The correlation between Government Finance Statistics (GFS) and governmnet secor in the system of national accounts is strong, as many countries first compile GFS on the basis on governmental, or administrative, accounts and then use the GFS as source for the government sector (total or central government only) in the national accounts. The coverage of the GFS will differ among countries, depending on their individual organization of the government.
‘A Manual on Government Finance Statistics’ issued by the International Monetary Fund in 1986 gives the guidelines for recording government finance statistics. The manual has recently been revised - with the final draft relased in July 2001, and the "new GFS" has to the extent possible been harmonized with the 1993 SNA. However, as most ccountries are still following the 1986 guidelines, this description of the relation between the two statistical systems is based on the old manaul.
The format for measuring government in the SNA differs somewhat from the format used in GFS, however, many similarities exist between the two systems. The difference in their objectives gives rise to a number of differences requiring adjustments before GFS can be incorporated into the SNA.
- Basis for recording; While SNA follows the rule of accrual accounting, and impute a number of transactions (consumption of fixed capital and imputed contributions to unfunded pension schemes), GFS follows the rule of cash accounting and avoids the implementation of transactions. The recommend basis of recording will most likely be changed to accrual accounting in the new Manual on Government Finance Statistics.
- Coverage; The coverage of government sector is the same in GFS and SNA, while the sub-sectoring might be different depending on which alternative for sub-sectoring countries chose to follow. GFS consolidate social security funds with the level of government in which they operate, while they according to SNA can be either consolidated with the level of government they operate, or a separate sub-sector. (In some countries, the central government may include units which engage in financial transactions which in most countries would be performed by central banks, e.g., issue of currency, maintenance of international reserves and operation of exchange stabilization funds, and transactions with the IMF. When the units in questions remain financially integrated with and under direct control and supervision of the central government, SNA will not treat them as separate institutional units but included them in central government. This units will not be part of central government as recorded in GFS.)
- Classifications; There are several transfers that are classified differently in the GFS compared to the SNA, but these differences are minor and partly a result of the fact that SNA has to follow a uniform classification for all institutional sectors. The revision of the GFS will most likely try achieve (close to) full harmonization.
Many theoretical differences between GFS and SNA may not apply in practice, however, since both systems most often relay on data sources available in only one form. The optimal relationship between government administrative accounts, GFS and SNA is a sequential one, with the compilation process yielding GFS derived from the governments accounts as its first product and national accounts as a further development. Compilers of SNA must usually take the building blocks used for GFS as their basic source, reclassify, supplement if necessary, and adjust to accrual basis in order to correspond with data from other institutional sectors.
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