Theory question 112
Public Finance(a) What is public recurrent expenditure?
(b) Give five reasons for the rapid increase in government expenditure in your country.
Show the model answer
Model answer
(a) Public recurrent expenditure is government spending on items that occur regularly every year, e.g. salaries, maintenance, interest on debt and running costs.
(b) Any five: population growth; expansion of social services (education, health); defence and security needs; inflation; debt servicing; provision of infrastructure; creation of new states/local governments; subsidies to public enterprises; corruption and wastage; increase in salaries and wages.
Explanation
Recurrent spending is regular running cost, unlike capital spending.