The execution of the country's budget is the provision by state bodies of the receipt of planned revenues and the ability of the executive power to ensure the financing of the obligation to spend funds, according to previously assumed obligations.
The Government and the legislative power are jointly and severally responsible for the specific parameters of the adopted budget and the amount of financing of the articles. The first forms specific figures, the second makes edits and, if they come to a common opinion, accepts the main financial document of the country by voting.
In the absence of a quorum or an elected government responsible for budgeting, the country lives and works according to actual expenses. This is an indicator of a political or economic crisis, it has a negative impact on the investment climate of the country.
Discussions on the parameters of the document to varying degrees indirectly affect the global and national financial markets, starting from the last quarter of the year, when the discussion of the project figures for each item of expenditure begins. Investors and speculators also take into account the planned revenues for the next year, assess the reality of their achievement.
In 2016, the promise of US President-elect Donald Trump to increase infrastructure spending to $1 trillion caused a multi-month increase in prices for metals and stock indices.
The budgets of oil-dependent economies are interesting with forecasts of the future average annual cost of oil and the exchange rate dollars to national currencies.
The European Union practices the adoption of a long-term plan of expenditures and revenues to support state programs for a period of 7 years. The document is compiled by the finance ministers of the EU countries, adopted by the European Parliament, and the supranational Accounting Chamber monitors its implementation. The budget is filled with contributions from the participating countries and EU tax fees.
The document is adjusted annually at EU summits, but investors take into account only indirect indicators, determining the shares of subsidized and donor states, tracking the budget execution of Germany, France and the UK (leaving the EU in 2019) on the websites of the Finance Ministries.
The US Federal Budget
The US budget is prepared by relevant departments taking into account the initiatives of the President, who submits the document for consideration and approval to Congress. If the articles and regulations require the adoption of additional laws, the senators adopt them and send them to the head of state for signature.
The expenses and revenues of the US budget are the largest in the world, so the revision and financing of certain items can become a fundamental factor in the growth or fall in prices for raw materials or shares of individual industries and companies.
The Chinese economy is built on the principle of "five-year plans", the main economic document of the country is adopted at the National Assembly, but this is a "ritual". The Central Committee of the Communist Party and the Chinese government have real control and influence on the structure.
In the XXI century, Japan's revenues have lost second place to China, but budget expenditure items have a greater impact on the markets and currencies of the Asia-Pacific Region.
Format of the budget execution report output
Of particular interest in the world markets is the report on the execution of the US budget – the data are published monthly in the form of the difference between income and expenses. Prior to the publication, traders have access to preliminary and previous values expressed in billions of dollars.
Statistics are released by the US Treasury Department, after the first decade at 21-00 Moscow time.
Impact of the Budget execution report on the Forex market
In the developed US economy, the indicator of income and expenses has a constantly negative value, so traders are guided by the difference in actual and forecast results. The excess of real readings over the preliminary data of analysts leads to the strengthening of the national currencies, the results of budget execution are lower than the forecast-to fall.