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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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Payment system

A payment system is the procedures and associated computer networks used to settle financial transactions in bond markets, currency markets, and futures, derivatives and options markets, and to transfer funds between financial institutions. Due to the backing of modern fiat currencies with government bonds, payment systems are a core part of modern currency systems.

Performance audit

Performance audit (value for money audit) comprising: · Audit of the economy of administrative activities in accordance with sound administrative principles and practices, and management policies. · Audit of the efficiency of utilisation of human, financial and other resources, including examination of information systems, performance measures and monitoring arrangements, and procedures followed by audited entities for remedying identified deficiencies. · Audit of the effectiveness of performance in relation to the achievement of the objectives of the audited entity, and audit of the actual impact of activities compared with the intended impact.

Performance budgeting (or programme budgeting)

Performance budgeting consists of classifying government transactions into functions and programmes in relation to the government’s policy goals and objectives; establishing performance indicators for each programme or activity; and measuring the costs of these activities and the outputs delivered. The terms “performance budgeting” and “programme budgeting” are often used interchangeably, but programme budgeting can also be defined as a form of performance budgeting giving greater emphasis to the classification of programmes according to the government’s policy objectives and the needs of efficient resource allocation. Variants of performance budgeting have been attempted over the years, aimed at replacing the traditional line-item budget as the main instrument for allocation of resources. A full system of performance budgeting is difficult to realise, in large part because of the high information requirements and complex management systems that are needed. In a number of countries, therefore, the terms “programme budgeting” or “performance budgeting” refer merely to the introduction into the budget of some outcome indicators, narrative statements, and or a program classification of expenditures that fit existing administrative arrangements, and are directly linked to budgetary appropriations.


Planning is the (psychological) process of creating and refining a plan, or integrating it with other plans. The term is also used to describe the formal procedures used in such an endeavour, such as the creation of documents, diagrams, or meetings to discuss the important issues to be addressed, the objectives to be met, and the strategy to be followed. Beyond this, planning has a different meaning depending on the political or economic context in which it is used.

In public policy, planning refers to the practice and profession associated with land use planning, urban planning or spatial planning.

In many countries, the operation of town and country planning system is often referred to as “planning” and the professionals which operate the system are known as “planners”. It is a process which is decided in advance what is to be done in the coming future.

In organizations, planning is also a management function, concerned with defining goals for future organizational performance and deciding on the tasks and resources to be used in order to attain those goals. To meet the goals, managers may develop plans such as a business plan or a marketing plan.


In finance, a portfolio is a collection of investments held by an institution or a private individual. Holding a portfolio is often part of an investment and risk-limiting strategy called diversification. By owning several assets, certain types of risk (in particular specific risk) can be reduced.

There are also portfolios which are aimed at taking high risks - these are called concentrated portfolios.
In strategic management and marketing, a portfolio is a collection of products, projects, services, or brands that are offered for sale by a company. Typically a company tries to achieve both diversification and balance in their portfolio of product offerings. In politics and government, a portfolio is the post and the responsibilities of a cabinet minister or other head of a government department.

Portfolio strategy approach

A corporate-level strategy approach that involves analyzing an organization’s mix of businesses in terms of both individual and collective contributions to strategic goals.

Positive reinforcement

A type of reinforcement in behavior modification, aimed at increasing a desired behavior, that involves providing a pleasant, rewarding consequence to encourage that behavior.

Positive synergy

The force that results when the combined gains from group interaction are greater than group process losses.


Privatization (alternately "denationalization" or "disinvestment") is the transfer of property or responsibility from the public sector (government) to the private sector (business). The term can refer to partial or complete transfer of any property or responsibility held by government. A similar transfer in the opposite direction could be referred to the nationalization or municipalization of some property or responsibility.


Procurement is the acquisition of goods or services at the best possible total cost of ownership, in the right quantity and quality, at the right time, in the right place for the direct benefit or use of governments, corporations, or individuals generally via, a contract.

Productive efficiency

Productive efficiency is when the economy is working on its production possibility frontier (PPF). This is when production is achieved at the lowest cost possible, and is when average cost is at the lowest point on the average cost curve. Graphically this is where the price is at the minimum point of the average total cost curve. Productive efficiency can be defined as “using the least amount of resources to produce a given good or service or output is being produced at the lowest possible unit cost”.


An efficiency concept that gauges the ratio of outputs relative to inputs into a productive process.

Profit budget

An operating budget that focuses on the profit to be derived from the difference between anticipated revenues and expenses.


Project is a single, non-divisible activity with a fixed time schedule, a dedicated budget and clearly defined objectives and outputs.


Protocol is a set of conventions that determine the treatment, exchange and formatting of data in an electronic communications system. It is also similar to a data standard but applied to procedures.

Public debt

Public debt is the external obligations of the government and public sector agencies.

Public expenditure management

Public expenditure management: the way in which public money is allocated to alternative uses and in which these decisions are implemented. It is broader than the traditional budget process through its focus on the link between expenditure and policy and its recognition of the importance of a broad range of institutional and management arrangements.

Public finance (government finance)

Public finance (government finance) is the field of economics that deals with budgeting the revenues and expenditures of a public sector entity, usually government. Governments, like any other legal entity, can take out loans, issue bonds and invest. Based on the taxing authority of the entity, they issue bonds such as tax increment bonds or revenue bonds. A bond issued by a public sector entity may give tax advantages to its owners.

Public policy

Public policy is a course of action or inaction chosen by public authorities to address a problem. Public policy is expressed in the body of laws, regulations, decisions and actions of government. Policy analysis may be used to formulate public policy and to evaluate its effectiveness.

Public sector

The public sector comprises the general government sector plus all public corporations including the central bank.

Public-choice theory

Public-choice theory is the use of modern economic tools to study problems that are traditionally in the province of political science. (A more general term is “political economy”, an earlier name for “'economics” that evokes its practical and theoretical origins but should not be mistaken for the Marxian use of the same term.) In particular, it studies the behavior of voters, politicians, and government officials as (mostly) self-interested agents and their interactions in the social system either as such or under alternative constitutional rules. These can be represented a number of ways, including standard constrained utility maximization, game theory, or decision theory. Public choice analysis has roots in positive analysis (“what is”) but is often used for normative purposes (“what ought to be”), to identify a problem or suggest how a system could be improved by changes in constitutional rules. A key formulation of public choice theory is in terms of rational choice, the agent-based proportioning of scarce means to given ends. An overlapping formulation with a different focus is positive political theory. Another related field is social choice theory.

Public-private partnership

Public-private partnership (PPP) is a system in which a government service or private business venture is funded and operated through a partnership of government and one or more private sector companies. These schemes are sometimes referred to as PPP or P3. In some types of PPP, the government uses tax revenue to provide capital for investment, with operations run jointly with the private sector or under contract. In other types (notably the Private Finance Initiative), capital investment is made by the private sector on the strength of a contract with government to provide agreed services. Government contributions to a PPP may also be in kind (notably the transfer of existing assets).