Glossary

The balance of payments records transactions between residents and non-residents during a given period. It comprises the current account, which includes the balances of goods and services, primary and secondary income, the capital account, and the financial account. The double-entry accounting principle used when recording transactions ensures that the sum of all international transactions - current, capital and financial - is, in principle, equal to zero. The financial account thus shows how the combined current and capital account balance is financed. The balance of payments statistics account for trade, investment or transfers made between the country and the rest of the world. The combined current and capital account balance is used to assess the annual performance of an economy vis-à-vis the rest of the world; it is positive in the case of a surplus and negative in the case of a deficit.

The balance sheet is an accounting instrument that shows the organisation's financial situation and reveals its equity situation at a given point in time, we could even say that it is like a snapshot of the enterprise at a given moment in time. It is a document organised into three areas: assets, liabilities and equity. Assets include all the assets and rights that the organisation owns, valued in monetary terms. These assets include cash, stocks, movable and immovable property, as well as all outstanding debts. Liabilities include the debts the organisation has incurred and not yet paid. Equity is made up of the initial endowment that enabled the organisation to start its activity, or supplementary endowments if necessary, plus profits, or less losses, made in past financial years and in the current financial year.

The budget balance net of temporary and one-off measures is the budget or overall balance minus temporary and one-off measures.

See: Fiscal surveillance 

The budget cycle includes all phases directly related to each budget. The fiscal cycle has six distinct and interdependent phases: (i) definition of the macroeconomic scenario; (ii) medium-term planning and programming; (ii) preparation of the State Budget; (iv) budget execution; (v) accountability; (vi) control and audit.

When the budget balance is negative, reflecting a financing need for general government financing, its symmetric is usually called the budget deficit.

Budget Law Maps is the designation given to the maps that are part of the State Budget Law and which, for this reason, are subject to approval in the Parliament. In accordance with the Budgetary Framework Law, the State Budget Law contains a total of 14 maps, including the maps that present the revenue forecasts and expenditure allocations of the central government, by functional and economic classification, as well as the expenditure map by organic-based mission, broken down by central government and social security programs.

Budget outturn is the set of operations that reflect the collection of revenue and the payment of expenditure set out in the State Budget.

Budgetary revisions within the competence of the Assembly of the Republic, as determined by number 1 of article 59 of the Budgetary Framework Law (namely in cases of increased total expenditure of central administration or of each mission of organic basis; alteration of budgetary programs that lead to an increase in the State's commitments; increase in the net debt limit, among others) are made through a Budgetary Revision Proposal Law. The revision is proposed by the Government and must be approved by the Assembly of the Republic.

According to the OECD, Budget transparency refers to the full disclosure of all relevant fiscal information in a timely and systematic manner. It is a multi-dimensional concept addressing the clarity, comprehensiveness, reliability, timeliness, accessibility and usability of public reporting on public finances, as well as citizen engagement in the budget process. Some of the most important benefits of budget transparency include enhanced accountability, legitimacy, integrity, inclusiveness and quality of budget decisions all of which could ultimately develop trust between governments and citizens.

In Portugal, the principle of budgetary transparency (Article 19 of the Budgetary Framework Law) applies to the approval and execution of the budgets of the services and entities that make up the general government sector. According to the Law, budgetary transparency implies the provision of information on the implementation and execution of programmes, budgetary policy objectives, budgets and accounts of the General Government sector, by sub-sector. The information provided must be reliable, complete, up-to-date, comprehensible and internationally comparable, so that the financial position of the General Government sector and the costs and benefits of its activities, including their present and future economic and social consequences, can be accurately assessed.

A budgetary amendment consists in reinforcing and/or reducing a budgetary appropriation of expenditure or a revenue forecast, in order to adjust the State Budget to its outturn throughout the year. It does not necessarily result in an amendment to the State Budget law. The competence for authorizing it can be from the Government, the Assembly of the Republic or the services (flexible management), depending on the type of budget amendment. The budgetary framework law determines the quarterly disclosure of budgetary amendments and of the maps of the State Budget law modified by those amendments.

See Net lending/net borrowing of General Government

The budgetary procedure encompasses all the rules and procedures governing the preparation, approval, and execution of the State Budget, including accountability and auditing. It is through the budgetary process that the Government obtains authorization from Parliament to allocate public resources towards activities aimed at achieving predefined public policy outcomes.

The budgetary program covers expenditure corresponding to a set of multi-annual measures that contribute to the achievement of one or more specific objectives relating to one or more public policies. Article 19 of Law no. 91/2001, of August 20 (Budgetary Framework Law - BFL).

The general-purpose budgetary reporting statements prepared by public sector entities provide information on whether resources have been obtained and used in accordance with the legally approved budget. This is achieved through the control of budget execution for both expenditure and revenue, the budgetary performance statement, and the monitoring of the annual execution of the multiannual investment plan.

The Public Accounting Standard No. 26 - Accounting and Budgetary Reporting, as provided in Annex II of the Accounting Standardization System for Public Administration , approved by Decree-Law No. 192/2015, dated September 11th, outlines the set of budgetary reporting statements to be prepared by all public sector entities. These include the Budgetary Performance Statement, the Budgetary Revenue Execution Statement, the Budgetary Expenditure Execution Statement, the Statement of Execution of the Multiannual Investment Plan (PPI), and the Annex to the budgetary statements.

It is a kind of provision to cover risks and corresponds to a capitation (normally 2.5%) of the budget of each central government budget programme, with the exception of institutions belonging to the National Health Service and Higher Education, as well as the Reclassified Public Entities covered by the simplified regime. The mobilisation of the budgetary reserve is subject to the prior authorisation of the Minister of Finance.

The Budgetary Revenue Procedure (in public accounting) consists of three sequential phases: revenue forecasting, liquidation, and collection. Liquidation can exceed the revenue forecast, but only the revenues budgeted in the budget can be liquidated.

Budgetary risk refers to the potential for deviations in budgetary variables from the forecast. In general, they include unexpected changes in macroeconomic variables, underestimation or overestimation of budgetary consolidation measures, the need to provide financial support to the banking system and other entities belonging to the General Government, financial equilibrium restoration and other litigation in Public-Private Partnerships.

Budgetary statements are a structured representation of the budget execution and performance of a public entity, providing users with information on whether resources have been obtained and used in accordance with the budget and legal and contractual requirements, including financial limits set by competent legislative authorities. To meet these objectives, budgetary statements provide information on expenditure appropriations and revenue forecasts, budget amendments, commitments, obligations and liquidated revenues, paid expenses, and collected revenues, as well as the degree of budgetary execution (expenditures and revenues) and budget performance. 

The Public Accounting Standard No. 26 – Accounting and Budgetary Reporting, as provided in Annex II of the Accounting Standardization System for Public Administrations, approved by Decree-Law No. 192/2015, dated September 11th, establishes the complete set of budgetary statements to be presented by public entities. Including both forecasted statements and reporting statements for entities required to present individual budgetary statements, as well as consolidated budgetary statements for entities obligated to present separate and consolidated budgetary statements.

Business cycles are fluctuations in the economic activity around its long-term trend or potential level. They are characterized by periods of expansion or recession. During expansions, the economy grows in real terms, while during recessions it contracts. An expansion begins after the economy hits a trough and ends when it reaches its peak. Between a peak and a trough, the economy is in recession.