Defending Dignity A Manual for National Human Rights Institutions on Monitoring Economic, Social and Cultural Rights WHAT IS A BUDGET? The budget is the key policy document prepared by a government. It reveals how much money it intends to raise (revenue), from whom (sources) and how it will be spent (expenditure). More than just a plan, the budget expresses a government’s policy priorities and translates policy proposals into expenditure allocations. It is the most important policy tool for managing the economy. A good budget should be: • Able to stimulate inclusive economic growth, job creation and investment in the economy • Flexible and sustainable, without relying on donor funding • An operational plan that reflects the priorities of the country • A tool for fulfilling human rights and achieving greater equality. A good budget process is: • Transparent: the public should have access to information about the budget and budget processes • Accountable: to the people, with regard to the budget process, revenue, spending and impact • Participatory: involving people in the budget process and taking into account their expressed desires and needs. BUDGET GLOSSARY The terminology used in budgets can differ significantly between countries. As a result, it is difficult to compile a common glossary for all countries. Nevertheless, there are some basic concepts that can help us better understand how much money is being allocated and to what. The first distinction is between: • Recurrent expenditures: expenses incurred year-after-year for running public administration (e.g. for paying salaries, procuring goods and services, providing subsidies). • Capital expenditures: one-off expenses for building assets (e.g. purchasing land, developing infrastructure) to improve the productive capacity of the economy. The second distinction relates to the way allocations are presented in the budget: • Economic classifications: provide limited information, simply identifying how much money is being allocated to different “inputs” (e.g. salaries and wages; utilities; travel; printing). They may also be referred to as line-items or object classifications. • Administrative classifications: identify the entity responsible for managing the allocated funds, such as the ministry of education and health or, at a lower level, schools and hospitals. • Functional classifications: categorize expenditure according to the purposes and objectives for which they are intended. See: International Monetary Fund, Manual on Fiscal Transparency: Glossary, 2007 104