Methodology

The European GFS and EDP statistics are based on the concepts and definitions set out in the European System of Accounts (ESA 2010). ESA 2010 is derived from and broadly consistent with the latest edition of the worldwide System of National Accounts (2008 SNA).

ESA 2010 is a legislative text and at the same time a conceptual framework. This conceptual framework is supplemented with additional guidance documentation in the form of:

Procedures for the development and implementation of methodology of EDP data

Eurostat provides additional methodological guidance on the accounting rules for the EDP statistics and the GFS, complementing or interpreting the general rules of ESA 2010.

The main aim of the underlying PDF document is to establish stable and appropriate procedures related to EDP and GFS methodological work, with a specific focus on clarity, transparency and timeliness. The document specifies the different types of methodological guidance in addition to ESA 2010, the consultation process for each type of guidance, as well as their implementation.

Key concepts for measuring government deficit and debt

ESA 2010 is a system for producing macro-economic statistics. As such, it records the economic reality of transactions rather than their legal form. This can involve looking through complex financial operations to understand who bears the financial risks and who has control over the rewards, irrespective of how the contracts have been constructed.

In the context of measuring government deficit and debt, this search for the economic reality affects such matters as the following:

  • The classification of units: 
    Is a unit included inside or outside the government sector? The government deficit and debt are primarily affected by units classified to the government sector. This is determined by considering whether or not a unit is controlled by government and whether it is a non-market or market (financed mainly by its own sales) unit. Privately controlled market institutional units are not included in the government sector.
  • The timing of transactions:
    ESA 2010 records transactions on an accrual basis, i.e., when the economic activity takes place, rather than when the cash is paid. Such differences may be large, and therefore significant for the government deficit.
  • The nature of a transaction:
    ESA 2010 distinguishes non-financial transactions such as consumption, wages and salary, subsidies or grants to cover losses, which directly affect the government deficit; and financial transactions as e.g. the acquisition of financial assets or the repayment of debts, which do not.