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The concepts of saving and net-lending
are introduced in Indicator 7
Indicator 9 respectively. However they are reintroduced
in this section on General Government to reflect the particular importance these concepts
have in the area of government finances. Saving is typically associated with the
"Golden Rule" concept, namely that government current
expenditures minus current receipts (such as taxes) should net out over the course of an
economic cycle. Net lending/borrowing reflects the fiscal position after accounting
for capital expenditures. Net-lending means that government is providing financial
resources to other sectors and net-borrowing means that government requires financial
resources from other sector.
It's important to note in this context
that whilst general government saving and net lending/borrowing are important concepts in
the SNA accounting framework and provide the basis for sound international comparisons,
they are not necessarily the key fiscal measures targetted by governments. Some countries
for example manage their budgets using broader notions that incorprorate the positions of
public corporations and others focus on more narrow concepts such as central government.
The European Commission uses the net-lending concept to monitor government fiscal
surpluses/deficits with an additional adjustment to reflect net streams of interest
payments resulting from swaps arrangements and forward rate agreements.
Definition
Gross Saving = Disposable income (operating surplus
plus taxes on production and imports received
minus subsidies payable plus property income
received minus property income payable plus net taxes on income and wealth received plus social contributions receivable plus other current transfers receivable minus other current transfers payable minus social benefits and social transfers in kind payable
minus the adjustment for the change in net equity
of households on pension funds)
minus general
government final consumption.
Net-lending = Gross saving
plus net capital transfers (receivable minus
payable) minus gross capital formation minus
acquisitions less disposals of non-produced non-financial assets
= Total general government revenue
minus total general government expenditure
= net acquisition of financial
assets minus net incurrence of liabilities.
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Comparability
The biggest issue affecting comparability across
countries concerns the scope of the government sector. In many countries, hospitals, for
example, are classified outside of the government sector and are instead recorded as
public corporations; on the grounds that they charge market prices for their services.
This is an important point as the guidance provided in the SNA on the delineation of
units between market and non-market providers (which refers to most output being
non-market) provides scope for differences in country practices. EU countries have
adopted a 50% rule for "most" in this context.
Another potential area where comparability may be
affected relates to the determination of public ownership. The SNA requires that
"control" be the determining factor and describes a
number of criteria that can be used to assess this requirement. Recognising that this is
non-trivial it includes a practical recommendation that a 50% rule relating to share
ownership should be adopted. However, in practice, countries may still choose to measure
ownership on the basis of the determining criteria.
Generally however the comparability
of net-lending/borrowing and saving figures for countries is very high.
Source
Online databases
Further reading
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Eurostat (2002), ESA95
Manual on Government Deficit and Debt, European Communities,
Luxembourg.
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Lequiller, F. and D. Blades (2007), Understanding National Accounts, OECD Publishing,
http://dx.doi.org/10.1787/9789264027657-en.
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OECD (2000), System of
National Accounts, 1993 - Glossary, OECD Publishing, http://dx.doi.org/10.1787/9789264180871-en.
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UN, OECD, IMF and Eurostat (eds.) (1993),
System of National Accounts 1993, United
Nations, Geneva, http://unstats.un.org/unsd/sna1993.
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| Indicator in PDF |
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| Table |
| 21.1. Gross saving and net lending/net borrowing of general
government |
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| 21.1 Gross saving and net lending/net
borrowing |
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