Budget Expenditures

Ingilab Ahmadov
2020
 Budget expenditures

The spending of money by the government or the

amount of the money spent
 Main directions of government
expenditures
Social programs

Governance expenses

Economy expenses

Investment

Defense and security

 Mandatory spending

Public expenditure that is governed by formula or criteria

set forth in authorizing legislation, rather than by periodic
appropriations

This type of spending contributes to the rigidity of the

budget
 Discretionary Spending

Public expenditure that is governed by annual or other periodic

appropriations, rather than by formulas or criteria set forth in
authorizing legislation
Mandatory Spending in US
Discretionary Spending in US
Non-Defense Discretionary Spending (US,
2019)
 Protected expense items (case of
Azerbaijan)
Salary;

Salary supplements;

Pension, other social allowances and payments;

Expenditures of internal and foreign government liabilities;

Expenditures of other provisions to be justified in accordance with the law on the

state budget of every year.

The Law on Budget System (Art.7)

 Capital expenditure

Funds spent for the acquisition of a long term asset;

The total spending on such asset would be divided over

several years;

This includes expenditures on equipment, land, building,

legal expenses, and other transfer costs, associated with
property.
 Recurrent expenditure

Expenditure that does not result in the acquisition of

long-term assets;

It consists mainly of expenditure on salaries, goods,

and services, etc.
Military Spends Around the World
Military Budgets by countries (% of GDP)
World Military Expenditures (% of total)
 Social spending

Social security

Social protection

Education

Public health

Culture
Health Expenditure (% of GDP)
US Federal Budget Expenditures
UK Government Expenditure
State Budget of Russia -2019
 Azerbaijan 2018 budget main
priorities

50
40 23.0%
30 17.2%
10.8% 10.4
9.5
20
10
0

İnvestisya xərcləri Ümumdövlət xərcləri Müdafiə xərcləri Sosial müdafiə Təhsil

Source: UNESCO UIS.Stat
Budget expenses on education, health and
social assistance in Azerbaijan
2011-2016 (in million AZN)

2011 2012 2013 2014 2015 2016 (proj.)

Education 1,399 1,575 1,530 1,653 1,711 1,713

Healthcare 563.2 662.7 669.3 725.6 777.7 744.9

Social protection
and social security 1,611 1,781 1,813 2,072 2,040 1,896

Source: Azerbaijan Ministry of Finance, Draft Budget Presentations, various years,

http://www.maliyye.gov.az/node/1128
Composition of Education Expenditure in
Azerbaijan
 Budget sequestration

Sequestration entails the permanent cancellation of budgetary resources by a uniform
percentage


Moreover, this uniform percentage reduction is applied to all programs, projects, and
activities within a budget account


However, the current sequestration procedures, as in previous iterations of such
procedures, provide for exemptions and special rules


That is, certain programs and activities are exempt from sequestration, and certain
other programs are governed by special rules regarding the application of a sequester.


Article 23. Review of the state budget and application of curtailment to expenditures
The Law on Budget System of Azerbaijan
 Questions for discussion
Higher level of budgeting, harder to balance: Why?

How to define the efficiency of each budget allocation?

What is the optimal composition of budget expenditures?

Social VS. investment budget : which one is more important?