OECD National Accounts Experts’ Meeting Session on General government accounts 8 October 2003

OECD National Accounts Experts’ Meeting

Session on General

government accounts

8 October 2003

The Italian General government sector: size, boundaries,

methods of classification and recent issues

ISTATDaniela Collesi

Deborah GuerrucciFederico Nusperli

[email protected]

THE SIZE OF GENERAL GOVERNMENT IN ITALY

GENERAL GOVERNMENT AND ITS SUBSECTORS AS REFERENCE FOR PUBLIC POLICIES

THE S.13 ARCHIVE AND STANDARD ISSUES

THE ORGANISATION OF GG

INTRODUCTION OF ESA95 AND THE REDEFINITION OF THE GENERAL GOVERNMENT SECTOR S.13

THE MAIN SOURCES AND THE DATABASE OF GENERAL GOVERNMENT SECTOR S.13

RECENT MEASURES CONCERNING GENERAL GOVERNMENT SECTOR: CLASSIFICATION ISSUES

NA offer a common basis of reference for international comparisons, a set of technical means of classification standards, identification on the statistical units and transactions

GG not widely accepted in a juridical contest also if it is used as a reference

GG sector is comparable only in the economic meaning


General government accounts in Italy for more than 12.5 % of GDP (as GG value added) from 1995

Figure 1 - General government Value added (ratio to GDP)

11,00

11,50

12,00

12,50

13,00

13,50

14,00

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002


Figure 2 – General government Net borrowing (ratio to GDP)

-14,00

-12,00

-10,00

-8,00

-6,00

-4,00

-2,00

-

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Net lending/Net borrowing


Figure 3 – Public expenditure by its main components (ratio to GDP)

0

10

20

30

40

50

60

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Capital EXP

Other current EXP

Final consumption EXP

The two components, and their further analysis: 1. total expenditures


Figure 4 – Public revenue by its main components (ratio to GDP)

The two components, and their further analysis:2. total revenues

0

5

10

15

20

25

30

35

40

45

50

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Other current revenues

Capital revenues

Social contributions

Taxes on production and imports

Current taxes on income, wealth


ESA95 Questionnaire

Table 2 Main aggregates of GG

Table 9 Detailed Tax and Social Contribution Receipts by Type

of Tax or Social Contribution and Receiving Subsector

Table 11 Expenditure of General government by functions


The Italian General government sector, according to NA, is a broadly accepted concept. Public finance documents assume GG as the reference sector to measure public finance objectives

The list S.13 is shared between Istat and the Ministry of Economy

Also if ESA95 has been introduced in Italy, it still remain hard to apply because of some differences with the public law


The direction followed by Government to pursue its functions:

delegating to other institutional sectors simply

maintaining the regulation activity

directly engaging them


Figure 5 – GG Final consumption expenditure by subsector (millions euros)

-

50.000

100.000

150.000

200.000

250.000

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Social Security funds

Local Government

Central Government

The transition in the provision of public services between the central level of government and the local one


Figure 6 – GG Total expenditure by subsector (millions euros)

-

100.000

200.000

300.000

400.000

500.000

600.000

700.000

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Social security funds

Local government

Central government

Total expenditure between the three subsectors. The relative size of Central government is decreasing in favour of Local governments and Social security funds


Figure 7 – GG Total revenues by subsector (millions euros)

-

100.000

200.000

300.000

400.000

500.000

600.000

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

SocialsecurityfundsLocalgovernment

Centralgovernment

The increasing share of revenues for local government


GG sector according to ESA95 used for the Yearbook of GG sectors

S.13 list represents an important tool for uses such as:

the customers classification into institutional sectors for the banking system (functional for the classification of financial accounts)

the classification of transfers performed by government units by beneficiary sector that should be used when analysing flows to build the economic accounts


One of the major effort in compiling the accounts is

A special effort towards standardisation regards the compilation of data for the State

According to the most recent law, the economic and functional classifications should be in virtually complete conformity with the NA criteria for the GG accounts:

» Functional classification from 1999 » Economic classification from 2000

The new functional classification is integrated with the COFOG with a fourth level for more detailed analysis

Also for the Regions the classifications used should be in conformity with the NA criteria

standardisation of sources


S.1311 Central government

S.1313 Local government

S.1314 Social security funds

General government has a three level subsector structure defined by using ESA 95:


