Accrual Budgeting and Fiscal Policy
April 1, 2009
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Summary
Can an accrual budgeting system-a system in which budgetary spending authorizations to line ministries are formulated in accrual terms-serve the needs of good fiscal policy? If so, how must such a system be designed? What are the practical challenges which may arise in implementing sound fiscal policy under a budgeting system which is significantly more complex than traditional cash budgeting? These are the primary questions addressed in this paper. Because any budgeting system must support the control of key fiscal policy aggregates, the paper also considers the case for reformulating fiscal policy in terms of accrual rather than cash aggregates. The primary focus is on the potential fiscal policy role of net lending and net financial debt. However, the paper also considers whether net worth is an aggregate with major fiscal policy relevance.
Subject: Accrual accounting, Capital spending, Currencies, Expenditure, Fiscal policy
Keywords: aggregate demand, balance sheet value, cash balance, cash budget, cash requirement, control total, debt measure, net lending, WP
Pages:
33
Volume:
2009
DOI:
Issue:
084
Series:
Working Paper No. 2009/084
Stock No:
WPIEA2009084
ISBN:
9781451872316
ISSN:
1018-5941
