B) Write down five questions about each text

Limit

Bank

Leads

Reduced

Adversely

Reliance

Occur

Supply

Repaid

Since the early 1970s quite a number of countries have been experiencing serious financial problems which have caused growing budget deficits.

Trying to find solutions to swollen budget deficits, governments undertake austerity programmes, work out harsh budget, implement macroeconomic stabilization, establish priorities for government spendings, analyse effects of different ways of financing their budget deficits.

In principle, budget deficits may be _____ by borrowing from domestic bank and nonblank sources, and from the rest of the world excessive ____ on any of these methods of finance may be dangerous because:

Government borrowing from central ____ directly affects the monetary base and the money ____. Excessive growth in the money supply leads to high inflation rates and balance-of-payments problems.

Substantial borrowing from the nonblank sector may ____ affect the structure of demand and growth potential. In particular, this borrowing may ____ the availability of resources to finance private investment. Such “crowding out” of private investment may ____ through the impact of government borrowing on domestic interest rates.

Reliance on external finance ____ to the accumulation of debt, which needs to be serviced and eventually _____.

A prudent fiscal policy permits a public deficits, but it must be maintained at a level consistent with other macroeconomic objectives: controlling inflation, promoting private investment, and maintaining external creditworthiness.

Words you may need:

austerity programme – програма жорсткої економії

harsh – жорсткий, суворий

“crowding out” – витіснення приватних інвестицій державними витратами

1. a) Read and discuss the texts.

It has become quite common for ministers of finance around the world to practice some variety of multiyear budgeting. For example, Canada, Germany and the United Kingdom all have multiyear expenditure plans which get reviewed and approved every year. In these countries, the starting point for the next year’s budget is the expenditure level approved for this year in the multiyear expenditure plan. Any changes to these previously approved levels have to be treated as additions to the budget, to be financed by raising total spending or by making offsetting changes in other programs.

In Germany, the annual budget is integrated in multiyear financial plan, which is presented to parliament at the same time the annual budget is presented.

The most important objective of multiyear financial plan is to monitor the possible existence of excessive demands on public resources.

In Canada, each year the federal government reviews and rolls forward the Fiscal Plan which comprises in more detail the current fiscal year and three more years. Each spending unit develops its own multiyear expenditure plan with the levels needed to keep the current level of services running for the next three years, which are then negotiates with the Treasury Board.

In the United Kingdom, the multiyear public expenditure survey also covers next three fiscal years.

Even when they do not have multiyear expenditure plans other countries carry out forecast of the financial consequences of current expenditures (for example, the future liabilities implied by increases in pension plans) or capital investment projects (such as future expenditure on maintenance and operation). For example, in Denmark, these is an appendix to the annual budget showing the expenditure level for the next three years.

Words you may need:

multiyear budget – багаторічний бюджет

offsetting changes – компенсаційні зміни

roll forward – переносити

1. a) Read and discuss the texts.

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