Government Finance Statistics Manual 2001

International Monetary Fund

• Publisher: INTERNATIONAL MONETARY FUND
• Year: 2001
• eBook ISBN: 9781589060616

NONE

1. Introduction

This chapter describes the purpose of this manual, the uses of government finance statistics, the structure of the government finance statistics system, major methodological changes from the previous edition of this manual, and methods of implementing the revised system.

A. Purpose of the manual

1.1 This second edition of the Government Finance Statistics Manual (GFS Manual or revised GFS Manual)¹ describes a specialized macroeconomic statistical system (the GFS system) designed to support fiscal analysis. The manual provides the economic and accounting principles to be used in compiling the statistics and guidelines for the presentation of fiscal statistics within an analytic framework that includes appropriate balancing items.² The manual does not treat systematically the practical aspects of compiling the statistics. These aspects of the GFS system will be addressed in a compilation guide.

1.2 The primary purpose of the GFS Manual is to provide a comprehensive conceptual and accounting framework suitable for analyzing and evaluating fiscal policy, especially the performance of the general government sector and the broader public sector of any country. The concept of a sector is described in Chapter 2. In short, the general government sector consists of entities that implement public policy through the provision of primarily nonmarket services and the redistribution of income and wealth, with both activities supported mainly by compulsory levies on other sectors. The public sector consists of the general government sector plus government-controlled entities, known as public corporations, whose primary activity is to engage in commercial activities.

1.3 Public finance analysts have traditionally used fiscal statistics to analyze the size of the public sector; its contribution to aggregate demand, investment, and saving; the impact of fiscal policy on the economy, including resource use, monetary conditions, and national indebtedness; the tax burden; tariff protection; and the social safety net (see Chapter 4. Box 1). In addition, analysts have become increasingly interested in assessing the effectiveness of spending on poverty alleviation, the sustainability of fiscal policies, net debt, net wealth, and contingent claims against government, including the obligations for social security pensions.

1.4 Achieving these analytic goals often requires the use of statistics for the public sector rather than the general government sector. Public corporations, non-financial as well as financial, can carry out government fiscal policies in a variety of ways, and analysis of their fiscal activities frequently requires statistics on all of their activities rather than isolated statistics on specific transactions. Even when statistics are compiled for only the general government sector, some information on public corporations is required to reflect the level and change in the level of equity ownership of public corporations held by units of the general government sector.

1.5 The basic concepts, classifications, and definitions employed in this manual depend on economic reasoning and principles that should be valid universally regardless of the circumstances in which they are applied. Therefore, the GFS system is applicable to all types of economies regardless of the institutional or legal structure of a country’s government, the sophistication of its statistical development, the system of government financial accounting, or the extent of public ownership of for-profit entities. Nevertheless, the fact that countries differ greatly in their governmental and economic structures means that the various parts of this manual will not be equally relevant.

1.6 This edition of the GFS Manual updates the internationally recognized standards for the compilation of statistics required for fiscal analysis that were established by the 1986 GFS Manual. The revised standards have been harmonized with the corresponding standards of other internationally recognized macroeconomic statistical systems to the extent consistent with the goal of supporting fiscal analysis. The other statistical systems are the overarching System of National Accounts (hereafter referred to as the 1993 SNA) and two specialized systems that are focused on the balance of payments and monetary and financial statistics.³ This manual draws heavily on the text of the 1993 SNA to avoid an inference that a different meaning is intended.⁴

B. Uses of the GFS system

1.7 The GFS system is designed to provide statistics that enable policymakers and analysts to study developments in the financial operations, financial position, and liquidity situation of the general government sector or the public sector in a consistent and systematic manner. The GFS analytic framework can be used to analyze the operations of a specific level of government and transactions between levels of government as well as the entire general government or public sector.

1.8 One method used in the GFS system to produce summary information on the overall performance and financial posilion of the general government or public sector is through the use of a set of balancing items, such as the net operating balance, net lending/borrowing, and the change in net worth. Such balancing items are most effectively defined and measured within an integrated and comprehensive accounting framework such as the GFS system.

1.9 In contrast to summary measures, the detailed data of the GFS system can be used to examine specific areas of government operations. For example, one might want information about particular forms of taxation, the level of expense incurred on a type of social service, or the amount of government borrowing from the banking system.

1.10 The harmonization of the GFS system with other macroeconomic statistical systems means that data from the GFS system can be combined with data from other systems to assess general government or public sector developments in relation to the rest of the economy. Similarly, the establishment of internationally recognized standards permits government finance statistics to be used in cross-country analyses of government operations, such as comparisons of ratios of taxes or expense to gross domestic product.

C. Structure and features of the GFS system

1.11 The GFS system pertains to the general government and public sectors as defined in the 1993 SNA and Chapter 2 of this manual. These sectors are defined in terms of institutional units, which are economic entities that are capable of owning assets, incurring liabilities, and engaging in economic activities and transactions with other entities in their own right. These characteristics render institutional units a subject of economic and statistical interest that can be satisfied by compilation of a full set of accounts for them, including balance sheets.

1.12 Two types of flows are recorded in the GFS system: transactions and other economic flows.⁵ For the most part, transactions are interactions between two institutional units that take place by mutual agreement. The Statement of Government Operations (see Chapter 4) records the results of all transactions during an accounting period. They are classified as revenue, expense, net acquisitions of nonfinancial assets, net acquisitions of financial assets, or net incurrences of liabilities. Transactions that generate revenue or expense result in a change in net worth. Other types of transactions result in equal changes to assets and/or liabilities and do not result in a change to net worth.

1.13 Other economic flows include price changes and a variety of other economic events that affect the holdings of assets and liabilities, such as debt write offs and catastrophic losses. The Statement of Other Economic Flows (see Chapter 4) summarizes these changes in assets, liabilities, and net worth.

1.14 The Balance Sheet (see Chapter 4) for the general government or public sector is a statement of the stocks of financial and nonfinancial assets owned, the stock of claims of other units against the owners of those assets in the form of liabilities, and the sector’s net worth, equal to the total value of all assets less...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• Foreword
• Preface
• Government Finance Statistics Manual 2001
• Footnotes