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Government Finance Statistics in SNA 2008

Learn about the significance, structure, and financial presentation of the General Government sector in the System of National Accounts 2008, addressing key accounting issues and policy implications.

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Government Finance Statistics in SNA 2008

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

  2. Outline 1/1 • Why dedicate a chapter to the General Government? • The General Government sector • Financial presentation of the General Government • Some accounting issues

  3. Why dedicate a chapter to the General Government? 1/1 • 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

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

  5. 2. The General Government sector 2/4 • What is a market producer? • Economically significant prices • To what extent sales cover production costs • No clear quantitative threshold • “Market situation”

  6. 2. The General Government sector 3/4 • 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)

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

  8. 3. Financial presentation of the General Government 1/3 Fundamental equations: • 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

  9. 3. Financial presentation of the General Government 2/3 Fundamental equations: • 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

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

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

  12. Summary 1/1 • 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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