Glossary

Earmarked revenue is revenue that is exceptionally and legally earmarked to finance a given expenditure.

Economic activity is a set of relationships and tasks carried out by economic agents with a view to obtaining goods and services in a given market, designed to satisfy human needs (such as education, food, security, among others). It encompasses the activities of production, distribution and redistribution of income, as well as its use in consumption and savings.

Economic agent is a person or entity that intervenes in the economic activity, performing at least one economic function. The main economic agents are: families, companies (financial companies and non-financial companies), the State and the rest of the world.

The economic classification is a normative framework intended for monitoring, from an economic perspective, the budgetary outturn of public revenues and expenditures (in a cash basis perspective), segregating two categories: on the revenue side, current and capital revenues; on the expenditure side, current and capital expenditure. The revenue classifier specifies the revenues by chapters, groups and articles, while the public expenditure classifier specifies the expenditures by groupings, subgroupings and rubrics. The economic classifier of public revenue and expenditure was approved by Decree-Law no. 26/2002, of 14 February.

Economic growth consists of an increase in the quantity of products and services produced by a given population during one or more periods of time. It involves an increase in the level of economic activity in a location, when all productive sectors that are part of that economy are evaluated. The assessment of economic growth is done through the analysis of the Gross Domestic Product (GDP) or Gross National Product (GNP).

The macroeconomic scenario consists in forecasting the future performance of the economy for a certain time period or interval (which can be measured on a quarterly, annual or multi-year basis). This forecast focuses on a selected set of variables and indicators representative of the economy, which usually include all or some of the following blocks: the overall economic activity (GDP and components), prices (HICP and the deflators of GDP and its components), the labour market (unemployment rate, employment and productivity), the external sector (net lending/borrowing of the economy and respective balances), cyclical developments (potential GDP and output gap), and public finances (budget balance and public debt).

The economic sentiment indicators, or economic climate indicators, are qualitative composite indicators which aim to capture the opinion of the various economic agents regarding the current state of the economy. They are calculated by weighting the various sectoral confidence indicators and may, in some cases, be standardised.

Effective revenue corresponds to revenue that definitively changes net financial assets. In the case of the State sub-sector, it corresponds to the sum of the chapters of the economic classification of budget revenue, excluding "financial assets" and "financial liabilities"; in the remaining sub-sectors, "balances from previous management" are also excluded.

The effective tax rate corresponds to the average tax rate borne by an individual or company. It is calculated by dividing the total tax paid by the value of the tax base.

Employees in the European System of National and Regional accounts correspond to the ILO definition of “paid employment”. Employees are defined as individuals who, by agreement, work for a resident institutional unit and receive a remuneration recorded as compensation of employees. It differs from overall employment by excluding self-employed persons.

Employers’ social contributions are payments (actual or imputed) made by employers to social protection systems with the purpose of ensuring their employees' right to social benefits due to certain social events.

Employment refers to the population aged 16 or above who, during the reference period, carried out work for at least one hour in return for payment or a benefit, in cash or in kind (including unpaid family work); have a formal employment link but are temporarily not working; have a business but are temporarily not working; or are in a pre-retirement situation but still working. It is the share of the labour force that is not unemployed.

Enforced tax collection corresponds to the tax collection made directly by the tax administration when the taxpayer does not meet its tax obligations within the time frame established in the legislation.

Environmental audit corresponds to the external audit carried out by an independent authority that aims to assess whether the environmental measures adopted in the annual budgets are effectively implemented.

Environmentally harmful subsidies are subsidies granted by the public entities that impose a harmful effect on the environment, notwithstanding their economic or social purpose (e.g.  professional diesel subsidies).

Abbreviation for European System of National and Regional Accounts.

In the framework of the European System of National and Regional Accounts (ESA), paragraph 1.66, an ESA transaction is an economic flow that is an interaction between institutional units by mutual agreement or an action within an institutional unit that it is useful to treat as a transaction, because the unit is operating in two different capacities. Transactions are split into four main groups:

a) transactions in products: which describe the origin (domestic output or imports) and use (intermediate consumption, final consumption, capital formation — covering consumption of fixed capital — or exports) of products;
b) distributive transactions: which describe how value added generated by production is distributed to labour, capital and government, and the redistribution of income and wealth (taxes on income and wealth and other transfers);
c) financial transactions: which describe the net acquisition of financial assets or the net incurrence of liabilities for each type of financial instrument. Such transactions occur both as counterparts of non-financial transactions, and as transactions involving only financial instruments;
d) transactions not included in the three groups above: acquisitions less disposals of non-produced non-financial assets.

Euro is the name of the European currency adopted by the European Council at its meeting in Madrid on 15 and 16 December 1995.

The euro area, or eurozone, is composed by the European Union Member States that adopted the Euro as currency, and in which a single monetary policy is conducted, under the responsibility of the Council of the European Central Bank. As of 2023, the euro area is composed of 20 members: Austria, Belgium, Croatia, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Portugal, Slovakia, Slovenia, Spain and The Netherlands. All EU Member States, except for Denmark, have pledged to join the euro as soon as they comply with the accession criteria. Andorra, Monaco, San Marino and Vatican City use the euro as their official currency, but are not considered euro area members as they are not EU Member States.

The European economic governance framework reform refers to a package of three legislative acts adopted in 29 April 2024: Regulation (EU) 2024/1263 of the European Parliament and of the Council, Council Regulation (EU) 2024/1264 and Council Directive (EU) 2024/1265. This reform amended the rules of the Stability and Growth Pact incorporating into Union law the substance of Title III (Fiscal Compact) of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union of 2 March 2012 (the ‘TSCG’).

