Manual on Government Deficit and Debt – Implementation of ESA 2010 – 2022 edition
Methodology
Conceptual framework
The European government finance statistics (GFS) and excessive deficit procedure (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 is broadly consistent with the latest edition of the worldwide System of National Accounts (2008 SNA). ESA 2010 is both a legislative text and a conceptual framework.
This conceptual framework is supplemented with additional guidance documentation:
- Manual on government deficit and debt - Implementation of ESA 2010
- Eurostat decisions
- guidance notes and clarifications
- bilateral advice to EU countries
Methodological guidance
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 procedures for the development and implementation of the methodology underpinning the EDP data describe the 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 imply 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 order to correctly describe the economic reality, it is necessary to consider the following:
Is a unit included inside or outside the government sector?
The government deficit and debt are primarily affected by units classified in the government sector.
This is determined by considering whether a unit is controlled by the 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.
ESA 2010 records transactions on accrual basis, meaning 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.
ESA 2010 distinguishes between
- non-financial transactions, such as intermediate consumption, wages and salaries, subsidies or transfers to cover losses of public corporations, which directly affect the government deficit
- financial transactions, as, for example, the acquisition of financial assets or the repayment of debt, which do not directly affect the government deficit.
Manuals
National accounts are an integrated accounting framework based on the concepts and definitions set out in the ESA 2010. This framework describes economic events for all units of the economy in a structured way, grouped within sectors according to their characteristics. As such, it is the reference point for all macroeconomic statistics.