Public Sector Governance and Accountability Series: Budgeting and ...

94 A. Premchand
TABLE 3.1
Receipts
An Illustration of the Structure of a Capital Budget
Expenditures
1. Estate and death duties 1. Acquisition of existing assets a
Taxes and property
Plant, property, and equipment
Earmarked revenues for capital projects Financial
2. Surpluses from the current account 2. Acquisition of new assets a
3. Proceeds of borrowing: Plant, property, and equipment b
Domestic
Financial (other than capital
Trust and captive accounts
transfers)
maintained by government
3. Capital transfers
External
Transfers to other levels of
Repayment of loans
government c
4. Depreciation allowances Transfers to state-owned
5. Sales of property d enterprises
Regular
4. Repayment of loans
Privatization proceeds
Total
6. Capital grants
Total
Source: Author’s compilation.
a. Contentious categories such as outlays on social capital are not included here.
b. May include jointly financed projects.
c. May include nonremunerative projects and some loans.
d. Do not include revaluation profits.
an asset (or a transfer leading to the acquisition or creation of an asset) are
included in the capital budget as long as they meet three criteria:
1. They are used in the production or supply of goods and services (produtivity
criterion).
2. Their life extends beyond a fiscal year (longevity criterion).
3. They are not intended for resale in the ordinary course of operations.
Economists first distinguish between outlays on self-financing projects
and outlays on self-liquidating projects. Although both are included in a
capital budget because they are funded from borrowing, self-financing
projects have the potential to service only future interest payments, whereas
self-liquidating projects have the potential to service both interest and
principal repayments.
Economists also distinguish between the acquisition of existing assets
and the acquisition of those that will be created. This approach enables a
bridge to be built to the national accounts. Productivity and longevity or