Why is the Budget of such great importance for NFPO's and governments?

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Expert Solution

A well-planned budget is of utmost importance for any government and NFPOs to ensure economic stability and growth.

Few reasons why it’s important for the government and NFPOs to have a budget:

Proper resource pool allocation
When it comes to budgeting, identifying areas of weakness helps the entity to allocate resources in a useful and sustainable manner. This is one of the most fundamental objectives behind framing a government budget. It’s important for the entity to ensure that funds reach where it’s required the most. Therefore using past data to identify sections of the society in need of economic welfare policies and implementing those policies helps the government demonstrate efficient governance and achieve economic stability .

Ensuring economic growth
A budget allows the entity to regulate the imposition of taxes in various sectors. Investment and expenditure are some of the most prominent factors contributing to the growth of a nation’s economy. The government can encourage people to emphasize more on savings and investments by providing tax rebates and subsidies.

Growth of business and trading

Businesses and enterprises look forward to the government budget as resources being allocated to various sectors are revealed. The government can encourage business owners to revise their policies accordingly and contribute to the country’s economic prosperity.

Mitigating economic divide
Economic disparity and inequality is an imminent threat to any country’s economy. The government can address these kinds of threats by introducing public and economic welfare policies for the underprivileged sections of the society through the budget.

Administering Operation of PSUs
Industries operating in the public sector contribute immensely to the country’s economy by providing employment to a lot of people and generating revenues. A budget helps the government focus appropriately on companies in the public sector by introducing policies to aid their growth.

ekkarill92 answered 1 year ago

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