Government needs to plan its activities, programmes, and projects by setting clear objectives and targets for a given period. Fiscal planning refers to government’s anticipation of revenues, spending, and financing within the planning period. Fiscal planning involves the determination of government revenue, spending, and borrowing for the ensuing year. Fiscal planning is very important in government budgeting as it provides the macroeconomic and fiscal framework within which the budget is implemented.

Therefore, planning relates to fiscal planning which entails the policy-making stage of the budgeting process. It is the fiscal policies that influence the budget statement. Budget, on the other hand, is the expressing of government policies and programmes in some quantitative terms. It relates government spending to the attainment of fiscal and economic policies of government.

(2 marks)