Table 2

EXPLANATION OF NET DIFFERENCE BETWEEN EXCHEQUER BALANCE AND GENERAL GOVERNMENT BALANCE

The Exchequer Balance is the traditional domestic budgetary aggregate which measures Central Government's net surplus or borrowing position. It is the difference between total receipts into and total expenditure out of the Exchequer Account of the Central Fund.

The General Government Balance (GGB) measures the fiscal performance of all arms of Government, i.e. Central Government, Local Authorities, Health Boards, Vocational Education Committees and non-commercial State sponsored bodies, as well as funds such as the Social Insurance Fund and the National Pensions Reserve Fund which are managed by government agents. It thus provides an accurate assessment of the fiscal performance of a more complete "government" sector.

The GGB does not reflect the position of commercial State sponsored bodies as these agencies are classified as being outside the General Government Sector.

The GGB is calculated in accordance with ESA95, a consistent standard developed by the EU to facilitate budgetary comparisons between EU Member States in accordance with their obligations under the Maastricht Treaty.

Details of the variation between the Exchequer Balance and the GGB are set out in the table below.

2002

2003

2004

2005

Estimated

Post-Budget

Projection

Projection

Outturn

Estimate

€m

€m

€m

€m

Exchequer Surplus (Deficit)

-193

-1,869

-3,442

-3,715

Interest adjustments (a)

-552

-331

-155

-150

Exclude equity and loan transactions (b)

-678

-151

-38

-109

Net (Borrowing)/Surplus of non-commercial State sponsored bodies

-1

36

-

-

Adjustments for Transactions between the Exchequer and Government Departments/Offices and Extra-Budgetary Funds (c)

36

-46

28

28

Impact of the National Pensions Reserve Fund (d)

1,228

1,296

1,394

1,500

Accrual Adjustments (e)

130

157

196

201

Net (Borrowing)/Surplus of Central Government

-20

-908

-2,017

-2,246

Net Surplus of the Social Insurance Fund

393

248

496

719

Transfer from Social Insurance Fund

-635

-

Net (Borrowing)/Surplus of Local Authorities

-125

-225

-260

-265

General Government Balance

-397

-885

-1,781

-1,792

Net Difference between Exchequer Balance and GGBalance

-204

984

1,661

1,923

Figures may not add due to rounding

(a)

This adjustment reflects the requirement, under ESA95 rules, that changes in the assets of the Capital Services Redemption Account and capital gains or losses on foreign exchange contracts, swaps, etc., should be excluded from the interest recorded for the purposes of calculating the GGB. An adjustment for interest accrued but not paid on small savings is also included.

(b)

Equity and loan transactions are excluded from the GGB on the basis that they affect the composition but not the level of assets and liabilities. The sale of ACC Bank in 2002, for example, is treated as a financial transaction under ESA95 conventions and the proceeds from this sale are not counted as income of the General Government Sector.

(c)

Transfers between units within the General Government Sector do not affect the GGB.

(d)

The National Pensions Reserve Fund (established in 2001) is within the General Government Sector and transactions within the Sector do not have an impact on the GGB. These figures include the contributions paid from the Exchequer and a provision for income earned by the funds.

(e)

This adjustment is required in respect of certain transactions recorded on an accruals basis in calculating the GGB. The main adjustments are in respect of Value Added Tax receipts and Departmental Balances.