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Explain five principles of Government spending.

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  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
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