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Understanding Financial Accounts

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Understanding Financial Accounts seeks to show how a range of questions on financial developments can be answered with the framework of financial accounts and balance sheets, by providing non-technical explanations illustrated with practical examples: What are the basic principles, concepts and definitions used for this framework which is part of the system of national accounts? What sources and which methodologies are used for their compilation? How are these used to monitor and analyse economic and financial developments? What can we learn about the 2007-2009 economic and financial crisis when looking at the numbers provided in this framework? What can we learn about financial risks and vulnerabilities? This publication is intended for young statisticians, students, journalists, economists, policy makers and citizens, who want to know more about the statistics that are at the heart of the analysis of financial developments in OECD economies.

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Deficit and debt of general government and public sector

Governments play important roles in the economy. In the financial accounts and balance sheets, these include being major borrowers, issuers of securities, and funders of other entities. The chapter first dwells upon the delineation of the general government sector and the public sector, which includes general government and public corporations, both of which have separate economic roles. Governments often have complex structures, which give rise to specific classifications (for example, budgetary and extra-budgetary) and levels (for example, central, state, and local). This chapter also provides more detail on government deficit, financial assets owned by government and the various definitions of government debt, including the pitfalls when comparing such data internationally. It also deals with consolidation issues and some other specifics concerning the valuation of financial assets and liabilities, and the assessment of sustainability of government finance.

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