Institutional units are economic entities that are capable of owning goods and assets, of incurring liabilities and of engaging in economic activities and transactions with other units in their own right.
For the purposes of the system, the domestic institutional units are grouped together into five mutually exclusive institutional sectors composed of the following types of units: non-financial corporations, financial corporations, general government, households, and non-profit institutions serving households. These five sectors together make up the total economy and each sector can be divided into sub-sectors.
Thus companies, whether engaged in commercial non-financial or financial business, are grouped in a different sector from households, even though the latter are in many cases also engaged in commercial production, and from government or other non-market producers such as voluntary agencies.
The classification system is that of the European System of Accounts 2010 (ESA2010). The sectors and sub-sectors distinguished in the present publication are as follows:
S.1 Resident Economy is the sum of all the sectors of the domestic economy.
S.11 Non-Financial Corporations are corporate bodies producing goods and non-financial services on a commercial basis. They include public limited companies, private companies and other corporate forms of business, whether owned by residents (including the government) or non-residents or both. In particular, therefore, Irish subsidiaries of foreign companies and the Irish branches of foreign companies operating in Ireland on a branch basis are included; while the foreign subsidiaries of Irish companies and the foreign branches of Irish companies operating abroad are excluded (they form part of the rest of the world sector S.2). The business activities of large partnerships (quasi-corporations) are in principle to be included here if separate accounts are available for statistical purposes. Under the implementation of ESA2010, entities which operate as holding companies for non-financial corporations are now classified in the financial sector.
Non-financial corporations are sub-divided into foreign-owned (S.11a), domestic (S.11b) and redomiciled (S.11c) in these accounts. These sub-divisions differ from the ESA 2010 classifications of S.11001, S.11002 and S.11003. The sub-sector S.11a corresponds to the ESA 2010 definition of sub-sector S.11003, foreign controlled non-financial corporations. Redomiciled PLCs and domestic NFCs are a part of sub-sector S.11002, national private non-financial corporations, however, following the treatment in the definition of modified GNI, Redomiciled PLCs are separated out in these accounts as S.11c. Government controlled non-financial corporations (S.11001) are included as part of S.11b.
S.12 Financial Corporations are corporate bodies producing financial services on a commercial basis. As with S.11, they can take various legal forms, with a range of ownership arrangements. The financial accounts of the following sub-sectors of S.12 are available to view in Statbank:
S.121 consists of the Central Bank of Ireland.
S.122 + S.123 Other Monetary Financial Institutions consists of credit institutions (banks and building societies), money market funds and credit unions.
S.124 Non-Money Market Investment Funds consists of all collective investment schemes except those classified in the money market sub-sector. Their business is to issue investment fund shares or units which are not close substitutes for deposits, and, on their own account, to make investments primarily in financial assets other than short-term financial assets and in non-financial assets such as real estate.
S.125 + S.126 + S.127 Other Financial Intermediaries (S.125), Financial Auxiliaries (S.126) and Captive Financial Institutions and Money Lenders (S.127). S.125 includes companies engaged in leasing and consumer and other lending, securitisation vehicles, derivative and security dealers, treasury companies and a range of other companies engaged in financial intermediation. S.126 covers companies which provide auxiliary financial services and other financial advisory and consultancy services. They are companies which are principally engaged in activities closely related to financial intermediation but which are not financial intermediaries themselves. S.127 consists of all financial corporations and quasi-corporations which are neither engaged in financial intermediation nor in providing financial auxiliary services. These included trusts, holding companies, special purpose entities, money lenders and certain types of sovereign wealth funds.
S.128 + S.129 Insurance Corporations (S.128) and Pension Funds (S.129). S.128 consists of life and non-life insurance corporations and of reinsurance corporations. S.129 consists of pension funds.
Financial corporations are also subdivided into foreign-owned (S.12a) and domestic (S.12b) in the non-financial account. There are no redomiciled financial corporations, because the activity of the redomiciled entity is, by definition, that of a head office (NACE sector M), not that of a financial service enterprise.
S.13 General Government consists of central and local government. Central government includes the Ireland Strategic Investment Fund, formerly the NPRF, and non-commercial agencies owned and funded by government. This sector does not include commercial state-owned companies, which are proper to S.11 or S.12 as appropriate: the Register of Public Sector Bodies (PDF 595KB) lists these institutional units in other sectors.
S.14 Households consists of persons in their capacity as holders of financial assets or as borrowers. The business assets and liabilities of unincorporated self-employed persons are also mainly reflected in this sector. Large autonomous unincorporated enterprises (quasi-corporations) are in principle included in the non-financial corporations' sector.
S.15 Non-Profit Institutions Serving Households consists of non-profit institutions such as charities, churches and sports clubs and non-commercial agencies not owned by the government.
S.2 Rest of the World. The figures represent the economy’s transactions with and financial claims on and liabilities to non-residents. The conceptual definition is the same as in the balance of payments (BOP) and international investment position (IIP) statistics. In particular, non-residents include foreign subsidiaries of Irish companies, the foreign branches of Irish companies that operate abroad on a branch basis, and the head offices of foreign companies that operate in Ireland on a branch basis. In the financial balance sheets, the figures therefore also correspond to those in the IIP statistics, but with the opposite convention for labelling assets and liabilities: what are shown in the IIP as assets (of Ireland) appear in these tables as liabilities of the S.2 sector, and vice versa. Holdings (by the Central Bank, S.121, as part of Reserve Assets) of Monetary Gold (asset class AF.11) are not considered to be the liability of any sector, and in particular they are not a liability of the rest of the world sector (S.2). Accordingly, the net financial asset position of S.2, which would otherwise be equal to the net financial asset position of the total domestic economy (S.1) with sign reversed, in fact exceeds that amount by the amount of the holdings of AF.11.
