Public money

Concepts for reading the budget

Revenue

Resources received, with different origins and restrictions.

Primary expenditure

Public spending other than interest payments on debt.

Primary balance

Primary revenue minus primary expenditure. It may be a surplus or a deficit.

Overall balance

Includes interest, according to the methodology used.

Gross debt

The stock of obligations included in the statistical definition adopted.

Net debt

Also takes certain financial assets into account; it depends on the coverage and methodology.

Public assets

Includes financial and non-financial assets with different liquidity and functions.

Tax expenditure

An estimated tax benefit relative to a reference system. Eliminating it does not guarantee revenue equal to the estimate.

Opportunity cost

What becomes impossible when we choose a use for a resource.

Contingent liability

An obligation that may arise, such as a credit guarantee being called upon.

A primary surplus is not the same as an overall surplus. Holding assets does not mean they can be sold immediately or that their entire value can be spent. High debt does not, by itself, demonstrate inevitable collapse.

A permanent proposal needs to show funding compatible with its permanence. Expected gains from efficiency, growth or reduced fraud should be studied. Before they materialise and are demonstrated, they cannot be treated as certain money to sustain new obligations.

A policy may be socially valuable even without paying for itself in the budget. In that case, we need to decide how to fund it and what will be prioritised.

Does a benefit for people free up money?

Hypothetical example. Return to the service network in the model example, now looking at expenditure. Suppose waiting times fall without excluding cases or reducing quality, and the same team is used more effectively while its pay is maintained. The other costs of the change have not yet been presented.

1. 01

   Social benefit

   In this exampleShorter waiting times, with no exclusion of cases or loss of quality, are an assumed condition in the example, not a verified real outcome.

   What this allows us to concludeThis gain may improve service users' lives even without being converted into Brazilian reais. Capacity was used more effectively, but the team's pay did not fall. This also does not demonstrate that the change had zero total cost.

2. 02

   Fiscal savings

   In this exampleNet savings remain undemonstrated: the amounts, comparison and records of avoided expenditure and additional costs are missing.

   What this allows us to concludeReorganisation may avoid expenditure while requiring new implementation or operating costs. To calculate the net effect, compare the same set of services, agencies and periods. Separate initial cost from recurring spending and savings; do not add a one-off investment to annual savings without defining how many years enter the calculation.

3. 03

   Available resources

   In this exampleAvailability for other spending also remains undemonstrated, even if a reduction in expenditure is eventually proven.

   What this allows us to concludeIt is necessary to identify in which budget, when and under what conditions the resource could fund another obligation. The agency or level of government making the saving may not be the one taking on the new expenditure. An identified saving is not automatic authorisation to spend on another purpose.

In the scenario described, the record can acknowledge the service benefit while keeping the other two accounts open. To support other spending with the claimed saving, the net reduction and its availability must be demonstrated. If the new expenditure is permanent, funding continuity requires its own analysis.

Where this example comes from

The distinction comes from section 5 of whitepaper 2.0, under “Accounts That Must Remain Separate”. The table is a new hypothetical editorial adaptation, not a transcription of the author's words or an estimate of savings for Brazil. It does not present figures from a real project or a legal rule for reallocating funds.

Whitepaper 2.0: from implementation to evaluation, section 5 (PDF) (opens in a new tab)