Creating a Budget

To begin this lesson, we will utilize some example planet data to reference for the rest of this article.  

Example

All other information is calculated automatically. You are free to calculate it on your own if you wish, as it may help you to calculate a budget that will give you a surplus. If you wish to do all calculations, please follow this template:

Calculation Walkthrough
Revenue Rate: 32.0%
Infrastructure Rate: 25.5%
Upkeep Rate: 95%
Final Surplus = GDP * 0.01 * (Revenue - Infrastructure) - 0.01 * (Public Debt + External Debt) - 0.01 * Upkeep Rate * Military Upkeep
Final Surplus = (500,000 * 0.01) * (32.0 - 25.5) - (0.01 * [50,000 + 250,000]) - (0.01 * [95 * 10,000])
Final Surplus = (5,000 * 6.5) - 3000 - 9500
Final Surplus = (32,500 - 3,000) - 9500
Final Surplus = 29,500 - 9,500 
Final Surplus = 20,000

Detailed Explanation
In your budget, the first thing to consider is your planet's Revenue Rate (RR). Based on your revenue rate, the total revenue your government collects is found. This is done by multiplying your Gross Domestic Product (GDP) by your revenue rate. GDP is a measure of the economic activity in your planet, and is found in your planet profile.

Surplus = (GDP)(0.01)(RR)

The Revenue Rate represents how much money the government is taking in, expressed as a percentage of GDP. The Revenue Rate can be raised without negative effects by improving efficiency in some way, decreasing corruption in some way, etc. Raising taxes will also raise the Revenue Rate, but may have negative effects to growth.

Your revenue is then adjusted for External Debt (ED) and Public Debt (PD) interest charges. Both are done at a 1% interest rate. This is done before the infrastructure deductions because in government finance debt payments take precedence over social spending, however that has no effect on the amounts received in the end.

Surplus = (GDP)(0.01)(RR) - (0.01)(ED + PD)

It is beneficial to pay off debt, but not in any amount. It is not advisable to pay huge sums off of the public or external debt at any one time, and adopting a slow reduction policy is better. 

Infrastructure (IR) is the amount of money that your government invests in domestic spending -- government services such as medical care, education, and police. It is expressed as a percentage of GDP. As a general rule: the higher your infrastructure, the better.

The current revenues are then adjusted by subtracting your current infrastructure expenses.

Surplus = (GDP)(0.01)(RR - IR) - (0.01)(ED + PD)

Military expenditures are then deducted from your revenues. Military expenditures are represented as a percentage of the Military Upkeep (MU, sum of all unit upkeeps), that percentage being the Upkeep Rate (UR).

Final Surplus = (GDP)(0.01)(RR - NI) - (0.01)(ED + PD) - (0.01)(UR)(MU)

Important