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Economics Form 5 Science

Chapter 3 : Public finance

COMPONENTS OF PUBLIC EXPENDITURES

There are two types of public expenditures namely re-current and capital expenditures.

Re-Current Expenditures: include all expenditures made by the government on the day to day running of the public services. This include money spend on regular basis e. g. Money spent on payment of workers, buying of office stationeries, payment of telephone, water and electricity bills, etc.

Capital Expenditures: include all expenditures made by the government on long term projects e. g. construction of roads, bridges, schools hospitals, research centres, etc.

However the government spends on the following to ensure the wellbeing of its citizens and the repayment constitute a significant component of government's expenditure.

 

  1. Provision of public goods and services: These are goods and services which are consumed collectively, and therefore, are very difficult Lo be produced by private individuals in the free market. It is only the government that can produce such goods and services which include roads, street lights, defense, law and order etc.
  2. Provision of merit goods: These are those goods that when consumed provide more social benefits than private benefits to the consumers. Examples would include education, and health care etc.
  3. Provision of administrative services: The administration of the country is managed through the creation of several services. The Presidency and the Ministries require buildings, Civil servants, tables and chairs, computers and other forms of furniture in order to function effectively.
  4. Provision of Social Security Benefits: The government spends a lot of money on a wide range of social benefits. Social benefits include pensions, family allowances, leave allowances, service cars, housing allowances, etc. Some countries pay unemployment benefits to those who are within the labour force but are unemployed.
  5. Contributions to International Organizations: Cameroon is a member to many international and regional political and economic organizations and, therefore spends a lot of her revenue in the form of contributions to the running of these organizations e. g. CEMAC. IMF, African Union etc
  6. Provision of Touristic sites: the government spends money on the maintenance of public zoos and gardens such as Mvog-beti, Limbe zoo, Limbe wildlife centre, National parks and other protected areas.
  7. Public Investments: government creates and runs enterprises as its investment such as nationalized industries and state corporations. Huge sums of money are spent to manage such investments e. g. CDC.
  8. Payments of debts: Money borrowed both internally and externally s usually paid back with interest. Consequently, debt servicing constitutes part of government expenditures.
par Claude Foumtum
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