Table 1 - GENERAL GOVERNMENT SECTOR (S.13)

Code Type of institutional unit Subsector

A MINISTERIES Central governmentB COSTITUTIONAL BODIES Central governmentC ECONOMIC ACTIVITIES REGULATION BODIES Central governmentD ECONOMIC SERVICES PRODUCERS Central governmentE INDIPENDENT ADMINISTRATIVE BODIES Central governmentF ASSOCIATIVE STRUCTURE BODIES Central governmentG CULTURAL SERVICES PRODUCERS Central governmentH OTHER BODIES Central governmentI RESEARCH BODIES Central governmentL EXPERIMENTAL RESEARCH BODIES Central governmentM REGIONS AND AUTHONOMOUS PROVINCES Local governmentN PROVINCES Local governmentO MUNICIPALITIES Local governmentP LOCAL HEALTH UNITS Local governmentQ HOSPITAL BODIES Local governmentR CHAMBERS OF COMMERCE Local governmentS TOURISM BODIES Local governmentT HARBOURS BODIES Local governmentU MOUNTAINS DEVELOPMENT BODIES Local governmentV REGIONAL DEVELOPMENT BODIES Local governmentZ UNIVERSITIES Local governmentX UNIVERSITIES STUDIES AIDING BODIES Local governmentY CONCERT AND SIMILAR BODIES Local governmentW PARK BODIES Local governmentJ REGIONAL BODIES FOR RESEARCH AND ENVIROMENT Local governmentK SOCIAL SECURITY FUNDS Social security funds

THE ORGANISATION OF GGTable 2 - General government by number of institutional units and employees

% %Central Government 196 2 53,7Ministeries 19 0,2 52,1Costitutional bodies 7 0,1 0,2Economic activities regulation bodies 6 0,1 …Economic services producers 13 0,1 0,3Indipendent administrative bodies 6 0,1 …Associative structure bodies 5 0,1 …Cultural services producers 60 0,6 0,1Other bodies 2 … 0,1Research bodies 36 0,4 0,6Experimental research bodies 42 0,4 0,1Local government 9.352 97,7 44,6Regions and authonomous provinces 22 0,2 2,9Provinces 100 1 1,9Municipalities 8.103 84,6 15,4Local health units 197 2,1 13,1Hospital bodies 123 1,3 7Chambers of commerce 102 1,1 0,3Tourism bodies 120 1,3 0,1Harbours bodies 20 0,2 …Mountains development bodies 355 3,7 0,2Regional development bodies 15 0,2 0,1Universities 19 0,2 …Universities studies aiding bodies 58 0,6 0,1Concert and similar bodies 13 0,1 0,1Park bodies 73 0,8 3,3Regional bodies for research and enviroment 32 0,3 0,1Social security funds 25 0,3 1,7Social security funds 25 0,3 1,7Total 9.573 100 100

Percentage distribution of employees

Institutional unitsType of institutional units by subsector


Check of the ESA79 list to move to ESA95

Exclusion of some bodies:

the 50% criterion

the control by GG sector

the financing by GG sector

for social security funds: control on management of the institution and compulsory participation for certain group of population

The institutions included in the sector S.13 are characterised by:

the nature of “institutional unit”

the institutional classification:

a. according to a juridical approach, an institution is public if the Italian legislation defines the unit “public” because it has a public purpose

b. according to an economic approach, an institution is included in the GG sector if it satisfies the ESA95 rules

Two groups:1. the public institution sector;2. the GG sector (S.13)

Some units which are public for the public law aren’t included in S.13

Some units which are private for the public law are included in S.13


THE MAIN SOURCES AND THE DATABASE OF GENERAL GOVERNMENT SECTOR S.13Sources used may be statistical surveys or administrative sources

