A public budget is a legally binding financial blueprint that details a government’s planned revenues and expenditures over a specific fiscal year. It serves as the primary instrument for executing fiscal policy, which manages macroeconomic stability, redistributes wealth, and allocates resources to public goods. The budgeting process begins with a macroeconomic framework that projects GDP growth, inflation, currency exchange rates, and employment levels. These economic variables directly dictate the state’s resource envelope—the total amount of revenue available for allocation without destabilizing the economy.

The authority to tax citizens and spend public money rests exclusively with the legislature. This constitutional principle prevents arbitrary executive spending and guarantees public oversight. Every fiscal decision must trace back to statutory provisions. For example, in Kenya, the Public Finance Management (PFM) Act of 2012 outlines the step-by-step responsibilities of the National Treasury and line ministries. It anchors budget ceilings, debt limits, and fiscal responsibility principles directly into law.