S.1N Not Sectorised. In the non-financial accounts an additional residual sector is used to report the amounts that appear as the statistical discrepancy in the National Income and Expenditure GDP accounts, arising from the use of two independent estimates of GDP (from the Income and Expenditure approaches). In each of NIE Tables 3 and 5, the official estimate of GDP is reported as the average of the two measures, and the discrepancy is therefore displayed as half the difference between the two independent estimates (and thus with different signs in the two tables). In the sector accounts it appears as the first balancing item in the sequence (in the gross value added item in the production account), and is then carried through successive accounts via the balancing item. In the final non-financial account, the full amount of the discrepancy then emerges as the unallocated net lending or borrowing in the economy. In the financial transactions account and in the financial balance sheets, no use is made of the 'not sectorised' convention. The amount of the discrepancy therefore contributes to the discrepancies for each sector between the net lending/borrowing from the capital account and the net financial transactions from the financial transactions account.
Sector accounts present a coherent overview of all economic processes and the roles played by the various sectors. Each economic process is described in a separate account. The accounts describe successively production, generation of income, primary and secondary income distribution, final consumption, redistribution by means of capital transfers, capital formation and financing, and end with the financial balance sheets of each sector.
The accounts record economic transactions, distinguishing between uses and resources, (e.g. the resources side of the transaction category D.41 interest records the amounts of interest receivable by the different sectors of the economy and the uses side shows interest payable) with a special item to balance the two sides of each account. By passing on the balancing item from one account to the next a connection is created between successive accounts.
These accounts are compiled for the total economy and include accounts for separate domestic sectors and the rest of the world sector. In this way the sector accounts describe:
• for each economic process the role of each sector, for instance general government in income and redistribution and credit institutions in financing.
• for each sector all economic transactions and their relation with other domestic sectors and the rest of the world.
The successive accounts are explained in more detail below.
1.1 Production Account
The production account shows the transactions that are related to the production process. The output is recorded as a resource, the intermediate consumption as a use. The balance of these two items for the individual sectors is B.1g gross value added at basic prices. The production account of the total economy is the total of the production accounts of the sectors together with the transactions for which there is no sectoral distribution available (taxes and subsidies on products). The balancing item of the production account for the total economy is B.1*g gross domestic product at market prices.
1.2 Generation of Income Account
This account displays the transactions through which gross domestic product at market prices is distributed to labour (compensation of employees), capital (operating surplus) and government (the balance of taxes and subsidies on production). The balancing item for the household sector in this account is called mixed income because, apart from operating surplus, it also contains compensation for work by self-employed persons and their family members. B.2g/B.3g gross operating surplus/gross mixed income is the balancing item for the entire account.
1.3 Allocation of Primary Income Account
This account records, as resources, the income from direct participation in the production process as well as property income received in exchange for the use of land, financial resources and other intangible assets. In addition, this account records the taxes on production and imports received by the government. On the uses side, property income paid is recorded as well as the subsidies paid by the government.
On this account the interest paid and received are recorded excluding imputed bank services (Financial Intermediation Services Indirectly Measured - FISIM1). In the National Accounts, insurance technical reserves are seen as a liability of insurance enterprises and pension funds to policyholders. Therefore, the receipts from investing these reserves are recorded as payments from insurance enterprises and pension funds to households, under D.44 other investment income. The balancing item of this account for each sector is B.5g gross national income; the primary income for the total economy is the national income.
1.4 Memorandum - Entrepreneurial Income Account
This memorandum account is included for the financial corporations and non-financial corporations sectors. In addition to gross operating surplus the account records all the property income transactions involving these two sectors. B.4g entrepreneurial income presents a more comprehensive measure of corporate profitability.
1.5 Secondary Distribution of Income Account
The secondary distribution of income account shows how primary income is redistributed by means of current taxes on income and wealth, social contributions (including contributions to pension schemes), social benefits (including pension benefits) and other current transfers. The balancing item of this account is B.6g gross disposable income. For the consuming sectors (households, NPISH and general government) this item is passed on to 1.6 use of disposable income account. For the other sectors the disposable income is generally equal to saving. This is then passed on to the capital account.
1.6 Use of Disposable Income Account
This account shows the element of disposable income that is spent on final consumption and also the element which is saved. As mentioned above, final consumption only exists for households, NPISH and general government. The net equity of households in pension funds is seen as a financial asset that belongs to households. Changes in pension entitlements need to be included in the saving of households. However, contributions to pension schemes and pension benefits have already been recorded on 1.5 secondary distribution of income account (as social contributions and social benefits). Therefore, an adjustment is needed to include in the saving of households the change in pension funds reserves on which they have a definite claim. This adjustment is called 'adjustment for the change in pension entitlements'. There is no need for a similar adjustment concerning life insurance because life insurance premiums and benefits are not recorded as current transactions. The balancing item is B.8g gross saving.
1.7 External Account
This account records the summarized transactions of the rest of the world sector (S.2), including, on the uses side, exports of goods and services, primary incomes and current transfers receivable. The resources side of this account includes imports of goods and services together with primary incomes and transfers payable. The balancing item is B.12 current external balance which records the net position with the rest of the world.
