Transcript Presentation of GFS in the European Statistical System (with emphasis on the excessive Deficit Procedure) Seminar on GFS - Istanbul Denis Besnard Eurostat 20 Nov.

Presentation of GFS in the European
Statistical System (with emphasis on the
excessive Deficit Procedure)
Seminar on GFS - Istanbul
Denis Besnard
Eurostat
20 Nov. 2013
GFS seminar Istanbul
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Contents
What are Government Financial Statistics?
1) Data to be reported regularly to Eurostat
2) A precise methodological framework required for their
compilation
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1) GFS data to be reported to Eurostat
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This is a "package", including:
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Notification tables, twice a year (end of March and end of September)
"basis" of the EDP (published)
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A set of supplementary tables in a "questionnaire relating to the EDP
notification tables" (not published)
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Some supplementary tables linked to "special events" related to the
"financial crisis" and for "intergovernmental lending" (published)
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Annual or quarterly tables part of the "transmission programme",
annex B of the (Parliament and Council) Regulation on ESA
(published)
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The four notification tables
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These tables were designed in 1993 and progressively improved until
the current version completed in 2000
They must cover 4 years plus the current year in which the notification
takes place as forecasts (planning), not controlled and assessed by
Eurostat
Each year must be given a status: final, half-final, half-finalised
Table 1 is a "summary table" (4 blocks)
Table 2 (for each sub-sector) explains the transition between the
public accounts budget balance (labelled as "cash", "accrual" and
"mixed") and deficit/surplus B9 for EDP (6 blocks)
Table 3B (for government sector and each sub-sector) explains the
contributions of the deficit/surplus and other factors to the variation in
the debt level (consolidation at the level of the sector and at the level
of sub-sectors) (3 blocks)
Table 4: Provision of other data in accordance with the statements
contained in the Council minutes of 22/11/1993.
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Table 1
Net borrowing (-)/ net lending (+)
General government
- Central government
- State government
- Local government
- Social security funds
EDP B.9
S.13
S.1311
S.1312
S.1313
S.1314
General government consolidated gross debt
Level at nominal value outstanding at end of year
By category:
Currency and deposits
Securities other than shares, exc. Fin. derivatives AF.33
Short-term
Long-term
Loans
AF.4
Short-term
Long-term
General government expenditure on:
Gross fixed capital formation
Interest (consolidated)
p.m.: Interest (consolidated)
AF.2
AF.331
AF.332
AF.41
AF.42
P.51
EDP D.41
D.41 (uses)
Gross domestic product at current market prices B.1*g
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Table 2
Working balance in central government accounts
Basis of the working balance (cash…)
Financial transactions included in the working balance
Loans, granted (+)
Loans, repayments (-)
Equities, acquisition (+)
Equities, sales (-)
Other financial transactions (+/-)
of which: transactions in debt liabilities (+/-)
Detail 1
(…)
Non-financial transactions not included in the working balance
Detail 1
(…)
Difference between interest paid (+) and accrued (EDP D.41)(-)
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Table 2 suite
Other accounts receivable (+)
Detail 1
(…)
Other accounts payable (-)
Detail 1
(…)
Working balance (+/-) of entities not part of central government
Net borrowing (-) or net lending (+) of other central government
bodies
Detail 1
(…)
Other adjustments (+/-) (please detail)
Detail 1
(…)
Net borrowing (-)/lending(+) (EDP B.9) of central government
(S.1311)
(ESA 95 accounts)
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Table 3
Net borrowing(+)/lending(-)(EDP B.9) of central government (S.1311) (with
opposed sign)
Net acquisition (+) of financial assets
Currency and deposits (F.2)
Securities other than shares (F.3)
Loans (F.4)
Increase (+)
Reduction (-)
Short term loans (F.41), net
Long-term loans (F.42)
Increase (+)
Reduction (-)
Shares and other equity (F.5)
Portfolio investments, net(2)
Shares and other equity other than portfolio investments
Increase (+)
Reduction (-)
Other financial assets (F.1, F.6 and F.7)
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Table 3 suite
Adjustments
Net incurrence (-) of liabilities in financial derivatives (F.34)
Net incurrence (-) of other liabilities (F.5, F.6 and F.7)
Issuances above(-)/below(+) nominal {face} value
Difference between interest (EDP D.41) accrued(-) and paid(4)(+)
of which: interest flows attributable to swaps and FRAs
Redemptions of debt above(+)/below(-) nominal value
Appreciation(+)/depreciation(-)(3) of foreign-currency debt (5)
Changes in sector classification (K.12.1)(5) (+/-)
Other volume changes in financial liabilities (K.7, K.8, K.10)(5)(-)
Statistical discrepancies
Difference between capital and financial accounts (B.9-B.9f)
Other statistical discrepancies (+/-)
Change in central government (S.1311) consolidated gross debt
(for sub-sectors, only:)
Central government contribution to general government debt (a=b-c)
Central government gross debt (level) (b)
Central government holdings of other subsectors debt (level) (c)
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Table 4
Trade credits and advances (AF.71 L)
Amount outstanding in the government debt from the financing of public
undertakings
In case of substantial differences between the face value and the present
value of government debt, please provide information on
i) the extent of these differences:
ii) the reasons for these differences:
Gross National Income at current market prices (B.5*g)(1)
(1) Data to be provided in particular when GNI is substantially greater than GDP.
