1. Government Finance Statistics in SNA 2008 Kurt Wass EFTA Statistical Office, Luxembourg Geneva 26 April 2010 Agenda item 2

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 1/1

3. 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 1/1

4. 2. The General Government sector Entities Private Sector Controlled by Public or Private Sector? Public Sector Institutional Unit? Controlling Unit Public corporation General Government Market Producer? 1/4 No Yes No Yes

5. 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” 2/4

6. 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) 3/4

7. 2. The General Government sector Borderline/difficult cases –Quasi-corporations –Restructuring agencies –Special purpose entities –Joint Ventures –Supranational authorities 4/4

8. 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 1/3

9. 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 2/3

10. Financial Assets FA L L L Expense Revenue Opening balance Transactions Closing balance Liabilities L FA Financial presentation of the General Government Net financial worth = Net lending/ borrowing Δ Net f.worth hold.g/l == Δ Net f.worth volume ch. = Net financial worth = Non Financial Assets NFA Other economic flows Net Worth Net acq NFA = = Net operating balance = = = == Holding gains/ losses Other changes in volume NFA 3/3

11. Some accounting issues Taxes – clarification of recording Interactions with non-resident government- type authorities Debt issues Interactions with the corporations sectors 1/1

12. 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. 1/1