1.8 Change in Net Worth due to Saving and Capital Transfers
On this account the capital transfers are recorded and combined with gross saving and the current external balance. The resulting balancing item is B.10.1 changes in net worth due to saving and capital transfers.
1.9 Acquisition of Non-financial Assets Account
On this account gross fixed capital formation, changes in inventories, acquisitions less disposals of valuables and non-produced non-financial assets are recorded among the uses. The decline in the value of fixed capital goods caused by consumption of fixed capital goods is recorded among the resources. The balancing item is B.9 net lending (+) or borrowing (-). It shows the amount a sector can lend / invest or has to borrow as a result of its current and capital transactions. It is consistent with the current and capital account balance in the Balance of International Payments.
Table 2 Financial Transactions Account (non-consolidated)
The financial transactions account of a sector provides a detailed review of the change in the financial relations with other sectors of the economy and with the rest of the world. It is therefore a logical extension of the current and capital transactions in the non-financial accounts. This account shows the transactions in assets and liabilities of each sector broken down by type of financial instrument. In the context of the preceding non-financial accounts, the amount a sector can either lend/invest or has to borrow (see balancing item B.9 in 1.9) can be tracked in the financial transactions account. For example, a sector which has a negative B.9 is a net borrower and such borrowings may be financed by reducing financial assets or increasing liabilities, or by some combination of both. Similarly, a sector with a positive B.9, a net lender, may decide to increase financial assets or reduce liabilities, or some combination of both.
The B.9F is the difference between a sector’s transactions in financial assets and liabilities. This is conceptually equivalent to the B.9 shown in the capital account but, due to the statistical discrepancy referred to as the 'net errors and omissions' in the Balance of Payments statistics, these indicators will differ for certain sectors.
Table 3 Financial Balance Sheet (non-consolidated)
This account shows the stock at the end of each year of the financial assets and liabilities of the sector. A change in balance sheet position from year to year can be explained in part by the net transactions during that year. In addition, valuation changes, exchange rate changes and reclassifications can impact on the balance sheet position. Note, however, that estimates are not available of the stock of non-financial assets (property, equipment, valuables, intangible non-financial assets) and it is not therefore possible to estimate the net worth of each sector or of the total economy.
Table 4 Financial Transactions Account (consolidated)
The consolidated financial transactions for each sector appear in Table 4. Consolidation refers to the elimination of transactions which occur between units within the same sector of the economy.
Table 5 Financial Balance Sheet (consolidated)
Table 5 shows the consolidated balance sheet positions for each sector. The end of year stock of financial assets and liabilities is shown excluding stock positions which exist between units within the same sector. This view of the accounts can be very useful when analysing financial instruments such as loan liabilities since the consolidated view removes inter-sectoral balances.
1A more detailed description of the FISIM methodology is available at The Impact of Financial Intermediation Services Indirectly Measured (FISIM) on the National Accounts (PDF 537KB)
Value Added (basic prices)
Value added at basic prices by industry is equal to the difference between output (basic prices) and intermediate consumption (purchasers' prices).
Output covers the value of all goods produced for sale, including unsold goods, and all receipts for services rendered. Output furthermore covers the market equivalent of goods and services produced for own use, such as own account capital formation, services of owner-occupied dwellings and agricultural products produced by farmers for own consumption. The output of such goods is estimated by valuing the quantities produced against the price that the producer would have received if these goods had been sold.
Intermediate consumption includes all goods and services used up in the production process in the accounting period, regardless of the date of purchase. This includes for example fuel, raw materials, semi-manufactured goods, communication services, cleansing services and audits by accountants. Intermediate consumption is valued at purchasers' prices, excluding deductible VAT. For companies that do not need to charge VAT on their sales, the VAT paid on their purchases is non-deductible. It is therefore recorded as a component of intermediate consumption.
Gross Domestic Product / Value Added (market prices)
Value added at market prices of the total economy (GDP) is calculated as follows:
Total value added at basic prices of industries
Balance of taxes and subsidies on products
GDP (value added) at market prices
VAT, taxes on imports, and subsidies on re-exports, cannot be attributed to individual industries. Therefore, GDP at market prices cannot be broken down completely by sector. Value added can be valued gross (including consumption of fixed capital) or net (excluding consumption of fixed capital).
Consumption of Fixed Capital1
Consumption of fixed capital represents the depreciation of the stock of produced fixed assets as a result of normal technical and economical ageing and insurable accidental damage. The consumption of fixed capital is the depreciation of the net stock of produced fixed assets during the year not caused by revaluations because of price changes, new fixed capital formation or discarding of fixed assets.
Compensation of Employees
Compensation of employees is the total remuneration paid by employers to their employees in return for work done. Employees are all residents and non-residents working in a paid job. Managing directors of limited companies are considered to be employees, therefore their salaries are also included in the compensation of employees. The same holds for people working in sheltered workshops. Compensation of employees includes wages, salaries, benefit-in-kind, and employers' social contributions.
Taxes on Production and Imports
Taxes on production and imports are compulsory payments to the government and the European Union (EU), which are related to production, imports, and to the use of production factors. Taxes on production and imports are classified into taxes on products and other taxes on production.
Taxes on Products
Taxes on products are related to the value or the volume of products. They are levied on domestically produced or transacted products and on imported products. Taxes on products are classified into taxes on domestic products, taxes on imports, and VAT.
