About Government Finance Statistics (General Government)
Government Finance Statistics (GFS) is a set of concepts and principles developed by the International Monetary Fund (IMF) specifically for measuring government financial activity. These concepts and principles allow the entire public sector to be analysed. That is:
all levels of government (both central and local government in New Zealand, and state government in countries like Australia and the United States of America)
all sectors of government (general government, public non-financial corporations, and public financial corporations). In New Zealand, general government is the consolidation of both local and central government.
Unlike accounting-based financial statements, GFS is an economic representation of a government's financial activity. It is the IMF's preferred standard for publishing financial statistics on government.
Assets: are what government owns. They represent a store of value, and can be a source of income or generate economic benefit when used. Assets are either current or non-current.
Balance sheets: measure the values of stocks of assets or liabilities. They are typically compiled at the beginning and end of the accounting period.
Capital transfer: a transaction in which one institutional unit provides a capital asset to another unit without receiving anything in return.
Capital transactions: relate to establishing or owning an asset. Capital transactions must be linked to a particular purpose. For example, charges for development work (eg building new subdivisions or buildings) to cover additional infrastructure costs incurred by government.
Change in inventories: the change in the value of inventories of raw materials, work-in-progress, and finished goods, over a given period. The change is measured in the appropriate prices in the market at the time additions and withdrawals are made.
COFOG: the Classification of Functions of Government is a detailed classification of the functions, or socioeconomic objectives, that government units aim to achieve through various outlays. See table 3.
Current transfer: a transaction in which one unit provides goods, a service, or an asset to another unit for the purposes of current expense without receiving anything in return.
Depreciation: the gradual writing-off over time of the value of a physical asset such as infrastructural assets, restricted assets, buildings, mobile equipment, and other plant, machinery and office equipment.
Employee expenses: the gross earnings of all paid employees. Includes overtime, sick and holiday pay, severance and redundancy payments, levies paid to the Accident Compensation Corporation (ACC), and employer contributions to superannuation schemes. Wages and salaries paid to employees, which were involved in own account capital formation, are no longer included in employee expenses.
Equity accounted investments: a balance sheet asset covering government equity in state-owned enterprises and market operating crown entities
Financial assets: consist of financial claims, monetary gold, and special drawing rights allocated by the IMF. Examples include: cash and bank deposits, stocks held, short-term accounts receivable, pre-payments, Treasury bills, and short-term loans.
Insurance liabilities: represents the present value of expected future payment of claims. Includes ACC liabilities and earthquake-related insurance liabilities.
Liabilities: debts that establish an obligation to provide economic benefits to another party that holds the corresponding financial claims.
Market entity: provides goods or services at prices that are economically significant.
Net debt: includes all financial assets and liabilities except shares and other equity and financial derivatives.
Net financial worth: equal to the total value of all financial assets less the total value of all liabilities. It is an important component of total net worth.
Net lending/borrowing position: an indicator of the financial impact of government activity on the rest of the economy. It shows a government's financing requirement and is calculated as the net operating balance less the net acquisition of non-financial assets.
A positive net lending/borrowing position indicates a net lending position. After accounting for all operating transactions and their net acquisition of non-financial assets, a government is still in surplus and has funds it can invest or lend.
A negative net lending/borrowing position indicates a net borrowing position. After accounting for all operating transactions and their net acquisition of non-financial assets, a government will need to borrow (or run down its financial investments) to fund all its expenditure.
Net operating balance: change in the net worth of government due to transactions, rather than to provisions and valuation or other changes. It is equal to total operating income less total operating expenses, and is important when measuring the ongoing sustainability of government operations. Provisions and valuation or other changes are treated as other economic flows in government finance statistics rather than transactions.
Net worth: the difference between the total value of all assets and the total value of all liabilities.
Non-financial assets: all economic assets other than financial assets. These can be fixed assets, such as infrastructure and buildings, inventories, valuables, or non-produced assets.
Operating expenditure: the amount spent on providing core services.
Operating income: funding earned to provide core services.
Retirement plan liabilities: unfunded obligations for the Government Superannuation Fund and the National Provident Fund.
Securities: securities other than shares are negotiable financial instruments serving as evidence that units have obligations to settle by means of providing cash, a financial instrument, or some other item of economic value. Examples include bills, bonds and debentures, commercial paper, negotiable certificates of deposit and tradable depository receipts.
Social benefits: transfers in cash or kind to protect the entire population, or specific segments of it, against certain social risks. Examples of social benefits include providing medical services and unemployment compensation.
Social security contributions: actual or imputed receipts from either employers on behalf of their employees or from employees, on their own behalf, that secure entitlement to social benefits for the contributors, their dependants, or their survivors. The contributions may be voluntary or compulsory.