Background Notes

Introduction

This release comprises the latest official publication by CSO of quarterly Government Finance Statistics (GFS) for the period Q1 2017 to Q2 2020.

The data published in this series are consistent with General Government Deficit and Debt levels reported at end September 2020 under the EU regulation governing the Excessive Deficit Procedure. Government accounts are compiled in the EU according to the European System of National Accounts framework ESA 2010.

The tables provide detailed revenue, expenditure and balance sheet data for general government. These data are also available on CSO Statbank .

The full suite of GFS tables are also available on the CSO Website. 

Data for all EU Member States are available on Eurostat's database.

Methodological changes to data

Methodological review and revision of compensation of employees (ESA 2010 code D.1):

The National Accounts IT (NAIT) project has enabled Government Accounts Compilation and Outputs (GACO) Division to review, develop and streamline its data sources and compilation methods. In parallel with this ongoing work, a new Revenue data source for compensation of employees, i.e. pay, (ESA 2010 code = D.1) has become available to the CSO. Pay As You Earn Modernisation (PMOD) is a more comprehensive and timely data from the Revenue Commissioners. This “live” monthly data is processed within the NAIT system. The vastly improved timeliness of this data leads to more real time quarterly estimates of D.1 and provides for consistency between annual and quarterly estimates.  The sub-components of D.1 were revised in this methodological review - Imputed Employer Pension Contributions (D.1221); Imputed Employer Non-Pension Contributions (D.1222) for the whole economy and government employee social contributions. The historical quarterly profile has been revised in line with public service numbers using the Denton method. This review has culminated in a robust method for the compilation of the components of D.1 for General Government (2011-2019) that is consistent with estimates of D.1 for other sectors of the economy.  

Revisions to data

Revisions to general government balance

Approved Housing Bodies: Since March 2020 data for three Approved Housing Bodies newly classified into the local government sector has been incorporated into the data for 2016-2020. 

Expenditure under the 'Early Childhood Care and Education Programme' (ECCE) was reclassified from P.2 to D.632 from 2011 onwards. Other changes to the D.632 figures reflect updated data for local authority housing payments and free fees payments to universities.

Revisions to general government debt

Estimates of the general government debt have been revised since April 2020.  Revisions are due to improved compilation processes and, for recent years, also reflect the availability of more up-to-date and detailed data sources.

Transactions of note Q2 2020 (Covid-19 measures)

In early March the Government implemented a number of fiscal measures in response to the Covid-19 pandemic. The table below sets out the preliminary impact of these measures in the year to date and also the ESA 2010 category assigned to each. These figures will be updated as more detailed accounts become available.

Covid-19 measures included in general government expenditure, € billion

Other supports implemented by Government have a less visible impact on the GFS aggregates:

• Commercial rates for businesses impacted as a result of the public health restrictions were waived for an initial 3-month period. The cost to local authorities is met by the Exchequer, resulting in an intra-government transfer between central government and local government. The visible impact is a reduced level of D.29 tax revenue.
• Employers affected by trading restrictions can avail of an arrangement to ‘warehouse’ VAT and employer PAYE liabilities incurred during the period. The accrual concept in ESA 2010 would require that such receipts, once paid, are recorded in Q1/Q2 2020, as appropriate. However at this stage robust data on which to base an estimate is not available. The CSO will continue to explore this data and, as a result, may update revenue in due course.
• The Covid-19 Credit Guarantee Scheme will facilitate up to €2 billion of lending to eligible businesses. The initial impact is a contingent liability of general government.
• The Ireland Strategic Investment Fund will invest up to €2 billion of its existing portfolio, through a new sub-portfolio - pandemic stabilisation and recovery fund – in medium and large enterprises.
• The ECB has made a recommendation to all euro-area banks that dividends are not paid to shareholders. The State has a shareholding in both AIB and Bank of Ireland and, as a result of the recommendation, D.42 (dividend revenue) is lower than last year.

Movements of note in the balance sheet, Q2 2020

The value of the State's assets in Equity and Investment Fund Shares (AF.5, Table 6) stood at €32.6 billion, representing a year-on-year fall of €2.7 billion. Over this period, the drop in value was composed of a reduction in holdings of this asset class of €1.0 billion (Table 5), together with a loss in value due to market fluctuations of €1.7 billion (Tables 5 and 6). These market losses related mostly to movements in the value of shares held in Irish Banks.

