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The glossary in this Portal provides definitions of core terms closely related to the medium-term expenditure framework; and links to other online glossaries.

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Balance of payments

An international economic element that is an account of goods and services, capital loans, gold, and other items entering and leaving a country, and a factor influencing the ability of an organization to conduct international business in that country successfully.

Balance sheet

Balance sheet is a financial statement showing the values of the stocks of assets and liabilities held by an entity at a particular point in time. A balance sheet is typically compiled at the beginning and end of an accounting period. Balance sheets summarising starting balances, incomes and outflows, and ending balances are generally required for each distinct fund within a government’s accounting structure. However, in practice, very few governments prepare statements of their financial position that can genuinely be described as comprehensive balance sheets covering all assets and liabilities.

Balance sheet budget

A financial budget that forecasts the assets, liabilities, and shareholders’ equity at the end of the budget period.

Balance sheet equation

Assets = Liabilities + Stock - holders' equity.

Balanced budget

From a Keynesian point of view, a balanced budget in the public sector is achieved when the government has enough fiscal discipline to be able to equate the revenues with expenditure over the business cycles. In other words, a government's budget is balanced if its income is equal to its expenditure. This allows for a deficit in periods of low economic prospects that however needs to be matched by a surplus in periods of high economic activity.

Balanced score card

Balanced score card: In 1992, Robert S. Kaplan and David Norton introduced the balanced scorecard, a concept for measuring a company's activities in terms of its vision and strategies, to give managers a comprehensive view of the performance of a business. The key new element is focusing not only on financial outcomes but also on the human issues that drive those outcomes, so that organizations focus on the future and act in their long-term best interest. The strategic management system forces managers to focus on the important performance metrics that drive success. It balances a financial perspective with customer, process, and employee perspectives. Measures are often indicators of future performance.

Since the original concept was introduced, balanced scorecards have become a fertile field of theory and research, and many practitioners have diverted from the original Kaplan & Norton articles. Kaplan & Norton themselves revisited the scorecard with the benefit of a decade's experience since the original article.

Implementing the scorecard typically includes four processes:
1. Translating the vision into operational goals; 2. Communicate the vision and link it to individual performance; 3. Business planning; and 4. Feedback and learning and adjusting the strategy accordingly.

Bottom-up budgeting

A process of developing budgets in which lower-level and middle managers specify their budgetary needs and top management attempts to accommodate them to extent possible.

Bounded rationality

A less than perfect form of rationality suggestion that in the real world, decision makers are rarely able to conduct a complete, rational analysis because decisions are complex and complete information is unavailable.

Break-even point

The point at which total income equals total expenditure and no loss exists.

Break-even analysis

A quantitative technique based on a graphic model that helps decision makers understand the relationships among sales volume, costs, and revenues in an organization.


Document(s) that include the plan of the future financial activities of the government or a governmental organisation. The budget is generally prepared annually, and comprises a statement of the government’s proposed expenditures, revenues, borrowing and other financial transactions in the following year and, in many countries, for two or three further years. The budget is prepared on a cash basis in most countries. It is submitted to parliament, which authorises expenditure by approving either a budget act or an appropriation act that is consistent with the budget proposals. The budget approved by the legislature and subsequent additions to it. This may order the executive to make the specified expenditures or authorize the executive to make expenditures up to the amounts specified. The authorization to spend may be given to individual ministries or departments or it may be granted specifically to the chief executive or his/her representative who retains the freedom to subsequently authorize spending by the ministries.


The process of stating in quantitative terms, usually dollars, planned organizational activities for a given period of time. It can also be described that the process of investigating what is being done and comparing the results with the corresponding budget data to verify accomplishments or remedy differences. Also called budgetary controlling.

Budget Process

Budget process is the vehicle by which the government sets its overall budget plans and within which decisions are made on the allocation of funds.