Program-Based Budgeting: the Goals, the Methods and the Classification

The most well-known way to improve the efficiency of the budget expenditure use is to utilize the program-based budgeting instead of the traditionally used budgeting methods. The rationale behind the use of the program-based budgeting in the Russian Federation is given in the Budgeting Process Reform Plan for the Period of 2004–2006. The key principles of the basic program-based budgeting pattern formation are described in the article. The use of the principles renders efficiency to and streamlines the budget formation process and the budget expenditure use. The article authors focus their attention on the program-based budget expenditure classification. The classification is crucial to ensuring that correct analysis of the budgeting process is made on the macro-level, program functionality and operational level. The classification is also important for determining the levels of responsibility of those who are in charge of the budget funds allocation and distribution.