chapter 6 spfm

GOVERNMENT

Is the entity that delivers public services and construct public infrastructure for the benefit of its citizens.

PUBLIC FINANCE

is the study of how government raises and spends money, including taxation, budgeting, and public expenditure.

Is an important function of the government. It essentially involves financial decisions about how funds are raised, allocated, and spent to meet the needs of the public.

(a.) acquire funds, (b.) how it decides to spend them and (c.) where it allocates such resources.

Public finance entails evaluating where the government (3)

a. Collecting taxes and Fees

b. Building public infrastructure

c. Paying off public debt

d. Implementing policies

e. Promote the welfare of the society

FUNCTIONS OF PUBLIC FINANCE

(a.) borrowings, (b.) floating of government securities such as bonds

other sources of funds

LEGAL APPROPRIATION

refers to an authorization made by law or legislative enactment directing payment out of government funds under specified conditions or for specific purposes.

DISBURSEMENT

refer to the actual withdrawal of cash from the Bureau of the Treasury due to the encashment of checks issued by agencies and payment of budgetary obligations.

CORPORATE FINANCE

Deals with financial decisions made within private company with overall goal is maximization of shareholder value.

PUBLIC FINANCE

Deals with financial decisions made in governmental setting with overall goal of efficient allocation of public funds for the delivery of basic goods and services to the public.

PUBLIC FINANCIAL MANAGEMENT

the process by which government resources, receipts and disbursement are effectively managed and efficiently allocated to achieve governmental objectives.

PUBLIC FINANCIAL MANAGEMENT

It involves the use of budgeting, accounting and auditing process to ensure transparency, accountability and good governance in the use of public funds.

PUBLIC FINANCIAL MANAGEMENT

It also encompasses the policy and institutional frameworks that guide the management of public finances at the national levels.

PUBLIC FINANCE

is a system of rules, procedures and practices for government to manage public finances.

a. Budgeting

b. Accounting

c. Auditing

d. Cash management

e. Management of public debt

f. Revenue generation

g. Public reporting of governmental operations

ENCOMPASSES OF PUBLIC FINANCIAL MANAGEMENT

GOVERNMENT RESOURCES ALLOCATION AND PRIORITIZATION

Aids in allocating resources based in national priorities and ensures adequate funding for critical sectors such as education, health care, and infrastructure.

BUDGET CREDIBILITY AND TRANSPARENCY

▬ Creates trust between the government and citizens.

It enables citizens to assess how their tax payments to the government are being utilized, encouraging public officials to carry out prudent spending.

EFFICIENT RESOURCE UTILIZATION

Guarantees that public resources are used efficiently and effectively to minimize waste.

It also ensures that resources are directed toward programs and projects that have the maximum impact on the society.

FISCAL DISCIPLINE AND STABILITY

Contributes to the stability of the economy and government finances through the efficient use of public resources.

PUBLIC ACCOUNTABILITY AND CONTROL

To ensures that public resources are utilized based on laws and regulations and hold public officials accountable to their financial decisions.

OPTIMIZED REVENUE COLLECTION

Is an instrumental in enhancing revenue collection systems of governments for funding in public services with an emphasis on efficient tax collection, customs duties , fees, licenses and other sources of government.

DEBT MANAGEMENT

Effective mechanism for managing public debt that requires borrowing at favorable terms guaranteeing that debts are maintained at sustainable level as well as utilizing debts to finance productive investments

POVERTY REDUCTION AND INCLUSIVE GROWTH

Ensures sound management of public finances enabling disbursement for programs that target poverty reduction and promote inclusive economic growth.

GOVERNMENT REVENUE

refers to the amount of money that a government collects from various sources such as taxes, licenses, fees, permits and other charges.

TAX REVENUE

 primary revenue source of government.

TAX

▬ is an enforced or mandatory contribution exacted by the government from private entities and individuals intended for a public purpose.

Bureau of Internal Revenue (BIR) and Bureau of Customs ( BOC)

▬ are the major tax collecting agencies of the national government.  

NON-TAX REVENUE

▬ Refers to government  impositions and collections that other than taxes.

This includes licenses, fees, registrations, permits, penalties and other charges.

CURRENT OPERATING EXPENDITURES

are those expenditures of the government expected to be made within the current fiscal year.

▬ These include Personal Services (PS) maintenance and other operating expenses (MOOE) and Financial expenses (FE)

PERSONAL SERVICES

include expenses such as salaries and wages, social security contributions and 13th month pay and other compensation to government officials and employees.

MAINTENACE AND OTHER OPERATING EXPENSES

▬ include expenses such as travelling expenses, supplies and materials, utilities, communication, rent, repairs, representation and the like.

FINANCIAL EXPENSES

▬ include expenses such as interest expenses on government borrowings, bank charges and fees, among others.

CAPITAL OUTLAYS OR CAPITAL EXPENDITURE

▬ This is governmental appropriations spent for the purchase of tangible properties which add to the long term asset of the government.

INFRASTRUCTURE EXPENDITURES

▬ Refers to the disbursement of funds for the construction of public works such as roads , bridges , ports , airports, water supply , irrigation and other capital investment , the benefits of which extend to the general public.

▬ Infrastructure expenditures refer to the capital outlays of the DPWH and Department of Transportation and Communication , NIA and other similar departments.

FINACIAL EXPENSES (FE)

▬ Pertains to interests expenses incurred by the government on account of its borrowing and bond liabilities, these government bonds and borrowings are used to fund capital investment projects of the government.

DEPARTMENT OF FINANCE

• central government agency responsible for overseeing the fiscal policies and management of the Philippines

BUREAU OF INTERNAL REVENUE

• the primary revenue generating agency responsible for collecting internal revenue taxes in the Philippines

BUREAU OF CUSTOMS

• government agency tasked with regulating facilitating the movement of goods across Philippines border

• it plays a significant role in generating government revenues through the collection of custom duties, tariffs and other fees.

DEPARTMENT OF BUDGET AND MANAGEMENT

• responsible for the national budget and ensuring efficient budget execution.

DEPARTMENT OF INTERIOR AND LOVAL GOVERNMENT

• oversees local governance and administration in the Philippines

BUREAU OF LOCAL GOVERNMENT FINANCE

the operating bureau under DOF that aims to improve the quality of local government finance

NATIONAL ECONOMIC DEVELOPMENT AUTHORITY

is the country's premier socioeconomic development planning and policy coordinating body.

COMMISSION ON AUDIT

• is an independent constitutional commission established to perform audits of government transaction, operation, resources and accounts.

FISCAL POLICY

• pertains to government policy on taxation, government spending and borrowing to influenced economic condition ns leading to the achievement of desired goals.

• its primary aim to stabilize economic growth, employment levels and regular inflation

BALANCED BUDGET

• occurs when a government total revenue equals to it's total expenditure.

• - in other words the government need not to borrow money nor use any reserves to cov3r it's expenditure

BUDGET SURPLUS

• occurs when a government total revenue exceeds it's total expenditure in a given fiscal period.

• it means the government is collecting more funds than it's spending.

DEFICIT SPENDING

• occurs when a government expenditures exceed it total revenue in specific fiscal period.

• to cover the gap, the government may need to borrow money by issuing bonds or using existing available reserves.

IMPROPER USE OF GOVERNMENT RESOURCES

should be avoided to ensure the

governmental services to the citizens.

PUBLIC FINANCE

seeks to provide services that cater to the needs of citizens while

maintaining vital public infrastructures and covering cost associated with

running a government.