What does the term 'interperiod equity' relate to?

The term 'interperiod equity' refers to the concept that the financial activities of a government should be transparent and sustainable over time, ensuring that current-year revenues are sufficient to cover current-year expenditures. This means that the costs of services provided in a given period should be financed by revenues generated in that same period, thereby avoiding the imposition of financial burdens on future taxpayers.

This principle emphasizes accountability in governmental budgeting and finance, as it ensures that each generation of taxpayers pays for the services it consumes. If revenues do not match the services provided, it can lead to future financial obligations that burden subsequent periods, which violates the essence of interperiod equity.

The other options touch on related concepts but do not capture the specific definition of interperiod equity as clearly. Ensuring compliance with long-term fiscal policies relates to the broader aspect of fiscal responsibility, while accounting for future liabilities deals with recognizing obligations that may not directly align with current revenues and expenses. Balancing budgets over multiple fiscal years emphasizes sustainability over time but does not specifically address the matching of current revenues to current services.