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Glossary

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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Word

Definition

Database

A set of data organized efficiently in a central location so that it can serve a number of information system applications.

Debt

Debt is that which is owed; usually referencing assets owed, but the term can cover other obligations. In the case of assets, debt is a means of using future purchasing power in the present before a summation has been earned. Some companies and corporations use debt as a part of their overall corporate finance strategy.

A debt is created when a creditor agrees to lend a sum of assets to a debtor. In modern society, debt is usually granted with expected repayment; in many cases, plus interest. Historically, debt was responsible for the creation of indentured servants.

Debt capital

A type of financing available to entrepreneurs that involves a loan to be repaid, usually with interest.

Debt management ratios

Financial ratios that assess the extent to which an organization uses debt to finance investments, as well as the degree to which it is able to meet its long-term obligations.

Decentralization

Organizational structure in which many individuals or sub-units can make decisions. At the organizational level, a vertical coordination method that addresses the extent to which power and authority are delegated to lower levels. Decentralization is generally divided into the following categories:Delegation: The most “light” kind of decentralization, involving ad hoc transfer of responsibility to public agencies. At the organizational level, a means of vertical coordination that involves the assignment of part of a manager's work to others along with both the responsibility and the authority necessary to achieve expected results.Deconcentration: Where at the decentralized levels agents of the central government are responsible for activities and accountable directly to central government. Deconcentration is generally prevalent where decentralized entities are dependent on the central government for most of their revenues (vertical imbalance).Devolution: Where local government employees are responsible for administering fiscal transfers from the central level, and are accountable to local government and not to central government. Devolution generally occurs where decentralized entities raise a significant part of their revenues.Privatization: Privatization is sometimes considered as a form of decentralization, where government activities are transferred to the private sector. This is a complicated area, partly because of the issues of contingent liabilities on government and of hidden fiscal costs.

Deconcentration

Deconcentration (see decentralization)

Deficit

Deficit on a commitment basis is defined as the cash deficit plus the net increase in arrears, or expenditure at the verification stage plus “lending minus repayments” minus revenues (on a cash basis). This measure of the deficit should not include commitments related to undelivered orders and multi-year commitments.

A
budget deficit occurs when an entity (often a government) spends more money than it takes in. The opposite is a budget surplus. The size of a governmental budget deficit is often an important political issue as well as one of economic policy. Fiscal conservatives denounce deficit spending and advocate balanced budgets. Keynesians argue that under some circumstances, deficit spending is justified. "Starve-the-beast" strategies usually lead to high budget deficits.

An accumulated deficit over several years (or centuries) is referred to as the government debt. Often, a certain part of spending is dedicated to paying of debt with certain maturity, which can be refinanced by issuing new government bonds. That is, a fiscal deficit leads to an increase in an entity's debt to others. A deficit is a flow. And a debt is a stock. Debt is essentially an accumulated flow of deficits. Any deficit must, ultimately, be repaid, either through taxation, or seignorage. The Ricardian equivalence hypothesis states that this means a public deficit is exactly the same as a tax rise. The existence of a deficit has in some cases led to the existence of a capital market and been a great benefit to economic activity.


Delegation

Delegation (see decentralization)

Departmentalization

An aspect of organization structure involving the clustering of individuals into units and of units into departments and larger units in order to facilitate achieving organizational goals.

Depreciation

The reduction in the value of an asset over time that is brought about through physical use or obsolescence. Under accrual accounting, depreciation estimated over the useful life of an asset is progressively deducted (written off) from the value of the asset each year. Depreciation as recorded in business accounting, or as allowed for taxation purposes, may deviate from the value of consumption of fixed capital estimated for the national accounts, especially during periods of inflation. In the productivity literature, value changes due to obsolescence are reflected in the capital gains/loss term of the user cost formula.

Deregulation

Deregulation is a subset of regulatory reform and refers to complete or partial elimination of regulation in a sector to improve economic performance.

Development budget

Public investments brought together in one plan intended to develop the economic and social potential of the whole economy or a specific area. They often include both capital and current spending on investment projects. In developing countries they are often mainly, but not exclusively, financed externally.

Devolution

Devolution (see decentralization)

Discretionary expense center

A responsibility center whose budgetary performance is based on achieving its goals by operating within predetermined expense constraints set through managerial judgment or discretion.

Discretionary spending

This refers to the part of the budget which the government and the legislature must each year decide to spend for the next fiscal year, such as for housing, education or foreign aid. It is to be contrasted with “mandatory spending” on those items where there exists a legal requirement for the government to provide funds and a permanent appropriation authorising such expenditures. Interests on the debt and entitlement programmes are examples. The “mandatory” part of the budget is often much larger than the discretionary portion.