On the other side of the balance sheet the State's liabilities grew by €14.3 billion during the second quarter of 2020. This was mainly a result of increased borrowing through the issuance of government bonds (AF.3, Tables 5 and 6) to help support the fiscal impact of the Government's responses to Covid-19. There was a lesser amount of offsetting debt reduction as the State continued to pay off the bilateral loan with the UK (AF.42, Tables 5 and 6).
Largely in response to the pandemic, further short-term borrowing of €8.5 billion (F.31+F.41, Table 5) was undertaken in the second quarter.  

GDP figures used in publication

The GDP figures used in this publication is based on the Quarterly National Accounts released on 7 September 2020.

Population estimates used in publication

The population estimates used in calculating the debt per capita data in Figure 3 are the current year's mid-April estimates of population except for the year 2017 where the 2016 census of population figure is used (see Statbank table PEA15: Annual Population Change by Component and Year).

Government Finance Statistics – concepts and definitions

GFS form the basis for fiscal monitoring in Europe, in particular in relation to the Excessive Deficit Procedure (EDP).

In addition to the legally binding accounting rules set out in ESA2010 the Manual on Government Debt and Deficit (MGDD) provides further implementation guidance in the context of GFS.

EU Member States are required to report government deficit/surplus and debt data biannually under the EDP - before 1 April and 1 October in year N, for years N-4 to N-1 calendar years, as well as a forecast for the current year. The data are reported in harmonised tables, which provide a consistent framework for the presentation of this data by Member States. The tables provide a structure for linking national budgetary aggregates with government deficit and debt.

In addition to the EDP transmission programme, detailed statistics on government revenue and expenditure are also provided to Eurostat under the ESA transmission programme. For quarterly data the main tables reported are:

Table 0801 Quarterly non-financial accounts by sector

Table 2500 Quarterly short term statistics (revenue and expenditure) for general government

Table 2700 Quarterly financial accounts for general government

Table 2800 Quarterly government debt (Maastricht debt) for general government

These data are available on the Eurostat website.

Definition of general government and its subsectors

The general government sector of the economy, is defined in ESA2010 paragraph 2.111: as “institutional units which are non-market producers whose output is intended for individual and collective consumption, and are financed by compulsory payments made by units belonging to other sectors, and institutional units principally engaged in the redistribution of national income and wealth.” General government comprises the sub-sectors central government (S.1311), state government (S.1312 – which does not apply in Ireland), local government (S.1313), and social security funds (S.1314 – which does not apply in Ireland)

General government balance is the standard European measure of the fiscal balance, which is used to monitor compliance with the Stability and Growth Pact obligations.

This measure is by definition equal to both Total Revenue (TR) less Total Expenditure (TE), and Net Acquisition of Financial Assets less Net Incurrence of Liabilities as shown in the GFS release.

A listing of some of the main items included in this release is shown below.

General government gross debt (GG debt) is defined in the EU regulations implementing the Maastricht Treaty as the gross debt liabilities of the consolidated general government sector, at nominal value.

‘Gross’ means that the value of any financial assets held by general government cannot be deducted from the GG debt. In Ireland’s case, this means that the liquid assets which are deducted from the ‘Gross’ national debt in arriving at the audited national debt cannot be deducted from the GG debt.

‘Debt liabilities’ are defined as the ESA 2010 categories AF.2 (Currency and deposits), AF.3 (Debt securities), and AF.4 (Loans).

This definition excludes liabilities in derivatives, equity liabilities, pension and insurance liabilities and accounts payable.

‘Consolidated’ means that any money owed by one entity within general government to another is excluded from the total GG Debt.

‘Nominal value’ is defined in the governing regulation as face value. If debt is sold at a discount, it is the undiscounted value of the instrument, rather than the amount actually received, that is shown in the GG debt. In other statistical contexts, ‘nominal value’ means face value plus any interest accrued but not paid; however, such interest is excluded from GG Debt by definition.

General government net debt is a measure produced in accordance with the methodology of the IMF/World Bank Public Sector Debt Statistics Guide, by subtracting from the GG gross debt figure the value of the financial assets corresponding to the categories of financial liabilities which comprise GG gross debt.

General government net worth is calculated as the sum of financial and non-financial assets of general government less financial liabilities.

Detailed codes and technical definitions can be seen in the ESA 2010 manual.

A listing of some of the main items included in this release is shown below.

