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Concepts and definitions

Central government guarantees

Central government guarantee data include such guarantees for which the state is liable.

Guarantees are arrangements whereby the guarantor undertakes to a lender that if a borrower defaults, the guarantor will make good the loss the lender would otherwise suffer. A fee is often collected for providing a guarantee.

Guarantees can also be provided for financial assets held by some unit. In this case, the commitment relates to cover losses related to a decrease in the value of assets or shortfalls in the recovery of the asset in full and in such cases there are various ways of activating the guarantor's obligations.

Central government guarantees also include guarantees administered by non-government units on behalf of general government or as part of the policy objectives of general government. An example of this is the export credit guarantees

Consolidated financial balance/flows

Financial assets and liabilities can be presented in consolidated form, i.e., after elimination of intra-sectorial transactions within sub-sectors (e.g. debts between municipalities) and between sub-sectors (including municipalities' debts to the state, employment pension corporations and other social security institutions within the general government sector). Consolidated data only show the relative positions of the sectors.

ESA 2010

ESA 2010 = European System of Accounts 2010, the EU's revised Regulation that steers the compilation of economic statistics.

Expired guarantees

A guarantee expires as the underlying credit is repaid. Repayment (in full or in part) is normally effected by the debtor. In some instances the guarantor of a loan is required to repay the loan in full or in part, based on a guarantee committed. This instalment also includes net changes in the stock of guarantees brought about by changes in the exchange rates, for example.

Financial assets category

The financial assets category includes all financial instruments that are described in the financial accounts.

The main classification criteria are the asset's liquidity and the laws that regulate its use. The asset must correspond to an unconditional liability; contingent assets are included only if they have a market value or can be offset against other liabilities.

Financial liabilities

Financial liabilities are economic liabilities that are categorised in the same manner as financial assets. Liabilities represent the counterpart of assets, i.e., an asset of one sector is always recorded as a liability of another sector.

General government debt

General government debt is general government sector consolidated gross debt valued at nominal value, and it is also known as EDP debt (= Excessive Deficit Proce-dure).

It comprises bonds, short-term securities, short-term and long-term loans and deposits received by general government from other sectors of the national economy or from the rest of the world. The EDP debt concept used in reporting according to the European Union's Growth and Stability Pact differs from that of ESA 2010 with regard to valuation and coverage. Finan-cial assets and liabilities are valued at market value in ESA 2010-compliant financial accounts, whereas general government EDP debt is valued at nominal value. Of the financial claims in ESA 2010, for example, deriva-tives, trade credits and advances are not included in the loan stock.

General government finances

The general government sector consists of state budget economy (on-budget activities) and extra-budgetary funds (off-budget activities).

Gross debt

Financial assets have no impact on total gross debt.

New guarantees granted

The total amount of outstanding guarantee commitments granted during the reference period.

Non-consolidated financial balance/flows

Financial assets and liabilities can be presented in non-consolidated form, i.e. all transactions are shown in full, including intra-sectorial and intra-sub-sectorial transactions. Intra-sectorial transactions in sectors consisting of a single institutional unit are nevertheless eliminated (e.g. borrowing within the central government sector). Intra-sectorial transactions do not have any impact on the sector's net worth or net lending.

Paid indemnities based on central government guarantees

Indemnities paid to lenders based on central government guarantee commitments during the reference period. Paid indemnities are given in gross.

The concept does not taken into consideration possible revenues from recovery claims (which are compiled in a separate item and are often directed to a different reference period than paid indemnities), and yields from possible insurance taken for guarantees. Paid indemnities include arrears and interests paid based on commitments.

Revenues from guarantee fees

Revenues accrued during the reference period from guarantee fees received as commission from guarantees for which the guarantor (state) is liable.

Revenues from recovery claims

Revenues accrued by the guarantor from recovery claims based on indemnities paid by to the guarantor (state) during the reference period.

Stock of guarantees

The total amount of central government outstanding guarantee commitments for which the guarantor (state) is liable in the reference period. The amounts do not include interest due.