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Maastricht deficit and debt level

Maastricht deficit and debt level

Under the European budgetary surveillance procedure, EU member states are obliged to submit data on the general government deficit and debt level to the European Commission (Maastricht Notification) twice a year (end of March and end of September). These data are checked and published by Eurostat. If there are any doubts about the quality of the reported data, Eurostat may publicly express its reservations. Eurostat also has the right to amend reported data if there is evidence that they do not comply with the accounting requirements. Further details are laid down in Council Regulation (EC) No 479/2009, last amended by Regulation (EC) No 679/2010 and Regulation (EU) No 220/2014.

The statistical definition of the data to be reported is based on the definitions in the national accounts (ESA 2010), which are specified in detail in Eurostat's "Manual on Government Deficit and Debt – Implementation of ESA 2010" and in other Eurostat decisions, advice and guidance notes regarding specific accounting issues. Relevant publications are posted on Eurostat's website.

In Germany, the data for past years to be reported for the government sector are compiled by the Federal Statistical Office and the Bundesbank. In addition, the Federal Ministry of Finance provides estimates for the current year. The Federal Statistical Office is responsible for transmitting the data to the European Commission.

The Federal Statistical Office calculates the Maastricht deficit, which corresponds to the figure for net borrowing pursuant to ESA 2010, and records the relationship between the deficit as defined in the national financial statistics and the Maastricht deficit. Details are published on the Federal Statistical Office's website under "National accounts". The Maastricht debt level is calculated by the Bundesbank. Furthermore, reconciliation accounts explain the relationship between the Maastricht deficit and the change in the Maastricht debt level.

Maastricht debt level and reconciliation accounts

EDP Notification Table 1 contains the data for calculating a country's deficit and debt ratios as defined in the European budgetary surveillance procedure. In addition, the table provides an overview of the deficits at the different levels of government (central government, state government, local government, social security funds; including off-budget entities pursuant to the national accounts definition), a breakdown of the debt structure by instrument category, and data on fixed capital formation, interest expenditure and nominal GDP.

The report on the Maastricht debt level must list the individual components at their face value and include the following items: currency and deposits (coins in circulation), short and long-term debt securities, and short and long-term loans. Financial derivatives, trade credits and other (remaining) liabilities which may result from allocating transactions to an accounting period other than that of the payment date in the national accounts or from financial transactions on the secondary market are not included.

Unlike the debt level as defined in the national financial statistics, the Maastricht debt level also includes (alongside coins in circulation) "imputed" borrowing. Examples include government initiated transactions that are attributable to the general government sector but are financed via public enterprises instead of the core budget, and capital expenditure by public-private partnerships provided that certain project risks are borne by the government. Securitisation transactions where the government transfers only part of economic ownership or which are based on future tax or social security contributions are also included in Maastricht debt.

In Table 1, general government Maastricht debt (central, state and local government and social security funds) is recorded as a consolidated position – ie after adjustment for debt between the different levels of government.

The Maastricht debt level is a gross figure. It therefore differs from the government's net financial position in that liabilities are not netted against the government's financial claims or financial assets (except for consolidation within the general government sector). This is the main reason for differences between the Maastricht deficit and the change in the Maastricht debt level. EDP Notification Tables 3A to 3E contain reconciliation accounts which explain the relationship between the deficit and the change in the debt level both for the consolidated general government sector (3A) and for the individual levels of government (3B to 3E). As well as transactions in government financial assets, changes in other liabilities that are not included in the components of the Maastricht debt level can also give rise to differences. Additional adjustments are needed when matching the Maastricht deficit to changes in the Maastricht debt level as the debt level is calculated on the basis of face values and does not cover capitalised interest (which is included in the deficit). Moreover, changes in the sector classification of certain public entities, for example, may cause changes in the debt level which are not reflected in the deficit.

While Table 1 records consolidated general government debt, the debt levels shown in Tables 3B to 3E include liabilities to other levels of government. If holdings of other government subsectors' debt, which are also recorded here, are subtracted, this gives the contribution of the individual level of government to the consolidated Maastricht debt level.

After Eurostat has verified the data, it publishes the full notification tables. Pursuant to Council Regulation (EC) No 479/2009, member states must also publish a description of the sources and methods used to compile the data. The sources and methods used by each member state are available on Eurostat's website.

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