Public Finance and Budgeting

Budgeting is a way of measuring and converting intended plans for the use of actual (i.e. tangible resources) to become financial values. It is a classical problem of how to sum up quantities of oranges and mangoes into a quantifiable economic measurement, the only real way for everyday manipulation is to show their economic values in terms of monetary revenues and costs. Through the process of budgeting the finance function gives the important connection between management control and management planning.

The definitions clearly show that the terms budgeting and planning are closely interconnected. Budgets represent the financial expression of an organisation’s policies and contain a statement of intent against which any performance or for that matter of non-performance can be compared.

In the past budgets have often been categorised according to the timeline for which they have been set. This scenario is now transforming as budget users have realised that the main objectives of budgets are not time dependent and are common. In the government, budgets are now seen an important tool to policy makers in setting tax rates and other necessary charges. A recent development in the government has been the coming up of strategic planning (Cleveland, 1915). Budgeting is definitely concerned with the enactment of an organization’s approved programme of activities within the scope of the strategic plan and the capital budget.

The principles explained here apply generally across the private and public sectors. The ensuing discussion will show the key objectives of budgeting and how these join with service planning. Different kinds of budgetary models will have evaluated by reference to their applicability to the government.

The Objectives of Budgeting

The main objectives of budgeting will vary on two key factors:

•  the kind of budget being produced;

•  The organisation and arrangement for which the budget is being produced.

Budgets have other key function in that they also serve a number of useful and important purposes which are key to an organisation’s success, and that is

Planning

It’s the Managers requirement to produce detailed plans to enable for the implementation of the strategic plan. The regular budgeting process motivates managers to plan for future functions, improve current strategic plans and consider how they can react to changing situation. This motivates managers to predict problems before they arise and ensures reasonable decision making. Without this incentive the pressures of the daily operations may lure managers not to plan for future operations and functions and hasty decisions based on expediency rather than reasoned out  judgement will be minimised.

Co-ordination

Budgeting ensures co-ordination and consolidation and allows the actions of the different parts of the organisation to be brought into a common plan. It also compels managers to examine the relationship that exists between the different areas of an organisation when making decisions and in helps in identifying and solving conflicts. Examples of the type of conflicts which could come up in a producing setting for instance would be between a purchasing manager who purchases in large quantities to obtain large discounts, a production manager who would like to avoid big stock levels and an accountant who is worried about the consequence on the business’s cash resources. Budgeting attempts to reconcile these differences.

Control

Managers can also manipulate budgets to take charge of the activities for which they are responsible of. Analyses of variances allow managers to identify those expenses which do not conform to the strategic plan and therefore may require alteration. By finding out the reasons for budget deviations managers may also be able to identify potential inefficiencies.

The budget forms the foundation of a controlling mechanism for several resources of an organisation which is achieved by the comparison of the resource measured to the end of a given time with that which was anticipated. The above  approach can hence be used for every measurable activities and resources within the institution – not just those which are directly financial.

Budgetary control outlines variations from the anticipated in order that management can take necessary remedial action so  that the policy objectives that are set in for the budget can be met. It is a usual process of monitoring process thus requires an  updating and budget changes through the feedback operation. This also leads to performance against the objectives to be measured and targeted.

Evaluation

Budgeting may also be manipulated as an effective management tool. It provides an important mechanism for informing and showing managers as to how good they are performing  in meeting targets they have previously enabled to set and an ability of the employee to meet the  targets is used is many institutions to determine bonuses and promotions. In this situation budgets will therefore influence human behaviour.

The articles are:

The summit Arab League in Baghdad has been performed and it is time to consider some stock. Given international experience of the summit in Arab League in Baghdad, it is natural to begin with the regional useful indicator of how things went. Altogether, 10 nations were perfectly represented by the rulers: Somalia, Libya, Djibouti, Comoros, Palestine,Sudan, Lebanon, Kuwait and Tunisia in addition to Iraq.

In  a way, those who visited Baghdad can be  summarized as  “Maghreb Spring” nations ( Libya, Tunisia), the poor in need of any assiatance they can get ( Sudan,Djibouti,  Somalia, Palestine, Comoros), and some “others” not that easily classified (Lebanon and Kuwait). The absence of quite a number of the GCC rulers can be formulated to continued aversion towards  the government Maliki in Iraq. The failure of the leaders of  Yemen and Eqypt to show up may show up the messiness of their  domestic positions as much as any significant policy on Iraq.

But there are  more to this than even the current preference of  republics that are poor for the building of ties with the new looking Iraq. The gap that is existing between the Gulf countries and Iraq remains wide, but  still if the government of Iraq can build good relationship and ties with non-GCC nations, it could create  an alternative bloc within the Arab League region.The disappointing absence of the  Iraq in this relation must have been the one of Algeria (Smith, 2004). Nevertheless, the outcome of the meeting that was to dilute the GCC policy on Syria. The  wealth of the states of the GCC  was in not sufficient to purchase any Arab policy on Syria.

It is also significant that the increasing number of Arab states are made to develop good interact with Iraq as a normal Arab state. This seems to be so despite continued steps by the states of Gulf to dismiss the government of Iraqi as Iranian marionettes. The heads of states in Arab,who went to Baghdad came to realized that the place  was not full of Safavids and that reduced regional politics to a cut Sunni–Shiite struggle are futile. The growing size of Arab leaders realize that it is normal for those in Iraq to have rulers who may be or may not be Shiites.

The second impact of the Baghdad meeting relates to the rate of internal Iraqi politics. Only weeks ago, both the Iraqiyya and Kurds talked tough about raising Iraqi local challenges onto the summit agenda. Plans for unseating the existing Prime Minister Nuri, appeared to garner a lot of  interest than the one already in place . Finally, the domestic circumstance in Iraq was not in the summit agenda, and neither  Kurdish president nor Ayad Allawi , attended the summit.

