Transcript No Slide Title

Government Finance Statistics
/ IMF Statistics Department
The GFSM 2001 System
– An Overview
1
Contents
 Why revise the GFSM 1986?
 Objectives of the GFSM 2001
 The GFSM 2001 system
• Coverage
• Definitions
• Accounting rules
• Analytic framework
• Statements
• Balances
• Implementation
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Why a revision of the GFS Manual 1986?
1/4
 Conceptual framework is ± 20 years old
 Cash-based recording, thus ignored inter alia:
• arrears
• interest on discounted bonds
• in kind transactions
• consumption of fixed capital
 Emphasis was on a single deficit measure
• revenue plus grants minus expenditure minus net
lending = deficit/surplus
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Why a revision of the GFS Manual 1986?
2/4
 Revenue and grants were defined as:
• All nonrepayable receipts
 Expenditure was defined as:
• All nonrepayable payments
 Lending minus repayments (“net lending”):
• Transactions in financial claims acquired for
purposes of public policy
• Repayable transactions, included above the line
with nonrepayable transactions
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Why a revision of the GFS Manual 1986?
3/4
 Financing was defined as:
• Government liabilities (“net borrowing”) and
changes in cash & deposits (financial asset)
 Focus of cash-based system was on govt’s
financing constraint
• Liquidity constraint viewed as most binding
priority of govt.
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Why a revision of the GFS Manual 1986?
4/4
 Recently new topics have assumed importance
for fiscal analysis, e.g.,
• arrears, transactions in kind, balance sheet items
(stocks, net worth), sustainability of fiscal policy
• world-wide shift toward resource-based
accounting, because of dissatisfaction with cashbased accounting
 Other related statistics Manuals have been
revised, e.g., SNA, BOP
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Objectives of the GFS Manual 2001
1/2
 A system to address evolving changes:
• in the way countries maintain their government
accounts, and
• analyze data in these accounts
 A manual that:
• serves specialized needs of compilers, analysts,
and policy makers, and
• subject to those needs, a manual that is
harmonized as fully as possible with the 1993 SNA
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Objectives of the GFS Manual 2001
2/2
 To achieve analytic objectives, the new GFS
system should generate data that:
• are directly linked to other macroeconomic
statistical systems
• enable analysts to do assessments of financial
soundness of government in ways applied to other
organizations in economy
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Coverage of the GFSM 2001 System
General government
Public non-financial
corporations
Non-financial
public sector
Public financial
corporations
Non-monetary
public sector
Public
sector
– Nonmonetary
– Monetary
(incl. the central bank)
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The GFSM 2001 System
(1/3)
 Balance sheet approach
• stock of assets, liabilities, and net worth (assets
minus liabilities)
 Measures of revenue and expense
• revenue
– transactions that increase net worth
• exclude sales of assets (which are exchanges of one
asset for another)
• expense
– transactions that reduce net worth
• exclude acquisition of assets
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The GFSM 2001 System
(2/3)
 Transactions in nonfinancial assets
• net acquisition of nonfinancial assets
– acquisition
– disposal
• consumption of fixed capital
 Financing (transactions in financial assets and liabilities)
• identify financial assets and liabilities separately (by
residency, instrument, sector)
– net acquisition of financial assets
– net incurrence of liabilities
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The GFSM 2001 System
(3/3)
 Integrated system
• Full integration of flows and stocks (operating
statements and balance sheets)
• Basic principle of GFSM 2001 system:
opening balance sheet value
+ transactions
+ other economic flows
= closing balance sheet value
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FLOWS
TRANSACTIONS
Revenue
minus
OPENING
BALANCE
SHEET
Expense
= NET OPERATING
BALANCE
minus
Nonfinancial
Assets
Nonfinancial
Assets
OTHER ECONOMIC FLOWS
Holding Gains
Other Changes in
& Losses
the Volume of Assets
CLOSING
BALANCE
SHEET
Nonfinancial
Assets
Nonfinancial
Assets
Nonfinancial
Assets
Financial
Assets
Financial
Assets
Financial
Assets
Liabilities
Liabilities
Liabilities
= NET LENDING/
BORROWING
Financial
Assets
Financial
Assets
• cash
• other financial assets
minus
Liabilities
Liabilities
Net Worth
Net Worth
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Changes in Net Worth
Accounting Rules
(1/3)
 Accrual-based recording
• when transaction takes place
–
–
–
–
income is earned
resources are used
liabilities are incurred
assets are acquired
• it is a timing and data coverage question
 Double-entry accounting
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Accounting Rules
(2/3)
 Time of Recording
• Flows are recorded when:
– economic benefits associated with the events have
flowed to or from the unit involved, or
– it is probable that future benefits will flow to or from the
unit, and
– the monetary value of the events can be reliably
measured
 Valuation
• All flows and stocks are valued at current market
prices
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Accounting Rules
(3/3)
 Netting
• Generally, flows and stocks are recorded on a
gross basis
– For analytic presentations, the net acquisition of assets
or net incurrence of liabilities may be used
– Revenue categories are presented net of refunds
– Expense categories are presented net of erroneous
and/or unauthorized transactions
 Consolidation
• In GFS, data presented for a group of units are
consolidated
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GFSM 2001 Statements
 Four statements:
• Statement of Government Operations
• Statement of Other Economic Flows
• Balance Sheet
• Statement of Sources and Uses of Cash
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The Statement of Government Operations
1/6
 Summarizes government’s transactions in a
given accounting period
 Transactions are classified according to
whether they:
• increase net worth (revenue)
• decrease net worth (expense)
• change the stock of a nonfinancial asset (capital
asset)
• change the stock of a financial asset or liability
(financing)
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The Statement of Government Operations
2/6
Revenue
- Expense
= Net operating balance (gross operating balance)
- Transactions in nonfinancial assets
= Net lending/borrowing
- Transactions in financial assets
Financing
+ Transactions in Liabilities
= zero (because of double-entry recording)
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The Statement of Government Operations
3/6
 Revenue
• Taxes
• Social Contributions
• Grants
• Other revenue
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The Statement of Government Operations
4/6
 Expense
• Compensation of employees
• Use of goods and services
• Consumption of fixed capital
• Interest
• Subsidies
• Grants
• Social benefits
Transfers
• Other expense
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The Statement of Government Operations
5/6
 Transactions in nonfinancial assets
• Fixed assets *
• Inventories (net change)
• Valuables
• Nonproduced assets *
* Minus consumption of fixed capital
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The Statement of Government Operations
6/6
 Financing
• Transactions in (all) financial assets and liabilities
• Multiple ways to classify:
– by residency of counter party (domestic, foreign)
– by type of financial instrument (securities other than
shares, loans, shares and other equity, etc.)
