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Classification of Government Budget Expenditures

            An administrative classification (ministries, departments, etc.), identifying the entity responsible for managing the public funds concerned. This classification must be sufficiently detailed to identify the expenditures of all government departments, including regional departments, to give managers greater predictability and facilitate internal control, in particular management control. It depends on the country's administrative organization and must cover all administrative units. It may include different levels, from ministries and higher institutions, departments and directorates, right down to individual operating units.
             An economic classification, or classification by type of expenditure, is used for day-to-day administration. Classification by type (e.g. electricity expenses, student grants, transportation expenses) can also be used to compile the government flow of funds Table (TOFE) and the national accounts. This classification must be consistent with the economic classification in the government chart of accounts, and is usually very detailed. The Chart of Accounts for Government Operations (PCOP) of Madagascar, for example, has nearly 60 accounts for purchases of goods and services alone. This classification generally serves for "economic" control of resources, but it is sometimes of a hybrid nature and deals as well with the destination of the expenditure or the way it is managed. This is the case with the budget "titles" in most Francophone countries, or the "categories" in Madagascar. Box 1 shows the categories as defined by the budget law of Madagascar. Table 1 shows the detailed presentation of the classification of expenditures by type in WAEMU countries, pursuant to Directive 08/2009/CM/UEMOA. This classification is consistent with the overall government chart of accounts.
             A programmatic classification may also be used, structured as a program, subprogram (or action) and activities.

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