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Macroeconomics

Macroeconomics is a branch of economic science that studies the economy as a whole, using aggregate variables that measure the production of goods and services, the employment of productive factors and the price level, abstracting from the differences between economic agents. Macroeconomics can be used to define policies that foster economic growth, tackle unemployment, and promote price stability.


Managerial Accounting

Managerial Accounting is a component of the accounting system outlined in Article 63 of the Budgetary Framework Law. This accounting subsystem facilitates the assessment of outcomes from activities and projects that contribute to the implementation of public policies and the achievement of objectives in terms of services to be provided to citizens. Managerial accounting is regulated by The Public Accounting Standard No. 27 – Managerial Accounting, as specified in Annex II of the Accounting Standardization System for Public Administration, approved by Decree-Law No. 192/2015, of September 11th.


Mandatory spending

Mandatory expenditure is expenditure resulting from law or contracts, expenditure associated with the payment of liabilities resulting from court judgements and expenditure resulting from external commitments (namely Portugal's financial contribution to the European budget).


Market output

Market output corresponds to production intended for sale on the market. It includes:

(i) Products sold at economically significant prices;

(ii) Products subject to direct exchange;

(iii) Products used for in-kind payments (including employee compensation in kind and mixed income in kind);

(iv) Products supplied by one local economic activity unit to another within the same institutional unit for use as intermediate or final consumption;

(v) Products added to stocks of finished goods and products and work in progress intended for one or more of the uses mentioned above.


Maturity structure of debt

The maturity structure of debt is obtained taking into account the period that elapses until the date on which the nominal value is repaid and, where applicable, the payment of the last coupon of the security.


Medium Term Objective (MTO)

The MTO corresponds to the specific objective of each EU member state which guarantees a safety margin against the deficit limit of 3% of GDP and the sustainability of public finances. The MTO is presented in terms of the structural balance, i.e. in cyclically-adjusted terms and net of one-off measures. The MTO is a specific figure for each country, revised every 3 years, within the range of -1% of GDP and a balanced budget or surplus position. The signatories to the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, including Portugal and the other euro area participants, have committed to an MTO of at least -0.5% of GDP, unless the debt ratio is significantly below the 60% threshold and the risks to the sustainability of public finances are reduced. The operationalization of the MTO in terms of the structural budget balance was introduced in the 2005 revision of the Stability and Growth Pact, concretizing the "medium-term objective of a budgetary position close to balance or in surplus".


Medium-Term Budget Framework

The Stability Program presented as part of the procedures related to the European Semester, together with the Laws governing the Major Options, constitutes the medium-term budget framework to be defined in the first phase of the budgetary process. The medium-term budget framework includes comprehensive and transparent multiannual budgetary objectives in terms of overall balance, expenditure, and public debt for the public administrations sector, with greater detail for the subsectors of central administration and social security.


Monetary aggregates

Monetary aggregates measure the amount of money in circulation in an economy. Considering different levels of liquidity, there are different monetary aggregates, which vary in their scope:

• M1 aggregate: This is the strictest definition. It exclusively comprises cash (coins and banknotes) in circulation and deposits that can be either redeemed immediately or used to make payments;

• M2 aggregate: This aggregate comprises all components of M1 and all deposits with an original maturity of up to two years and deposits that may be redeemed at notice up to three months;

• M3 aggregate: This is the most comprehensive aggregate. It includes all components of M2 in addition to some financial instruments issued by monetary financial institutions, such as repurchase agreements, money market fund shares and bonds issued by monetary financial institutions with a maturity of up to two years.

In some economies, such as the United Kingdom, there is also the aggregate M0, which is narrower than M1 by exclusively comprising banknotes and coins in circulation and bank reserves.


Multiannual Commitment

Multiannual commitment is a commitment that, when undertaken, generates responsibilities for the entity over more than one budgetary period, or at least in a period different from the one in which it is assumed.


Multiannual Framework of Public Expenditure

The Multiannual Framework of Public Expenditure (MMPF) is the document which establishes, in budgetary accounting, a limit for total expenditure and by mission on an organic basis, for the current year and the following four years. This framework replaced the previous multiannual budgetary programming framework (QPPO) from 2020.


Municipal Cohesion Fund

The Municipal Cohesion Fund corresponds to the parcel of the Financial Equilibrium Fund which aims to strengthen municipal cohesion, encouraging the correction of asymmetries, for the benefit of less developed municipalities, where there are situations of inequality in relation to the corresponding national averages. It is foreseen in articles 27 and 29 of Law No. 73/2013, of September 3. It corresponds to the sum of a “tax offset” and an “unequal opportunity offset” based on an “unequal opportunity index”.


Municipal financial distress

Under the terms of Law no. 73/2013, of 3 September (the financial regime for local authorities and intermunicipal entities), municipal financial distress is considered to have occurred whenever the municipality's total debt exceeds on 31 December of each year three times the average net current revenue collected over the last three financial years.


Municipal financial recovery

The situation of municipal financial recovery is considered to occur whenever the total debt (see “Total Debt Limit”) of the municipality is higher than three times the average of the net current revenue collected in the last three fiscal years, according to Article 61 of Law No. 73/2013, of September 3rd.


Municipal financial reorganisation

Municipal financial reorganisation corresponds to the municipal financial recovery mechanism, enshrined in Article 58 of Law No. 73/2013, of 3 September (financial regime of local authorities and intermunicipal entities), to which municipalities may adhere with a view to reprogramming their debt and consolidating financial liabilities.


Municipal General Fund

The Municipal General Fund corresponds to the parcel of the Financial Equilibrium Fund (FEF), enshrined in Article 28 of Law No. 73/2013, of 3 September (financial regime of local authorities and intermunicipal entities), which aims to provide municipalities with adequate financial conditions to perform their duties, depending on their respective levels of operation and investment.


Municipal Regularisation Fund

The Municipal Regularisation Fund corresponds to the fund made up of the amounts of budgetary transfers deducted from municipalities for non-compliance with the respective reorganisation plans, and is used, through the Directorate General of Local Authorities (DGAL), to pay the municipality's debts to third parties.


Municipal Social Fund

The Municipal Social Fund corresponds to an earmarked grant, enshrined in Article 30 of Law No. 73/2013, of 3 September (financial regime for local authorities and intermunicipal entities), whose value corresponds to the expenses related to the attributions and competences transferred from the central administration to the municipalities.


Municipal Support Fund

The Municipal Support Fund concerns a fund shared in equal parts by the State and by all Portuguese municipalities, endowed with administrative and financial autonomy and with a share capital of € 418 million in 2022. Its objective is the financial recovery of municipalities in situation of financial imbalance, through the implementation of municipal adjustment programs, via budgetary rebalancing measures, debt restructuring and financial assistance. This fund was established by Law No. 53/2014, of 25 August.


Municipal surcharge

The municipal surcharge is a levy on the taxable profit subject and not exempt from corporate income tax (CIT). It corresponds to the proportion of income generated in each municipality by the resident taxable persons who carry out a commercial, industrial or agricultural activity (as its main economic occupation) and by the non-residents with a permanent establishment in that municipality.


Municipal tax revenue

Municipal tax revenue is the revenue from direct and indirect municipal taxes, which include, namely, revenue from property taxes (recurrent and on property transactions), municipal surcharge on CIT, single circulation tax and other taxes that have since been extinct, but whose collection has not been carried out previously.


Municipal total debt

The total debt of budgetary operations of the municipalities includes loans, financial leasing contracts and any other forms of indebtedness, assumed on the initiative of the municipalities themselves, with financial institutions, as well as all other debts to third parties resulting from budgetary operations.