## list-of-research-projects-for-updating-the-gfsm-2014 ## Source details **Canonical URL:** [list-of-research-projects-for-updating-the-gfsm-2014](https://www.imf.org/-/media/files/data/statistics/gfsm/list-of-research-projects-for-updating-the-gfsm-2014.pdf) ## Other formats - [Markdown version](/-/media/files/data/statistics/gfsm/list-of-research-projects-for-updating-the-gfsm-2014.pdf.md) - [Structured JSON version](/-/media/files/data/statistics/gfsm/list-of-research-projects-for-updating-the-gfsm-2014.pdf.json) --- ### 1.1 AI.1 SNA/BPM Valuation principles and methodologies - Key recommendations from the GN: - Provides further clarification on how to value transactions and stocks, particularly in nonmarket contexts. - Provides more guidance on appropriate discount rates and calculations for rates of return to capital. - Recommendations are relevant to the valuation applied to GFS transactions and stocks. - Technical points emphasized: - Valuation guidance targets both transactions and stock positions. - Particular emphasis on valuation in nonmarket contexts. - Guidance includes recommended approaches for selecting discount rates. - Guidance includes recommended calculations for rates of return to capital. - Implications for GFS compilation and recording: - GFS compilers should apply the GN’s clarified valuation approaches when valuing transactions and stocks in government finance statistics. - When valuing nonmarket outputs or assets, GFS should follow the GN’s guidance on discount rates and rates of return to capital to ensure consistency with SNA/BPM valuation principles. - GN recommendations may affect balance sheet valuations and the measurement of flows in GFS where nonmarket valuation issues arise. ### 2.1 Boundary between government-controlled nonmarket producers (government units) and public nonfinancial corporations - Background / Issues: - GFSM 2014 guidance on “economically significant price” is challenging for many countries. - Most countries assess sector classification using the “market test” described in GFSM 2014 paras. 2.69-2.75 where sales are expected to cover at least 50% of production costs, but GFSM 2014 para. 2.69 advises that there is “no prescriptive numerical relationship between the value of sales and the production costs”. - Revision questions: - Should GFSM guidance be more prescriptive? - Should guidance be extended to provide more guidance on defining sales and production costs for the market test? - Is there a need to provide more qualitative guidance on when economically significant prices should be deemed to be not present? - Particularly challenging cases: - Assessment of sector classification for public utility companies with effective monopolies. - Market regulatory agencies (already discussed in GFSM 2014 paras. 2.156-2.159). - Note: Eurostat has developed more extensive guidance on sector classification within their Manual on Government Deficit and Debt; some of this guidance might be relevant to an updated GFSM. - Expected outcomes: - A discussion note exploring more detailed, practical, and prescriptive guidance on determining the distinction between government-controlled nonmarket producers (government units) and market producers (public corporations) for units engaged in nonfinancial activities. ### 2.13 Equity for public corporations - Background/Issues: - Many public corporations are 100% owned by general government units and their shares are not traded on the markets, yet government ownership (net worth) must be valued and reflected in general government assets/liabilities (GFS equity and investment fund shares) and be symmetrical with public corporations’ balance sheets. - Valuation of these corporations is often significant for evaluating the financial position/net worth of general government units. - Statistical treatment may be similar to consolidation on the basis of modified equity in public and private accounting standards, adjusting for direct financial claims already recorded in government/public corporation balance sheets (loans and advances, debt securities, accounts receivable/payable, etc.). - Areas where better guidance would help: - (i) methodology for measuring the value of public corporations; - (ii) recording the variation from one accounting period to another in the value of public corporations, transactions versus other economic flows (revaluations); - (iii) treatment of negative equity value in public corporations, and the gross versus net treatment (equity assets / equity liabilities). - Expected outcomes: - Discussion note exploring additional guidance on valuation and calculation of equity for public corporations where government shareholding is not traded on the markets. ### 2.28 Tax expenditures, tax deferrals, and other similar incentives - Background/Issues: - Tax expenditures and tax deferrals are widely used fiscal instruments; the same objectives could be achieved via subsidies or other direct outlays. - Tax credits are recorded within GFS (net basis for nonpayable tax credits and gross basis for payable tax credits), but tax expenditures—defined as concessions or exemptions from a “normal” tax structure that reduce government revenue collection (see GFSM 2014 para. 5.28)—are not recorded as flows within GFS. - GFSM 2014 para. 5.28 notes importance of reporting these in supplementary reports, although no guidance is provided on how to report tax expenditures (and similar). - Expected outcomes: - Discussion note elaborating on different types of tax expenditures (or tax abatements) and how they might feature in statistics, possibly proposing a supplementary table via which such tax expenditures could be reported. ### 2.29 Retained earnings of public corporations and their impact on fiscal analysis - Background/Issues: - SNA/BPM update considered recording reinvested earnings (RIE) of public corporations within government accounts similar to FDI