Program budgeting – Characteristic features and practical experiences

Abstract

Incremental budgeting, i.e. the chapter based budgeting mechanism that groups expenditure items mostly according to the administrative classification – and is also used in Hungary – is suitable for the detailed planning of expenditures and the itemised control of their implementation. However, it is not suitable to measure the quantity and quality of products and services that were generated through the expenses, or the absolute and relative costs involved. In its reports the State Audit Office of Hungary has several times called for the application of modern budgeting techniques in the Hungarian system of public finances. One of these techniques is the so called program budgeting. Based on the available international experience and the presented case studies, the main purpose of this article is to promote the comprehensive application of program budgeting in Hungary. However, we cannot omit mentioning the theoretical background of some of the correlations.