EO Sources - Notes to statistical annex tables 25-33: Fiscal balances and public indebtedness

Table 25 General government total outlays
Table 26 General government current tax and non-tax receipts
Table 27 General government financial balances
Table 28 General government cyclically-adjusted balances
Table 29 General government underlying balances
Table 30 General government underlying primary balances
Table 31 General government net debt interest payments
Table 32 General government gross financial liabilities
Table 33 General government net financial liabilities

Definition: The figures for total outlays consist of current outlays plus capital outlays. Current outlays are the sum of current consumption, transfer payments, subsidies and property income paid (including interest payments). Data refer to the general government sector, which is a consolidation of accounts for the central, state and local government plus social security. One-off revenues from the sale of the third generation mobile telephone (often called Universal Mobile Telephone System) licenses are recorded as negative capital outlays. Up to the 83rd issue of the OECD Economic Outlook, general government outlays were adjusted for large one-offs in the case of three countries (Germany, Japan and the Netherlands respectively in 1995, 1998 and 1995). From the 84th edition onwards, raw data consistent with national definitions are shown. The treatment of large one-offs in the OECD Economic Outlook database is described in Joumard , I., M. Minegishi, C. André, C. Nicq and R. Price (2008), Accounting for one-off operations when assessing underlying fiscal positions.

Sources: National accounts

Related links: OECD National Accounts and The 1993 System of National Accounts, Glossary

Last updated:  22 December 2008

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Definition: Tax receipts of the government sector are defined as the sum of direct taxes on household and business sectors, indirect taxes and social security contributions. Non-tax receipts include operating surpluses, property income, user charges and fees, other current and capital transfers received by the general government. Data refer to the general government sector, which is a consolidation of accounts for the central, state and local government plus social security.The treatment of large one-offs in the OECD Economic Outlook database is described in Joumard , I., M. Minegishi, C. André, C. Nicq and R. Price (2008), Accounting for one-off operations when assessing underlying fiscal positions.

Revenue/GDP-ratios based on national account methodology (i.e. as applied in the Economic Outlook tables and the Outlook database) are not fully comparable with the information found in the OECD's Revenue Statistics. Revenue Statistics contains detailed information for all member countries on tax as well as non-tax revenues, including social security contributions. The data in Revenue Statistics are provided by the national tax authorities and are generally based on standard national accounts definitions and methodologies (System of National Accounts (SNA) / European System of Accounts (ESA)). However, divergences with the national accounts exist in some areas. The differences are small for most countries and in most years, but are substantial in some cases. The most frequently used measure of the tax burden, total taxes plus social security contributions as a percentage of GDP, differed by respectively 1.7 and 4 percentage points for Greece and Germany in 2006-2007 between Revenue Statistics and the national accounts in 2006-2007. The divergence between the tax/GDP-ratio (including social security contributions) in Revenue Statistics (RS) and the national accounts/Economic Outlook (EO) is due to a variety of general and country specific factors. The most important general explanations are the following:

1. Differences in accounting periods. For Japan, Canada, Australia and New Zealand, the fiscal year (used in RS) differs from the calendar year (used in EO).
2. Voluntary social security contributions to the government are included as revenues in EO but not in RS. For some countries, including Germany, these contributions are fairly large.
3. Imputed employer social security contributions for government employees are counted as revenues in EO but not in RS. On the other hand, actual contributions by government employees and by governments in respect of their employees, to social security schemes within the government sector are regarded as revenues in both EO and RS. The absence of imputed government contributions in RS explains much of the difference for most EU countries (amounting to 2.0 percentage points of GDP for Belgium and Greece and 1.7 and 1.4 percentage points of GDP for France and Austria repectively in 2007).
4. For EU countries, the proportion of each country's VAT collection and the share of customs revenues which are transferred to the EU as part of the so-called 'third own resource of the EU' are treated by ESA95 - and hence in EO - as being paid directly to the EU rather than as being paid to each individual country's government and then passed on to the EU. In other words, VAT and customs revenues are shown net of the amounts transferred to the EU, even though these amounts are included in GDP. In RS, these transfers are not deducted from the value added tax and customs revenues for individual countries and the data on total tax revenue as a percentage of GDP also include them.

These general explanatory factors could push the difference between tax ratios in EO and RS in either direction: the impact from factor 1 is uncertain, factors 2 and 3 tend to increase the tax/GDP-ratio in EO compared with RS, whereas factor 4 has the opposite effect. Hence the overall impact is ambiguous. But even where there is no effect on total revenues, the individual components can be significantly affected.