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Supplementary table for the financial crisis
Part 1 : Net revenue/cost for general government (impact on government deficit)
A
REVENUE (a+b+c+d)
a)
Guarantee fees receivable
b)
Interest receivable
c)
Dividends receivable
d)
Other
B
EXPENDITURE (e+f+g+h)
e)
Interest payable
f)
Capital injections recorded as deficit-increasing (capital transfer)
g)
Calls on guarantees
h)
Other
C
Net revenue/cost for general government (A-B)
Part 2 : Outstanding amount of assets, actual liabilities and contingent liabilities of general government
Assets / Liabilities
D
a)
b)
c)
Closing balance sheet
Loans
Securities other than shares
Shares and other equity
d)
e)
f)
Contingent liabilities and assets outside gen. gov. (guarantees)
Securities issued under liquidity schemes (not in gov. Debt)
Special purpose entities outside gen. gov. (guarantees)
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Questionnaire relating to the EDP notification tables
Table 1: "Revision of general government net lending (+)/ net borrowing (-) and revision
of general government consolidated gross debt"
Table 2: Breakdown of financial transactions included in the working balance
Table 3: Adjustments for sector delimitation in EDP tables
Table 4: Breakdown of other accounts receivable/payable (F.7) reported in EDP tables
Table 5: Taxes and social contributions: other accounts receivable/payable (F.7) of
general government
Table 6: Recording of EU flows in EDP tables
Table 7: Military equipment expenditure (weapons and supporting equipment)
Table 8: Central government claims, debt cancellation
Table 9: Guarantees recording
Table 10: Capital injections, super-dividends and privatisations
Table 11: Public-Private Partnerships (PPPs)
Table 12: Securitisation operations
Table 13: Sale and leaseback operations
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The ESA GFS tables (transmission programme)
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A number of tables out of 29 are specifically dedicated to GFS
(consistent with data notified)
Table 2 (annual): "Main aggregates of general government" showing
Revenue and Expenditure, highly relevant for government (t+ 3/9)
Table 9 (annual) "Detailed tax and social contribution receipts by type
of tax and social contribution and receiving subsector including the
list of taxes and social contributions according to national
classification" (T+9)
Table 11 (annual) "General government expenditure by function"
(t+12)
Table 25 "Quarterly Non-Financial Accounts of General Government"
(t+3)
Table 26 (quarterly) "Financial accounts of general government" (t+3)
Table 28 (quarterly) "Government debt (Maastricht debt) for general
government"
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Annex: ESA central framework and GFS transactions and aggregates
(abstract from ESA10chapter 20)
The ESA central framework
In the ESA central framework, net lending/net borrowing (B.9) is the balancing item of the
capital account. The balancing item of general government in the ESA GFS presentation is
identical to the net lending/net borrowing (B.9).
In the ESA central framework, the first account is the production account, and therefore the
first resource of an institutional sector in the ESA is its output.
As the majority of services provided by government are not sold at economically
significant prices and so are non-market, government output is measured by convention as
the sum of production costs.
Similarly, final collective consumption expenditure, consisting of services provided to the
community by government such as general services, defence, safety and public order, are
measured as the sum of production costs. Also by convention, collective consumption
expenditure (P.32) is equal to the actual final
consumption (P.4) of government.
Final individual consumption expenditure of households provided directly by government on a
non-market basis is also measured by its production costs.
As a result, two types of flows are "imputed" in the ESA accounts of government:
1) On the resources side, the non-market output, other (P.132) in the production account;
2) On the uses side, the actual final consumption (P.4) and the social transfers in kind - nonmarket production (D.631), in the redistribution of income in kind account, and in "use of
adjusted disposable income account.
