Background Notes

Background Notes

Introduction

This release comprises the latest official publication by CSO of quarterly Government Finance Statistics (GFS) for the period Q1 2015 to Q4 2018.

The data published in this series are consistent with the General Government Deficit and Debt levels reported at end-March 2019 under the EU regulation governing the Excessive Deficit Procedure (EDP). Consequently, they may not always be fully aligned with the National Income and Expenditure and related publications such as the Institutional Sector Accounts. Government accounts are compiled in the EU according to the European System of National Accounts framework - ESA2010.

The calculation methods for quarterly GFS are similar to those used in deriving the annual GFS. As some of the available sources are of lesser reliability than those used for annual GFS, the quarterly estimates are subject to a greater margin of error than the annual figures.

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

The full suite of GFS tables are available on the CSO website here

Data for all EU Member States are available on Eurostat’s data base here

Sale of mobile telephony (UMTS) licences

On 27 March 2017 Eurostat published a Guidance Note on the treatment of mobile phone licences, exploration rights and other licences on the recording of revenues arising from the sale of licences by government - click here In October 2017, CSO amended the treatment of past sales of mobile phone licences (in 2002, 2007 and 2013) to bring these in line with the March 2017 guidance note on the treatment of the sales of UMTS licences.

The latest sale of UMTS licenses in 2017 for the 3.6GHz band is included in the data published in this release. This data has been processed in the same manner as earlier sales, see Background notes of October 2017 release here for further detail on the methodology.

Reclassification of pension funds

The Eircom No. 2 and Coillte No. 2 pension funds were reclassified retroactively in the sector of general government (S.13) for this publication. This decision was verified by Eurostat at an EDP dialogue visit in February 2019.

Eircom No. 2 fund was established in 1999 by a capital transfer (D.99) of £800m/€1,015m from government (S.13) to the financial sector (S.12).  This transfer has been removed from both S.13 and S.12.  Corresponding adjustments were made to AF.2 in the financial accounts of both sectors.

Data on the value of this fund and payments from this fund are only available from 2011 and currently up to 2017.  For the years 1999 to 2010, transfer payments have been estimated based on the original asset value of the fund and the asset value at end 2011.  Transfer payments (D.62) from government (S.13) have increased and have decreased by a corresponding amount for the financial sector (S.12). The government (S.13) financial account shows corresponding F.2 flows in cash and reduction in AF.2 with the reverse reflected in the financial accounts of S.12.  For the years 2011 to 2017, more detailed data is used as the estimate of D.62 pension payments.  The financial accounts reflects these payments and imputes Other Economic Flows based on the change of the value of assets for this fund from the beginning of the year and the end of the year and the cash payments made during the year.

Data for 2018 has been estimated based on the previous year’s values and will be up-dated once updated 2018 data is available.  This fund is due to run out in 2020 or 2021 at which point the Minister for Finance will take responsibility for the payment of pensioners.

Coillte No. 2 fund was established in 1989 upon the establishment of Coillte.  Data on payments from this fund and receipts of this fund from 2008 to 2017 are available from Coillte’s annual financial reports.  This data was used to estimate transfer payments (D.62) to pensions and actual household contributions (D.6113) payments from households to the fund (i.e. re-routed to households).  The D.6113 payments also include the employer contributions to this fund.

Data for the years 1989 to 2007 have been trended based on average year-on-year change for the years for which data is available.  Thus the D.62 payments and D.6113 receipts of government (S.13) have increased with corresponding decreases in these transactions for the financial sector (S.12).  On the financial accounts, cash flows (F.2) and stock of cash (AF.2) for both the government (S.13) and financial sector (S.12) have corresponding adjustments.

This fund is due to run out in 2019 at which point the Minister for Finance will take responsibility for the payment of pensioners.

Reclassification of Approved Housing Bodies to local government sub-sector (S.1313)

As of March 2018, 14 Approved Housing Bodies (AHBs) have been reclassified to the local government sub-sector (S.1313) from the Non-Profit Institution Serving Households Sector (S.15). In addition the housing activities of another non-profit organisation have been re-routed to the local government sub-sector. Details on the reclassification can be found here .

Super dividend

In 2018 Q2 the exchequer received a super dividend of €1,426 million from the Central Bank of Ireland.

IBRC payment to Exchequer

In 2013 the payment by the Exchequer of €1.1 billion to meet obligations to IBRC deposit holders under the guarantee schemes in operation was treated as the granting of a loan from the Exchequer to IBRC, on the understanding that the Exchequer would be treated as a creditor of IBRC in the liquidation process and that there was a reasonable expectation of repayment.  The 2018 re-payment of €340.7 million was made in 2018 Q4.

Consultant’s pay settlement

In June 2018 there was a settlement made following a court process with medical consultants in relation to pay arrears.  The backdated payments of €213 million were recorded as D.99 expenditure of central government in Q2 2018.

Investment Portfolio

In quarter 4 of 2018 the market value of the State's Equity and Investment Fund Shares assets stood at around €37.0 billion, down from €38.7 billion in quarter 3 (Table 6). The movement in the value of this instrument class is mainly explained by stock market losses during the quarter relating to shares held in Irish banks.

Debt Issuance and Redemption

Quarterly General Government Consolidated Gross Debt fell by approximately €10.0 billion in Q4 2018. This reduction was driven mostly by the net redemption of debt securities amounting to €9.6 billion and the repayment of loans of €0.4 billion.

Movements of note in the balance sheet

There were large transactions in F.8 assets and liabilities in Q3 2018 of +€10.2 billion and +€9.7 billion respectively. In ESA terms, F.8 corresponds to other accounts receivable or payable. These assets and liabilities are created in situations where there is a timing difference between the underlying transactions and the corresponding payments.

The repayment of debt in quarter 4 resulted in an outflow of cash from the Exchequer causing, in large part, the drop in deposit assets (see AF.2 assets, Table 6) of €8.6 billion which were used to finance this activity.

GDP figures used in publication

The GDP figures used in the current publication are consistent with those published in the latest National Income and Expenditure Accounts and the Quarterly National Accounts published on 14 March 2019.

Revisions to General Government Deficit/Surplus (GG Deficit/Surplus)

Due to updated data becoming available revisions have been made to the previously published Total Revenue (TR) and Total Expenditure (TE) figures.

Similarly, revisions have been made to previously published Net acquisition of financial assets and Net incurrence of liabilities figures. This is the alternative measure of GG Deficit/Surplus, referred to as Net Lending/Borrowing. See Tables 1 and 5.

Revisions to General Government Gross Debt, Net Debt and Net Worth

Revisions have been made to Debt and Net worth figures. These revisions are due to increased availability of data. See Tables 2 and 6.

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).

European GFS, including EDP statistics, are produced according to the legally binding accounting rules of the European System of Accounts (ESA2010). The Manual on Government Debt and Deficit (MGDD) provides further guidance on the implementation of ESA 2010 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

These data are available on the Eurostat website here

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 deficit/surplus (GG deficit/surplus) is the standard European measure of the fiscal balance, which is used to monitor compliance with the Stability and Growth Pact.

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 (Tables 1 and 5). In order to respect this accounting identity, a technical adjustment is made to the level of transactions recorded in liability category F32 (long-term debt securities) to eliminate any statistical discrepancy between the two approaches to the calculation of GG deficit/surplus. This adjustment has no impact on Gross debt, Net debt or Net worth.

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 here

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 (Pay) - the total remuneration of government employees.

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 share

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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