Second notification of government deficit and debt figures for 2009

STAT/10/157

22 October 2010

Second notification of government deficit and
debt figures for 2009

Eurostat publishes today government deficit and debt figures1 for 26 Member States. There are no figures for Greece and no euro area and EU27 aggregates. These data will be published by Eurostat by mid November. For further information, see "Reservations on reported data".

In 2009 the largest government deficits in percentage of GDP were recorded in Ireland (-14.4%), the United Kingdom (-11.4%), Spain (-11.1%), Latvia (-10.2%), Portugal (-9.3%), Lithuania (-9.2%), Romania (-8.6%), Slovakia (-7.9%), France (-7.5%) and Poland (-7.2%). No Member State registered a government surplus in 2009. The lowest deficits were recorded in Luxembourg (-0.7%), Sweden (-0.9%) and Estonia (-1.7%). In all,
24 Member States recorded a worsening in their government deficit relative to GDP in 2009 compared with 2008, and two (Estonia and Malta) an improvement.

At the end of 2009, the lowest ratios of government debt to GDP were recorded in Estonia (7.2%), Luxembourg (14.5%), Bulgaria (14.7%), Romania (23.9%) and Lithuania (29.5%). Eleven Member States had government debt ratios higher than 60% of GDP in 2009: Italy (116.0%), Belgium (96.2%), Hungary (78.4%), France (78.1%), Portugal (76.1%), Germany (73.4%), Malta (68.6%), the United Kingdom (68.2%), Austria (67.5%), Ireland (65.5%) and the Netherlands (60.8%).

Eurostat also publishes government revenue and government expenditure2 data for these 26 Member States.

Reservations on reported data3

In its News Release 55/2010 of 22 April 2010, Eurostat expressed a reservation on Greek data.

Eurostat is not publishing Greek data in this News Release.

Eurostat has completed its enquiries on statistical compilation of the Greek fiscal data and is now undertaking a process of quality assessment of statistical source data from public accounts, in cooperation with the Greek Statistical Office and the Greek Court of Auditors. Following this process, and the release of the annual report of the Greek Court of Auditors at the beginning of November 2010, Greek fiscal data will be published by Eurostat by mid November 2010.

Amendment by Eurostat to reported data4

United Kingdom: Eurostat has amended the deficit data notified by the United Kingdom for the years 2006 to 2009 for consistency of recording of UMTS licences proceeds in 2000. This leads to an increase in the government deficit in 2007 and 2008 (as well as for financial years 2007/2008 and 2008/2009) by 1.044 mn GBP (0.1% of GDP) and in 2006 and 2009 (financial years 2006/2007 and 2009/2010) by 1.045 mn GBP (0.1% of GDP). There is no change in the reported debt figures.

Other issues

Publication of supplementary tables for the financial crisis

Eurostat publishes supplementary tables for the financial crisis on its website:

http://epp.eurostat.ec.europa.eu/portal/page/portal/government_finance_statistics/excessive_deficit/supplementary_tables_financial_turmoil.

These tables contain data on the "net revenue/cost for general government (impact on ESA95 government deficit)" and "outstanding amounts of assets, actual liabilities and contingent liabilities of government" in relation to government interventions in the context of the financial crisis for the years 2007 to 2009. See also the Eurostat decision on the statistical recording of public interventions to support financial institutions and financial markets during the financial crisis (Eurostat News Release 103/2009 of 15 July 2009).

Background

In this News Release, Eurostat, the statistical office of the European Union, is providing5 government deficit and debt data based on figures reported in the second 2010 notification by EU Member States for the years 2006-2009, with the exception of Greece, for the application of the excessive deficit procedure (EDP). This notification is based on the ESA95 system of national accounts. This News Release also includes data on government expenditure and revenue and an annex with the main revisions since the April 2010 News Release.

Eurostat will also be releasing information on the underlying government sector accounts (excluding Greece and euro area and EU27 aggregates) on the government finance statistics section on its website:

http://epp.eurostat.ec.europa.eu/portal/page/portal/government_finance_statistics/introduction

• According to the Protocol on the excessive deficit procedure annexed to the EC Treaty, government deficit (surplus) means the net borrowing (net lending) of the whole general government sector (central government, state government, local government and social security funds). It is calculated according to national accounts concepts (European System of Accounts, ESA95). Government debt is the consolidated gross debt of the whole general government sector outstanding at the end of the year (at nominal value).

• Table of national data: these are in national currencies. For Cyprus, Malta, Slovenia and Slovakia, data for the years prior to the adoption of the euro have been converted into euro according to the irrevocable conversion rate.

• Government expenditure and revenue are reported to Eurostat under the ESA95 transmission programme. They are the sum of non-financial transactions by general government, and include both current and capital transactions. For definitions, see Council Regulation No. 2223/96, as amended. It should be noted that the government balance (i.e. the difference between total government revenue and expenditure) is not exactly the same under ESA95 as that for the purpose of the excessive deficit procedure. Regulation (EC) No 2558/2001 on the reclassification of settlements under swaps agreements and forward rate agreements implies that there are two relevant definitions of government deficit/surplus:

• The ESA95 definition of net lending /net borrowing does not include streams of payments and receipts resulting from swap agreements and forward rate agreements, as these are recorded as financial transactions;

• For the purpose of the excessive deficit procedure, streams of payments and receipts resulting from swaps and forward rate agreements are recorded as interest expenditure and contribute to the net lending/net borrowing of general government.

