Government Finance Statistics in SNA 2008

Kurt Wass

EFTA Statistical Office, Luxembourg

Geneva 26 April 2010

Agenda item 2

Outline

1. Why dedicate a chapter to the General Government?

2. The General Government sector

3. Financial presentation of the General Government

4. Some accounting issues

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• Why dedicate a chapter to the General Government?

• Policy Sector – directly instrumental for economic policy• Different powers, motivation and functions • Affects behaviour of other economic units• The Public Sector• Revision of SNA recognized the need to provide a

presentation of government more suitable for finance analysts and policymakers

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2. The General Government sector

EntitiesPrivate Sector

Controlled by Public or Private Sector?

Public Sector

Institutional Unit? Controlling Unit

Publiccorporation

General Government

MarketProducer?

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No

Yes No

Yes

2. The General Government sector

• What is a market producer?– Economically significant prices

• To what extent sales cover production costs• No clear quantitative threshold• “Market situation”

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2. The General Government sector

• The subsectors of the General Government Sector:– Central government (IMF: Budgetary and

Extrabudgetary)

– State government

– Local government

– Social Security (can be assigned to the other three subsectors)

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2. The General Government sector

• Borderline/difficult cases– Quasi-corporations

– Restructuring agencies

– Special purpose entities

– Joint Ventures

– Supranational authorities

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3. Financial presentation of the General Government

Fundamental equations:(1) Transactions:

Revenue- Expense= Net operating Balance (impact on net wealth)- Net acquisitions of non-financial assets= Net lending/net borrowing

Outlays: Expense + Net acquisitions of non-financial assets

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3. Financial presentation of the General Government

Fundamental equations:(2) Change in net wealth:

Net wealth (t)+ Transactions affecting net wealth (t+1)+ Other economic flows (t+1)= Net wealth (t+1)

- Financial presentation: combine (1) and (2) to establish an integrated (and consolidated) financial presentation

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FinancialAssets FA

LLL

FA FA

Expense

Revenue

Opening balance

Transactions

Closing balance

Liabilities L

FA

Financial presentation of the GeneralGovernment

Net financialworth

=

Net lending/borrowing

Δ Net f.worthhold.g/l

= =

Δ Net f.worthvolume ch.

=

Net financialworth

=

NonFinancial

AssetsNFA NFA

Other economic flows

Net Worth Net Worth

Net acqNFA

=

=

Net operatingbalance

=

=

=

==

Holding gains/losses

Other changesin volume

NFA

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Some accounting issues

• Taxes – clarification of recording

• Interactions with non-resident government-type authorities

• Debt issues

• Interactions with the corporations sectors

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Summary

• The new chapter 22 in SNA 2008:– clarifies sectorisation issues– brings a new integrated and consolidated financial

presentation framework of the general government (and the public sector)

– clarifies some specific accounting issues

• The philosophy of national accounts remains:– the aim is to reflect economic realities rather than legal or

administrative arrangements.

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