Download Basic Terms used in Public Finances

Basic Terms used in Public Finances
Term
Budget
Budget year
Budget cycle
Expenditure
Economic classification
Current expenditure
Capital expenditure
Functional classification
Government revenue
Supplementary budget
Line item budget
Budget execution
Tax
Subsidies
Definition
A comprehensive statement of Government financial plans including
expenditures, revenues, deficit or surplus, and debt. The budget is the
Government’s main economic policy document, indicating how the Government
plans to use public resources to meet policy goals.
The next fiscal year for which the Legislature must approve appropriations.
All the major events or stages in making decisions about the budget, and
implementing and assessing those decisions. It usually has four stages:
formulation, approval, execution and audit.
The term refers to Government spending (or outlays) made to fulfil a
Government obligation, generally by issuing a cheque or disbursing cash.
The GFSM 2001 refers specifically to a “classification of expenditure by the
nature of transaction, that is, whether requited or unrequited, for current or
capital purposes, kind of goods or services obtained, and sector or subsector
receiving transactions” (IMF, 2001, p. 325). It is generally used to identify the
nature and economic effects of government operations. Though not formally
described as “economic” in the GFSM 2001, the classification of revenue into
current (tax and non-tax), capital, and grants serves a similar purpose.
Spending on wages, benefit payments and other goods and services that are
consumed immediately.
Investments in physical assets such as roads and buildings that can be used for a
number of years.
Functional classification: The GFSM 2001 refers specifically to the COFOG, which
is the international standard for classifying expenditures of government
according to broad purposes for which transactions are undertaken. It is
generally used to measure the allocation of resources by government for the
promotion of various activities and objectives (such as health, education, and
transportation and communication).
It is an increase in net worth resulting from a transaction. For general
government units, there are four main sources of revenue: taxes and other
compulsory transfers imposed by government units, property income derived
from the ownership of assets, sales of goods and services, and voluntary
transfers received from other units.
Also called Adjustment Budget or Supplemental Budget. It contains the proposed
amendments to the main annual budget. This is the mechanism with which the
Government seeks legislative approval for spending that differs from the original
budget and appropriations. Supplementary budgets are given legal force through
adjustment or supplemental appropriations.
A general term used to describe a relatively unsystematic budgetary chart of
accounts. In addition to standard votes or “lines” for items such as “salaries and
wages,” separate lines for new requirements are introduced as they arise, thus
giving rise to lengthy, ad hoc forms for appropriating and accounting for
spending.Medium-term budget framework
It is the the process of monitoring, adjusting, and reporting on the current year’s
budget.
It is a compulsory unrequited payment to the government.
Subsidies are current unrequited payments that government units make to
enterprises on the basis of the levels of their production activities or the
Budget ceiling
Consolidation (budget)
Fee
quantities or values of the goods or services they produce, sell export, or import.
Subsidies may be designed to influence levels of production, the prices at which
outputs are sold, or the remuneration of the enterprises.
It is a cap on government spending items.
The process that takes data from different systems, entities (and possibly
formats) and combines that information to create a unified view.
A charge or a payment for any professional service. In the case of government,
the service is provided by the government institutions.
Sources: (1) The law of Public Finance 500/2002 and additional revisions; (2) OECD (2006), OECD Budget
Practices and Procedures Database Phase II, Final Glossary, 19 December 2006; (3) OECD, OECD Glossary
of Tax Terms (2017); (4) OECD, OECD Glossary of Statistical Terms; (5) IMF (2007), Manual of Fiscal
Transparency; (6) IMF (2001), Government Finance Statistics Manual.