Reproductions of this material, or any parts of it, should refer to the IMF Statistics Department as the source. Government Finance Division IMF Statistics Department 9 th Meeting of the Advisory Expert Group on National Accounts September 8–10, 2014, Washington D.C. Claudia Dziobek, Chief - IMF Government Finance Division Tuesday, September 9, 2014 (Afternoon Session-Item 14) The Use of Indicators on Deficit and Debt

Government Finance Division IMF Statistics Department Overview  GFS and National Accounts  Availability of International Guidelines for Debt Data Compilation  Sources of Differences in Debt Data  A Cascading Approach to Presenting Debt Data  Way Forward 2

Government Finance Division IMF Statistics Department GFS and National Accounts  GFSM 2014 aligned with 2008 SNA  Government a major sector  GFSM 2014 framework requires additional information to NA data for more detailed fiscal analysis e.g., Different aggregates (revenue, expense, expenditure) Detailed breakdown of taxes, subsidies, other government revenue Consolidation  IMF GFS questionnaire seeks more detailed information than that available from NA compilation. 3

Government Finance Division IMF Statistics Department GFS and National Accounts  GFSM Framework has four alternative measures of the deficit / surplus: Net/gross operating balance Net lending/net borrowing (NLB) Cash surplus/deficit Total financing  Other surplus / deficit indicators are also widely used e.g. Primary balance (or primary surplus / deficit) Structural / cyclical balances  All these indicators provide an indication of the in-year fiscal position. 4

Government Finance Division IMF Statistics Department GFS and National Accounts  Government gross debt a key fiscal indicator: Defined as a subset of total government liabilities – six debt instruments  Debt securities  Loans  Currency and deposits  SDRs  Other accounts payable  Insurance, pension and standardized guarantee schemes  For debt statistics, analytical need for debt at different valuations (not just market values) 5

Government Finance Division IMF Statistics Department Availability of International Guidelines for Debt Data Compilation  International guidelines for compiling debt well established: Government Finance Statistics Manual 2014; Government Finance Statistics Manual 2014 Public Sector Debt Statistics: Guide for Compilers and Users; and Public Sector Debt Statistics: Guide for Compilers and Users External Debt Statistics: Guide for Compilers and Users (EDSG), External Debt Statistics: Guide for Compilers and Users (EDSG), 2011  In practice, differences in debt data limit cross country comparability 6

Government Finance Division IMF Statistics Department Sources of Differences in Debt Data  Differences arising from: Institutional sector coverage – central government? general government? public sector? other? Debt instrument coverage – just debt securities and loans, or wider coverage of debt instruments? Valuation – market, nominal, or face value Consolidation - consolidated or unconsolidated debt? 7

Government Finance Division IMF Statistics Department Sources of Differences in Debt Data Institutional Sector Coverage 8 Includes State and Local 139% 106% 49% Source=World Bank/IMF /OECD Quarterly Public Sector Debt Statistics Database Canada’s Gross Debt by Sector (in percent of GDP)

Government Finance Division IMF Statistics Department Sources of Differences in Debt Data Debt Instrument Coverage 9 Note magnitude of Pension Liabilities Source = Government Finance Statistics Yearbook (GFSY) Australia: Debt Instruments (in percent of GDP)

Government Finance Division IMF Statistics Department Cascading Approach to Presenting Government Debt Data Levels of Government  GL1 – Budgetary Central Government  GL2 – GL1 plus extrabudgetary units and social security funds  GL3 – GL2 plus state and local governments  GL4 – GL3 plus nonfinancial public corporations  GL5 – GL4 plus financial public corporations Aggregations of Debt Instruments  D1 – debt securities and loans  D2 – D1 plus SDRs and currency and deposits  D3 – D2 plus other accounts payable  D4 – D3 plus insurance, pensions and standardized guarantee schemes 10

Government Finance Division IMF Statistics Department Cascading Approach to Presenting Government Debt Data 11

Government Finance Division IMF Statistics Department Country Examples: China P.R. Hong Kong 12 Very low levels of debt in D1-D3 – most debt is employment related pensions for civil servants

Government Finance Division IMF Statistics Department Country Examples: Iceland 13 Major increase in Icelandic debt is from D3 to D4 at all levels of government GL3/D3 = 105 percent of GDP GL3 / D4 = 132 percent of GDP

Government Finance Division IMF Statistics Department Country Examples: USA 14 Some debt securities issuance by State and Local Governments – emphasizes importance of general government data D1/GL1 is 79 percent of GDP. D4 /GL3 is 122 percent of GDP

Government Finance Division IMF Statistics Department Way Forward  The IMF is adopting the cascading approach in the recently updated questionnaire to collect data from member countries for publication in the 2014 GFSY Countries or regions are also allowed to disseminate a debt aggregate using their national definitions of debt  The same approach is adopted for the presentation of government/public sector debt data in the World Bank/IMF/OECD Public Sector Debt Statistics databaseWorld Bank/IMF/OECD Public Sector Debt Statistics database 15