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Workshop on SDG Indicator 2.a.1, Turin, Italy, March 2018 - GFS methodology - Identifying expenditure

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Workshop on SDG Indicator 2.a.1, Turin, Italy, March 2018 - GFS methodology - Identifying expenditure

  1. 1. Workshop on SDG Indicator 2.a.1; Turin, Italy, 27-28 March 2018 GFS METHODOLOGY – IDENTIFYING EXPENDITURES Sangita Dubey, Senior Statistician/Team Leader, FAO Titus Mwisomba, Manager of Agriculture Statistics, Tanzania Bureau of Statistics Giulia Gonnella, Statistician, FAO
  2. 2. TABLE A: Government expenditure on agriculture and related functions General Government Central Government State Government s Local Government s Consolidatio n Column General Government4 Budgetary Central Government Extrabudgetar y Units Social Security Funds Consolidation Column Central Government3 Functional classification2 (1) (2) (3) (4) (5) (6) (7) (8) (9) 7 EXPENDITURE (TOTAL OUTLAYS) 704 Economic Affairs 7042 Agriculture, forestry, fishing, and hunting → Recurrent → Capital 70421 Agriculture (crops and animal husbandry) → Recurrent → Capital 70422 Forestry → Recurrent → Capital 70423 Fishing and hunting → Recurrent → Capital 7048 R&D Economic Affairs 70482 R&D Agriculture, forestry, fishing, and hunting 705 Environmental protection 7054 Protection of Biodiversity and Landscape → Recurrent → Capital 7055 R&D Environmental Protection → Recurrent → Capital 7z1 Other, please specify: ________________________ 7z2 Other, please specify: ________________________ Central government expenditure on agriculture Total central government expenditure FAO GOVERNMENT EXPENDITURE ON AGRICULTURE (GEA) QUESTIONNAIRE & INDICATOR 2.a.1 Indicator 2.a.1 numerator is based on the FAO GEA questionnaire.
  3. 3. INDICATOR METHODOLOGY – THE GEA QUESTIONNAIRE • FAO GEA questionnaire developed in collaboration with IMF, which is responsible for the global compilation of annual data on Government Finance Statistics (GFS). • Table A of the GEA questionnaire developed to parallel IMF GFS Questionnaire Table 7 – “Expenditure by Function of Government (COFOG)” • FAO questionnaire seeks more details on Agriculture sector, plus recurrent/capital breakdown • Data sharing between FAO and the IMF helps validate data and fill gaps. • FAO-IMF coordination extends to technical training FAO GEA Questionnaire IMF GFS Questionnaire
  4. 4. Table A of GEA questionnaireTable 7 of GFS questionnaire • FAO GEA Questionnaire includes relevant aggregates of Table 7 of IMF GFS Questionnaire • GEA requests additional detail related to agriculture and environmental protection sectors. The FAO GEA and IMF GFS Questionnaires INDICATOR METHODOLOGY – THE GEA QUESTIONNAIRE
  5. 5. INDICATOR METHODOLOGY & CLASSIFICATIONS USED Classification of the Functions of Government (COFOG) Government Finance Statistics Manual (GFSM) 2014 • Developed and led by the IMF • International accounting framework to compile fiscal accounts. • applicable to all types of economies • ensures globally comparable statistics on government finance, including government expenditures. • classifies government activity according to socio-economic sectors, consistent with ISIC • Led by OECD, also published by United Nations Statistics Division.
  6. 6. GFS: INTRODUCTION & ANALYTIC OBJECTIVES 6 GFS is a quantitative tool that supports fiscal analysis • Facilitates identification, measurement, monitoring, and assessment of impact of a government’s economic policies and other activities on economy • Closely linked with other macroeconomic statistical systems (SNA, BOP, MFS) GFS data should enable assessment of • management and policy decisions • financial soundness of general government and public sectors • Long term sustainability, liquidity constraints and financing needs
  7. 7. 7 Accounting rules in GFSM are the same as other macroeconomic statistical systems • Accrual-based recording: Recording of transactions when transactions take place, i.e. - Income is earned - Resources are used - Liabilities are incurred - Assets are acquired • Cash flow data: as additional requirement to allow analysis of liquidity constraints/position • Double-entry accounting: Every debit entry has a credit entry and vice versa GFS: ACCOUNTING RULES
  8. 8. 8 Revenue Expense Assets & Liabilities  Taxes;  social contributions;  grants;  other revenues An increase of net worth resulting from transactions GFS FRAMEWORK Key components covered by the GFS: Excludes disposals of Assets (= exchanges of one asset for another)
  9. 9. 9 Revenue Expense Assets & Liabilities A decrease of net worth resulting from transactions GFS FRAMEWORK Key components covered by the GFS: Excludes acquisitions of Assets (= exchanges of one asset for another) • Compensation of government employees; • Consumption of fixed capital; • Purchase of goods and services; • Interest paid on debt; • Subsidies and grants; • Social benefits.