– by “sector” of counter party (general government,
central bank, depository corporations, etc.)
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Statement of Other Economic Flows
1/2
 Shows influences on govt’s financial position in
accounting period from flows other than
transactions, i.e.
• Holding gains in assets & liabilities (revaluations)
– Changes in the price of the asset or liability
• Other volume changes in assets and liabilities
– exceptional or unexpected events (e.g., floods,
earthquakes, wars, etc.)
– normal events (e.g., discovery of subsoil asset, registration
of patent)
– reclassifications (e.g., unit from central to local govt)
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Statement of Other Economic Flows
2/2
Changes in nonfinancial assets
Holding gains
Other volume changes
+ Changes in financial assets
Holding gains
Other volume changes
+ Changes in liabilities
Holding gains
Other volume changes
= Changes in net worth from other economic flows
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Balance Sheet
1/2
 Shows the stocks of assets, liabilities and net
worth at beginning and end of accounting
period
• Economic assets are recorded in GFS, i.e., owners
of assets can:
– enforce ownership rights
– derive economic benefits
• Valued at current market value
• Assets by type of asset
• Liabilities by type of instrument
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Balance Sheet
2/2
 Nonfinancial assets
 Financial assets
 Liabilities
 Net worth(t)
{= Net worth(t-1)
+ changes in net worth due to transactions [net
operating balance](t)
+ changes in net worth due to other economic flows(t)}
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Statement of Sources and Uses of Cash
1/2
 Shows the total amount of cash generated or
absorbed by government through
• current operations
• transactions in nonfinancial assets
• transactions in financial assets and liabilities
(other than cash itself)
 Net change in government’s overall cash
position is sum of the net cash received from
all the above
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Statement of Sources and Uses of Cash
(Shortened Version) 2/2
Cash receipts from government operating activities
− Cash payments for government operating activities
= Net cash inflow from operating activities
− Net cash outflow from investments in NFAs
= Cash surplus/deficit
+ Net cash inflow from financial operations other
than cash:
Net acquisition of financial assets other than cash
Net incurrence of liabilities
= Net change in stock of cash
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STATEMENT OF GOVT. OPERATIONS VS. CASH FLOW STATEMENT
Statement of Government Operations
Revenue
minus
Statement of Sources & Uses of Cash
Cash inflows and outflows from
transactions:
• Operating activities
Expense
= NET OPERATING
BALANCE
minus
Nonfinancial
Assets
• Purchases & sales of nonfin. assets
= NET LENDING/
BORROWING
Financial
Assets
• cash
• other financial assets
minus
Liabilities
• Financing activities
= Net change in the stock of cash
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Core Balances of the GFSM 2001 System
 Multiple balancing items for transactions:
• Net operating balance
– Balance of transactions affecting net worth
– Closely related to 1993 SNA government saving
• Net lending/borrowing
– Net operating balance minus transactions in NFAs
• Cash surplus/deficit
– Net cash inflow from operating activities minus net
cash outflow from investments in NFAs
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Other Analytic Measures
 Some other analytic measures for fiscal policy
(see Box 4.1 in GFSM 2001)
• Overall fiscal balance
– Net lending/borrowing minus acquisition of financial
assets for policy purposes
• Overall primary balance
– Overall fiscal balance plus net interest expense
• Net worth
– Total stock of assets minus liabilities
• Net financial worth
– Total stock of financial assets minus liabilities
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Implementation of GFSM 2001
(1/2)
 It is recognized that full implementation of the
new GFS system is a long-term activity
 Priorities can only be established by each
country taking into account their situation,
including available resources
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Implementation of GFSM 2001
(2/2)
 Nonetheless, countries are encouraged to
develop a migration path towards the new
system.
 It is likely that this will include, over time:
• improving existing cash-based data systems
• adopting the new classification structure
• making adjustments to existing data for serious
deficiencies
• developing balance sheet information
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Hot Topics
 Coverage
 Bond Indexation
 Debt
 Public-Private Partnerships and Leasing
Arrangements
 Headline Fiscal Policy Indicators
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