Other Taxes on Production
Other taxes on production include all taxes on production paid by producers not related to the value or volume of products produced or transacted. Examples are rates and refuse charges paid by producers.
Subsidies are current payments from the government or the EU to producers, with the objective to influence output prices, employment, or the remuneration of production factors. Subsidies are distinguished between subsidies on products and other subsidies on production.
Subsidies on Products
Subsidies on products are related to the value or the volume of products. They can be distinguished between subsidies on domestic products and subsidies on imports.
Subsidies on Domestic Products
Subsidies on domestic products are related to the value or the volume of domestically produced or transacted products. Examples are EU subsidies on food products and public transport subsidies.
Subsidies on Imports
Subsidies on imports are related to the value, or the volume, of imported products that are re-exported without undergoing any processing. These are mainly subsidies on the re-exports of dairy products. Subsidies on imports cannot be broken down by industry.
Other Subsidies on Production
Other subsidies on production include all subsidies on production paid to producers not related to the value or volume of products domestically produced or transacted. These are mainly wage subsidies.
Operating Surplus/Mixed Income
Gross operating surplus (GOS) at factor cost is the balance that remains after deducting from the value added (basic prices) the compensation of employees and the balance of other taxes and subsidies on production. The operating surplus of the self-employed is called mixed income because it also contains compensation for work by the owners and their family members. Net operating surplus/mixed income remains after deducting consumption of fixed capital from gross operating surplus/mixed income.
Throughout the accounts GOS is given at factor cost, except in figure 2.3 and table ISA05, where it is gross operating surplus at basic prices. In this figure and table where we give a NACE breakdown of gross operating surplus, it is factor cost GOS plus taxes (D.29) less subsidies (D.39), giving basic price GOS. This simplifies the presentation of the breakdown of basic price Gross Value Added into just two components: compensation of employees and basic price Gross Operating Surplus.
Incomes that accrue from lending or renting financial or tangible non-produced assets, including land, are defined as property income.
Interest is accrued for the accounting period (i.e. the calendar year in these accounts) for which the underlying claim or liability has been in place. Actual payments or receipts of interest are adjusted to eliminate the margins that represent the implicit charges made by financial intermediaries, i.e. Financial Intermediation Services Indirectly Measured (FISIM). The amounts of interest paid by borrowers to financial intermediaries must be reduced by the estimated value of the charges payable and the amounts of interest receivable by depositors must be increased. The value of the charges is treated as payments for services rendered by financial intermediaries to their customers and not as payments of interest.
FISIM represents the margin which banks withhold for themselves in paying interest on deposits or charging interest on loans. In the case of household deposits with financial corporations, it is calculated as the difference between a reference rate and the average interest rate multiplied by the stock of deposits held by households. In the case of loans to households, it is calculated as the difference between the reference rate and the average loan rate multiplied by the stock of loans held by households.
Distributed Income of Corporations
Dividends are a form of property income received by owners of shares to which they become entitled as a result of placing funds at the disposal of corporations. Dividends are recorded gross, before deduction of dividend tax. This applies also for the taxes on dividends to and from the rest of the world. Dividends are recorded at the moment they are made payable.
Reinvested Earnings on Foreign Direct Investment
Reinvested earnings on foreign direct investment are calculated as follows:
Operating surplus of the foreign direct investment enterprise
Property income and current transfers receivable
Property income and current transfers payable, including dividends (actual remittances) to foreign direct investors and any current taxes payable on income and wealth of the foreign direct investment enterprise
Reinvested earnings on foreign direct investment
Other Investment Income
In the national accounts, pension and life insurance provisions are seen as a liability of insurance enterprises to policyholders. Therefore, the investment revenues on these provisions are booked as payments from insurance enterprises to households. Subsequently, households reinvest these revenues as imputed contributions to pension funds and life insurance companies (part of D.61). In the financial accounts, the latter transaction is recorded as a component of net equity in life insurance and pension funds reserves.
Rent on land refers to the rent received by a landowner from a tenant and does not include the rentals of buildings and of dwellings situated on it.
National Income/Primary Income
This includes factor income flows to the rest of the world, i.e. wages and salaries to non-resident employees, interest and dividends to non-resident investors, retained profits of foreign owned subsidiaries, and branch profits. Income earned abroad is attributed to Ireland. National income is the sum of GDP and net primary income from the rest of the world.
Current Taxes on Income and Wealth
Current taxes on income and wealth of corporations consist of corporation tax and dividend tax. These taxes are based on the profits of corporations. Current taxes on income and wealth of households include all taxes that are periodically imposed on income and wealth, such as income tax, capital gains taxes, and other taxes on the net wealth of individuals. Non-periodical levies, such as inheritance tax are defined as capital transfers (D.9).
Several types of taxes are simultaneously seen as taxes on production and imports when imposed on producers, and as taxes on income and wealth when imposed on consumers. For instance, motor vehicle tax is a tax on production when it is imposed on company cars and a tax on income and wealth when imposed on cars for private use. The treatment of dividend tax results from the recording of dividends. Because dividends are recorded gross, i.e. before deduction of dividend tax, dividend tax is in all cases recorded at the receiving sector. The same applies for the dividend tax to and from the rest of the world.
Social contributions include social security contributions, private social contributions (i.e. contributions to pension schemes) and imputed social contributions. Employers, employees, self employed persons and non-active persons pay these contributions. Actually, the employers' part is paid directly to the insurers. However, in the national accounts, the employers' contributions are considered to be part of primary income of households (i.e. the income from direct participation in the production process). Therefore, in the first instance, these contributions are treated as payments by employers to households, as compensation of employees (part of D.1), who are deemed to pay them to the insurers in the income account (part of D.61).
