Public Sector Debt Statistics : Guide for Compilers and Users: Guide for Compilers and Users

International Monetary Fund

• Publisher: INTERNATIONAL MONETARY FUND
• Year: 2011
• eBook ISBN: 9781616351564

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Chapter 1 Introduction

A. Purpose and Focus of the Guide

1.1 The purpose of the Public Sector Debt Statistics—Guide for Compilers and Users (the Guide) is to provide comprehensive guidance for the measurement and presentation of public sector debt statistics.

1.2 The primary focus of this Guide is on gross and net debt liabilities of a public sector unit because:

• Usually, statistical development of a balance sheet concentrates first on debt liabilities, then financial assets in the form of debt instruments, and later moves to incorporate nondebt liabilities and other assets; and
• A particular interest exists with policymakers and analysts in public sector units’ gross and net debt.¹

1.3 Nonetheless, of interest for policymakers and analysts is also the size and composition of a public sector unit’s liabilities and financial assets, including nondebt instruments.² Further, the integration of stock positions and the various types of economic flows, as presented in the Government Finance Statistics Manual (GFSM), facilitates a comprehensive assessment of the economic impact of a public sector unit’s activities and the sustainability of its policies.

1.4 This Guide also provides advice on the compilation of public sector debt statistics and on their analytical use. The intention is to contribute to an improvement in, and a greater understanding of, public sector debt statistics. In doing so, the Guide is responding to widespread policy and user interest in improving the availability and international comparability of public sector debt statistics.

B. Conceptual Framework

1.5 This Guide provides a conceptual framework for compiling public sector debt statistics. The framework is derived from the System of National Accounts 2008 (2008 SNA) and the Balance of Payments and International Investment Position Manual, Sixth Edition (BPM6). The same classifications and definitions will be used in the forthcoming revision GFSM, but differ in minor ways from the current edition, Government Finance Statistics Manual 2001 (GFSM 2001). Under this conceptual framework, public sector debt includes all liabilities of public sector units (as defined in the 2008 SNA) excluding equity and investment fund shares and financial derivatives and employee stock options. The total amount of these debt liabilities is presented as the gross debt position of the public sector unit(s) for which the statistics are compiled.

C. Structure of the Guide

1.6 The Guide may be divided into four parts:

• Conceptual framework—Chapters 2–5;
• Compilation principles and practices—Chapters 6–8;
• Some analytical tools for public sector debt analysis—Chapter 9; and
• Work of international agencies in the area of public sector debt statistics—Chapter 10.

1.7 The structure of the part covering the conceptual framework is as follows:

• Chapter 2 provides a definition of gross and net debt. Using the definitions of institutional units and sectors, this chapter defines the public sector and its subsectors. This chapter also explains, in detail, the accounting principles required for the measurement of public sector debt.
• Chapter 3 defines debt instruments as well as the institutional sector of the counterparties to the debt instruments.
• Chapter 4 deals with several issues in public sector debt statistics. It provides definitions of several kinds of debt operations, and guidance on the statistical treatment of each of them.
• Chapter 5 provides tables for the presentation of public sector debt statistics: two summary tables, five detailed tables, and six memorandum tables. Together, the statistics in these tables provide a comprehensive view of public sector debt statistics in a country.

1.8 The structure of the part covering compilation principles and practices is as follows:

• Chapter 6 provides an overview of the main considerations in the compilation and dissemination of public sector debt statistics, including the main data sources for the various debt instruments.
• Chapter 7 provides guidance on the identification of the holders of traded debt securities.
• Chapter 8 provides practical guidance on the consolidation of public sector debt statistics, i.e., the elimination of inter- and intrasectoral stock positions among the units for which the statistics are compiled.

1.9 Chapter 9 covers some of the analytical tools used in public sector debt analysis. This chapter is included to help compilers place their work in context and to illustrate to some of the main uses of public sector debt statistics in the IMF’s work. Chapter 10 sets out the work in the area of public sector debt statistics of the BIS, Commonwealth Secretariat, ECB, Eurostat, IMF, OECD, Paris Club Secretariat, UNCTAD, and the World Bank.

