Budgetary developments (national accounts)
Council Regulation (EC) No 2223/96 (ESA95) stipulates how the government sector is to be defined in the national accounts. The methodological framework laid down in this regulation are, among other things, the basis of the statistics on the government that feed into the European budgetary surveillance procedure. They specify that general government comprises the subsectors central government (including special funds), state government, local government and social security funds.
ESCB government finance statistics (GFS definition)
Pursuant to ESA95, the fiscal policy activities of the EU institutions at a national level are not included in the government sector account. For example, import duties and VAT-based contributions to the EU budget are not included when calculating the tax and social contributions ratio pursuant to ESA95 as they are booked as direct EU revenue. On the expenditure side, EU subsidies to domestic non-government recipients are likewise omitted.
However, a broader definition of the government sector and government activity can be useful for analysing the domestic effects of fiscal policy. The ESCB therefore created the government finance statistics (GFS) framework, which includes the relevant EU budget transactions in the government sector of the individual EU countries. Payments that would be booked as transactions between the EU and resident businesses under ESA95 are thus recorded in the government sector, meaning that government revenue and expenditure recorded in the GFS statistics are usually higher. However, payment flows between general government and the EU budget are consolidated, ie netted against each other. Finally, if the country is a net payer (recipient) vis-à-vis the EU, the net payments (net receipts) are added as an item of expenditure (revenue). All in all, this does not change the general government net lending/net borrowing of the individual EU country, which therefore corresponds to the net figure pursuant to ESA95.
As well as providing a more comprehensive portrayal of fiscal policy activity at national level, another advantage of the GFS framework is that purely structural shifts in EU financing have no impact on general government revenue and expenditure ratios. Under ESA95, by contrast, a shift from VAT-based contributions to GNI-based contributions, for example, would lead to higher revenue and expenditure because the GNI-based contributions are reported as payments from the national government to the EU whereas VAT funds are deducted from national tax revenue and posted as direct EU revenue.
In addition to the national accounts data pursuant to ESA95 published in the Statistical Section of the Bundesbank's Monthly Report, the Bundesbank's website provides data on the government sector, including Germany's transactions with the EU under the GFS system. These data are collected in accordance with the ECB Guideline on government finance statistics (ECB/2009/20). The ECB's Government Finance Statistics Guide provides a comprehensive outline of the GFS framework.