  10. 10. 10 GFS FRAMEWORK Key components covered by the GFS: Revenue Expense Assets & Liabilities  Fixed assets;  Inventories;  Valuables;  Nonproduced assets • Nonfinancial Assets • Financial Assets • Liabilities Net investment in nonfinancial assets = Acquisitions of nonfinancial assets - Disposals of nonfinancial assets - Consumption of fixed Capital
  11. 11. GFS FRAMEWORK transactions that affect the stock of non- financial assets without changing net worth transactions that imply a decrease in net worth. Net Investment in non- financial assets Expense Expenditure = +
  12. 12. DISCUSSION: EXPENSE VS NET INVESTMENT IN NON FINANCIAL ASSETS Groups Ministry/ Institution Department/ Program Activity Description Expense (Y/N) Net Investment in Non Financial Assets (Y/N) Ministry of Agriculture Administration and HR Management Acquisition Of Household & Institutional Equipment Ministry of Livestock Development and Fisheries Fisheries Development Division Basic Salaries - Pensionable Posts
  13. 13. DISCUSSION: EXPENSE VS NET INVESTMENT IN NON FINANCIAL ASSETS Groups Ministry/ Institution Department/ Program Activity Description Expense (Y/N) Net Investment in Non Financial Assets (Y/N) Ministry of Agriculture Administration and HR Management Acquisition Of Household & Institutional Equipment N Y Ministry of Livestock Development and Fisheries Fisheries Development Division Basic Salaries - Pensionable Posts Y N
  14. 14. DISCUSSION: EXPENSE VS NET INVESTMENT IN NON FINANCIAL ASSETS Groups Ministry/ Institution Department/ Program Activity Description Expense (Y/N) Net Investment in Non Financial Assets (Y/N) Ministry of Natural Resources and Tourism Tourism Acquisition of Vehicles and Transportation Equipment Ministry of Community Development, Gender, Elderly and Children Gender Development Current Subsidies To Non-Financial Public Corporations
  15. 15. DISCUSSION: EXPENSE VS NET INVESTMENT IN NON FINANCIAL ASSETS Groups Ministry/ Institution Department/ Program Activity Description Expense (Y/N) Net Investment in Non Financial Assets (Y/N) Ministry of Natural Resources and Tourism Tourism Acquisition of Vehicles and Transportation Equipment N Y Ministry of Community Development, Gender, Elderly and Children Gender Development Current Subsidies To Non-Financial Public Corporations Y N
  16. 16. DISCUSSION: EXPENSE VS NET INVESTMENT IN NON FINANCIAL ASSETS Groups Ministry/ Institution Department/ Program Activity Description Expense (Y/N) Net Investment in Non Financial Assets (Y/N) Ministry of Health and Social Welfare Curative Services Employer Social Benefits In Cash Ministry of Water and Irrigation Water Resources Acquisition Of Intangible Non- Produced Assets
  17. 17. DISCUSSION 1: EXPENSE VS NET INVESTMENT IN NON FINANCIAL ASSETS Groups Ministry/ Institution Department/ Program Activity Description Expense (Y/N) Net Investment in Non Financial Assets (Y/N) Ministry of Health and Social Welfare Curative Services Employer Social Benefits In Cash Y N Ministry of Water and Irirgation Water Resources Acquisition Of Intangible Non- Produced Assets N Y
  18. 18. UNDERSTANDING EXPENDITURES IN THE FAO GEA QUESTIONNAIRE GFSM Expenditures
  19. 19. Recurrent expenditures: flows incurred for the provision of goods and services to the community on a nonmarket basis, and redistribution of income and wealth by means of transfer payments Capital expenditures: amounts used for the acquisition of nonfinancial assets (i.e., fixed assets; inventories; valuables; and non-produced assets).
  20. 20. DISCUSSION: HOW ARE EXPENSES, RECURRENT EXPENDITURES, CAPITAL EXPENDITURES, ETC. RELATED? Groups Flows incurred for the provision of goods and services to the community on a nonmarket basis, and redistribution of income and wealth by means of transfer payments Amounts used for the acquisition of nonfinancial assets (i.e., fixed assets; inventories; valuables; and non-produced assets). A decrease of net worth resulting from transactions Transactions that affect the stock of non-financial assets without changing net worth ?
  21. 21. DISCUSSION: HOW ARE EXPENSES, RECURRENT EXPENDITURES, CAPITAL EXPENDITURES, ETC. RELATED? Groups flows incurred for the provision of goods and services to the community on a nonmarket basis, and redistribution of income and wealth by means of transfer payments amounts used for the acquisition of nonfinancial assets (i.e., fixed assets; inventories; valuables; and non-produced assets). A decrease of net worth resulting from transactions transactions that affect the stock of non-financial assets without changing net worth ? Recurrent Expenditure = Expense Capital Expenditure = Net acquisition of nonfinancial assets

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