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Glossary


Overview:
» Abbreviations
» Budget deficit/surplus | Maastricht deficit/surplus
» Central government
» Conversion rates of the eurozone members
» Debt to GDP ratio
» Deflation
» EDP Notification Tables
» European system of national and regional accounts (ESA95, ESA2010)
» Eurozone | Euro area
» Excessive deficit procedure (EDP)
» Exchange rate
» General government sector
» Government consolidated gross debt | Maastricht debt
» Government expenditure
» Government gross debt
» Government net debt
» Government revenue
» Gross domestic product (GDP)
» Inflation
» Interest
» Local government
» Maastricht criteria | Euro convergence criteria
» Net lending/borrowing
» Nominal GDP
» Population
» Public debt | National debt | Government debt
» Real GDP
» Social security fund
» State government
» Surplus/deficit to GDP ratio
» Thousand, million, billion, trillion



Abbreviations

EDP:  excessive deficit procedure
ESA:  European system of national and regional accounts
EU:  European Union
EU-27:  27 Member States of the EU (until 2013-06-30)
EU-28:  28 Member States of the EU (since 2013-07-01)
Euro-17:  17 members of the eurozone (until 2013-12-31)
Euro-18:  18 members of the eurozone (from 2014-01-01 until 2014-12-31)
Euro-19:  19 members of the eurozone (since 2015-01-01)
GDP:  gross domestic product
p.a.:  per annum (per year)



Budget deficit/surplus | Maastricht deficit/surplus

The budget deficit (−) or budget surplus (+) according to the Maastricht Treaty is calculated as follows:

Calculation: budget deficit/surplus

According to the Maastricht Treaty, the budget deficit of a Member State's general government sector should not exceed 3.0 percent of GDP.

See also:
- Debt clocks of the EU Member States (including real time surplus/deficit and GDP data)
- EU ranking: budget surplus/deficit in percent of GDP
- EU ranking: budget surplus/deficit per citizen
- EU ranking: budget surplus/deficit in percent of government revenue



Central government

Central government consists of all administrative departments of the state and other central agencies whose responsibilities cover the whole economic territory of a country, except for the administration of social security funds. The central government sector is one of four subsectors of the general government sector.



Conversion rates of the eurozone members

1.00 euro (EUR) equals:
- Austrian schilling (ATS):  13.7603
- Belgian francs (BEF):  40.3399
- Cypriot pound (CYP):  0.585274
- Dutch guilder (NLG):  2.20371
- Estonian kroon (EEK):  15.6466
- Finnish mark (FIM):  5.94573
- French franc (FRF):  6.55957
- German marks (DEM):  1.95583
- Greek drachma (GRD):  340.750
- Irish pound (IEP):  0.787564
- Italian lira (ITL):  1 936.27
- Latvian lats (LVL):  0.702804
- Lithuanian litas (LTL):  0.28962
- Luxembourgish franc (LUF):  40.3399
- Maltese lira (MTL):  0.429300
- Portuguese escudo (PTE):  200.482
- Slovak koruna (SKK):  30.1260
- Slovenian tolar (SIT):  239.568
- Spanish peseta (ESP):  166.386

See also:
- Debt clock of the eurozone
- Definition: eurozone | euro area



Debt to GDP ratio

Public debt of an EU Member State in percent of the Member State's nominal GDP p.a.

According to the Maastricht Treaty, a Member State's debt to GDP ratio should not exceed the threshold of 60.0 percent.

See also:
- Real time comparison of the EU Member States: 'debt to GDP ratio' and 'deficit to GDP ratio'
- EU ranking: public debt in percent of GDP



Deflation

Deflation is the rate at which the general level of prices for goods and services decreases in a given period (e.g. one year).

See also:
- Definition: inflation



EDP Notification Tables

EDP Notification Tables are documents in which the EU Member States report EDP-related data to Eurostat twice per year - at the end of March and at the end of September. The data are reported in harmonised tables. These tables are designed specifically to provide a consistent framework, with a link to national budgetary aggregates and between the deficit and changes in the debt. Eurostat publishes the notification tables as transmitted by Member States. EDP Notification Tables include data for the current year which are forecasts and not statistics.



European system of national and regional accounts (ESA95, ESA2010)

The European system of national and regional accounts (ESA95, ESA2010) collects comparable, up-to-date and reliable information on the structure and developments of the economy of the EU Member States and their respective regions. By providing an internationally compatible accounting framework, ESA makes it possible to describe the total economy of a region, country or group of countries, its components and its relation to other total economies.

