Question

Explain five principles of Government spending.

Answer 1

1. Sanction. 
   • The expenditure must be authorized/approved by parliament/relevant bodies.
2. Economy.
   • Should be incurred in the most affordable way/to avoid any possible wastage/misuse
3. Accountability/Good/proper financial management
   • Public funds should be well managed/proper records maintained(for auditing)
4. Flexibility
   • The expenditure policy should accommodate the changing/prevailing economic situations (e.g. drought/floods/pandemics etc).
5. Maximum/optimum Social benefit
   • Any expenditure must accord maximum benefit to the majority of the people.
6. Productivity.
   • The expenditure should be incurred projects that can yield a (return on Investment).
7. Equity.
   • Should be incurred in a way that ensures fair income distribution.
8. Surplus
   • Savings should be spent on emergencies/fill revenue gaps between collections & projection/ expenditure should be less than the revenue collected
9. Elasticity
   • Expenditure should be capable of being expanded/contracted in line with the size of the economy