Definition of Public Expenditure
Miscellanea / / July 04, 2021
By Florencia Ucha, in Jan. 2010
Disbursement of money to meet obligations
The concept of expense has a recurring use in our language and is also a frequent action in our daily lives. Spending is an outlay of money that people make to meet obligations and also to acquire goods that are needed to survive or others that meet the needs of consumption. Many times the expenses can turn out to be an investment that in the future will allow us to receive more incomeFor example, acquiring a machine with which we will produce more goods and of course will allow us to sell more products, to cite an example.
This situation can be framed within the framework of private actions, while there is what is called public spending that It is precisely the one that executes the public sector of a nation to cover expenses and make purchases that result from the action of govern.
Expenditure made by a government in the exercise of power
Within the framework of a government exercise, public spending is designated or considered to be that flow of money that represents the negative component of equity and that occurs as a result of both budgetary and non-budgetary operations budgetary. It is the result of the variation of assets and of the obligations that are occurring during the government period.
The accounting authorization, on the other hand, is the formal name that receives the operation through which what we mentioned above is manifested. Then, the competent authority to which it corresponds to carry out this activity will be in charge of determining the figure as approximately as possible and reserving it for this purpose.
Origin and destination of public spending
The expenses generally incurred by a government are very diverse in nature and can range from meeting some needs of the moment, such as the acquisition of an asset that is essential for its management, to completing obligations that have been taken in previous years, while a good part of public spending is aimed at satisfying the needs of those who have the least and thus gradually reducing the inequality in terms of income distribution that mostly affects each of the countries that make up the planet.
Public spending carried out by a government occurs mainly in three areas, in the government itself, in the social development and in economic development.
Health, education, urbanization, housing, sewerage, water and sanitation, social assistance, anti-poverty plans, regional development and Social security are some of the social areas in which the government spends the money it collects for taxes, fees, among others.
And when it comes to providing economic development to a nation, the areas or sectors in which it will spend government are some of these: communications, transportation, agricultural development, science and technology, training, employment promotion, energy, endowment infrastructure.
The fact that a government regularly and publicly accounts for the things it spends on is a sign of the transparency of its management, who does not do it and hides it, will tell us veiled that the things on which it is spent have nothing to do with priorities or needs.
Imbalance in public spending
Unfortunately this state of affairs is very frequent in public administrations, that the executive itself or the areas of the same depend on spending public funds, which all citizens contribute through their taxes, on unnecessary issues or that do not report to them to citizenship any kind of benefit.
The Balance in public spending is a fundamental issue to have a economy healthy and balanced. Meanwhile, when a government spends more than it should, there will be a fiscal mismatch and will end up generating an inflationary scenario that of course will directly harm the entire citizenship.
Formally, this state is called a public deficit and implies that the expenses made by the state far exceed non-financial income in a given period, which is generally one year.
The basic policies to combat the deficit will imply an increase in income from direct or indirect taxes, reduction of spending, or a combination of both, depending on the context.
Of course, it is not an easy task and it always entails adjustments that citizens end up paying, as we have already said, through the payment of more taxes that are added to those already paid.