Glossary

Administrative expenditure

Spending on staff and equipment necessary for the organisation to function. This relates to staff and equipment for the primary process (policy process) and for supporting the primary process (operational management).

Adopted budget

A draft budget (submitted on Budget Day) as subsequently modified by an amendment, motion or incidental supplementary budget, but before the changes made by the first supplementary budget.

Contract

A contract involves a direct payment to third parties for the purchase of goods and services (communications, information, projects, infrastructure, etc.) for policy implementation purposes. A contract is awarded for a specific final product/result (outsourcing). In general, these are contracts that do not fall under ‘hiring external staff’

Contribution to departmental agencies

This financial instrument for programme articles is intended to cover a departmental agency’s administrative expenditure. The contributions consist of the owner contributions paid by the parent ministry and the implementing costs paid to an agency by the contracting authority. Programme funds, such as funds required for grant schemes, are presented under ‘grant’ in the table of policy-related budgetary consequences and not under ‘contribution to departmental agencies’. If the minister has them carried out by another party, this is mentioned under the grant scheme in the table.

Contribution to national/international organisations

The financial contribution to national/international organisations that the government engages to implement policy and/or for membership of national/international organisations, e.g. contributions to the European Union, UN and NGOs.

Contribution to non-departmental agencies (ZBOs/RWTs)

The total financial contribution (both programme and administrative expenditure) to non-departmental agency partners (autonomous administrative authorities (ZBOs)/legal persons with statutory tasks (RWTs)) that the government engages to implement policy.

Contribution to other budget chapters

The financial contribution to other budget chapters (including budget funds).

Contribution to social funds

The financial contribution to the funds from which benefits (in cash or in kind) are paid out under social insurance legislation.

Contribution to subnational authorities

The financial contribution to subnational authorities, such as provinces, municipalities and water authorities, that the government engages to implement policy, e.g. special-purpose grants to municipalities and provinces.

Equipment

Only spending on equipment for the support processes is included in the central administrative expenditure article. This includes desktop computers, telephones, pencils and pens. It does not include electronic patient records, electronic motorway signs, and specific systems for the Tax and Customs Administration. These ICT resources are directly connected to the primary process.

Financial information

Quantitative information from financial records. The financial notes on a ministry’s financial statement should be included in the policy report in a clearly identifiable manner – i.e. in separate sections – as part of the explanatory notes on each budget article (this applies to both policy and non-policy articles).

Financial instruments

Expenditures are classified by financial instrument, based on the minister’s role and responsibility. This means that the manner in which a ministry disburses an expenditure determines the financial instrument to which it is assigned.

If, when a budget is being drawn up, it is not yet clear whether the expenditure will be channelled via a contract award or a grant award, for example, a clear choice must be made. A useful guideline is to place the entire amount in the category under which such expenditure mostly falls, taking previous years into account.

All the financial instruments are listed below:

• grants;
• loans;
• guarantees;
• funding;
• income transfers;
• contracts;
• contribution to departmental agencies;
• contribution to non-departmental agencies (ZBOs/RWTs);
• contribution to subnational authorities;
• contribution to national/international organisations;
• contribution to other budget chapters;
• contribution to social funds.

Funding

A financial transfer to institutions for policy implementation purposes, in so far as it does not fall under contracts or grants. This mainly concerns transfers to educational and/or research institutions for education and/or research purposes.

Grants

The entitlement to financial resources provided by an administrative authority for the purpose of certain activities of the applicant, other than as payment for goods or services supplied to the administrative authority (section 4:21, General Administrative Law Act).

Guarantee

A conditional financial commitment by a public authority, which leads to a payment only if a particular circumstance occurs in respect of the counterparty (i.e. if a risk materialises).

Guarantees

The cash expenditure arising from a conditional financial commitment to a counterparty. The commitment leads to a payment if an event covered by the guarantee occurs. If outstanding guarantee obligations are expected to lead to a payment, ‘guarantees’ is included as a separate instrument under cash expenditure.

Hiring external staff

This means paying for experts and other staff provided by a private, for-profit organisation to perform work for a central government client that shares managerial authority over them.

Income transfer

The transfer of funds to an individual and/or household without demanding anything directly in return, to help the counterparty cover its ongoing expenses. The transfer generally takes the form of a payment or contribution by the government.

Legal obligation

An obligation that arises under a treaty, act, royal decree, ministerial order, decision, commitment or some other agreement between organisational units recorded in a verifiable manner.

Loans

Loan expenditure may be classified under grants if necessary. Loans to which ‘soft’ conditions are attached (interest rate below the market rate, waiver clauses, etc.) often resemble a grant, usually of a public-law nature (grant decision). Spending on loans is included as a separate instrument if this provides greater clarity.

Non-financial information

Quantitative and qualitative information about policy, including operational management, in so far as the purpose of that information is to provide insight into the effectiveness and efficiency of policy implementation and the efficiency of operational management. It does not include financial information.

Staff

All spending on staff (including the hiring of external staff) for both the primary and support processes is included in the central administrative expenditure article. This includes policy officers, prison officers, customs officers, taxline staff and information officers.

Supplementary budget

A bill amending the budget. Examples of a supplementary budget are:

• the first supplementary budget, associated with the Spring Memorandum;
• the second supplementary budget, associated with the Autumn Memorandum;
• an incidental supplementary budget;
• a final budget act.