A budget may be defined as a financial statement of the total estimated revenue and the proposed expenditure of a government in a given period, usually a year.
Types of Budget
1. Balanced Budget
This is when the total estimated revenue is equal to the proposed expenditure. This means that nothing will be left as reserve from the money collected in form of revenue.
2. Surplus Budget
A budget is called surplus when the total estimated revenue is more than the proposed expenditure. In this type of budget, not all estimated revenue is proposed to be spent in that year, there will be reserve.
3. Deficit Budget
This is the direct opposite of surplus budget, and it is when the government’s total proposed expenditure for a period is more than the total estimated revenue. The question that arises is where does a government get the money it uses in financing deficit budget? The money comes through borrowing from the central and commercial banks, the public, printing of more currency, etc.
Types of Revenue and Expenditure
1. Recurrent Revenue
This is the amount of money collected by the government from their usual regular sources of revenue, for example, taxes, rates, rents, fees, fines etc.
2. Capital Receipts
This is the proposed expenditure of a government on projects that will last for many years like roads, dams, sea and airports, hospitals, schools, etc.
4. Current Expenditures
These are expenses carried out by the government year by year. These expenses that continue to recur the the forms of wages and salaries that are paid to the civil servants every month in every financial year.