Introduction to Government Finance Statistics (GFS)

Government Finance Statistics (GFS) is an internationally accepted system for presenting data on the financial activities of government in a format suitable for economic analyses, planning, and policy determination. GFS is a statistical statement that systematically summarizes, for a specific time period, the economic transactions of the government with other units. GFS focus upon financial transactions - taxing, borrowing, spending, and lending - rather than on the utilization of labor, the consumption and production of goods and services, and other measures of physical volume. In the GFS organize transactions in categories dealing with aspects of government activity such as revenue, expenditure, and deficit/surplus that arises when spending is higher/lower than revenue. Included in GFS are also tables covering the financing of any deficit/surplus, as well as tables on outstanding debt of the government.

Separate statistics about government finances are needed because of (i) the important role of the government in a nation’s economy. Governments affect the economy through taxation policies, expenditure policies (e.g., subsidies), and financing activities (e.g., borrowing on the financial markets), (ii) the special characters of governments activities (the activities are selective, and the motivation to carry out the activities are different for the government compared to other units in the economy - policy rather than profit), and (iii) the need to monitor the government’s operations and financial needs.

GFS is distinguished from two other accounting systems, government records/accounts and national accounts statistics. Government accounts are maintained by operating units for purposes of control and accountability, while national accounts recast the income and expenditure of government in a form common to all institutional sectors in the economy so as to measure and aggregate their production, consumption, other income and expenditures, capital accumulation and finance, as well as capital and financial balances. All systems meets separate and important needs, however, they are closely linked together in the way that government, or administrative, accounts are the source for GFS, and GFS provide data that are necessary for the compilation of national accounts statistics.