• Contributions to pension schemes are based on collective contracts with pension funds and life insurance companies. The contributions are calculated as follows:
Actual contributions to pension schemes (gross)
Compensation of insurance services (part of consumption of households)
Supplement from investment income
Contributions to pension schemes
The supplement from investment income is part of the property income attributed to insurance policyholders that relates to pensions.
• Other private social contributions: These are contributions paid to private social schemes excluding pension schemes. The contributions to these schemes can be derived in the same way as the contributions to pension schemes.
• Imputed social contributions: Imputed social contributions represent the counterpart to the 'unfunded employee social benefits' (less any employees’ social contributions) paid directly by employers to their (former) employees. It is necessary to introduce this imputation because the direct payments are recorded twice. Firstly they are recorded as employers’ social contributions (part of the compensation of employees). Secondly they are recorded as social benefits.
Social benefits are transfers to households, intended to relieve them from the financial burden of a number of risks or needs, such as sickness, invalidity, disability, old age, dependants, and unemployment. Social benefits are classified as social security benefits, social assistance benefits, private social benefits (i.e. pension benefits) and unfunded employee social benefits.
Social security benefits: Social security benefits are paid by social security funds in the field of unemployment, disability, sickness, old age, etc.
Social assistance benefits: Social assistance benefits are payments of the central and local government to households, for which no quid pro quo by the beneficiary is expected. Children's allowance is a social assistance benefit.
Pension benefits: Pension benefits are private social benefits in the field of old age, survivors, or disability, paid by pension funds and life insurance companies.
Unfunded employee social benefits: These social benefits are directly paid by employers to their (former) employees, without involving any social security fund. Examples are some civil service pension provisions.
Non-Life Insurance Premiums
Non-life insurance premiums comprise both the actual premiums payable by policyholders to obtain insurance cover during the accounting period and the premium supplements payable out of the property income attributed to insurance policy holders, after deducting the compensation of insurance services. These premiums provide cover against damage as a result of fires, floods, crashes, theft, violence, accidents, sickness, etc.
As the compensation of insurance services of non-life insurance enterprises is calculated by subtracting the claims from the premiums (actual premiums and premium supplements), it follows that the total non-life insurance premiums must equal the total non-life insurance claims of the insurance enterprises.
Non-Life Insurance Claims
Non-life insurance claims represent the amounts which insurance enterprises are obliged to pay in settlement of injuries or damage as a result of fires, floods, crashes, collisions, theft, violence, accidents, sickness, etc. The claims are a resource of the ultimate beneficiary, who is not necessarily the policyholder, and therefore while total net premiums equal total claims, the distribution by sector varies between these transactions.
Other Current Transfers
This transaction includes all transactions not mentioned before, which do not have the character of a capital transfer. This concerns particularly the current transfers of general government.
Disposable income is the balancing item of the secondary distribution of income account. It shows for each sector its disposable income, which remains after the redistribution of primary income by current transfers (compulsory or non-compulsory) between the sectors. Total disposable income of all resident units is called disposable national income, which is equal to national income plus net current transfers received from the rest of the world.
Final Consumption Expenditure
Final consumption expenditure consists of expenditure incurred by resident institutional units on goods and services that are used for the direct satisfaction of individual needs or wants, or the collective needs of members of the community. Final consumption expenditure may take place on the domestic territory or abroad. Final consumption expenditure exists only for households, NPISH and general government.
Final Consumption Expenditure by Households
Final consumption expenditure by households includes the following borderline cases:
Non cash expenditure arising from:
• Income in kind, such as accommodation, food, clothing etc.
• Services of dwellings, which are occupied by the owners themselves and without any actual rent payments. These services are valued by applying the rents of similar dwellings.
Goods and services produced for own use, as in agriculture. The value of these products is calculated by applying the market prices for similar products.
It also includes durable consumption goods such as private cars, household appliances, furniture, and clothing. However, the purchases of dwellings by households are not seen as final consumption, but as fixed capital formation by households.
Final Consumption Expenditure by NPISH
Final consumption expenditure by NPISH consists of all the non-market output of this sector, excluding the own account capital formation.
Final Consumption Expenditure by General Government
Final consumption expenditure by general government results from the specific recording of government output. Only a small part of government output is actually sold (market output). The larger part of government output is paid out of public funds and provided free of charge to all sectors (non-market output).
The government is, by convention, considered to be the consumer of its own output, because the allocation of government output to different users is problematic. In the absence of market prices, output and final consumption expenditure by general government is calculated from the production costs as follows:
Compensation of employees
Consumption of fixed capital
Other taxes on production (paid by the Government)
Other subsidies on production (received by the Government)
Output (basic prices)
Output (basic prices)
Sales (= market output)
Own-account capital formation
Social benefits in kind via market producers
Final consumption expenditure by the Government
Actual Individual Consumption
Final consumption expenditure by households refers to expenditure on consumption goods and services by households. In contrast, actual individual consumption refers to the acquisition of consumption goods and services by individuals. The difference between these concepts lies in the treatment of certain goods and services financed by the Government or NPISH, but supplied to households as social transfers in kind. By convention, all final consumption expenditure by NPISH, households, and most of the final consumption expenditure by the government in the field of education, health, social security and welfare, sport and recreation and culture, are treated as individual consumption. So actual individual consumption is:
Final consumption expenditure by households
Final consumption expenditure by NPISH
Individual consumption by the government
Actual individual consumption
Actual Collective Consumption
Services for collective consumption (collective services) are provided simultaneously to all members of the community or all members of a particular section of the community. Actual collective consumption consists, in particular, of government expenditures on services in the field of:
• Management and regulation of society
• Security and defence
• Law and order, legislation and regulation
• Public health
• Management of infrastructure and economic development.