What Allawi and Barzani need to know is that their position rises analogous to the ones  of the states of GCC within the circle of the Arab League. The GCC nations who boycotted the Baghdad confirmed their forward Syria reversed policy. If they insist in boycotting Maliki, Allawi and Barzani may as well experience something similar with their own ambitions locally in Iraq. Most importantly, other  leaders in Iraqiyya like Usama al-Nujayfi who is the parliament speaker and the Rafi al-Eisawi who is their finance minister were present at the summit. Their showing up  highlighted how a  protest letter  from Qatar which spoke on behalf of the famous “Sunnis in Iraq” was quite unsophisticated to corespond to  the challedging Iraqi situation. The foreign minister of Bahraini as well opted to meet Maliki.

Perhaps one of the  best indication of the variuos affairs in the state in Iraq was the mortar attack around Iranian embassy as well as simultaneity of the summit. The two occurred during the same time, though the attack could neither derail nor  interrupt  the Arab leader's meeting. These attacks seems to continue happening, but they are not likely to produce politics collapse in Iraq being sought by the perpetrators. The Iraqi opponents of the government of Maliki – who have quite a good number of valid reasons for their critism– should know that a policy of dialogue with him stands a better possibility of achieving something in the real world the uncertainty of  Baghdad: Maliki Brings the Arab League to the city.

A week before the occurrence of a scheduled Baghdad Arab League summit, a wave of attacks lead to killing of more than fisty individuals across the middle of  Iraq. The security forces had as well been created on high level alert at the run-up towards the summit, yet the attacking terrorists were still in a position to strike the main cities such as Karbala,Kirkuk and Baghdad with corruption. The al Qaeda-affected the Islamic Iraq State to claimed responsibility. This was  a deliberate attempt that derailed the summit of the Arab League thus undermininig the Iraqi government fledging.

Bringing the  League of the Arabs together in Baghdad successfully, the number one  such gathering in the capital of Iraqi since the year 1990 and only the 2nd in the history of that country - would make signal in bringing back modicum of normalcy to this  state that is still emerging from the intervention years and civil war.

The Iraqi parliamentarians are on a week-long holiday from when they had passed their annual 2012 budget. Meanwhile, the Iraqi media have given the responsibility to the Iraqi politicians to allow them in venting their anger that regards to the items that are clear in the budget in which they had thought about.

After the passing the budget in the first days, the debate was highly dominated by signals to a point where some in the state, especially the ones that were close to Prime Minister, were not happy with the parliament failure to pass the article 36 budget that would have initiated  the state greater freedom in relation to money spending. There were suggestions that the state would take the matter before the federal supreme court – based on the fact that the  budget(annual) is a  legislation special case for which article 62 that stands for  Iraqi constitution. This imposes the limits as to the much that parliament can perform in terms of amending (fundamentally nothing much more than moving money from a single post to another. Moreover, it has come out that it was the committee(financial) headed by Haydar, a Maliki ally, that took a leading role in adding articles to the  day's budget of voting subsequent towards article 36 cancellation, including some that likely nonsensical, for example, a quoting scholarships that can be evenly be distributed between governorates. Was some of this latest added matter of intentional move to make the budget vulnerable to problems in the Supreme Court so that the state could hence regain the article 36 if needed? One may wonder, due to the fact that the cancellation of one article on spending normally do not go beyond what this constitution consents for in relation to transfers, that is, the equivalent of nullifying an item, and also due to the fact that  it has been performed before in the budget of the year 2011, article 22 went further and cancelled the “public spending” of a number of presidents also through a change in the last minutes.

In the time that is leading up to the summit of the Arab scheduled for March, the parliament focus is likely to take to the amnesty law, that is, with one more attempt at a 2nd reading on Thursday. In fact, the Sadrists as well as the secular Iraqiyya have various individuals in their constituencies who enjoy the importances from the amnesty law whereby the Maliki’s Law presses for more restrictive and regulative and definitions of who are supposed to be eligible for pardon. This law is at the level of a 2nd reading for a number of months, exemplifying the type of stalemate that has been long-term thus becoming so characteristic of the politics in Iraqi.

The impediments towards the implementation of the budgetary policies

•  The impediments of increasing the capacity to spend on infrastructure

This may involve the increase in the taxes of the citizens and they tend to have a resistance towards such kind of moves and the expenditure towards infrastructure tends to take a lot of time.

I. Lever private sector finance and expertise

The government finds a hard time to lever the private sector due to their increase in the government expenditure.

•   Enhance environment for step up in private sector investment.

This can be done through further tax reform that will raise the public sector revenue so that they can implement the budgetary policies. The investors or citizens of the country may resist such a move making it an impediment in the implementation of the budgetary policies

•  Strengthen employment creation incentives.

This is achieved by reinforcing labor-based infrastructure and service delivery in the economy and in which the public sector may be lacking the revenue for this long term plan.

It can also address the regulatory stumbling blocks to the increased formal sector job creation which has led to fewer opportunities to people who haven’t made it in the public sector labor force.

They can also reduce the level of poverty and vulnerability in the economy but at a high cost.

•  Improve access to services for the poor

By improving the services to the poor it will mean that the government will have to incur extra cost of spending in its budget.

•  Extend coverage and improve quality of basic & social service delivery.

This will make the government to spend more in improving quality and service delivery and the people of the nation will have to incur the cost by the increase of their taxes and this may become a stumbling block especially where there is a negative attitude towards remitting of taxes