Answer to Question #106873 in Management for Blessing

Question

Public finance has been variously described as a cluster of core financial activities. It is an indispensable tool in the management of a Nation's resources because; public finance is mainly involved with resources mobilization and expenditure management in the public sector. concisely discuss the assertion.

Answer 1

Public financial management can be defined as a set of rules, laws and systems used by various levels of government to actively mobilize resources, apportion public funds, execute public spending and account for the allocated funds. The scope of public finance is broader than resource mobilization and expenditure management, however, these two are interconnected ends, which should be mutually examined, in any discussion involving public sector financial activities. Public finance becomes a crucial instrument in managing nation’s financial resources as highlighted below.

• It instils cumulative fiscal discipline such that levels of revenue collected and public expenditure are in line with set targets. This will reduce fiscal deficits, which in return lowers unsustainable public borrowing.
• It ensures that public resources are assigned to prioritized areas for enhanced allocative efficiency.
• It contains measures that ensures operational effectiveness is attained such that value for money is realized in the delivery of services.