Glossary

Implicit contingent liabilities are obligations that do not arise from a legal or contractual source, but are recognised once a condition or event has been fulfilled. Although there is no legal commitment, there are expectations based on past behaviour for the state to ensure responsibility arising from a given event or circumstance, generally associated with a moral obligation or various pressures. Examples of this type of responsibility include: 

(i) bailing out local or regional public sector entities, or public or private entities; 
(ii) guaranteeing the solvency of the banking sector; 
(iii) covering the obligations of sub-national administrations; 
(iv) the cleaning up of liabilities in privatised entities; 
(v) the failure of non-guaranteed pension funds (including protection for small investors); 
(vi) the non-guaranteed debt of public sector units; 
(vii) environmental reconstruction and natural disaster relief, and 
(viii) military financing.

The implicit interest rate represents the weighted average of financing cost of an economic agent. In the case of public debt, it is calculated through the ratio between the value the current year's interest and the value of the debt stock of the previous year.

Imports of goods and services consist of transactions of goods and services (purchases, barter and gifts) from non-residents to residents. Imports 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. Imports of services consist of all services supplied by non-residents to residents.

Imputed social contributions are intended to finance social benefits provided directly by employers to their employees, former employees, or their dependents, without involving an insurance company or autonomous pension funds and without creating a special fund or establishing a reserve for this purpose. The value of imputed contributions is equal to the amount of social contributions that would be required to secure the entitlement to accumulated social benefits.

Independent Bodies, according to Article 2 of Regulation (EU) N. 473/2013 of the European Parliament and of the Council of 21 May 2013, means bodies which are structurally independent from the budgetary authorities of the Member State and for which the applicable national legislation guarantees a high degree of functional autonomy and accountability, including:

(i) a statutory regime based on binding legal or regulatory provisions or administrative arrangements;

(ii) a prohibition on accepting instructions from the budgetary authorities of the Member State concerned or from any other public or private body;

(iii) the ability to communicate publicly and in a timely manner;

(iv) procedures for appointing members on the basis of their experience and competence;

(v) adequacy of resources and access to information for the fulfillment of their mandate.  

According to Article 5 of the same Regulation, Member States (whose currency is the euro) "shall have independent bodies to monitor compliance with: 

a) the numerical fiscal rules incorporating into national budgetary procedures their medium-term budgetary objective as set out in Article 2a of Regulation (EC) No 1466/97;

b) the numerical fiscal rules referred to in Article 5 of Directive 2011/85/EC.   

Those bodies shall, where appropriate, provide public assessments of national budgetary rules concerning, inter alia:  

a) the occurrence of circumstances leading to the triggering of the correction mechanism applicable in the event of an observed significant deviation from the medium-term objective or the adjustment path towards the medium-term objective in accordance with Article 6(2) of Regulation (EC) No 1466/97;  

b) Whether the budgetary correction is taking place in accordance with national rules and plans;

c) the occurrence and cessation of circumstances referred to in the tenth subparagraph of Article 5(1) of Regulation (EC) No 1466/97 which may allow a temporary deviation from the medium-term budgetary objective or from the adjustment path towards that objective provided that such deviation does not jeopardize medium-term fiscal sustainability." 

In February 2014, the OECD Council adopted the Recommendation of the Council on Principles for Independent Fiscal Institutions. The Principles seek to reinforce the core values that IFIs both promote and operate under – independence, non-partisanship, transparency, and accountability – while demonstrating technical competence and producing relevant work of the highest quality that stands up to public scrutiny and informs the public debate. As such, they aim to assist countries to design an enabling environment conducive to the good performance of an IFI and to ensuring its long-run viability.

The Portuguese Public Finance Council is an independent body.

Sources: EC and OECD

See: Independent Body

Article 4(4) of Regulation (EU) No 473/2013 of the European Parliament and of the Council of 21 May 2013 (part of the two-pack) stipulates that budget proposals and stability programs must be based on independent macroeconomic forecasts, i.e. forecasts produced or endorsed by an independent body. 

The indirect taxes are applied to the production, sale, purchase or use of goods and services carried out by economic agents regardless of their ability to pay. The VAT is an example of an indirect tax.

The inflation rate is the percentage change in the Consumer Price Index (CPI) of a given period compared to the value recorded in a previous period. It is usually calculated annually.

Initial debt maturity is the period of time, normally expressed in years, that elapses from the moment a debt security is issued until its amortization date.

The Insurance System is the contributory component of the Social Security System, based on the principle of professional solidarity, which aims to guarantee benefits to replace income from work as a result of the occurrence of certain eventualities, such as unemployment, illness or old age. It includes the general social security scheme, applicable to most employees, the self-employed scheme, other special compulsory schemes and a voluntary scheme.

Intangible assets are identifiable nonmonetary assets without physical substance. They are controlled by the entity as a result of past events and are expected to provide future economic benefits or potential service potential for the public entity. Expenditures on advertising, training, and research and development activities fall within this definition. The accounting treatment of intangible assets is regulated by the Public Accounting Standard 3 - Intangible Assets, as provided in Annex II of the Accounting Standardization System for Public Administration, approved by Decree-Law No. 192/2015, of September 11th.

Central government departments with administrative autonomy in day-to-day management, but which do not have financial autonomy. These services are part of the State sub-sector and correspond mainly to Government Offices, Directorates-General, Inspectorates-General and Regional Directorates.

Interest is the premium (remuneration) that the entity granting a certain loan receives from the borrower, as payment for the service rendered and the opportunity cost of capital.

It applies to the following financial assets:

a) deposits;

b) debt securities;

c) loans;

d) other receivables.

In national accounts, interest is recorded on an accrual basis.

Intermediate consumption consists in the value of goods and services consumed as inputs in a production process, excluding fixed assets whose consumption is recorded as consumption of fixed capital. Those goods and services may be either transformed or used in the production process.

Intermunicipal entities include metropolitan areas and intermunicipal communities. The attributions of intermunicipal entities include, in general, regional planning and development and the provision of essential public services, as well as the promotion of articulation between municipalities and central government services in various fields.

The international investment position (IIP) indicates the value of the financial assets of residents of an economy that are claims on non-residents and the liabilities of residents of an economy to non-residents, plus gold bullion held as reserve assets. The difference between assets and liabilities is the net position of the IIP and represents either a net claim (positive IIP) on or a net liability (negative IIP) to the rest of the world. The value of the IIP at the end of a period results from positions at the end of the previous period, transactions in the current period, and other changes attributable to factors other than transactions between residents and non-residents, explained by other changes in volume and revaluations due to exchange rate or price changes.

The International Public Sector Accounting Standards (IPSAS), issued by the International Public Sector Accounting Standards Board (IPSASB), are a set of international accounting standards, on an accrual basis, that follow high quality standards for use by public sector entities around the world in the preparation of general purpose financial reports. They aim to harmonize public accounting worldwide and increase the quality and transparency of financial reporting worldwide. In Portugal, the financial accounting subsystem integrated into the System of Accounting Standardization for Public Administration (SNC-AP) is convergent with the International Public Sector Accounting Standards.

The intertemporal budget constraint, from an intertemporal perspective, means that there must be a coincidence between the resources that are obtained through taxes and the public expenditure that is realized. This constraint implies that the initial debt value must be equal to the expected present value of future surpluses.

See Gross fixed capital formation.