Concerning 2009, for most Member States, the difference, if any, between the two balances is minor except in Sweden (0.26% of GDP), Finland (0.25% of GDP) and Denmark (0.11% of GDP). These differences improve net lending/net borrowing for EDP purposes for all the mentioned countries.

• The term “reservations” is defined in article 15 (1) of Council Regulation 479/2009, as amended. The Commission (Eurostat) expresses reservations when it has doubts on the quality of the reported data.

• According to Article 15 (2) of Council Regulation 479/2009, as amended, the Commission (Eurostat) may amend actual data reported by Member States and provide the amended data and a justification of the amendment where there is evidence that actual data reported by Member States do not comply with the quality requirements (compliance with accounting rules, completeness, reliability, timeliness and consistency of statistical data).

• According to Article 14 (1) of Council Regulation 479/2009, as amended, Eurostat provides the actual government deficit and debt data for the application of the Protocol on the excessive deficit procedure, within three weeks after the reporting deadlines. This provision of data shall be effected through publication.

For further information on the methodology of statistics reported under the excessive deficit procedure, please see Council Regulation 479/2009 (available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:145:0001:0009:EN:PDF), Council Regulation 2223/96, as amended (consolidated version available at

http://eur-lex.europa.eu/LexUriServ/site/en/consleg/1996/R/01996R2223-20030807-en.pdf) and the Eurostat publication "ESA95 manual on government deficit and debt", second edition (2002), 240 pages, ISBN 92-894-3231-4, pdf file free of charge, paper copy 37 euro (excluding VAT). Additions to this manual on securitisation, capital injections, classification of funded pension schemes, lump sum payments to government in the context of the transfer of pension obligations, and long term contracts between government units and non-government partners are available in the government finance statistics section on the Eurostat website.

Selected Principal European Economic Indicators: http://ec.europa.eu/eurostat/euroindicators

GDP, government deficit/surplus and debt in the EU (in national currencies)

GDP, government deficit/surplus and debt in the EU (in national currencies)

GDP, government deficit/surplus and debt in the EU (in national currencies)

GDP, government deficit/surplus and debt in the EU (in national currencies)

* Data refer to calendar years. Data referring to the financial year (1 April to 31 March), are shown in italics. For the United Kingdom, the relevant data for implementation of the excessive deficit procedure are financial year data.

Annex

Main revisions between the April 2010 and October 2010 notifications

Below are shown country specific explanations for the largest revisions in deficit and debt for 2006-2009 between the April 2010 and October 2010 notifications, as well as in GDP.

Since the April 2010 notification, there have been revisions of the 2009 government deficit of between +0.3% and
-0.3% in 21 Member States, of between -0.4% and -1.0% in three Member States, and over-1.0% in two Member States.

Deficit

Bulgaria: The revisions in the deficit are mainly due to the implementation of the time-adjusted cash method for the recording of accrual tax revenue (2006-2009) and the reclassification of the railway infrastructure company inside the general government sector (2007).

Germany: The decrease in the deficit for 2009 is mainly due to updated source data on taxes and social contributions and non-financial assets.

Latvia: The increase in the deficit for 2009 is mainly due to the reclassification of a capital injection into a bank as government expenditure.

Lithuania: The increase in the deficit for 2009 is due to updated source data on discounts and premiums on government securities.

Hungary: The increase in the deficit for 2009 is due to updated source data on investment.

Malta: The increase in the deficit for 2006-2008 is due to a methodological change in recording of government bonds issued as compensation to the Catholic Church.

Portugal: The revision in the deficit for 2006-2009 is due to the reclassification of a radio and TV company from the non-financial corporation sector into the government sector.

Romania: The increase in the deficit for 2008 and 2009 is mainly due to the reclassification of public corporations inside the general government sector and reclassification of a financial transaction as a non-financial transaction (2008).

Slovenia: The increase in the deficit for 2009 is mainly due to updated source data on taxes and social contributions.

Slovakia: The increase in the deficit for 2009 is mainly due to the revision of transactions relating to accrued taxes (notably due to the size of the settlements received in the following year) and the reclassification of capital injections in several public corporations as capital transfers.

Finland: The increase in the deficit for 2009 is mainly due to an upward revision of social security benefits data.

Sweden: The increase in the deficit for 2006-2009 is due to a major national accounts revision, updated source data and a methodological change in relation to the recording of local government employees' pension schemes.

Debt

Bulgaria: The increase in the debt for 2007-2009 is due to the reclassification of the railway infrastructure company inside the general government sector.

Cyprus: The increase in the debt for 2009 is due to updated source data.

Portugal: The increase in the debt for 2006-2009 is due to the reclassification of a radio and TV company from the non-financial corporation sector into the government sector.

Slovakia: The decrease in the debt in 2009 is due to an elimination of guaranteed debt, originally expected to be called.

Sweden: The revision in the debt for 2006-2009 is due to a correction of the conversion to national currency of swapped debt instruments.

GDP

The GDP for 2009 notified in October 2010 for EDP purposes was revised by a number of Member States compared to that notified in April 2010 by small amounts, and by larger amounts (more than 1% of GDP) for Bulgaria, Ireland, Latvia, Portugal, Slovenia and Sweden. Changes in GDP affect deficit and debt ratios due to the denominator effect.

Revisions in government deficit/surplus and government debt ratios

from the April 2010 to the October 2010 notification

* Revisions to deficit/surplus ratios: a positive sign means an improved government balance relative to GDP, and a negative sign a worsening.

Revisions in government deficit/surplus and government debt ratios

from from the April 2010 to the October 2010 notification

* Revisions to deficit/surplus ratios: a positive sign means an improved government balance relative to GDP, and a negative sign a worsening.