Adjustment for the change in Pension Entitlements
Since households are treated in the financial accounts as owners of the pension funds reserves, an adjustment item is necessary to ensure that any excess of contributions to pension schemes over pension benefits does not affect household saving:
Contributions to pension schemes
Adjustment for the change in pension entitlements
Saving is the difference between disposable income and final consumption expenditure. The adjustment for the change in pension entitlements is added to disposable income in this calculation.
The household saving ratio is gross household saving expressed as a percentage of total resources, i.e. the sum of gross household disposable income and the adjustment for the change in pension entitlements. Household saving represent that part of disposable income that is not spent on final consumption of goods and services. The use of this saving either for financial investment or debt reduction is recorded in the financial accounts.
Exports and Imports (merchandise)
Exports and imports are valued f.o.b. (free on board) for national accounts purposes. While imports are valued c.i.f. (cost, insurance and freight) in the official external trade statistics, adjustments are made to reflect an estimated f.o.b. valuation. These adjustments result from the application of different c.i.f./f.o.b. conversion ratios to the values of imports from within the European Union and from outside the European Union.
In addition, and in line with EU and ECB requirements, merchandise imports from within European Union member states are compiled on the basis of country of consignment rather than country of ultimate origin (as was the case formerly). Some adjustments are also made to the official merchandise trade statistics to conform to the balance of payments (BOP) change of ownership and market valuation principles.
In addition, certain exports sales of software licences are included in national accounts and BOP service exports and not in national accounts and BOP merchandise exports. The BOP merchandise figures now include the estimated values of (unrecorded) retail exports of fuel to Northern Ireland and of unrecorded imports of goods for personal consumption from Northern Ireland and elsewhere.
Exports and Imports of Services
Exports and imports include various categories of service types: transport, tourism and travel, communications, insurance services, financial services, computer services, royalties and licences, business services, etc. Some specific points of note are:
• Because of the presentation of merchandise imports on a f.o.b. (rather than c.i.f.) basis, the freight element of the c.i.f. to f.o.b. adjustment is included in transport.
• The value of insurance services provided to non-residents by resident insurers (credit) is estimated as the value of direct and supplementary premiums earned, less the value of claims payable less increases in the actuarial element of insurance technical reserves.
• Exports and imports of computer software that is embedded in hardware or carried on other physical media are not included in computer services but under merchandise. Sales and purchases of software transmitted electronically, as well as exports of certain software licences, are recorded under computer services.
Current External Balance
The surplus/deficit on the current account of the balance of payments is equivalent to this item. It consists of:
• Net exports, the difference between exports and imports of goods and services
• Net primary income from the rest of the world: compensation of employees, taxes on production and imports, subsidies and property income, such as interest and dividends
• Net current transfers from the rest of the world, such as dividend tax, social security benefits, and other current transfers.
Capital transfers are payments for which no quid pro quo by the beneficiary is expected. They burden the wealth of the payer, or are meant to finance fixed capital formation or other long-term expenditures of the receiver. Capital transfers can be classified into investment grants, capital taxes, other capital transfers and imputed capital transfers.
Investment grants are capital transfers which are intended to finance fixed capital formation of other institutional units.
Capital taxes are compulsory, non-periodical payments to the Government. They are based on the wealth of taxable persons. In practice, they only cover the inheritance tax. Taxes on net wealth of individuals are imposed periodically and are therefore recorded as taxes on income and wealth.
Other Capital Transfers
Other capital transfers are capital transfers that cannot be characterised as investment grants or as capital taxes.
Fixed Capital Formation
Fixed assets are produced tangible or intangible assets that are used in the production process for more than one year. Gross fixed capital formation consists of producers’ acquisitions less disposals of fixed assets:
Tangible fixed assets include the following:
° Dwellings and non-residential buildings
° Civil engineering works
° Transport equipment
° Machinery, equipment and computers
° Cultivated assets (trees and livestock)
° Missile systems and other military weapons.
Intangible fixed assets include the following:
° Mineral exploration
° Computer software
° Research and Development
° Entertainment, literary or artistic originals
° Other intangible fixed assets.
Major improvements to land (reclamation, land consolidation and land preparing for building).
Fixed capital formation also includes:
• Work in progress of construction, such as unfinished dwellings, non-residential buildings, and civil engineering works, recorded as fixed capital formation of the client.
• Military structures and equipment, similar to those used by civilian producers, such as airfields and hospitals.
• Improvements to existing fixed assets that go well beyond the requirements of ordinary maintenance and repairs.
• Transfer costs of fixed assets, such as conveyance fees and costs made by real estate agents, architects and notaries.
Changes in Inventories
Inventories consist of all raw materials, semi-manufactured goods, work in progress and final products that producers have in stock at a certain moment, held both at home and abroad. Changes in work in progress are in general considered to be changes in inventories. However, work in progress in construction is seen as fixed capital formation of the client and not as changes in inventories of the construction industry. This concerns unfinished buildings and civil engineering works.
