National Accounts Classification of General Government - Budget 2003

Introduction

1. The following tables bring together estimates of the consolidated capital and current accounts of General Government which includes the Exchequer, various extra-budgetary funds (e.g. the Social Insurance Fund), various non-commercial semi-state bodies and local Government, classified according to the definitions employed in national income accounting.  The main purpose of the presentation is to provide a basis for relating the income and expenditure of General Government to such national income aggregates as saving, investment and personal income, whereas many other budgetary documents cannot be readily used in this way.  The presentation thus gives a more comprehensive view of fiscal policy than would be possible on the basis of the budgetary accounts alone.

2. The figures shown for 2001 are based on published information.  Figures for 2002 are provisional and are subject to revision when the Appropriation Accounts and other final accounts become available.  The estimates shown for 2003 are consistent with the Budget Day projections.

3.  Transactions between the various funds and accounts are eliminated so as to show the net flows between the General Government sector and the rest of the economy.  Current transactions of government trading activities are omitted, but estimates of the gross surplus on these activities are included in item 12.

4.   The various definitions employed are similar to those used in Table 21 of the National Income and Expenditure accounts published by the Central Statistics Office.  It should be noted that there are some differences in presentation between Table 21 as published in the National Income and Expenditure and the following tables as some of the headings used in Table 21 have been amalgamated.  Additionally, items 29 (Capital receipts less Financial Transactions) and 37 (Capital expenditure less Financial Transactions) are included to facilitate the calculation of a Net Lending/ Borrowing figure - this is also known as the General Government Balance. 

5.  It should be noted that Net Lending/Borrowing (item 40) varies from the Exchequer Balance shown in the Exchequer Budgetary accounts.  The reasons for these differences are:

·       an adjustment, in accordance with ESA conventions, to the National Debt interest charge to exclude changes in the assets of the Capital Services Redemption Account and capital gains or losses on foreign exchange contracts, swaps, etc.;

·        the exclusion of equity and loan transactions from the General Government Balance on the basis that such transactions affect the composition but not the level of assets and liabilities. The proceeds from the sale of ACC Bank in 2002, for example, are treated as a financial transaction under ESA conventions and are not counted as income of the Government Sector, whereas these receipts are included as income in the Exchequer Balance.

·    payments in respect of the prefunding of future pension liabilities do not impact on the General Government Balance as they are treated as part of the General Government Sector under ESA conventions and transactions within the Sector do not impact on the General Government Balance.  However, such payments are included as expenditure in the calculation of the Exchequer Balance;

·        the treatment of extra-budgetary fund transactions of which the most notable examples are (i) assigning payments from Funds such as the Hepatitis C Trustee Fund to the year in which actual payments are made from the Funds whereas the impact on the budgetary arithmetic occurs in the year in which transfers were made from the Exchequer to the Funds; and (ii) the accrual of certain transactions to the period when the underlying economic activity took place.  This includes Departmental and Revenue Commissioners Balances carried from one year to another which are discounted in favour of the underlying transactions, and an adjustment to certain tax receipts to accrue the receipts to the period when the underlying economic activity giving rise to the tax liability took place; and

·        including the full impact of local government receipts and expenditure whereas the Exchequer Balance only includes transfers between local government and the Exchequer.

The differences between the Exchequer Balance and Net Lending/ Borrowing (the General Government Balance) are shown in tabular form in Table 2 of the Budget 2003 Statistics and Tables.