1.10 The Guide includes three appendices: the first appendix deals with the relationship between public sector debt statistics and external debt statistics; the second with the relationship between flows and stock positions in public sector debt statistics; and the third provides a glossary of terms used in this Guide.

Chapter 2 Definitions and Accounting Principles

A. Introduction

2.1 This chapter defines debt and institutional sectors of an economy. These definitions are essential to developing a conceptual framework and providing practical guidance on compiling debt statistics. The classifications and definitions used in this Guide are harmonized with the System of National Accounts 2008 (2008 SNA) and the Balance of Payments and International Investment Position Manual, Sixth Edition (BPM6). The same classifications and definitions will be used in the forthcoming revised Government Finance Statistics Manual, but differ in minor ways from the current edition, Government Finance Statistics Manual 2001 (GFSM 2001).

2.2 Section B defines the two main debt concepts: gross debt and net debt. Sections C and D define the public sector, its institutional coverage, and its sectorization. The definitions of debt, together with the definitions of the public sector and its subsectors, allow for defining debt for the public sector and any of its subsectors. The last section of this chapter discusses the accounting principles underlying the compilation of public sector debt statistics. These principles are in conformity with the other macroeconomic statistics. The annex to this chapter discusses the accrual of interest and its impact on debt.

B. Definitions of Debt

1. Gross debt

2.3 Total gross debt—often referred to as “total debt” or “total debt liabilities”—consists of all liabilities that are debt instruments.¹ A debt instrument is defined as a financial claim that requires payment(s) of interest and/or principal by the debtor to the creditor at a date, or dates, in the future.² The following instruments are debt instruments:

• Special drawing rights (SDRs);
• Currency and deposits;
• Debt securities;
• Loans;
• Insurance, pension, and standardized guarantee schemes; and
• Other accounts payable.

2.4 From the above list follows that all liabilities included in the Government Finance Statistics Manual (GFSM) balance sheet are considered debt, except for liabilities in the form of equity and investment fund shares and financial derivatives and employee stock options.

2.5 Debt liabilities owed by residents to residents of same economy are domestic debt, and debt liabilities owed by residents to nonresidents are external debt. The definition of residence is explained in more detail later in this chapter and follows the current international standards (the 2008 SNA and BPM6). The relationship between public sector debt and external debt statistics is explained in Appendix 1 of this Guide.

2.6 Equity and investment fund shares are not debt instruments because they do not require the payment of principal or interest and, therefore, have different implications for vulnerability and liquidity. For the same reason, financial derivatives—both forwards and options—are not debt liabilities because no principal is advanced that is required to be repaid, and no interest accrues on any financial derivative instrument.³ In Chapter 5, this Guide recommends to compile and disseminate data on financial derivatives positions as a memorandum to public sector debt statistics. Such information is useful because these contracts can add to a public sector unit’s liabilities and, if used inappropriately, cause significant losses.⁴

2.7 Due to specific legal, institutional, and practical arrangements, some definitions of debt other than the above may also exist. It is therefore useful to always clearly identify the definition of debt according to the instruments included. Total debt in this Guide covers all debt instruments specified in paragraph 2.3, but narrower definitions are sometimes presented, including:

• only currency and de...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• Foreword
• Preface
• Chapter 1. Introduction
• Chapter 2. Definitions and Accounting Principles
• Chapter 3. Identification of Debt Instruments and Institutional Sectors
• Chapter 4. Selected Issues in Public Sector Debt
• Chapter 5. Presentation of Public Sector Debt Statistics
• Chapter 6. Data Collection, Compilation, and Dissemination
• Chapter 7. Identifying the Holders of Traded Debt Securities
• Chapter 8. Consolidation of Public Sector Debt Statistics
• Chapter 9. Some Tools for Public Sector Debt Analysis
• Chapter 10. Work of International Agencies
• Appendix 1. Relationship between Public Sector Debt Statistics and External Debt Statistics
• Appendix 2. Reconciliation of Public Sector Debt Flows and Stocks
• Appendix 3. Glossary
• Index
• Footnotes