Increases in inventories occur when goods are produced (or purchased) but not yet sold (or used) in the year under review. Decreases in inventories occur when goods are withdrawn from existing inventories in order to be sold or used in the production process.
The assessment of the changes in inventories is done in such way that gains or losses on inventories caused by price changes are avoided. With this objective, the initial and final stock of each good is valued at the same price – namely, raw materials at the average purchase price in the period, final products at average sales price and work in progress at the average cost price. This valuation method prevents output, and subsequently value added, from being influenced by changes in prices of stocks during the period under review.
Acquisitions less Disposals of Valuables
This transaction consists of the acquisitions less disposals of precious stones, non-monetary gold, antiques, art objects, and jewellery that are acquired and held primarily as stores of value. In the national accounts this transaction is mostly combined with changes in inventories.
Acquisitions less Disposals of Non-Produced Assets
Acquisitions less disposals of non-produced assets mainly consist of purchases of assets such as licences or marketing assets (like trademarks). This item also includes sales of land by landowners such as farmers to investors in dwellings and non-residential buildings. The valuation of sales and purchases of land is exclusive of VAT and transfer costs, which are included in fixed capital formation.
Net Lending (+) or Net Borrowing (-)
Net lending (+) or net borrowing (-) shows the amount a sector can lend/invest, or has to borrow, given the current and capital transactions in the sector accounts.
1Consumption of fixed capital automatically becomes available as a by-product of the calculation of the stock of fixed assets, which are computed using Perpetual Inventory Method, see Estimates of the Capital Stock of Fixed Assets.
2A more detailed description of the FISIM methodology is available at The Impact of Financial Intermediation Services Indirectly Measured (FISIM) on the National Accounts (PDF 537KB)
Financial instrument classes
The scope of the tables is restricted to financial assets and liabilities: in other words, fixed assets and intangibles are not included, except when they are held by residents abroad or by non-residents in Ireland (see AF.5 below). The financial instrument classes distinguished are as follows:
AF.1 Monetary Gold and Special Drawing Rights (SDRs). Monetary gold (AF.11) includes all gold which is not intended for industrial purposes and not held in the form of valuables. Special drawing rights (SDRs) (AF.12) consist of the international reserve assets created by the IMF. Together these instruments form part of the official external reserves held by the Central Bank of Ireland. In the financial accounts statistics gold is recorded only on the assets side of the table, as it is not considered to be the liability of any sector.
AF.2 Currency and Deposits. This category includes currency (AF.21), consisting of notes and coins in circulation which are commonly used to make payments. As a liability, this item only exists for general government (issuing of coins), monetary financial institutions (Central Bank of Ireland issuing of bank notes) and the rest of the world (foreign currency). The asset is shown in the sector which is the holder of the currency.
The category also includes transferable deposits (AF.22), i.e. deposits that are immediately convertible into currency or transferable without restriction; and all other deposits (AF.29). Both are shown as an asset of the holder and the liability only exists for the deposit-taking sectors - mainly monetary financial institutions, but also the rest of the world and general government in respect of small savings schemes.
AF.3 Securities Other Than Shares. This category covers Debt Securities other than Equities which includes both Short-Term (AF.31) and Long-Term (AF.32). Short-term are all securities with a maximum term of one year.
AF.4 Loans. This category covers all credits which do not have the characteristics of deposits. Loans granted to monetary financial institutions are, by definition, included in the deposit category (AF.2). Short-Term Loans (AF.41) have an original maturity of up to one year or are repayable on demand. Long-Term Loans (AF.42), i.e. loans with an original maturity of more than one year, mainly include mortgage loans and long-term consumer credit.
AF.5 Shares and Other Equity. These are claims which are fully or partly entitled to a share in profits of a corporation or to a share in net assets in the event of liquidation. The category includes shares (AF.51), both quoted (AF.511) and unquoted (AF.512), and other forms of equity (AF.519). Other forms of equity include cross-border investments in unincorporated businesses (branch operations) or fixed assets (such as property). Shares and Other Equity also include shares in mutual funds and similar types of collective investment scheme (AF.52).
AF.6 Insurance, Pension and Standardised Guarantee Schemes includes non-life insurance technical reserves (AF.61), life insurance and annuity entitlements (AF.62), pension entitlements (AF.63), claims of pension funds on pension managers (AF.64), entitlements to non-pension benefits (AF.65) and provisions for calls under standardised guarantees (AF.66).
AF.7 Financial Derivatives and Employee Stock Options covers derivatives (AF.71) and employee stock options (AF.72). Employee stock options are agreements under which an employee has a right to purchase shares of their employer’s stock at a stated price under an agreed timeframe.
AF.8 Other Accounts Receivable/Payable. This covers trade receivables and payables (AF.81) and all other financial assets and liabilities (AF.89).
BF.90 Net Financial Assets. This is calculated as total financial assets less total liabilities. Since it excludes non-financial assets (property, equipment, durable goods, intangible non-financial assets etc), it is not a measure of net worth.
B9.F Net Financial Transactions. This is calculated as the total net transactions in financial assets less the total net transactions in liabilities. In principle it should equal the net lending/borrowing (B.9) item from the non-financial accounts. However, as a consequence of using various sources, statistical discrepancies between B.9 and B9.F will generally occur.