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(annex)
The ESA GFS presentation of statistics
The same basic transaction categories are used in the ESA GFS presentation, but mainly on
the basis of actual monetary flows, to obtain the total revenue and the total expenditure of
government.
Only a selection of imputed flows is taken into account: imputed social contributions and
capital transfers in kind.
Eliminating from the resources side the non-market output (P.132) to obtain total revenue,
and eliminating from the uses side the actual final consumption (P.4=P.32) and the social
transfers in kind - non-market production (D.631) to obtain total expenditure…
…results in the same balancing item: the net lending/net borrowing (B.9).
The only social transfers in kind that are accounted for in the GFS aggregate total
expenditure of government are social transfers in kind provided to households via market
producers (D.632), as they are subject to real payments of government units.
These transactions are also those to be added to the sum of production costs (equal to nonmarket output, other - P.132) to obtain the final consumption expenditure of the general
government.
P.3 = P.132 + D.632
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(annex)
ESA Resources
ESA GFS Revenue
P.1 Output, of which
Market output (P.11)
Sales of goods and services
Output for own final use (P.12)
Sales of goods and services
Non-market output (P.13), of which:
- Payments for non-market output (P.131) Sales of goods and services
- Non-market output, other (P.132)
Not accounted for in Total revenue
D.2 Taxes on production and imports (receivable)
Total taxes
D.3 Subsidies (receivable)
Other current revenue
D.4 Property income
Other current revenue
D.5 Current taxes on income and wealth
Total taxes
D.61 Social contributions
Total social contributions
D.7 Other current transfers
Other current revenue
D.91r Capital taxes (receivable)
Total taxes
D.92r Investment grants (receivable)
Other capital revenue
D.99r Other capital transfers (receivable)
Other capital revenue
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(annex)
ESA Uses and capital transactions ESA
GFS Expenditure
P.2 Intermediate consumption
Intermediate consumption
D.1 Compensation of employees
Compensation of employees
D.2 Taxes on production and imports (payable)
Other current expenditure
D.3 Subsidies (payable)
Subsidies
D.41 Interest
Interest
D.4 Property income (excluding D.41)
Other current expenditure
D.5 Current taxes on income
Other current expenditure
D.62 Social benefits other than
social transfers 1in kind
Social benefits other than ST in kind
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2) Methodological framework required
for data compilation
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When EDP started: ESA 1979
Eurostat had to take decisions, as this National Accounts Manual was
of small (if any) usefulness for some issues arising very quickly (so,
when possible, reference to manuals below)
SNA93, followed by ESA95 (close but not identical – applicable from
2000 onwards) was an important step from a methodological point:
 1) the shift from cash to accrual
 2) the inclusion of balance sheets and thus the identification of change in
stocks factors (transactions / other flows)
 3) a change in principles for government sector delineation and definition
of institutional units
 4) the identification of new financial instruments (notably financial
derivatives)
 5) the notion of rearranged transactions ("rerouting", "partitioning" and
"recognising the principal party to a transaction")
 6) the definition of consolidation and netting
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Eurostat Manual
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But high need for interpretation, implementation guidance and
supplementation
In 1999, Eurostat elaborates the "Manual on Government Deficit and
Debt" - MGDD (more recent edition in 2013)
The Manual has a specific structure for each chapter ("background of
the issue", "treatment in national accounts", "rationale of the
treatment") and provides simplified examples (under the form of "T
accounts") but it is not a compilation guide (normally, no mention of
sources data, except in some cases)
The content of the Manual is largely at the initiative of Eurostat
(coordination, propositions), based on its control experience but is
written in cooperation with experts from Member States (Task
Forces)
It may also result from a request from Member states facing a
specific issue asking for Eurostat advice (rules of procedures
specified in 2009); result is included in the Manual if considered by
Eurostat " "of common interest"
From 2012 onwards, in principle, annual edition of the Manual
Shortly, a new edition for the adaptation to ESA10
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The structure of the Manual reflects what must be
covered by the GFS methodological framework
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What is the delineation of the government sector?
What is the time of recording of transactions?
How to record the operations, frequently very specific, between
government and public corporations, notably "capital injections"?
How to record the relations between government and the financial
sector (including the central bank and "defeasance")?
Which problems are raised by the sales of (financial and nonfinancial) assets by government?
What are the basic criteria for recording leases, licences and
concessions (including public-private-partnerships)?
How to record the debt related transactions by government and
guarantees it may grant?
What is the measurement of government debt, including operations
on derivatives repos and securities lending?
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Thank you for your attention
[email protected]
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