Observation

This question was also popular among the candidates and their performance was  average. Candidates were required to define national budget in the (a) part of the question, explain capital expenditure and recurrent expenditure with a relevant example in the (b) part of the question and explain any four ways in which a budget is necessary for a government in the (c) part of the question. Majority of the candidates were able to define national budget and to explain capital expenditure and recurrent expenditure in the (a) and (b) parts of the question respectively. Most candidates were unable to explain the ways in which a budget is necessary for a government in the (c) part of the question. Candidates were expected to answer thus to score maximum marks in this question.

(a) A national budget is a financial statement of a country which shows the estimates of proposed expenditure and expected revenue for a year.                                   

(b)(i)    Capital expenditure is expenditure made on major projects which are durable in nature or last for a long time e.g. building a school, a dam etc.                                      
(ii)   Recurrent expenditure is government expenditure which occurs on regular basis or is repeated e.g. paying of salaries.                                                                  

 (c)(i)   It helps to redistribute income where higher taxes are imposed on the rich as against the poor so as to enhance the welfare of the poor.
(ii)   It helps to redistribute resources by taxing heavily certain sectors of the economy e.g. mining sector.
(iii)  A budget can impose high taxes on imports thereby, controlling a balance of payments deficit.
(iv)  It helps to maintain economic stability where certain measures can be put in place e.g. price control, fiscal policies etc.
(v)   It helps to implement policies and development plans which are embodied in the budget.
(vi)  It can be used to address the problem of unemployment by increasing government expenditure.
(vii) It helps in evaluating the performance of government and the economy.
(viii) It helps government to raise revenue.