Finally, a host of country specific factors exist, including differences between EO and RS in the treatment of tax credits, and taxes on transfers. For Germany, for instance, RS records income taxes net of child tax credits that are used to reduce taxes paid, whereas German national accounts and EO data regard the child tax credit as an expenditure item and so do not allow for its deduction from reported tax revenues.

Sources: National Accounts

Related links: OECD National Accounts and The 1993 System of National Accounts, Glossary

Last updated:  22 Decembre 2008

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Definition: Government net lending is general government current tax and non-tax receipts less general government total outlays. See notes to Annex Tables 25 and 26.

The ESA95 definition of net lending differs from the Maastricht definition in that it does not include streams of payments and receipts from swap agreements and forward rate agreements, as these are recorded as financial transactions rather than interest expenditure.

Over the historical period, compared to the figures in the OECD Economic Outlook No. 83, the data differ for three countries (Germany, Japan and the Netherlands respectively in 1995, 1998 and 1995) due to removal of adjustments for large one-offs (see notes attached to Annex Table 25).

Sources: National Accounts

Related links: National Accounts, The 1993 System of National Accounts, Glossary and Annex Table 61

Last updated: 22 December 2008

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Definition: The budget balance can be decomposed into a cyclical and a non-cyclical component. The decomposition is aimed at separating cyclical influences on the budget balances resulting from the divergence between actual and potential output (the output gap), from those which are non-cyclical. Changes in the latter can be seen as a cause rather than an effect of output fluctuations and may be interpreted as indicative of discretionary policy adjustments. It should be noted, however, that changes in resource revenues - as a result of oil price changes, for example - and in interest payments - as a result of past debt accumulation or changes in interest rates - are neither cyclical nor purely discretionary. Yet these changes are reflected in the evolution of the cyclical component of the budget balance. (For details on the methodology used in calculating cyclically-adjusted budget deficits see Giorno, C., P. Richardson, D. Roseveare and P. van den Noord (1995), Estimating potential output gaps and structural budget balances, Van den Noord, P. (2000), The size and role of automatic fiscal stabilisers in the 1990s and beyond, and Girouard, N. and C. André (2005), Measuring cyclically-adjusted budget balances for OECD countries). One-off revenues from the sale of the third generation mobile telephone (often called Universal Mobile Telephone System) licenses are excluded in computing the cyclically-adjusted balance for a number of countries where reported revenues are substantial. Other one-off expedients improving headline fiscal balances are not excluded (see Joumard , I., M. Minegishi, C. André, C. Nicq and R. Price (2008), Accounting for one-off operations when assessing underlying fiscal positions).

Estimates for Norway exclude net revenues from petroleum activities and are expressed as a percentage of mainland GDP; they do not make adjustments for certain other transactions which are used by the Norwegian authorities in their estimates of underlying balances.

Sources: OECD calculations

Related links: National Accounts and The 1993 System of National Accounts, Glossary

Last updated: 17 July 2009

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Definition: This new indicator eliminates the impact of one-offs from the cyclically-adjusted financial balances. One-offs are derived as the deviations from trend in net capital transfers. For more details on the methodology see Joumard , I., M. Minegishi, C. André, C. Nicq and R. Price (2008), Accounting for one-off operations when assessing underlying fiscal positions  See notes to Tables 27 and 28.

Sources: OECD calculations

Related links: National Accounts and The 1993 System of National Accounts, Glossary
Last updated: 22 December 2008

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Definition: These figures are derived by adding back net interest payments (Annex Table 31) to general government underlying balances (Annex Table 29).See notes to Tables 29 and 31.

Sources: OECD calculations

Related links: National Accounts and The 1993 System of National Accounts, Glossary
Last updated: 22 December 2008

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Definition: The data shown for Austria, Greece, Italy and Sweden are net of the impacts of swaps and forward rate transactions on interest payments, in accordance with national income accounts conventions. The data reported to Eurostat for the excessive deficit procedure includes such transactions and therefore may show lower interest payments in some years.

For Belgium, the figures include interest payments on the debt of the railway company SNCB from 2005 onwards. For Germany, the figures include interest payments of the Inherited Debt Fund from 1995 onwards. In the case of Ireland and New Zealand, where net interest payments are not available, net property income is used as a proxy. For Japan, the figures include interest payments on the debt of the Japan Railway Settlement Corporation and the National Forest Special Account from 1998 onwards.

