Public finance glossary

Terms from deficits to credit ratings

Deficit

Expenditure exceeding revenue over a period. A flow over a year, not total debt.

Debt

The stock of outstanding liabilities on a particular date. Each statistical measure has its own scope.

Principal

The amount borrowed itself, separate from interest.

Interest

The price of borrowing money under agreed terms.

Debt servicing

Expenditure linked to financing debt. In the Ministry of Finance series used here, interest and related fees, not principal repayments.

Bond

A security representing an issuer's debt to its holder; the issue terms determine the details.

Bond yield

A rate of return based on the price and future payments. Not always the same as the coupon set at issue.

Coupon

An interest payment specified in a bond's terms. Not all bonds have one.

Maturity

The date a liability must be paid under its terms.

Refinancing

Replacing maturing debt with new financing. This does not itself reduce total debt.

The primary balance

The budget balance excluding interest expenditure.

Structural balance

An estimated balance adjusted for the economic cycle and one-off or temporary measures.

Mandatory expenditure

Spending arising from legal obligations. Changing it may require changing the law.

Quasi-mandatory expenditure

Other spending difficult to change under the budget classification used, such as salaries. The exact boundary depends on methodology.

Debt consolidation

Eliminating debt relationships within the sector being measured.

Fiscal consolidation

Measures to improve the fiscal balance. A different meaning from statistical consolidation of accounts.

Credit rating

An expert assessment of credit risk. An opinion based on an agency's methodology, not a repayment guarantee.

GDP

The value of economic output over a period after subtracting intermediate consumption. Not state budget revenue.

Percentage point

The unit of difference between percentages: an increase from 40% to 45% is 5 percentage points, not 5%.

Nominal and real

A nominal value is in current koruna; a real value is adjusted for price changes using a chosen index.

Non-resident

An entity statistically resident outside the domestic economy. Not the same as foreign nationality.

Debt brake

A statutory rule activating measures at a defined debt level, not automatic bankruptcy.

The same word can mean different things

For “consolidation”, check whether it means eliminating internal relationships or improving the budget balance. For interest, distinguish the coupon, market yield and effective cost of all debt. Simplified definitions do not replace a source's specific methodology.

Sources and further reading

• Ministry of Finance: debt management terms ↗
• ECB: the primary balance and debt dynamics ↗
• Fiscal responsibility legislation ↗

Illustrative examples are neither an actual budget nor a personal obligation. For data, use the period and methodology stated beside the table.