Interpreting the balance sheets of the financial sectors
The significant involvement of Irish companies, such as banks and other financial companies, in international financial transactions (sectors S.124 and S.125+S.126+S.127 in particular) tends to result in those entities having very large foreign assets and liabilities relative to other measures of the economy, such as GDP (This is in contrast to other economies which engage less heavily in international financial transactions). In most cases the foreign liabilities of a given sector are, to a large extent, offset by foreign assets, so that the net foreign position of that sector is not out of line with corresponding sectors in a similar economy.
Valuation principles in the financial accounts
In general, balance sheet positions are reported at end-year market value where they are available or can be estimated, and transactions are reported at the actual value of the transaction. This applies in particular to marketable securities (AF.3 and part of AF.5) on both the assets and liabilities sides. However, unquoted equity assets and liabilities (part of AF.5) are in general reported at book value. Foreign assets and liabilities are reported in general on the same basis as in the CSO’s International Investment Position statistics. The liabilities under Insurance Technical Reserves of life insurance companies and, especially, pension funds (and the corresponding assets of policy holders and fund members) are estimated primarily from the values of the assets of the companies and the funds, and are not based on the actuarial liabilities to policy holders and fund members.
The values reported for the net financial assets of each sector must be assessed in the light of these differences in valuation practice. Firstly, the absence of estimates of the non-financial assets, such as property, means that the net financial assets can not be taken as an estimate of the net worth of the sector. For the household sector, for example, the net worth will clearly be much larger than the (positive) net financial assets, as much of the wealth of households is invested in property and durable goods. This is also true, but to a proportionately lesser extent, for the corporate sectors, especially for the non-financial corporate sector. In general, for these corporate sectors, the net financial assets are typically negative, partly for this reason, but an additional factor must also be taken into account. The net financial assets of a company as reported in these results will be negative to the extent that the market value of its shares, if this is what is used in the account, exceeds the net asset value as reported in its balance sheet. For the majority of indigenous non-quoted companies the equity liability is captured essentially on the basis of their net asset value as reported in their balance sheet.
Tables 2.1 to 2.4 are given on a non-consolidated basis for both sectors and sub-sectors. In other words, a liability of a unit in a sector to another unit in the same sector or sub-sector (such as a deposit received by a bank from another bank) is reported in the liabilities table for the sector of the reporting unit and in the assets table for the lending sub-sector and sector (in this example, in the tables for S.122+S.123 and S.12). A consequence of this is that the aggregate sector S.12 (financial corporations) and the groupings of sub-sectors within S.12 (S.122 + S.123, and S.125 + S.126 + S.127) are also not consolidated. The results for S.1 (total economy) are by definition not consolidated; in other words, the entry for any instrument for S.1 is the arithmetic total of the sectors S.11, S.12, S.13 and S.14/15.
Tables 2.5 to 2.8 give the accounts on a consolidated basis which means the transactions or positions which occur between units within the same sector of the economy are eliminated. In the example used in the previous paragraph, the deposit received by a bank from another bank will be excluded from sector S.122+S.123 in both the assets and liabilities table. Each sector/sub-sector (S.11, S.121, S.122+S.123, S.124, S.125+S.126+S.127, S.128+S.129, S.13 and S.14/15) is given on a consolidated basis but it is important to note that the overall S.12 total is not fully consolidated and therefore the aggregate S.12 is not the arithmetic sum of its consolidated sub-sectors.
Data sources and compilation of the financial accounts statistics
Financial Accounts statistics are in general compiled by assembling and combining statistics drawn from other primary published and unpublished sources. The main sources currently used are the CSO Balance of Payments and International Investment Position statistics including the underlying surveys, and published Central Bank statistics, primarily money and banking statistics. Other sources used include government administrative and statistical records, including those of state-owned companies and accounts filed with the Companies Registration Office and the statistical reports of representative bodies.
The first phase of compilation involves assembling from these sources the asset and liability positions of each sector for each instrument class at the end of each year and, as far as possible, the net transactions in the year. Where transactions estimates are not available in the primary source, estimates are made by removing from the change in position the estimated effect of revaluations, due for example to price movements in securities, or to exchange rate movements in the case of items denominated in foreign currencies. In the early stages of the work, the positions and transactions are then further allocated to the extent possible to counterpart sectors, based on original information or on preliminary allocation proportions. For many cells in the tables this process yields two estimates, one from each side, for example deposits of government with resident banks, reported as claims on banks in the government statistics and as liabilities to government in the banking statistics. Almost invariably the two estimates differ to some extent, because of differences in such factors as coverage, valuation and timing. Furthermore, for many other cells, only a single-sided estimate is available. This is the case in particular for the Household Sector, for which no direct or primary data are available, and which must be compiled entirely on the basis of counterpart data and estimations.
In the second phase, discrepancies are identified and the tables are balanced. This is done by a mixture of mechanical and judgemental processes to bring about compliance with several accounting identities and conventions. A key requirement is that the sum of all holdings by residents and non-residents of financial assets of a given class should be equal to the sum of all liabilities of that class (also by residents and non-residents). In this operation, priority is given to retaining, as far as possible, consistency with other well-based statistics such as official banking and International Investment Position and Balance of Payments statistics, and government financial statistics. Some of the imbalances that come to the surface inevitably therefore get allocated to sectors or instruments for which the primary statistics are less well based, particularly S.125+S.126+S.127 (other financial intermediaries) due to its relatively large size.
Annual financial accounts, published by the CSO, and quarterly financial accounts published by the Central Bank, show differences across the sectors of the economy. These differences arise from the classification and revision practices adopted by each institution following the introduction of ESA 2010. Both institutions are working closely to ensure a consistent approach in future publications.