The ESA prescribes the structure and layout of supply and use tables, symmetric input-output tables and tables linking supply and use tables to the sector accounts. These requirements refer to definitions of transactions and to concepts of classification and valuation.



Eurozone | Euro area

The eurozone (also: euro area) is an economic and monetary union of currently (January 2016) 19 EU Member States that have adopted the euro as their currency. In order to join the eurozone, an EU Member State must spend two years in the European Exchange Rate Mechanism (ERM II).

The 19 members of the eurozone are (January 2016): Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia and Spain.

See also:
- Debt clock of the eurozone
- Definition: conversion rates of the eurozone members



Excessive deficit procedure (EDP)

The excessive deficit procedure (EDP) is an action launched by the European Commission against any EU Member State that exceeds the budgetary deficit ceiling imposed by the EU's Stability and growth pact legislation. The procedure entails several steps, potentially culminating in sanctions, to encourage a Member State to get its budget deficit under control, a requirement for the smooth functioning of economic and monetary union.

According to the "Protocol on the Excessive deficit procedure", annexed to the Maastricht Treaty on economic and monetary union, Member States in the euro area and euro area candidate countries must demonstrate sound public finances. There are two criteria:
(1) the budget deficit must not exceed 3.0 percent of GDP
(2) government consolidated gross debt must not exceed 60.0 percent of GDP

See also:
- Real time comparison of the EU Member States: 'debt to GDP ratio' and 'deficit to GDP ratio'
- EU ranking: budget surplus/deficit in percent of GDP
- EU ranking: public debt in percent of GDP



Exchange rate

In general, an exchange rate is the price of one currency (e.g. euro) in relation to another currency (e.g. pound sterling).

Exchange rates are classified by the International Monetary Fund (IMF) into three broad categories, reflecting the role of the authorities in determining the exchange rates and/or the multiplicity of exchange rates in a country:
(1) official rate: is used to describe the exchange rate determined by authorities
(2) market rate: is used to describe exchange rates set largely by market forces
(3) for countries maintaining multiple exchange arrangements, the rates may be labelled principle rate, secondary rate and tertiary rate

A nominal effective exchange rate is the exchange rate of the domestic currency vis-à-vis (as compared with) other currencies weighted by their share in either the country's international trade or payments.

Real effective exchange rates take account of price level differences between trading partners. Movements in real effective exchange rates give an indication of the evolution of a country's aggregate (total) external price competitiveness.



General government sector

The general government sector by convention includes all the public corporations that are not able to cover at least 50 percent of their costs by sales and, therefore, are considered non-market producers.

The general government sector has four subsectors:
- central government
- state government
- local government
- social security funds

In the European System of Accounts (ESA95), paragraph 2.68, the sector "general government" has been defined as containing:
"All institutional units which are other non-market producers whose output is intended for individual and collective consumption, and mainly financed by compulsory payments made by units belonging to other sectors and/or all institutional units principally engaged in the redistribution of national income and wealth."

Therefore, the main functions of general government units are:
(1) To produce goods and services to satisfy households' needs (e.g. state health care) or to collectively meet the needs of the whole community (e.g. defence, public order and safety).
(2) To organise or redirect the flows of money, goods and services or other assets among corporations, among households and between corporations and households; in the purpose of social justice, increased efficiency or other aims legitimised by the citizens; examples are the redistribution of national income and wealth, the corporate income tax paid by companies to finance unemployment benefits, the social contributions paid by employees to finance the pension systems.

See also:
- Debt clocks of the EU Member States (including real time surplus/deficit and GDP data)
- Rankings concerning the EU Member States' financial situation



Government consolidated gross debt | Maastricht debt

Government consolidated gross debt (also: Maastricht debt) is the sum of the general government sector's liabilities in currency and deposits, securities other than shares (excluding financial derivatives) and loans outstanding at a specific point of time (e.g. at the end of the year), measured at nominal value and consolidated. "Consolidated" means that debt data do not take into account transactions within the same sector (i.e. within a Member States' general government sector, like e.g. a municipality borrowing from another municipality).

According to the Maastricht Treaty, a Member State's general government consolidated gross debt should not exceed 60.0 percent of GDP.

See also:
- Debt clocks of the EU Member States (including real time surplus/deficit and GDP data)
- EU ranking: public debt in percent of GDP
- EU ranking: public debt per citizen
- EU ranking: public debt in percent of government revenue



Government expenditure

Government expenditure is the money a government spends.

