Short description of the methods

General government sector

The public sector, or general government, as defined in the ESA95 comprises central government, state government and local government, as well as social security funds. In Finland, general government comprises central government, local government, Regional Government of the Åland Islands, and social security funds. The sector concept is identical in statistics on both net lending and liabilities.

Central and local government enterprises are not included in the general government sector in Finland. Besides budgetary finance, the central government sector also comprises extra-budgetary funds.

Social security funds in Finland comprise units that administer the social security decreed by government. These include the bodies implementing basic security, such as the Social Insurance Institution and unemployment funds, and corporations, pension funds, pension foundations and public institutions (e.g. the Local Government Pension Institution) managing unemployment pension insurance. For the purpose of statistics production, employment pension institutions were defined as being part of the public sector in Finland by a special decision of the Commission of the European Union in January 1997.

Voluntary pension funds and foundations are not included in employment pension institutions. In national accounts statistics on deficit and debt, these so-called A pension funds and foundations and A parts of AB pension funds and foundations could only be separately itemised in the data on employment pension institutions as of the beginning of the statistical year 2000. This change has some bearing on the EMU deficit and debt.

EMU deficit

In national accounts calculations, EMU deficit corresponds with the net borrowing/net lending of general government exclusive of net payments relating to swap and forward rate agreements, which in EMU deficit reporting are entered as interest expenditure (deficit), but in national accounts as changes in derivative liabilities (with no impact on deficit). In Finnish national accounts, these swap interest payments were deducted from central government interest expenditure from year 2003. The reported EMU deficit corresponds direct with the national accounts deficit before year 2003.

Budget deficit and net borrowing

Budget deficit in Finland refers to the net financing requirement of the state budget. The concept embraces budget finance. It is calculated as a difference between state income and expenditure before borrowing and amortisations.

National accounts data on deficit/surplus, or net borrowing/lending are obtained from net financing requirement via several correction items. In national accounts, net borrowing/lending may not be influenced by items representing financial transactions (changes in receivables and liabilities), such as borrowing, received loan repayments or other financial investments.

More incidental items are represented by the emission and exchange rate gains and losses which appear in the state budget in so far as they are not included in national accounts interest items. Differences in budget calculations may also originate from partial recording of the taxes, subsidies and interests of the accounts on bases other than cash (on performance basis or as time adjusted), as well as from other more incidental recording or timing differences.

EMU debt

EMU debt comprises promissory note loans, bonds and debentures, short-term securities, other short-term loans and cash received by general government from the other sectors of national economy or from the rest of the world. The debt concept used as the EMU criterion deviates from the ESA95 in both valuation and scope. In financial accounts complying with the ESA95 financial assets and liabilities are valued at market value whereas the EMU debt is valued at nominal value. Of the financial claims of the ESA95, derivatives, trade credits and advances, and other accounts payable are not included in loan stock but are taken into account as items influencing changes in the debt.

All data causing changes in the debt are presented consolidated. Foreign currency denominated loans are recorded in the statistics in their swap agreement currencies and not in the currencies in which they were originally drawn. Only the value of the coins in circulation, and not that of the central government's total metallic monetary liability, is recorded in the statistics and the central government's cash debt.

Terms

General government = central government, local government, and social security funds.

State finances = budget finance and extra-budgetary funds.

EMU-deficit = Net borrowing / net lending of general government

Financial deficit = Net borrowing = Negative net lending

Budget deficit = Net financing reguirement of the state budget.

EMU-debt = Consolidated gross debt of the general government at nominal value.

Consolidated debt = debts to/from general government sector have been eliminated

Gross debt = financial assets do not affect debt

ESA95 = "European System of Accounts 1995" manual of the European Union for the compiling of economic statistics. Adopted in deficit reporting in 2000.

 

 


Last updated 24.1.2014

Referencing instructions:

Official Statistics of Finland (OSF): General government deficit and debt [e-publication].
ISSN=1799-5914. 2004, Short description of the methods . Helsinki: Statistics Finland [referred: 17.11.2019].
Access method: http://www.stat.fi/til/jali/2004/jali_2004_2006-03-31_men_001_en.html