Home  Journals  Financial Analytics: Science and Experience  14(296) - 2016 April

Budgetary risk of inflation

Vol. 9, Iss. 14, APRIL 2016

Article PDF Version

Received: 10 March 2016

Accepted: 17 March 2016

Available online: 15 April 2016

Subject Heading: RISK, ANALYSIS AND EVALUATION

JEL Classification: H61, H63, H68

Pages: 16-25

Importance In budgetary planning, the inflation risk assessment will ensure adequate amounts of allocations throughout the entire fiscal year. This risk is the most elaborated and usable category in the current business practice. However, the public sector continues to operate without considering this aspect.
Objectives The research formalizes categories of the budgetary risk of inflation and identifies the specifics of an inflationary influence on budgetary indicators. I also determine a multiplicative effect of budget on inflation.
Methods Using methods of analysis and synthesis, I found how macroeconomic indicators of inflation influence budgetary indicators.
Results I formulated the specifics of the budgetary process that influenced the accuracy level of budgetary plans. Public budget especially needs to be revised in terms of inflationary indicators. The budgetary risk of inflation causes budgets to be performed with deviation.
Conclusions and Relevance If the budgetary risk of inflation is forecasted, it can be considered during the budgetary process so to converge projected and factual budgetary indicators. If the level of projected inflation is assessed for certain budgetary revenue and expenses, it will precise budgetary planning.

Keywords: budgetary risks, inflation index, budgetary accuracy, forecast

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