What is public expenditure?

Public spending is the total amount of money that the public sector it disburses in order to meet a series of objectives, whether social, economic or labor. Among the most common and acclaimed objectives is to end inequality, redistribute wealth or meet the needs of citizens.

Therefore, the main objective of this term is to be able to achieve a series of goals that a certain country has set for itself. These objectives are met thanks to the expense that is made, which does not prevent them from being met.

Among the citizens' needs that public spending tries to meet, we find: the redistribution of wealth, ensuring certain justice, improving employment conditions, increasing economic growth, promote a sustainable society, improve in terms of education (accessibility and quality), among others.

Types of public spending

Public spending can be classified depending on where it is made and what it refers to. We therefore have:

  • Capital expenditure. It refers to an expense that is intended to obtain assets. Tangible and intangible assets are taken into account, as well as the purchase of fixed assets (infrastructures of a school, hospital, etc.).
  • Current expenditure. It is the expense that is allocated to the daily or basic operations of the State. It includes the payment of salaries of civil servants or in public services.
  • Investment expense. It is an expense intended to create, increase, improve or replace existing public capital.
  • Transfer cost. It is the type of expense that the State allocates for families and companies. They are subsidies for unemployment, transfers or certain aids.

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