Implementing the GFSM 2001 System: Migration Paths & Experiences Government Finance Division Statistics Department IMF

Government Finance Division, IMF Statistics Department 2 Contents of Lecture Introduction Factors to take into account for migration path Alternative bases of accounting Country-specific steps needed in development of migration path Possible migration paths Migration experiences May be different from country to country May be different from institution to institution

Government Finance Division, IMF Statistics Department 3 Introduction (1/2) Implementation of fully integrated GFS system will Take time and resources Need to progress at pace determined by differing needs and circumstances of country involved Governments of most countries will need to revise their underlying accounting systems to reflect Accrual accounting principles; and Classifications of GFS system

Government Finance Division, IMF Statistics Department 4 Alternative Bases of Accounting (2/2) A wide spectrum exists For illustrative purposes - consider four points on that spectrum Cash basis Modified cash basis Modified accrual basis Full accrual basis Cash basis Full accrual Bases between cash and full accrual

Government Finance Division, IMF Statistics Department 5 Development of a Migration Path (1/7) Six possible development stages 1. Conviction stage 2. Political stage 3. Planning stage 4. Application stage 5. Legislation stage 6. Implementation stage 1.Accounting systems 2.Staff resources 3.User education

Government Finance Division, IMF Statistics Department 6 Development of a Migration Path (2/7) 1.Conviction stage What is existing system? GFSM 1986 format? Budget format? Shortcomings? What are needs / advantages for country to migrate to GFSM 2001 system? Improvements in government’s policy decisions? Improvements in accountability? Greater transparency? Better economic analysis? Comparability and consistency What are international demands? International organizations? Accounting bodies?

Government Finance Division, IMF Statistics Department 7 Development of a Migration Path (3/7) 2.Political stage Adequate preparation To achieve further success Political will? Possible country-specific factors Balancing items may seem to deteriorate Debt position Misinterpretation –Emphasize that GFSM 2001 provides much improved measures of long term government performance Resistance to change

Government Finance Division, IMF Statistics Department 8 Development of a Migration Path (4/7) 3.Planning stage Need a detailed action plan Spanning several years Maintain data collection and compilation –Historic links –Parallel runs Cooperation between institutions imperative Committee representing all relevant institutions and agencies Task forces Working groups Project and time schedules

Government Finance Division, IMF Statistics Department 9 Development of a Migration Path (5/7) 4.Application stage Coverage of units and expense accounts Choose a recent year’s data; identify government institutional units; rearrange expenditure items and identify accrual items Revenue accounts Assets and liabilities accounts Other aspects Presentation and legal aspects Project results, training, etc. Technical aspects

Government Finance Division, IMF Statistics Department 10 Development of a Migration Path (6/7) 5.Legislation stage New legal framework that includes Timeframe for development stages Assessment of effects on government accounts Could include reporting requirements and assignment of responsibilities

Government Finance Division, IMF Statistics Department 11 Development of a Migration Path (7/7) 6.Implementation stage Depend on migration path A finite task with definite and specific objectives Flexibility to adjust Accommodate new developments as they occur ●Change classifications in cash accounting system to the GFSM 2001 framework ●Estimate noncash items, e.g., grants in kind, other payments in kind ●Adjust time of recording of flows, e.g., interest ●Add consumption of fixed capital to Statement of Government Operations ●Obtain partial data on holding gains (revaluations) and other economic flows, e.g., foreign loans, debt write-off

Government Finance Division, IMF Statistics Department 12 Summary of Progress of the Migration Toward GFSM 2001 Presentation in Staff Reports By Area Department There has been a steady progress with the implementation of the Board decision, and by the end of June 2013, 136 staff reports included the GFSM 2001 presentation of fiscal data. This number includes countries with Fund supported programs, and it represents about 70 percent of all staff reports. Source: IMF Staff Reports

Number of Countries Reporting Data for the GFSY in GFSM 2001 Format Source: Government Finance Statistics Yearbook Government Finance Division, IMF Statistics Department 13 Source: Government Finance Statistics Yearbook

Number of Countries Reporting Data on Assets and Liabilities Government Finance Division, IMF Statistics Department 14 Source: Government Finance Statistics Yearbook

GFS Reporting by Country Government Finance Division, IMF Statistics Department 15 Source: Government Finance Statistics Yearbook 2012

Government Finance Division, IMF Statistics Department 16 CountryGFS missions total - STAGO (FY 2001 – FY 2012) 5/1/2000 – 4/30/2012 NA missions total - STARE (FY 2001 – FY 2012) 5/1/ /30/2012 Albania (ALB)113 Azerbaijan (AZE)220 Armenia (ARM)02 Belarus (BLR)24 Bosnia and Herzegovina (BIH) 57 Cambodia (KHM)715 China (CHN)95 Georgia (GEO)29 Kazakhstan (KAZ)13 Kosovo (UVK)011 Kyrgyz Republic (KGZ)22 Lao PDR (LAO)23 Macedonia, FYR (MKD)511 Moldova (MDA) 211 Mongolia (MNG)512 Montenegro (MNE)15 Poland (POL)30 Russian Federation (RUS)42 Serbia (SRB)45 Turkey (TUR)710 Turkmenistan (TKM)05 Ukraine (UKR)111 Uzbekistan (UZB)06 Total65172