Main components of general government expenditure and revenue

P.2       Intermediate consumption – value of goods and services used in the process of production, excluding fixed assets

P.5       Gross capital formation

            P.51g   Gross fixed capital formation - acquisitions, less disposals, of fixed assets during a given period plus certain additions to the value of non-produced assets realised by productive activity. Fixed assets are tangible or intangible assets produced as outputs from processes of production that are themselves used repeatedly, or continuously, in processes of production for more than one year

            P.51c   Consumption of fixed capital - the amount of fixed assets used up, during the period under consideration, as a result of normal wear and tear and foreseeable obsolescence, including a provision for losses of fixed assets as a result of accidental damage which can be insured against.

P.52     Changes in inventories

P.53     Acquisitions less disposals of valuables

D.1      Compensation of employees – the total remuneration of government employees

D.21    Taxes on products are taxes that are payable per unit of a given good or service produced or transacted. Included in this is customs and excise taxes and VAT. To accrue this data the cash receipts are time adjusted. Customs and excise taxes are time adjusted by 1 month and VAT is time adjusted by 2 months. For example Q1 VAT is March, April, May cash receipts.

D.29    Other taxes on production (payable) all taxes that enterprises incur as a result of engaging in production, independently of the quantity or value of the goods and services produced or sold. These include taxes on use or ownership of land or buildings, taxes on use of fixed assets, taxes on total wage bill and payroll, taxes on international transactions related to production.

D.3      Subsidies (payable) - current unrequited payments which general government or the institutions of the European Union make to resident producers, with the objective of influencing their levels of production, their prices or the remuneration of the factors of production

D.4      Property income accrues when the owners of financial assets and natural resources put them at the disposal of other units of the economy. The income payable for the use of financial assets is called investment income, while that payable for the use of a natural resource is called rent. Property income is the sum of investment income and rent.

           D.41    Interest receivable by the owners of a financial asset for putting it at the disposal of another institutional unit - applies to deposits (AF.2), debt securities (AF.3), loans (AF.4) and other accounts payable (AF.8)

           D.42    Dividends receivable by the owners of share equities. Dividends exclude "super dividends" which arise where the dividend paid is large relative to the recent level of dividends and earnings. Super dividends are recorded as withdrawal of equity (F.5). This arises, for example, in the case of dividends paid by the Central Bank in 2015.

           D.45    Rent of a natural resource – income receivable by the owner of a natural resource for putting the resource at the disposal of another party.

D.5      Current taxes on income, wealth, etc., (payable) - all compulsory, unrequited payments, in cash or in kind, levied periodically by general government and by the rest of the world on the income and wealth of units in the economy, and some periodic taxes which are assessed neither on income nor wealth

D.6      Social contributions - transfers to households, in cash or in kind, intended to relieve them from the financial burden of a number of risks or needs.

D.7      Other current transfers – includes VAT and GNI based EU budget contributions, current transfers between subsectors of government, current international co-operation and current transfers to households and non-profit institutions.

D.9      Capital transfers - involve the acquisition or disposal of an asset, or assets, by at least one of the parties to the transaction.  Includes capital taxes and investment grants.

 P.1       Total output of Government is equal to market output, own account capital formation, and non-market output (i.e. the sum of D.1+P.2+P51c). The market output referred to in this publication is the imputed market value of social housing rented dwellings. See Table 3.

P.3        Final consumption expenditure of Government is equal to the total of its output (P.1) plus the expenditure on products/services supplied to households via market producers minus the sales of goods and services (at both market and non-market prices). This is made up of individual non-market services plus collective non-market services (P.31 and P.32). See Table 4.  

Categories of Financial Flows

F.1       Monetary gold and special drawing rights (SDRs)

            F.11     Monetary gold

            F.12     Special drawing rights (SDRs)

F.2       Currency and deposits

            F.21     Currency

            F.22     Transferable deposits

            F.29     Other deposits

F.3       Debt securities

            F.31     Short-term

            F.32     Long-term

F.4       Loans

            F.41 - Short-term loans

            F.42 - Long-term loans

F.5       Equity and investment fund shares

            F.51 Equity

            F.52 Investment fund shares/units

F.6       Insurance pension and standardised guarantee schemes

F.7       Financial derivatives and employee stock options

            F.71     Financial derivatives

            F.72     Employee stock options

F.8       Other accounts receivable/payable

            F.81     Trade credits and advances

            F.89     Other trade credits

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