ABSTRACT
Extrabudgetary funds exist in almost every country, and extrabudgetary operations account on a worldwide average for about one-third of total government expenditure. In developed countries, pensions account for about 90 percent of non-budgeted expenditure. Extrabudgetary operations can be funded in various ways, including by direct transfers from the treasury, but tax earmarking and user fees are the most common sources of financing. The four main types of extrabudgetary operations are sovereign wealth funds, social security funds, aid-financed expenditure and road funds. Tax expenditures aim at achieving certain public policy objectives by providing benefits to qualified individuals or entities or by encouraging particular outcomes. They may also be intended to improve tax equity or offset imperfections in other parts of the tax structure. Several developing countries prepare multiyear program 'budgets', at the urging of the donors, with shifting coverage and little impact on the annual budget decisions.