Government expenditure is defined as the sum of:
- intermediate consumption
- gross capital formation
- compensation of employees
- other taxes on production
- subsidies payable
- property income (including interest) payable
- current taxes on income, wealth etc.
- social benefits other than social transfers in kind
- social transfers in kind related to expenditure on products supplied to households via market
  producers
- other current transfers payable
- adjustment for the change in net equity of households in pension funds reserves
- capital transfers payable
- acquisitions less disposals of non-financial non-produced assets

See also:
- EU ranking: total government expenditure in percent of GDP
- EU ranking: total government expenditure per citizen



Government gross debt

Government gross debt is the sum of all financial liabilities (primarily government bills and bonds) of the government and public sector agencies.

See also:
- Definition: government net debt
- Debt clocks of the EU Member States (including real time surplus/deficit and GDP data)
- EU ranking: public debt in percent of GDP
- EU ranking: public debt per citizen
- EU ranking: public debt in percent of government revenue



Government net debt

Government net debt ist the sum of all financial liabilities of the government and public sector agencies minus all financial assets of the government and public sector agencies. Financial assets of the general government sector have a corresponding liability outside that sector. It is, however, at the government's discretion whether to list monetary gold and special drawing rights, financial assets for which there is no counterpart liability, as financial assets.

See also:
- Definition: government gross debt



Government revenue

Government revenue is the income a government receives.

Government revenue is defined as the sum of:
- sales, consisting of:
   · market output
   · output for own final use
   · payments for the other non-market output
- taxes on production and imports
- other subsidies on production
- property income
- current taxes on income and wealth etc.
- social contributions
- other current transfers
- capital transfers

See also:
- EU ranking: total government revenue in percent of GDP
- EU ranking: total government revenue per citizen



Gross domestic product (GDP)

Gross domestic product (GDP) is a basic measure of a country's overall economic health. As an aggregate measure of production, GDP is equal to the sum of the gross value added of all resident institutional units (i.e. industries) engaged in production, plus any taxes and minus any subsidies, on products not included in the value of their outputs. Gross value added is the difference between output and intermediate consumption.

GDP is also equal to the sum of the final uses of goods and services (all uses except intermediate consumption) measured in purchasers' prices, minus the value of imports of goods and services. Furthermore, GDP is equal to the sum of primary incomes distributed by resident producer units.

See also:
- Definition: real GDP
- Definition: nominal GDP
- Debt clocks of the EU Member States (including real time surplus/deficit and GDP data)
- EU ranking: GDP per citizen



Inflation

Inflation is the rate at which the general level of prices for goods and services increases in a given period (e.g. one year).

See also:
- Definition: deflation



Interest

Interest is the amount that the debtor becomes liable to pay to the creditor over a given period of time without reducing the amount of principal outstanding under the terms of the financial instrument (deposit, security other than a share, loan and other account receivable) agreed between them.

Eurostat reports government expenditure on interest payments in a consolidated form. "Consolidated" means that interest data do not take into account transactions within the same sector (i.e. within a Member States' general government sector, like e.g. interest payments by a municipality to another municipality). DebtClocks.eu shows interest data according to EDP D.41, i.e. expenditure on interest payments (consolidated) including flows on swaps and forward rate agreements.

See also:
- EU ranking: expenditure on interest payments in percent of GDP
- EU ranking: expenditure on interest payments per citizen
- EU ranking: expenditure on interest payments in percent of public debt
- EU ranking: expenditure on interest payments in percent of government revenue



Local government

Local government consists of all types of public administration whose responsibility covers only a local part of the economic territory, apart from local agencies of social security funds. The local government sector is one of four subsectors of the general government sector.



Maastricht criteria | Euro convergence criteria

The Maastricht criteria (also: euro convergence criteria) are conditions that EU Member States must fulfill in order to join in economic and monetary union and to use the euro as official currency. There are four conditions, all aimed at growing convergence of European Monetary Union participants:

(1) Government budgetary position: EU Member States are to avoid situations of excessive government deficits, that is their ratio of planned or actual government deficit to GDP should be no more than 3.0 percent and their ratio of general government debt to GDP should be no more than 60.0 percent, unless the excess over the reference value is only exceptional or temporary or the ratios have declined substantially and continuously.

(2) Price stability: EU Member States should have a price performance that is sustainable and an average rate of inflation that does not exceed by more than 1.5 percentage points that of the three best-performing Member States in terms of price stability for a period of one year before the examination.

(3) Long-term interest rates: EU Member States should have had an average nominal long-term interest rate over a period of one year before the examination that does not exceed by more than 2.0 percentage points that of the three best-performing Member States in terms of price stability.

