Question

In: Finance

Traditional budget formulation process focuses on the compelling needs to address the widespread problem of poor...

Traditional budget formulation process focuses on the compelling needs to address the widespread problem of poor public sector performance.
What are these processes that traditional budget formulation focuses on? Give an example of each focus.

Solutions

Expert Solution

Traditional budgeting formulation is a complex method to prepare the budget of current year by changes in previous year’s budget. The changes are mainly allocation of fund to new heads and developments, changes in past data as adjustment of expenses, inflation rate and other market factors. The traditional budget also approaches the factors to address the widespread problem of poor public sector performance in previous year.

The focus has been given on

  • Allocation : The primary focus on allocation of fund for development of particular sector
  • Performance: formulation and execution focused primarily output flow and input control
  • Consolidation: sometime focus is given on consolidation of various projects of same nature together into a single larger one.
  • Participation: reach to citizens and civil society, particularly at the local and regional levels of government
  • Fiscal sustainability: focus on the medium-terms makes the process not attuned to long-term issues

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