Presentation made by Giovanna Dabbicco, Italy, at the 16th Annual OECD Accruals Symposium held at the OECD Conference Centre, Paris, on 21-22 March 2016.

1. Debt measures in Statistics
and Financial Statements
Giovanna Dabbicco
16th ANNUAL OECD ACCRUALS SYMPOSIUM
OECD Conference Centre, Paris, March 21-22, 2016

2. OUTLINE
1. Financial Statement VS GFS/NA: Similarities and Differences
2. Identities and balances from GFS and FS: Net worth
3. Comparing Government Debt
4. Complementarity of the Various Measures of Government Debt
5. Value(s) Added of Consolidated Financial Statements
compared to GFS
Using the Balance Sheet in the Public Sector Giovanna Dabbicco OECD 22 March 2016

3. Using the Balance Sheet in the Public Sector Giovanna Dabbicco OECD 22 March 2016
SNA/ESA vs. IPSAS: Similarities and
Differences
National accounts
IPSAS
SNA / ESA GFS
Balance sheet Balance sheet Statement of financial
position
Non-
financial
assets
Liabilities Financial
assets
Liabilities Non-Current
Assets
Non-current
liabilities
Financial
assets
Non-
financial
assets
Net
financial
worth
Current
assets
Current
liabilities
Net worth Net worth Net Assets
/ Equity
• Stocks broadly
similar.
• IPSAS: Current
vs Non- Current
assets.
• GFS: Financial
vs non financial
assets; Domestic
vs foreign.
• Classifications
e.g. COFOG.
• The balancing item of financial assets and liabilities is called financial
net worth (BF.90) (ESA 2010 7.10).
• For institutional sectors the balancing item on the balance sheet is net
worth (ESA 2010 7.04).
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4. Net Worth Estimates in Statistics and
Financial Statements
As a result of the different valuation of entries, net worth estimates in
statistics and IPSAS based financial statements usually differ.
Changes in net
worth due to the
net operating
balance plus
other economic
flows.
GFS
A basic
accounting
identity links the
value of the stock
of a specific type
of asset in the
opening balance
sheet and the
closing balance
sheet.
ESA
The net
assets/equity is
the residual
interest in the
assets of the
entity after
deducting all its
liabilities. It may
be positive or
negative.
IPSAS
2 Using the Balance Sheet in the Public Sector Giovanna Dabbicco OECD 22 March 2016

5. Comparing Government Debt
GFS Financial Statements
(IPSAS)
General Government Sector S.13 Whole-of-Government/Sub consolidation
(includes public corporations)
Deposits; Loans ; Debt securities (do
not include financial derivatives)
Deposit; Loans; Debt securities (include
Financial derivatives); Trade payables;
Provisions; Pension liabilities.
Nominal Value (Face value for
Maastricht Debt)
Market Value
Using the Balance Sheet in the Public Sector Giovanna Dabbicco OECD 22 March 2016
Three axis for the comparison: coverage, elements reported, and
measurement.
"Debt" not formally defined under IPSAS, whether gross or net. Which
balance sheet items should be included?
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6. Complementarity of the Various Measures of
Government Debt
• Maastricht: Only liabilities;
only bodies within general
government
• PSND : Consolidated gross
debt less liquid assets; public
sector
• WGA : Net liabilities (include
pensions, contingents); public
sector
• Market values: information
on the investors exposure
to government (i.e. gain and
losses)
• Nominal values: for debt
sustainability analysis (i.e.
interest rate changes on
debt servicing)
Market and Nominal
value: complementary
perspectives
Debt: broader to narrower
Coverage: narrower to
broader
Using the Balance Sheet in the Public Sector Giovanna Dabbicco OECD 22 March 20164

7. Value(s) Added of Consolidated Financial
Statements compared to Statistics
A more comprehensive balance sheet
• Net liability includes public sector pension liabilities, long term
provisions and PFI liabilities not included in the National Accounts
• Public sector’s contingent assets and liabilities beyond the usual
government statistics
Fundamental for public finances planning, and fiscal sustainability
issues.
Coverage of public sector entities:
• CFS may include public market corporations, notably relevant at
WGA level.
5 Using the Balance Sheet in the Public Sector Giovanna Dabbicco OECD 22 March 2016

8. Using the Balance Sheet in the Public Sector Giovanna Dabbicco OECD 22 March 2016

9. Using the Balance Sheet in the Public Sector Giovanna Dabbicco OECD 22 March 2016
Balance Sheet ESA/GFS definitions
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A statement of the values of
assets economically owned
and of liabilities owed by an
institutional unit or group of
units, at a point in time (ESA
2010 7.01)
Asset and liability boundary
exclusions:
(a) human capital;
(b) natural assets (e.g. air, river
water);
(c) consumer durables; and
(d) contingent assets and liabilities
An economic asset is a store of value
representing the benefits accruing to the
economic owner by holding or using the
entity over a period of time…. (ESA 2010
7.15)
Liabilities are established when a
debtor is obliged to provide a
payment or a series of payments to a
creditor (ESA 2010 5.06)
Economic benefits:
• Primary incomes /Property income
• Value, including holding gains and losses,
realised by disposing of the asset or terminating
it.
Economic owner: risks/ rewards - not
necessarily legal owner.
ESA Balance sheet logic :A matrix approach: Sectors, Asset/Liability,
Instruments

10. Using the Balance Sheet in the Public Sector Giovanna Dabbicco OECD 22 March 2016
IPSAS Statement of financial position:
definitions
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Also referred to as a
balance sheet or
statement of assets
and liabilities, at a
reporting date.
• Contributions from
owners: future economic
benefits or service
potential contributed to
the entity by external
parties
• A financial interest in the
net assets/equity of the
entity
IPSAS (2014) 1. 7. Liabilities are
present obligations of the entity arising
from past events, the settlement of
which is expected to result in an
outflow from the entity of resources
embodying economic benefits or
service potential.
Assets are resources controlled by an
entity as a result of past events and
from which future economic benefits or
service potential are expected to flow to
the entity (IPSAS (2014) 1.7)

11. Comparing Government Debt
Using the Balance Sheet in the Public Sector Giovanna Dabbicco OECD 22 March 2016
S. 1311
Central
Government
Government
department
and
ministries
S. 11001
Public non-
financial
corporations
Public
corporation
s controlled
by central
government
Public
corporation
s controlled
by central
government
Public
corporation
s controlled
by local
government
Public
corporations
controlled by
SSF
NPIs
controlled
by central
government
NPIs
controlled
by local
government
Debt Public Sector
= S.13 +S. 11001 +S. 12001
Maasticht Debt S. 13 General Government Sector
Central Bank
Other
Financial
corporations
NPIs
controlled
by local
government
NPIs
controlled by
SSF
S. 12001 Public financial
corporations
Public
Market
producers
(goods and
non-financial
services)
Public Market producers
(financial services)
Non-market producers
Public producers
S. 1312
State
S. 1313
Local
Government
S. 1314
Social
Security
Funds
AlternativemeasuresofUKpublicsectordebt
2011-12
£ %GDP
WGA(Netliabilities) 1347 87
PSND 1104 74
Maastrichtdefinition 1312 85
Source:OBR(2014)andHMTreasury(2013)
“WGA liabilities includes
all amounts owed by
government such as public
sector pension liabilities
and provisions for future
cash expenditure, as a
result of events that have
already happened” (UK,
WGA 2013-2014)
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