Question 4

Does the Executive’s Budget Proposal or any supporting budget documentation present expenditures for the budget year by economic classification?
 * a. Yes, expenditures are presented by economic classification.
 * b. No, expenditures are not presented by economic classification.
 * c. Not applicable/other (please comment).

Note on expenditure classifications
There are three different types of expenditure classification. Each classification system has different advantages and answers a different question:
 * Administrative unit ==> who spends the money
 * Functional classification ==> for what purpose is the money spent
 * Economic classification ==> what is the money spent on

Unlike classification by administrative unit, which tends to be unique to each country, functional and economic classifications for government budgeting have been developed and standardized by international institutions. Cross-country comparisons are facilitated by adherence to these international classification standards.

Questions about expenditure classification are repeated throughout the questionnaire, for each of the various budget documents. It is important that budget data are presented in a consistent format throughout the different stages of the budget process to facilitate transparency and accountability.

Guidelines
Question 4 asks whether the Executive’s Budget Proposal or its supporting documentation presents expenditures for the budget year organized by economic classification. Economic classification provides information on the nature of the expenditure, such as whether funds are being used to pay for wages and salaries, capital projects, or social assistance benefits. To answer “a,” the Executive’s Budget Proposal or its supporting documentation must present expenditures for the budget year organized by economic classification.

1) Minimum for accepting an economic classification - the case of Canada in OBS 2017
Canada’s EBP used a basic economic-like classifications to organize broad categories of revenue and spending, they were not however, considered sufficiently detailed to meet the standard. See for instance Annex 1 of Budget 2016 (Details of Economic and Fiscal Projections). See the section on "Outlook for program expenses," which includes Table A1.4 and the table on "Major Transfers." However, the GR disagreed, and IBP found additional information: The budgetary expenditure is presented in Standard Object format in the Main Estimates document. While this is not part of the Executive Budget Proposal, it is a supporting document. While presented in limited detail, the standard object table provides basic economic-like information. The answer was adjusted to “a.”

2) Some, but not all, expenditure by economic classification
Some countries present some, but not all, of expenditure by economic classification (for example: Botswana, Trinidad and Tobago, and Zambia). In these cases, if more than 2/3 of expenditure is presented by economic classification, the answer should be “a.” If less than 2/3 of expenditure is presented, it should be a “b.”

3) What counts as an economic classification?
In OBS 2019, we agreed that current and capital disaggregation are not sufficient to qualify as an economic classification. For an economic classification to be counted, it should have some level of disaggregation below the level of recurrent expenditures (such as wages or interest payments), though capital expenditures presented as a single line item is acceptable. In the case of Vietnam, their use of an “economic classification” shows varying degrees of detail across their budget documents. Vietnam’s EBP and EB include some categories below current expenditure, including interest payments, even though wages and salaries are not shown. The classifications shown in these two documents were accepted as economic classifications in OBS 2019. However, in Vietnam’s YER, expenditures were only shown with expenditure categories for capital, current, and contingencies. Because there was no disaggregation of the current expenditure, this presentation was not accepted as a economic classification in OBS 2019.