treatment. - Arguments for inclusion: would remove need for a superdividend test and make operational profits and losses of public corporations directly impact key government balancing items, providing a more holistic fiscal picture. - Challenges: - Interpretation of GFS if RIE of public corporations are included. - Impact on fiscal policy and analysis. - Applicability where government does not have 100% ownership or control via non-equity means. - Note: No intention to treat RIE of public corporations within the core government accounts as part of the GFSM update. - Expected outcomes: - Discussion note to: - Evaluate pros and cons of recording RIE of public corporations within government accounts. - Set out the impact of RIE on fiscal interpretation of GFS, with pros and cons for fiscal analysis and policymaking. - Propose a format for presenting these data as supplementary items for countries wishing to adopt this approach. - The same note might consider treatment of share buybacks as in Annex 1 of the SNA/BPM guidance note on reinvested earnings (GN F.2 on Asymmetric Treatment of Retained Earnings). - Related guidance referenced: - GN D.16 on Treatment of Retained Earnings - GN F.2 on Asymmetric Treatment of Retained Earnings - SNA/BPM Issue Note on retained Earnings ### 2.30 Methodological guidance on compilation and analyzing SOE data - Background/Issues: - Increasing user demand for transparent fiscal information on activities and balance sheets of public corporations. - GFSM 2014 discusses public sector fiscal statistics, including public corporations, but offers limited guidance on compiling and analyzing fiscal statistics for public corporations. - Some scattered information exists (e.g., which transactions and stocks are relevant to public corporations), but not consolidated in one place. - GFSM 2014 is silent on whether COFOG should be applied to public corporations’ spending, and if so how. - The title “government finance statistics” and general government focus of many data collection templates create a lack of clarity on reporting operations and financial positions of public corporations. - Expected outcomes: - Discussion note exploring compilation and presentation of GFS for public corporations with recommendations on how and whether this should be addressed in the updated GFSM. - Consideration of whether additional “of which” breakdowns of GFS transaction and stock classifications would facilitate analysis of interactions between government and public corporations. ### 2.31 GFS within fiscal analysis and policymaking - Background/Issues: - Annex of Chapter 4 of GFSM 2014 briefly discusses using GFS within fiscal analysis and highlights certain fiscal indicators. - No detailed discussion on how GFS can support analysis of fiscal risks and sustainability. - No discussion on connection of GFS to the budgetary cycle and forecasts. - User interest in more information on fiscal analysis using GFS, including public financial management, inclusion of public corporations (see 2.30), and treatment of provisions and contingent liabilities (e.g., guarantees) recorded outside the main GFS framework. - Expected outcomes: - Discussion note exploring resources and techniques for using GFS in fiscal analysis and GFS-based policymaking, with recommendations on how and whether this should be addressed in the updated GFSM. ### 2.32 Balance Sheet Analysis - Background/Issues: - IMF surveillance applies a Balance Sheet Approach (BSA) to analyze sustainability and detect sector vulnerabilities and solvency or credit risks. - Although BSA is founded on integrated balance sheets such as those in the GFS framework, GFSM 2014 only includes passing references to BSA and very little detail on how BSA is used in fiscal analysis. - Expected outcomes: - Discussion note briefly discussing the BSA as applied to the public sector and providing recommendations on how and whether this should be discussed in the updated GFSM. *International Monetary Fund — list of research projects for updating the GFSM 2014.* ### 1.1 AI.1 SNA/BPM Valuation principles and ### 1.1 AI.1 SNA/BPM Valuation principles and methodologies ### Key recommendations from the GN - The GN provides further clarification on how to value transactions and stocks, particularly in nonmarket contexts. - The GN provides more guidance on appropriate discount rates and calculations for rates of return to capital. - The GN recommendations are relevant to the valuation applied to GFS transactions and stocks. ### Technical points emphasized - Valuation guidance targets both transactions and stock positions. - Particular emphasis is placed on valuation in nonmarket contexts. - Guidance includes recommended approaches for selecting discount rates. - Guidance includes recommended calculations for rates of return to capital. ### Implications for GFS compilation and recording - GFS compilers should apply the GN’s clarified valuation approaches when valuing transactions and stocks in government finance statistics. - When valuing nonmarket outputs or assets, GFS should follow the GN’s guidance on discount rates and rates of return to capital to ensure consistency with SNA/BPM valuation principles. - The GN’s recommendations may affect balance sheet valuations and the measurement of flows in GFS where nonmarket valuation issues arise. *Source: GN recommendations on SNA/BPM valuation principles and methodologies as described for GFSM update.* ### 2.1 Boundary between ### 2.1 Boundary between government-controlled nonmarket producers engaged in nonfinancial activities (government units) and public nonfinancial corporations ### Background / Issues - GFSM 2014 guidance on “economically significant price” is challenging for many countries. - Most countries assess sector classification of government-controlled nonfinancial entities using the “market test” described in GFSM 2014 paras. 