(4) Exchange rates: EU Member States should have respected the normal fluctuation margins of the exchange rate mechanism without severe tensions for at least the two years before the examination. In particular, the Member State shall not have devalued its currency's bilateral central rate against any other Member State's currency on its own initiative over the same period.

See also:
- Real time comparison of the EU Member States: 'debt to GDP ratio' and 'deficit to GDP ratio'
- EU ranking: public debt in percent of GDP
- EU ranking: budget surplus/deficit in percent of GDP



Net lending/borrowing

The terms net lending and net borrowing are used in two contexts:
- net lending/borrowing according to ESA
- net lending/borrowing under EDP

Net lending/borrowing according to ESA is calculated as total government revenue minus total government expenditure.

Net lending/borrowing under EDP is synonymous to the budget surplus/deficit according to the Maastricht Treaty. Net lending/borrowing under EDP is calculated as net lending/borrowing according to ESA plus/minus net streams of interest payments resulting from swaps arrangements and forward rate agreements.

Net lending/borrowing

According to the Maastricht Treaty, a Member State's net borrowing under EDP should not exceed 3.0 percent of GDP.

See also:
- Debt clocks of the EU Member States (including real time surplus/deficit and GDP data)
- EU ranking: budget surplus/deficit in percent of GDP
- EU ranking: budget surplus/deficit per citizen
- EU ranking: budget surplus/deficit in percent of government revenue



Nominal GDP

Nominal GDP is a GDP figure that has not been adjusted for inflation/deflation (i.e. GDP in current market prices).

See also:
- Definition: real GDP
- Debt clocks of the EU Member States (including real time surplus/deficit and GDP data)
- EU ranking: GDP per citizen



Population

Population is defined as the usual resident population and represents the number of inhabitants of a given area on a specific date (here: on 1 January of the year in question). The population transmitted by the countries to Eurostat can be either based on data from the most recent census adjusted by the components of population change produced since the last census or based on population registers.

See also:
- EU ranking: population



Public debt | National debt | Government debt

Public debt (also: national debt, government debt) is the sum of all external obligations of the government and public sector agencies.

External obligations are the debt or outstanding financial liabilities arising from past borrowing. Debt may be owed to foreign or domestic creditors and in the own or another currency. Typically, debt financing is in the form of loans or bonds, where the debtor may be either a government or private sector entity.

Public debt can be categorised into:
- government net debt
- government gross debt

See also:
- Debt clocks of the EU Member States (including real time surplus/deficit and GDP data)
- EU ranking: public debt in percent of GDP
- EU ranking: public debt per citizen
- EU ranking: public debt in percent of government revenue



Real GDP

Real GDP is a GDP figure that has been adjusted for inflation/deflation (i.e. GDP in constant prices). It evaluates the value of all goods and services produced in a given year in base-year prices.

See also:
- Definition: nominal GDP



Social security fund

A social security fund is a central, state or local institutional unit whose main activity is to provide social benefits.

It fulfills the two following criteria:
(1) By law or regulation (except those about government employees), certain population groups must take part in the scheme and have to pay contributions.
(2) General government is responsible for the management of the institutional unit, for the payment or approval of the level of the contributions and of the benefits, independent of its role as a supervisory body or employer.

The social security funds sector is one of four subsectors of the general government sector.



State government

State government is defined as the separate institutional units that exercise some government functions below those units at central government level and above those units at local government level, excluding the administration of social security funds. The state government sector is one of four subsectors of the general government sector.

According to Eurostat's statistics on public debt, only four EU Member States have a state government level: Austria, Belgium, Germany and Spain.



Surplus/deficit to GDP ratio

An EU Member State's budget deficit/surplus p.a. in percent of the Member State's nominal GDP p.a.

According to the Maastricht Treaty, a Member State's deficit to GDP ratio should not exceed the threshold of 3.0 percent.

See also:
- Real time comparison of the EU Member States: 'debt to GDP ratio' and 'deficit to GDP ratio'
- EU ranking: budget surplus/deficit in percent of GDP



Thousand, million, billion, trillion

Short/long scale: thousand, million, billion, trillion, milliard

DebtClocks.eu uses the short scale since it is the most commonly used scale in English-speaking countries.

For more information:
- http://en.wikipedia.org/wiki/Long_and_short_scales






   Source of definitions: Eurostat: Statistics Explained - Glossary




DebtClocks.eu - Public debt and budget deficits under the Maastricht Treaty


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   Contact
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   Andreas Burth
   andreas.burth@debtclocks.eu
©  Andreas Burth     |     Site notice