public finance

Government´s activities oriented towards obtaining funds from diverse sources to finance the country’s development. It consists of collecting taxes as well as gathering complementary funds, such us credits and loans, from inside and outside the country.

Public finance is only one part in the field of Public Economics. The essential components of a public financial management system are; the resource generation, meaning the collection of sufficient resources from the economy in an appropriate way, the resource allocation, meaning the correct resource distribution, and the expenditure management, meaning the efficiently and effectively use of these resources. Government expenditures can be; purchases of goods and services for current use which are called “governmental consumption”, if those goods and services are bought with the intention to create future benefits are called “governmental investment”, and those purchases that are other different that goods and services and only represent transfers of money, are called “transfer payments”. Activities involved in the running of the state for the purpose of producing value for the citizens are “government operations”. In order for a public administration to finance its expenditures it can rely to government revenues, investment revenue, government debt, or privatization.