Implementing the Government Finance Statistics Manual : Migration Paths & Experiences

1. Implementing the Government Finance Statistics Manual:Migration Paths & Experiences Workshop on the Implementation and Links between the System of National Accounts, 2008and the Government Finance Statistics Manual November 20–22, 2013 in Istanbul, Turkey Gary Jones Government Finance Division Statistics Department DISCLAIMER: This presentation represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management.

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 Government Finance Statistics (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 Bases between cash and full accrual Full accrual Government Finance Division, IMF Statistics Department

5. Migration from GFSM 1986 to GFSM 2001/13 (2/2) • Likely that many countries will broadly follow similar paths as they implement GFSM, e.g., • 1st step, to classify cash data in GFSM framework • 2nd step, to supplement cash data with additional, noncash information (e.g., grants in kind) • 3rd step, to supplement cash data with significant accrual information (e.g., interest) • 4th step, to implement accrual accounting system Government Finance Division, IMF Statistics Department

6. Implementation of GFSM Government Finance Division, IMF Statistics Department

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

8. Development of a Migration Path(2/7) • Conviction stage • What is existing system? • GFSM 1986 format? Budget format? • Shortcomings? • What are needs / advantages for country to migrate to GFSM 2001/13 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

9. Development of a Migration Path(3/7) • 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 2001/13 provides much improved measures of long term government performance • Resistance to change Government Finance Division, IMF Statistics Department

10. Development of a Migration Path(4/7) • 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

11. Development of a Migration Path(5/7) • 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

12. Development of a Migration Path(6/7) • 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

13. Development of a Migration Path(7/7) • 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 2001/13 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

14. Government Finance Division, IMF Statistics Department

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

16. Number of Countries Reporting Data on Assets and Liabilities Source: Government Finance Statistics Yearbook (GFSY) Government Finance Division, IMF Statistics Department

17. GFS Reporting by Country GG – Consolidated General Government A – Accrual or noncash basis of accounting C – Cash basis of accounting F.B.S. – Financial Balance Sheet (Yes / No) Source: Government Finance Statistics Yearbook 2012 Government Finance Division, IMF Statistics Department