Sequencing the budget is what?

Debt consolidation with a loan is a matter that concerns not only individuals and entrepreneurs, but entire countries. It's one thing to make a budget for a year, quite another to fulfill it. The state, of course, can turn to international lending, but this is not always profitable. In this case, there is a sequestration of the budget. This procedure is legislatively established in the United States and some countries, but most of the name is trying not to sound, presenting cost reductions as a necessary, but not an obligatory measure.

Sequencing the budget: what is it?

US law provides for a procedure that limits public spending to clearly defined categories. This is the sequestration of the budget. The Congress accepts the amount of annual appropriations. If the costs exceed the established, then there is a simultaneous and proportionate reduction in all categories. This amount is not transferred to the specified areas, but is left in the Treasury. The very term "sequestration of the budget" is taken from the legal sciences. In the legal sciences, it means the transfer of property to bailiffs in order to prevent damage to it prior to the consideration of the dispute in court.

The Gramm-Rudman-Hollings Act and the Present

The term "sequestration of the budget" was first applied in the American law of 1985. He devoted a whole part of the act to reduce the deficit, compiled by Gramm, Rudman and Hollings. But already in 1990 it was decided to abandon the rigid restrictions. The new system lasted 12 years. Then, for a long time, sequestration was the subject of expert discussion. But in 2011, this procedure became an integral part of the Budget Control Act. With the help of this bill it was possible to solve the problem of exceeding the established limit of debts. The Committee on Debt Reduction was established. Sequencing of budget expenditures is the last measure that can be applied if Congress does not succeed in adopting a law on cost reduction. Many experts talked about the sequestration of the budget in 2013. To the joy of taxpayers, the government managed to avoid this.

Budget Process in Russia

Every year, the government forms the Federal Law, which shows how the population of the country will live. Then the budget is signed by the President and comes into force. The financial year in this case completely coincides with the calendar year. The main components of the budget are revenues, expenditures and their differences. In the Russian Federation there is a deficit, that is, government expenses are not covered by tax and other revenues. If 50 billion is income and expenditure is 150, then the country needs to find somewhere those inadequate 100. Deficit is a balancing article. You can put any amount there, but this will not generate additional money in the state. If there are no resources for financing certain projects, then this is just a deception of the population. Moreover, this state of affairs creates a precedent for uncontrolled disposal of funds: one article can be reduced by 10%, another - by 50, the third - completely removed. But is it possible to say in this case that the budget is being implemented? Nevertheless, in Russia this is often the case.

Coverage of the deficit

If there is not enough money, then it's logical to take them somewhere. It is clear that then they will have to be given with interest, but here the crisis current situation comes to the fore, and not dreams of good prospects. The sources of deficit cover include borrowing from individuals and legal entities, as well as international organizations and other states. The problem with the latter is that their loans often involve political influence on the internal situation in the country with a shortage of cash.

In addition, the state can issue bonds, which are purchased by individuals and legal entities. But it is important to understand that money will still have to be given away sooner or later, therefore budget expenditures should not be connected with populist slogans, but with really promising sectors with great impact.

Functional classification

In order to avoid sequestering the budget in the future, it is important to correctly establish the costs for certain industries from the very beginning. Functional characteristics show where the money is spent. For example, you can find out how much it spent on the implementation of management, defense, health and education. At the same time this characteristic is uniform for all subjects of the Russian Federation. Further all expenses and incomes are reduced to the consolidated budget. In its most general form it consists of three parts: the content of ministries and other management bodies, interaction with the territories, implementation of certain development programs. As for transfers, they do not have a targeted focus. General expenses for the subject of the federation are considered according to the norms. This means that an increasing factor (for example, the North) can be applied to some regions.

Sequencing Budget 2014

The consequence of a constant deficit is the growing need to reduce the expenditure side every year and to find new ways of financing it. In late 2013, the RF Minister of Finance announced the need to reduce budgetary allocations. He stressed that the sequestration of the budget for 2014 is not provided. Anton Siluanov assured that this is not a cutting of expenses, but a choice of priorities that meet the requirements of the time. An increase in the deficit of 400 billion rubles does not allow allocating funds for the development of Transbaikalia and the Far East, as well as the development of the infrastructure necessary for the World Cup, which will take place in 4 years in Russia. Therefore, according to the minister, it is necessary to change priorities and send money to more promising sectors. For 2014, revenues are planned at 13.4 trillion.

Nevertheless, the new budget caused a lot of criticism. Most refer to the redistribution of funds as sequestration. Experts believe that a much more correct step is always to expand the revenue side, rather than close monitoring of embezzlement.