Table 3 - General government: sources used for the compilation of the accounts

Body observed Source Body observed Source

ASL and AO Ministry of health Social security funds Ministry of Economy

Social security funds ISTAT State Ministry of Economy

Regions ISTAT State sector Ministry of Economy

Municipalities ISTAT State receipts Ministry of Economy

Municipalities Ministry of Interior Regions Ministry of Economy

Provinces Ministry of Interior Regions' receipts Ministry of Economy

Chambers of commerce ISTAT Municipalities Ministry of Economy

APT ISTAT Municipalities' receipts Ministry of Economy

EDISU ISTAT Provinces Ministry of Economy

Universities ISTAT Provinces' receipts Ministry of Economy

Other bodies ISTAT Chambers of commerce Ministry of Economy

Mountain communities Ministry of Economy

Universities Ministry of Economy

Other bodies Ministry of Economy

STATISTICAL SURVEYS ADMINISTRATIVE SOURCES


The micro-database provides basic information on the various institutions, some quantitative and some relating to other features of the units:

value of NA economic transactions according to COFOG classification

non-monetary variables such as geographical area, number of local units and legal form

information on employment, such as the number of employees by economic activity according to ATECO classification


Figure 8 - Classification of the instituional units: decisional tree

Institutional unit

Is it productive?

NO

YES

S14 Households (consumers)

Is it controlled by GG units?

NO

YES

S14 Households (producers) or S11 Non financial corporations or S12 Financial corporations or S15 Non profit institutions or

serving households

Is it a non market unit? (50% criterion)

NO

YES

Is it a non profit institutions serving households?

S11 Non financial corporations or S12 Financial corporations

NO

YES

S13 General Government

Is it mainly financed by GG units?

NO

S15 Non profit institutions serving households

YES

MEASURES CONCERNING THE GENERAL GOVERNMENT SECTOR: CLASSIFICATION ISSUES

The different kinds of measures :

a. creation of new units with specific tasks, classified inside General government sector (S.13)

b. restructuring of existing General government units

c. creation of new public units to be classified outside sector S.13

d. restructuring of existing General government units

e. transfer of competencies from General government institutions to private units

The main elements that must be taken into account :

MEASURES CONCERNING THE GENERAL GOVERNMENT SECTOR: CLASSIFICATION ISSUES

a. the degree of public control over the new or restructured institutions

b. the characteristics of their activity and of the transactions in which they are involved

c. the possible assumption by General government of some risks borne by the new or restructured institutions

The creation of Patrimonio Spa and Infrastrutture SpA

On June 2002 a State law established the creation of two joint-stock companies. Both were 100% public owned: Patrimonio SpA directly by the State, Infrastrutture SpA by the Cassa Depositi e Prestiti

The objective of Patrimonio SpA would have been the increase of value, the management and, in some cases, the sale of the assets included in the State balance sheet


The first task of Infrastrutture Spa will be the financing of TAV SpA, Italian High-Speed Railway lines

The receipts of the issuance will be transferred to TAV that will repay its debt with the income deriving from the tolls, possibly supplemented by a State additional contribution

This kind of operations does not provide for any, even theoretical, State intervention

According to the available information ISTAT has decided to classify Infrastrutture SpA in the S.12 sector, as a Financial Intermediary, Patrimonio SpA in the S.13 sector, as a Central Government Institution


The rationale of this decision is the following:

a. The two companies are public producers as they are fully controlled by General government units

b. The main activity of Infrastrutture SpA is financial intermediation, so the sector is Financial Corporation sector irrespective of its costs and revenues (ESA95 Manual on government deficit and debt, §I.1.3)

c. Patrimonio Spa has to be classified according the result of ESA95 50% rule. At present, considering that production costs include the Consumption of fixed capital that is very relevant, because of the relevant value of the assets that have been transferred to the company, the classification into General government sector is the most suitable

The transformation of ANAS into a joint-stock company

The Italian Financial Act for 2003 established that ANAS had to be transformed into a joint-stock company

The main changes in ANAS activity will be:

a. a different risk exposure as the State guarantee on ANAS liabilities will be removed

b. the tranfer of the roads’ ownership from the State to ANAS

c. the necessity to operate in a competition market

d. the need to increase the return of the activity both improving the efficiency of the core business and diversifying the sources of income

The transformation of ANAS into a joint-stock company

It has been announced that:

tolls will be introduced in some of the roads managed by ANAS, that are currently free of charge

any income deriving from the use of the roads will be fixed according to market criteria

services will be furnished to companies operating in the transportation and infrastructure sector

Compared to the expected revenues, the production costs borne by ANAS currently calculated in NA are significant mostly due to Consumption of fixed capital

OECD National Accounts Experts’ Meeting Session on General government accounts 8 October 2003

Documents

Transcript of OECD National Accounts Experts’ Meeting Session on General government accounts 8 October 2003