Our workFiscal and budget policy

Every government levies taxes to finance its expenditure. Every government must regularly decide how much to spend, what to spend it on and how to finance its expenditure through fiscal policy. The main instrument of fiscal policy is the budget, presented annually by the Minister of Finance to Parliament. In the budget the minister outlines government’s spending plans for the financial year, and how government proposes to finance its expenditure. Senior budget officials are often confronted with a great deal of fiscal and budget policy advice that may provide short-term solutions, but may be unsustainable over the medium to long term. It is therefore important that fiscal policy carefully balances all equity and efficiency goals. Finance ministries work closely with central banks, international finance institutions and sub-national governments on determining the government’s spending plans for the financial year, and how government proposes to finance its expenditure.