Explanatory Memorandum to COM(2003)242 - Quarterly financial accounts for general government - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2003)242 - Quarterly financial accounts for general government. |
|---|---|
| source | COM(2003)242  |
| date | 08-05-2003 |
The structure of the attached Regulation follows the existing Regulation (EC) No 1221/2002 of the European Parliament and of the Council of 10 June 2002 on quarterly non-financial accounts of government to some extent. This specifically refers to the time pattern that national data for all Member States will be available with sufficient quality in the course of 2005. Furthermore, for almost all definitions reference is made to the Council Regulation (EC) No 2223/96 of 25 June 1996 on the European System of National and Regional Accounts in the Community (ESA 95) and stock should be taken on the sources and methods used to compile the quarterly data.
The Recitals 1, 3 and 4 cover points especially relevant to financial accounts of government: the appropriateness of using ESA 95 definitions, the general need of data on government financial transactions and balance sheets to support monetary policy and the specific need of from-whom-to-whom data to allow a detailed analysis of government financing and financial investment by counterpart sector and instrument. These Recitals refer to the view that Member States have always indicated to compile and disseminate quarterly public financial accounts for the purpose to present a complete set of sectoral accounts for the government and to strengthen the statistical basis of an integrated system of financial accounts, preferably on the European level for monetary and for fiscal policy purposes.
As a reminder, the special Economic and Financial Committee report, endorsed by the Council (Ecofin) on 18 January 1999, stressed the importance of quarterly data for the surveillance and co-ordination of economic policies in the context of the third phase of European monetary union and completing the single market. In the report, short-term financial statistics were seen as a priority, since they are crucial for the accurate definition and monitoring of economic policy, and notably as a key factor in the EMU policy mix. It also clearly stated that the final aim was the provision of complete quarterly accounts within a reasonable period (later agreed as three months), but following a step-by-step approach.
The Articles cover the framework of data supply (Articles 1, 3 to 7) including readily available information on sources and methods used to compile the quarterly data (Article 8) and specific quality aspects (Articles 2 and 9). The series to be reported are described in Articles 3 to 5. Article 3 lists the various categories of financial instruments as defined and codified in ESA 95, while Article 4 specifies the government sector and its sub-sectors for which quarterly data are to be provided. Article 5 indicates that only consolidated data shall be transmitted for all government sub-sectors, but consolidated and non-consolidated data for the sector as a whole. Finally, this article also refers to the quarterly data, which should be provided as from-whom-to-whom information. A detailed list of this specific data set is described in the Annex to the Regulation. These data would enable a comprehensive analysis of who is financing whom, to which amount and with which instruments.
The Regulation specifies that data must be based as far as possible on information provided directly by sources within general government. Thus, it does not rule out the use of estimates, but these should be exceptional and have a limited impact on the figures. However, an exception is made for data on unquoted shares and other equity where there are major difficulties in some countries, and interpolation or extrapolation are considered acceptable alternatives to direct quarterly data.
According to Article 6.3 the Regulation foresees that the Commission (Eurostat) may grant derogations for the starting date of the data transmitted for the state and local government sub-sectors, not exceeding two years (between mid-2003 and mid-2005). Moreover, the quarterly data to be transmitted shall cover back data from the first quarter of 1999 for transactions and from the fourth quarter of 1998 for balance sheet items, as outlined in Article 7. Back data can be based on 'best estimates' if necessary.
As indicated in Article 8 Member States have to provide the Commission (Eurostat) with a description of the sources and methods used to compile the quarterly data starting mid-2003. In parallel, the Commission (Eurostat) shall, by end-2005 at the latest, submit to the European Parliament and Council a report containing an assessment of the reliability of the quarterly data delivered by the Member States.
The proposal of Regulation is the result of work carried out jointly by Eurostat and the European Central Bank with national experts. Since February 2000, a Joint Eurostat/ECB Task Force on Quarterly Financial Accounts for the Government Sector has held regular meetings. The Task Force was mandated by the Committee on Monetary, Financial and Balance of Payments Statistics (CMFB) to develop quarterly financial accounts for the government sector and its sub-sectors of EU Member States. In addition the Task Force has conducted various test data transmissions of quarterly national financial accounts from the EU Member States to Eurostat and to the ECB
Based on a sufficient coverage of the data regularly transmitted by Member States from mid-2003 onwards it might be feasible to compile euro area and EU financial transaction accounts and balance sheets, first, for central government and social security funds and, later, for other government sub-sectors. These data on specific sub-sector accounts for the euro area might be used to integrate them into the ECB's quarterly Monetary Union financial accounts (MUFA).
Linking the two Regulations, the Regulation on non-financial accounts and the Regulation on financial accounts for the government sector will allow incorporating saving and non-financial investment, but also other real variables like the various components of government revenue and expenditure. At the end, it will lead to a much-enriched analysis linking financial and non-financial developments, which enables for the government sector a detailed assessment of fiscal policy impulses, of specific traces of the ECB monetary policy transmission process related to government, and of related income and wealth effects. A full integration of the real and financial variables also of other sectors, however, would require more complete financial and non-financial accounts by sector. This extension is part of the ECB/European Commission (Eurostat) Action Plan on EMU statistical requirements.