The European Semester is the annual cycle of economic policy coordination that takes place in the first six months of the year. First, on the basis of the EU's Annual Growth Survey, policy guidelines are given to the member states. In April, the national economic and structural policy programs are submitted for further examination by the European Commission. Finally, the European Council and the Council of Ministers provide country-specific recommendations before the member states finalize their draft budgets.

The European System of National and Regional Accounts (ESA) is an internationally compatible accounting framework that systematically and in detail describes an economy (i.e. a region, a country or a group of countries), its components and its relations with other economies as a whole. This accounting framework for national accounts was created in 1970 as an adaptation of the SNA (United Nations System of National Accounts) to the specific conditions of the European project. It has undergone successive revisions: ESA79 (recommended for use between 1979-1995) and ESA95 (mandatory from 1995 to August 2014). Since September 2014, public finance statistics have been reported according to ESA 2010 rules. ESA 2010 differs from ESA 95 in terms of scope and concepts. Most of the differences correspond to differences between the 1993 SNA and the 2008 SNA.

Established by the Treaty on European Union (Maastricht, 1992), it is an economic and political union of 27 Member States (2023): Belgium, Bulgaria, Czech Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland, Sweden and Croatia. The United Kingdom left the European Union on 31 January 2020.

An excessive deficit is a situation in which the budget deficit and/or public debt are above the reference values established in the protocol annexed to the Treaty on the Functioning of the European Union. The reference value for the budget deficit is 3 per cent of GDP, while public debt should not exceed 60 per cent of GDP. The Council of the European Union is responsible for deciding, on a proposal from the European Commission and taking into account other relevant factors (e.g. the medium-term economic and budgetary situation), whether an excessive deficit exists in a Member State.

Excessive Deficit Procedure (EDP) is a procedure under the Stability and Growth Pact, by which the Commission and the Council monitor national public finances. The procedure is activated when a Member State: exceeds or is at risk of breaching the 3% of GDP deficit threshold or has breached the debt rule by having a level of public debt above 60% of GDP, which is not falling at a satisfactory pace. Countries placed in EDP are given a deadline to correct their excessive deficit situation. Under this procedure, deficits and debt are notified to the European Commission twice a year.

The excise duties are intended to tax the consumption of products with specific characteristics such as alcohol, tobacco or energy goods. The special taxation of these goods also aims to discourage their excessive consumption, thus reducing the negative externalities deriving from them.

The execution rate is an indicator, expressed in percentage, that results from the ratio between the amount executed in the period under analysis, for a given item of revenue or expenditure, and the corresponding forecasted amount (or adjusted appropriation) deducted from captivations. This rate is calculated using the approved or amended budget as reference.

The expected theoretical VAT is the amount of VAT that would be collected if all the transactions of goods and services subject to this tax, in national accounts, were to pay with the tax rates defined by law. 

The expenditure financed by general revenue corresponds to the part of expenditure that is financed by revenue resulting mainly from tax collection and, to a lesser extent, from borrowing. It therefore does not include expenditure that is financed by the departments' own revenue.

An expenditure rule is a type of budget rule that can be defined as a "global or majority restriction on public expenditure, set well before the start of budget preparation (Ljungman, 2008*). It is carried out at a macro level of expenditure, as distinct from sectoral budget ceilings (meso level) and the sum of the budgets of different bodies (micro level). In practice, it functions as an instrument to discipline the level of public spending ex-ante and thus anchor multi-annual budget programming.

*Expenditure Ceilings -- A Survey; by Gösta Ljungman; IMF Working Paper 08/282; December 1, 2008

Explicit contingent liabilities are obligations defined by law or contract and only arise if a certain event occurs. They consist of legal or contractual financial agreements that establish conditional requirements for making payments of economic value. These requirements only become effective if one or more of the stipulated conditions are met. Explicit contingent liabilities can take various forms, although guarantees are the most common. The explicit responsibilities associated with these liabilities are those resulting from: 

(i) State guarantees granted to public companies or private entities, or state guarantees issued on debts or other obligations to subnational governments;
(ii) State insurance schemes (deposit insurance, crop insurance, war risk insurance); 
(iii) Potential lawsuits, arising from pending legal proceedings; 
(iv) Indemnities, which reflect commitments to accept the risk of loss or damage that another party may incur; and (v) Uncalled capital, the obligation to provide additional capital, on request, to an entity of which the state is a shareholder.

Exports of goods and services consist of transactions of goods and services (sales, barter and gifts) from residents to non-residents. Exports of goods occur when economic ownership of goods changes between residents and non- residents. This applies irrespective of corresponding physical movements of goods across borders. Exports of services consist of all services supplied by residents to non-residents.

The exports market share is calculated by dividing the exports of the country by the total exports of the region/world. The indicator measures the degree of importance of a country within the total exports of the region/world. For the calculation at current prices, the market share refers to the world trade (world export market share). Data on the values of exports of goods and services are compiled as part of the balance of payments of each country. A country might lose shares of export market not only if exports decline but most importantly if its exports do not grow at the same rate of world exports and its relative position at the global level deteriorates.

The external debt measures the debt of all resident sectors that is held by non-residents. The gross external debt considers the total value of the debt of the resident sectors vis-à-vis non-residents, while the net external debt corresponds to the gross external debt deducted from the same type of assets that residents hold over non-residents.