fiscal year. Secrets are not protected articles, the
composition of which is determined by the VRU (salary, scholarship medication).
 Sequesturer of the budget is a correction of budget expenditures due to the deviation
between the sum of current budget revenues and the amount of expenditures of the
approved budget.
The budget system is the organization and principles of budgeting
systems, the relationship between its links. The budget system is determined
state system.
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In the unitary states, the budget system consists of two levels:
state and local budgets.
In federal states, the fiscal system consists of three
niv: the federal budget, federal budget budgets and local budgets
zhetov
Today, according to the Budget Code of Ukraine, it is budget
the system of Ukraine consists of the state budget of Ukraine and local ones
budgets
Local budgets recognize the budget of the Autonomous Republic
Crimea, oblast, rayon budgets, city district budgets and city budgets
self-government.
The budgets of local self-government recognize the budgets of the
communities of villages, settlements, cities and their associations.
Consolidated budget is a set of budget indicators that are used
for analyzing and forecasting economic and social development
state
Official transfers are funds received from other government agencies.
the authorities, the authorities of the Autonomous Republic of Crimea, local authorities
self-government, other states or international organizations on a royalty-free basis
and irrevocably. These include grants, subsidies and grants.
A grant is a transfer that is passed from one level to another.
which is irrevocable and free of charge and which does not have a target prize-
hypothesis The subvention is an intergovernmental transfer that has a targeted
and is assigned to a certain purpose in the order determined by that body,
who made a decision to grant a subvention. Subsidy is a transfer which
transferred from one level of the budget to another on irrevocable and
based on it, which has a special purpose and is fully reimbursed
budget allocations are foreseen.
Budget process - regulated by the rules of law activities,
connected with the drafting, review, approval of budgets, their
 tion and control over this process, review of reports on the implementation of the
budget
jets that make up the budget system of Ukraine.
The Budget Code provides the following stages of the budget process:
1. Drafting budgets.
2. Consideration and adoption of the Law on the State Budget of Ukraine,
sheng about local finances.
3. Implementation of the budget, including, if necessary, amendments
the law on the State Budget of Ukraine, the decision on local budgets.
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4. Preparation and review of the report on budget execution and adoption
decision on it.
Unified Budget
In government accounting, a general term for on-budget and off-budget items. Off-
budget items include dedicatedspending paid with specially levied taxes. For example, 
Social Security is an off-budget item because FICA taxesexclusively pay for it. On-
budget items include all other mandatory and discretionary spending. Most discussion 
of thefederal budget in the United States refers to the unified budget, unless otherwise s
tated.
When the state transfers the right to spend, intergovernmental relations arise.
Inter-budgetary relations are the relations between the state, the Autonomous
Republic of Crimea and local self-government to provide the corresponding budgets
with the financial resources necessary for the fulfillment of the functions provided for
by the Constitution of Ukraine and the laws of Ukraine.
According to the directions of the relationship between the budgets are divided into
vertical - between budgets of different levels, and horizontal - between budgets of the
same level (in Ukraine only vertical).
Types of relationships: regulated by legislative and guidance documents;
contractual - on the basis of an agreement between the relevant authorities or the
management.
In order to ensure consistency between the powers to finance expenditures
enshrined in the legislative acts of Ukraine in the budgets, and the budget resources
that should ensure the fulfillment of these powers, intergovernmental relations are
regulated.
The purpose of regulating intergovernmental fiscal relations is to ensure consistency
between the powers of spending on expenditures established by the legislative acts of
Ukraine on budgets and the budget resources that should ensure the fulfillment of
these powers.
The mechanism of regulation of intergovernmental fiscal relations is based on the
use of financial standards of budget security as a certain level of social services per
capita, the provision of which is guaranteed by the state based on available financial
resources and a certain amount of intergovernmental transfers.