Overhead – Public expenditures refer to the expenditures incurred by the central governments on several different activities in order to achieve the welfare of the people as well as for the sake of increasing economic development, especially in developing countries. In other words, the expenditures incurred by the public authorities, such as the central and local governments, are known for the fulfillment of social needs collectively for the people and for the development of the various sectors in the state under the name of “public expenditures.”
What are the types of overhead?
There are four main types of public expenditures, which are:
Capital expenditures and revenue
The capital expenditures of the government refer to those expenditures that lead to the creation of fixed assets, and they are called development expenditures, and the reason for this name is due to their role in increasing the productive capacity of the economy. As for revenue expenditures, they are called current or consumption expenditures, as they are incurred by the state on both the civil administration, the defense forces, public health, the education sector, and the maintenance of government agencies. Examples of capital expenditures and revenues are:
- Expenditures on agricultural and industrial development
- Irrigation dams and public institutions
Developmental and non-developmental expenditures; productive and non-productive expenditures
- Productive expenditures: They refer to the expenditures spent by the state for the development of infrastructure, public projects, or the agricultural sector, which are expenditures that play an important role in increasing the productive capacity of the economy and increasing income and bringing it to the government.
- Non-productive expenditures: They refer to those expenditures incurred by the government without any consideration, that is, without generating any income. Examples include interest payments, expenditures on law and order, and public administration, since they do not create any productive assets that bring income to the government.
- Development expenditures: It refers to all expenditures that increase economic growth.
Transfer and non-transfer expenses
- Transfer expenditures: They refer to the expenditures incurred by the government without obtaining any returns in return for these expenditures. These expenditures include public expenditures on the old national pension system, interest payments, subsidies, unemployment allowances, and social welfare benefits for the weak and poor sections of the state. When the government incurs such expenditures, it does not get anything in return, but it increases the welfare of people in society, especially the weaker sections of the state. Therefore, this type of expenditure results in a fair distribution of monetary income within society.
- Non-transfer expenditures: These are any expenditures incurred by the government that lead to the creation of revenues, directly or indirectly. Examples of these expenditures are:
- Economic infrastructure expenditures such as energy, transportation, and irrigation
- Expenditures of social infrastructure, such as the expenses of education, health, and family care
- Expenditures for internal law, order, and defense
- General administration expenses.
The government seeks to create a healthy environment for economic activity in the country by incurring such expenses.
Project expenses and other plans
They are expenditures incurred by the state on the development activities described in the plan for five consecutive years. These expenditures are borne by the state on transportation, rural development, the communications sector, the agricultural sector, energy, and social services.
Other types of overhead
These types of expenditures are categorized on the basis of the duties and tasks of the government, and they are as follows:
- Defense spending: is defined as expenditures incurred by the government on the types of defense equipment, wages, salaries of the armed forces, the salaries of the navy, the salaries of the air forces, etc, which the government incurs to provide security for its citizens from external aggression.
- Civil expenditures: the expenditures incurred by the government to maintain law and order and administer justice
- Development spending: the expenditures incurred for the development and growth of the agriculture, industry, trade, and transportation sectors
What is the significance of overheads?
Public expenditures play an important role in modern economic activities, as they help to significantly increase economic growth and ensure its stability. It is also important:
- promote rapid economic development.
- Promote trade and economic exchanges.
- Rural sector development
- promote balanced regional growth.
- Strengthening the agricultural and industrial sectors.
- Exploitation and development of mineral resources such as coal and oil
- Securing the social welfare of the people
- Promote full employment, eliminate unemployment, and maintain stable prices for goods and services.
- Ensuring an equitable distribution of income.
What are the overhead objectives?
Public expenditures have a set of objectives, and the following is an explanation of these main objectives:
- Administration of law, order, and justice.
- Maintaining police strength and durability.
- Maintaining the strength of the army and providing defense goods.
- Maintaining diplomats in foreign countries.
- Public Administration.
- Public debt service.
- Industry development.
- Development of transportation and communications.
- Developing the health sector and providing health care to the people
- Creating social benefits
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