Transcript No Slide Title

Government Finance Statistics
IMF Statistics Department
The GFSM 2001 System
– An Overview
Rif Basanti
Deputy Chief of Government Finance Division
Statistics Department, IMF
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
2
Why a revision of the GFS Manual 1986?
1/3
 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
3
Why a revision of the GFS Manual 1986?
2/3
 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.
4
Why a revision of the GFS Manual 1986?
3/3
 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
5
Objectives of the GFS Manual 2001
1/3
 To achieve analytic objectives, the new GFS
system should generate data that:
• are directly linked to other macroeconomic
statistical systems; harmonized as fully as
possible with the 1993 SNA
• enable analysts to do assessments of financial
soundness of government in ways applied to other
organizations in economy
6
Government Finance Statistics systems
2/3
GFSM 1986:
GFSM 2001:
Transactions
Transactions
Revenue
Revenue
Opening
balance
Expenditure
Expense
Other
economic
flows
Closing
balance
Nonfinancial
assets
NFA
NFA
NFA
Opening
liabilities
FA
Closing
liabilities
Financial
assets
FA
FA
FA
Liab
Liab
Liab
Liabilities
Liab
Liab
Liab
GFSM 2001 analytical framework
3/3
Statement of
Government
Operations
Revenue
Opening
Balance Sheet
Expense
=
Net worth
=
Nonfinancial
assets
Change in
net worth Tr
=
Nonfinancial
assets
Statement of
Other Economic
Flows
Change in net
worth OEF
=
Nonfinancial
assets
Net worth
=
Nonfinancial
assets
+
+
Net finanical
worth
Net lending/
borrowing
Net financial
worth
=
+
=
Change in net
f.worth OEF
Financial
assets
Financial
assets
Financial
assets
Financial
assets
-
-
-
-
Liabilities
Liabilities
Liabilities
Liabilities
Other flows
Stocks
Stocks
Transactions
+
Closing
Balance Sheet
+
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)
9
The GFSM 2001 System
(1/3)
 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
10
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
11
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
12
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
13
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
14
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
15
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
16
GFSM 2001 Statements
 Four statements:
• Statement of Government Operations
• Statement of Other Economic Flows
• Balance Sheet
• Statement of Sources and Uses of Cash
17
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)
18
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)
19
The Statement of Government Operations
3/6
 Revenue
• Taxes
• Social Contributions
• Grants
• Other revenue
20
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
21
The Statement of Government Operations
5/6
 Transactions in nonfinancial assets
• Fixed assets *
• Inventories (net change)
• Valuables
• Nonproduced assets *
* Minus consumption of fixed capital
22
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.)
23
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)
24
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
25
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
26
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)}
27
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
28
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
29
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
30
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
31
Implementation 1/1

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
32
Implementation 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
33
Step 1: Cash basis => reclassification to new GFS
Migration path:
I.
II.
GFS 1986:
Cash data to GFS tables 1 to 5
Partial balance sheet (Table 6)
GFSM 2001:
Transactions
Transactions
1
Revenue
Revenue
4
2
Current
and
capital
expenditure
Expense
=>
5
Stocks of
financial
assets &
liabilities
*
FA
Stocks of
liabilities
NFA
FA
**
Liab
Liab
Liab
COFOG
6
FA
3
Liab
Stocks of
financial
assets &
liabilities
3
3
Stocks of
liabilities
FA by
sectors
FA
6
Liab
Liab
* Net operating balance
** Net lending / borrowing
Step 2: Full coverage of units and events (approach
Migration path:
I.
II.
Step 1:
accrual recording)
Statement of Government Operations (Tables 1-5)
Partial balance sheet (Table 6)
Transactions
Transactions
1
Revenue
Revenue
4
2
=>
Expense
FA by
sectors
Expense
5
Stocks of
financial
assets &
liabilities
NFA
Stocks of
financial
assets &
liabilities
Stocks of
financial
assets &
liabilities
*
3
NFA
3
FA
FA
FA
FA
**
Liab
Liab
Liab
COFOG
6
FA
3
Liab
Stocks of
financial
assets &
liabilities
FA
6
Liab
NW tr
Liab
* Net operating balance
** Net lending / borrowing
Step 3: Full accrual accounting for financial accounts
Migration path:
I.
II.
III.
Step 2:
Statement of Government Operations (Tables 1-5)
Other Economic Flows for financial assets
Partial balance sheet (Table 6)
Transactions
Transactions
1
Revenue
Revenue
=>
Expense
Stocks of
financial
assets &
liabilities
NFA
2
Stocks of
financial
assets &
liabilities
Expense
Stocks of
financial
assets &
liabilities
*
3
FA
FA
FA
FA
**
Liab
NW tr
Liab
Liab
6
FA
3
Liab
Other
economic
flows
NFA
3
Stocks of
financial
assets &
liabilities
6
FA
6
FA
6
Liab
Liab
Liab
NW tr
* Net operating balance
** Net lending / borrowing
Step 4: Accrual accounting for nonfinancial assets
Migration path:
I.
II.
III.
Step 3:
Statement of Government Operations (Tables 1-5)
Statement of Other Economic Flows
Integrated stocks and flows (Table 6)
Transactions
Transactions
1
Revenue
Revenue
=>
Expense
Stocks of
financial
assets &
liabilities
NFA
Other
economic
flows
Stocks of
financial
assets &
liabilities
2
Opening
balance
FA
FA
FA
3
NFA
6
NFA
FA
**
Liab
NW tr
Liab
Liab
Liab
6
NFA
6
FA
3
Liab
Closing
balance
*
3
FA
Other
economic
flows
Expense
NFA
6
FA
6
FA
6
Liab
Liab
Liab
NW tr
NW OEF
NW
GFS as a fiscal policy instrument
GFSM 2001
Transactions
Revenue
COA
Chart of
Accounts
ESA 95
Other
economic
flows
Closing
balance
Opening
balance
Expense
NFA
NFA
NFA
NFA
Current
Accounts
FA
FA
FA
FA
Accumulation
Accounts
Liab
Liab
Liab
Liab
Balance
Sheet
ESA95
SNA’93
GFS2001
Transactions
Transactions
Revenue
account
Expense
account
Non-financial
assets
BOP’93
Production
account
Operating
balance
Income
account
Capital
transfers &
Non-financial
assets
export G&S
import G&S
income transactions
current transfers
Transactions
GDP
(value added)
Current
account
Saving
Capital
account
Current
account
balance
capital transfers
transactions in NPNFA
MFS2000
Transactions
Financial
assets &
liabilities
Financial
assets &
liabilities
Net lending / borrowing
Financial
assets &
liabilities
Financial
assets &
liabilities