Sources: National Accounts

Related links: National Accounts and The 1993 System of National Accounts, Glossary

Last updated: 22 December 2008

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Definition: The figures for gross financial liabilities (Annex Table 32) refer to the debt and other liabilities (short and long-term) of all the institutions in the general government sector, defined by ESA95/SNA93, subject to data availability. For the United States, Flow of Funds estimates are used, which value debt at face value. The gross data are consolidated within and between the sub-sectors of the general government sector, national sources permitting. The figures for net financial liabilities (Annex Table 33) measure the gross financial liabilities of the general government sector less the financial assets of the general government sector. Such assets may be cash, bank deposits, loans to the private sector, participation in private sector companies, holdings in public corporations or foreign exchange reserves, depending on the institutional structure of the country concerned and data availability.

The status and treatment of government liabilities in respect of their employee pension plans in the national accounts have been diverse across countries, making international comparability of government debts difficult. The current interpretation of the 1993 SNA is that: i) "autonomous" funded pension plans should be classified outside the general government sector, which entails that their assets and liabilities are not reflected in the general government debt data; ii) non-autonomous pension plans should be classified inside the general government sector and only the funded component should be reflected in the general government liabilities. Furthermore, the 1993 SNA recommends that the liability inherent in unfunded schemes be recorded as a memorandum item for the government sector. However, while some countries have produced some estimates of these implicit liabilities, few follow the 1993 SNA recommendation. Information on how some countries assume their employee pension liabilities and finance them (funded or unfunded) is provided below:

• In the United States, government employee pension funds are partially funded. Data reported by the Federal Reserve and used by the OECD include them in the personal sector and not the government sector. Hence their holdings of nonmarketable government securities (7.6% of GDP in 2005) are counted as a liability of the government sector (in contrast to countries with unfunded schemes). However, the stated assets of these funds are not sufficient to cover their liabilities. The difference, known as the unfunded pension liability of the government, is not recorded within the overall debt of the US government (in contrast to Canada, for example).  It amounted to 10.2 percent of GDP in 2005.
• For Canada, Statistics Canada includes unfunded liabilities of government employee pension plans in the general government debt data on the basis that they have been explicitly recognised by the government and that this is broadly equivalent to the issue of a long-term government bond. These liabilities amounted to 14.1 per cent of GDP in 2007 and are not included in the OECD data for the general government gross financial liabilities. An autonomous and funded pension scheme was also created in 1998 for government employees. It is classified outside the general government sector (in the personal sector) and associated liabilities are not reflected in the OECD data for the general government liabilities.
• For Australia, the Australian Bureau of Statistics includes unfunded portions of government employee superannuation plans on its government balance on the basis that unfunded liabilities are explicitly recognised by governments in their balance sheets due to the contractual provisions contained in the underlying superannuation legislation. The OECD figures for Australia are however adjusted by subtracting the unfunded pension liabilities from the national data for government debts. These unfunded pension liabilities amounted to about 18.5 per cent of GDP in 2007. The government employee superannuation liabilities that are funded are not separately identified in the statistics. However, some Australian governments are shifting towards fully funding emerging liabilities as well as putting aside accelerated contributions to eliminate existing liabilities completely over a 20 to 30 year period.
• The New Zealand government produces accounts which are consistent with the Generally Accepted Accounting Practice (GAAP) and includes unfunded government pension liabilities. However, the OECD subtracts the unfunded liability in order to make the figures more comparable internationally. This liability amounted to 4.6 per cent of GDP in FY2008. The liabilities of the Accident Compensation scheme and the guarantee of the National Provident Fund are also excluded.

In the case of Austria, financial assets data exclude shares, holdings in public corporation and financial assets of the social security system. For Belgium, data on financial assets exclude shares, holdings in public corporations and lending. In 2005 data include the assumption by the government of the debt of the railway company SNCB which amounted to 1.7 and 1.6 percentage points of GDP in 2005 and 2006, respectively. For Finland, the reduction of total net financial assets from 1995 on is mainly due to a change in the treatment of housing corporation shares: these shares are no longer classified as financial assets in the Finnish financial accounts. For example, time series data do not account any more for the substantial amount of housing corporation shares held by local government. In the case of Germany, bonds held by the social security system which constitute liabilities for another sector of general government have not been fully consolidated. The figures for Germany also include the Inherited Debt Fund from 1995 onwards. For Japan, both gross and net financial liabilities include the debt of the Japan Railway Settlement Corporation and the National Forest Special Account from 1998 onwards and the debt of the Japan Highway Corporation from 2005 on. For the United Kingdom and Australia, data on financial assets exclude shares and holdings in public corporations. For Australia figures refer to fiscal years ending 30 June. The government's equity participation in businesses is not included in government financial assets. Also for Australia, data from 1993 onwards exclude State Central Borrowing Authorities, which has been transferred from the general government sector to the public financial enterprise sector.
Sources: National Accounts
Related links: Maastricht definition of general government gross public debt (Annex Table 62)
Last updated: 22 December 2008

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