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

104 A. Premchand
TABLE 3.3
Position
Macroeconomist
Political participant
Market participant
(continued)
Perspective
Permit clearer identification of assets and thus
distinguish between investment and operational
budget
Promote greater conformity with GAAP
Pave the way for a full introduction of accrual
accounting.
Believes capital budgets do the following:
Permit a greater recognition of the economic
significance of some government activities
May contribute to better distinction of the cost of
government services among beneficiaries and
taxpayers
Because of debt financing, may promote greater
intergenerational equity and may lead to more smooth
tax policies (by switching lumpy investments to debt
financing from pay-as-you-go methods)
May be useful as a tool of compensatory policy but
must be tempered by the recognition that most categories
of capital expenditures may have the same
effect as current expenditures
Promote workable limits on borrowing and more
coordinated borrowing
Require sound techniques of deficit estimation that
emphasize, from the viewpoint of sustainability, the
overall deficit.
Believes capital budgets do the following:
Provide alternatives to tax-financed activities
Provide more visibility for government activities
Provide the much-needed infrastructure that
facilitates government services
Have the potential to promote greater accountability
Provide a basis for exploring partnerships with the
corporate sector.
Believes capital budgets do the following:
Permit a specific link between bond issues and the
projects financed
Facilitate an assessment of the risk factors and the
net worth of the government
Offer a better perspective than financial statements,
which are too aggregative in nature.
Source: Author’s compilation.