Question

A local government might adopt a one-year budget, but why might long-term budget forecasting be important for a local government?

Answer 1

The best practice that the Government must adopt is long term budget forecasting andd financial planning. This is a collaborative process that considers uture scenarios and helps governemnt to navigate through the challenges. Long term budget oreccating helps in projecting revenues and expenditures over a long-term period, using assumptions about economic conditions, future spending scenarios, etc. This is a process of aligning financial capacity with long-term service objective. Long term planning provides insights into future financial capacity so that strategies can be developed to achieve long-term sustainability in light of the government's service objectives and financial challenges. It stimulates discussion and helps to build on future strategies.

A long term Budget forecasting must include the below elements:

1. A budget plan must at-least look at 5-10 years in the future. This way the government would be in a better position to predict what may be the development areas in the near future.

2. A long term budget must consider all the areas where growth is required and then the funds must be planned and applied appropriately.

3. The budget must be properly strategized and visualised so that it is clear to all the parties concerned, It has to be communicated effectively so that the plans laid therein are implemented smoothly.

4. The budget should have a plan and correctly analysed with all the revenue and expenses taken into consideration, so that the resources are aligned effectively and the policies and priorities are laid down.