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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

Economic classification (of government expenditure)

Economic classification (of government expenditure): Classification of expenditure by the nature of the transaction, that is requited or unrequited, for current or capital purposes, kind of goods or services obtained, and sector or sub sector receiving transfers. It is generally undertaken as a measure of the nature and economic effect of government operations.

Economic contraction

An economic contraction is a reduction in goods and services for sale in the market place. Typically it relates to a downturn in production caused by external factors such as weather, or by such internal factors as taxes, regulatory constraints or other impacts on producer incentives. Economic contraction and expansion relate to overall output of all goods and services whilst the terms inflation and deflation relate to the value of money.

Economic wellbeing

Economic wellbeing refers to quality of life of a population in terms of living in decent homes, not having to suffer poverty, furthering their education and moving on to gainful employment are all factors that contribute to young people achieving economic wellbeing. Personal or household income is generally regarded as the single best measure of the degree to which people are "well off." But other factors also contribute to people’s well-being. Extended measures of well-being gauge how people are faring at the household level. Included are possession of consumer durables, housing and neighborhood conditions, and the meeting of basic needs. Indicators of children’s well-being are used to take a closer account of how well children progress to adulthood and include measures of cognitive development, social interactions, health, and successful completion of school.

Empowerment

Empowerment refers to increasing the spiritual, political, social or economic strength of individuals and communities. It often involves the empowered developing confidence in own capacities.

Sociological empowerment often addresses members of groups that social discrimination processes have excluded from decision-making processes through - for example - discrimination based on race, ethnicity, religion, and gender. It is worth noting that the empowerment-techniques are often associated with feminism: consciousness-raising.


Entitlement

In institutional economics, entitlement is a relationship, such as ownership or leasehold, to an asset or a stream of income, as distinct from the income or asset itself. In a private ownership market economy, entitlements may be based on inheritance or transfer, or on acquisition of commodities through trade, entrepreneurship, or own labour. The concept of entitlements comes from law, and is useful to underscore institutional structure - whether of property ownership or a job contract. It links economic outcomes to social elements, the law and practice.

Entitlement programme (demand-led programme)

Any spending programme where expenditure is open-ended (usually transfer/grant payments) and where beneficiaries must be paid or given transfers/grants if they meet certain criteria, as defined in legislation or government regulations. Some common examples are found in social security programmes, unemployment programmes, and poverty-reduction programmes.

Envelope budgeting

A personal budget is a finance plan that allocates future personal income towards expenses, savings and debt repayment. Past spending and personal debt are considered when creating a personal budget. There are several methods and tools available for creating, using and adjusting a personal budget.

Equity (vertical equity, horizontal equity)

In financial term, equity refers to the value of the interest of an owner or partial owner in an asset.

When discussing income distribution in socio-economic context, it is usual to distinguish between vertical equity and horizontal equity.
Vertical equity relates to the relative treatment of individuals (families or households) at different income levels. Horizontal equity relates to the way in which individuals at the same income level are treated. Vertical equity tends to be the focus of income distribution studies. It turns out, however, that often the combined impact of taxes, transfers, and benefits results in individuals at different income levels being treated very unequally, and it is not uncommon for the ranking of individuals in similar circumstances in the income distribution to be markedly affected by fiscal policy. This often reflects well-defined objectives of fiscal policy, such as a desire to encourage particular patterns of consumption, to promote home ownership or saving for retirement, or to foster regional development. It may, however, reflect inadequate administration or capricious discrimination. Most analyses of income redistribution take no account of rankings, be they intentional or unintentional. However, studies that have attempted to reflect re-ranking have revealed a tendency for redistribution, especially through taxation, to be overestimated by the standard procedure.

Estimate(s)

In the strict sense, an estimate is the particular value yielded by an estimator in a given set of circumstances. The expression is widely used to denote the rule by which such particular values are calculated. It seems preferable to use the word estimator for the rule of procedure, and estimate for the values to which it leads in particular cases.

In the practical context, estimates are forecasts of revenue and vote Ministers’ requests for authority from Parliament to incur expenditure and liabilities; i.e., the estimate of what revenue will be raised and expenditure incurred during the coming fiscal year.

External Audit

A financial audit involving the review and verification of the fairness of an organization's financial statements that is conducted by an independent auditor.

Extra-budgetary funds/accounts

Extra-budgetary funds/accounts (EBF): The term generally refers to government activities that are not included in the annual budget presentation. Moreover, EBFs may be subject to different systems of cash management, control and reporting than the budget itself. A wide variety of extra-budgetary arrangements are used, including funds (such as social security funds) set up under separate legislation, commodity funds that use proceeds of commodity aid, and earmarking certain revenues for specific purposes.