External Debt Relationship to Government Finance Statistics

Government Finance Statistics

The Government Finance Statistics (GFS), or the "fiscal accounts" show the balance of incomes and expenditures of the (central) government, and how it is financed. Expenditures include interest paid to foreigners by the government, and revenues include interest on foreign assets. If central government is running a deficit, the balance between expenses and incomes will be financed by external and domestic credit creation. Thus, the external debt accounts should be reconciled with the records of government finance.

Differences exists between external debt accounts and government finance accounts, as represented by the World Bank's DRS and the IMF's Government Finance Statistics (GFS). While GFS accounts include short-term debt, the World Bank's DRS system collects long-term debt only at the present time. However, the Bank estimates total external debt on the basis of other sources (above), which should be reconciled with the GFS data on external debt.

Furthermore, because GFS is based an cash accounting, debt service payment will be shown when paid - leaving service payments in arrears hidden. Also, GFS values debt at the amount government is obligated to pay when the debt matures, thus, excluding the effects of discounted premia, accrued interest and capital gains/losses.