A budget, also known as the economic policy statement, is an estimate of income and expenditure for a set period, usually up to a year for economies and countries.
Personally, one can draw a budget to track one’s spending to minimize wasteful spending and impulse buying. Businesses also use budgets to measure their growth in terms of income and expenditure.
Income basically refers to money that will be received and expenditure, monies that will be spent.
A person’s budget contains how much revenue or income they expect to receive during a stipulated period and how they intend to spend within that period. There are three types of budget, i.e. balanced budget, surplus budget and deficit budget.
A balanced budget is when the estimated expenditure is equal to the expected revenue. This type of budget is a difficult task for most people, especially governments, to achieve.
However, a surplus budget is when the expected revenue surpasses the estimated expenditure. In the case of economies, this may imply that the government’s earnings from taxes are greater than the amount spent by a government on public welfare, whiles the estimated expenditure exceeds the estimated revenue of a government in a financial year.
In Ghana, the Minister of Finance is expected to, at the end of every year, present the budget and economic policy of the government for the following year to parliament, after which it will be approved after deliberations by members of the house.
The exercise is in line with Article 179 of the 1992 Constitution and Section 21 (3) of the Public Financial Management Act, 2016 (Act 921).