2.69-2.75 where sales are expected to cover at least 50% of production costs, but GFSM 2014 para. 2.69 advises that there is “no prescriptive numerical relationship between the value of sales and the production costs”. - Questions for revision: - Should the GFSM guidance be more prescriptive? - Should guidance be extended to provide more guidance on defining sales and production costs for the market test? - Is there a need to provide more qualitative guidance on when economically significant prices should be deemed to be not present? - Particularly challenging cases noted: - Assessment of sector classification for public utility companies with effective monopolies. - Market regulatory agencies (already discussed in GFSM 2014 paras. 2.156-2.159). - Eurostat has developed more extensive guidance on sector classification within their Manual on Government Deficit and Debt; some of this guidance might be relevant to an updated GFSM. ### Expected outcomes - A discussion note that explores possible more detailed, practical, and prescriptive guidance on how to determine the distinction between government-controlled nonmarket producers (government units) and market producers (public corporations) for units engaged in nonfinancial activities. *Source: GFSM 2014 research project list (section 2.1).* ### 2.13 Equity for public ### 2.13 Equity for public corporations ### Background/Issues - Many public corporations are 100% owned by general government units and their shares are not traded on the markets. However, the government ownership (net worth) in these enterprises must be valued and reflected in the general government assets/liabilities (GFS equity and investment fund shares). This record must also be symmetrical in GFS with that in the public corporations’ balance sheet. - The value of these corporations is often significant for the evaluation of the financial position/net worth of general government units. The statistical treatment may be similar to consolidation on the basis of modified equity in public and private accounting standards, by adjusting for direct financial claims already recorded in the balance sheet of government units / public corporations (loans and advances, debt securities, accounts receivable/payable, etc.). - Compilers and users could benefit from better guidance regarding: - (i) methodology for measuring the value of public corporations; - (ii) recording the variation from one accounting period to another in the value of public corporations, transactions versus other economic flows (revaluations); - (iii) the treatment of negative equity value in public corporations, and the gross versus net treatment (equity assets / equity liabilities). ### Expected outcomes - Discussion note which explores possible additional guidance on the valuation and calculation of equity for public corporations where the government shareholding is not traded on the markets. *International Monetary Fund — list of research projects for updating the GFSM 2014: 2.13 Equity for public corporations.* ### 2.28 Tax expenditures, tax ### 2.28 Tax expenditures, tax deferrals, and other similar incentives ### Background/Issues - Tax expenditures and tax deferrals are widely used as important instruments within fiscal policy. These same government policy objectives could be achieved alternatively through subsidies or other direct outlays. - While tax credits are recorded within the GFS (on a net basis for nonpayable tax credits and gross basis for payable tax credits), tax expenditures (and similar) – defined as concessions or exemptions from a “normal” tax structure that reduce government revenue collection (see GFSM 2014 para. 5.28) - are not recorded as flows within the GFS. - GFSM 2014 para. 5.28 notes that it is important to report these in supplementary reports, although no guidance is provided on how to report these tax expenditures (and similar). ### Expected Outcomes - Discussion note which elaborates on the different types of tax expenditures (or tax abatements) and how they might feature in statistics, possibly with a proposed supplementary table via which such tax expenditures could be reported. --- ### 2.29 Retained earnings of public corporations and their impact on fiscal analysis ### Background/Issues - The SNA/BPM update considered whether it would be appropriate to record the reinvested earnings (RIE) of public corporations within the government accounts, in a similar way to that which is applied within foreign direct investment (FDI) arrangements. - Arguments made in favor of the proposal included that it would remove the need for a superdividend test and the operational profits and losses of public corporations would directly impact key government balancing items, thereby providing a more holistic fiscal picture. - Challenges include how to interpret GFS in which the RIE of public corporations are included in the accounts, and what impact this might have on fiscal policy and analysis. - Questions arise about the applicability of this approach where government does not have 100% ownership or where control is not as a result of equity ownership, but rather due to other control factors. - Note that there is no intention to treat the RIE of public corporations within the core government accounts as part of the update to the GFSM. ### Expected Outcomes - Discussion note which: - Evaluates the pros and cons of recording the RIE of public corporations within the government accounts. - Sets out the impact of RIE on the fiscal interpretation of GFS, with pros and cons as to the usefulness for fiscal analysis and policymaking. - Proposes a format for presenting these data as supplementary items for those countries who may wish to introduce this approach as an alternative presentation. - The same discussion note might also consider the treatment of share buybacks as done in Annex 1 of the SNA/BPM guidance note on reinvested earnings (GN F.2 on Asymmetric Treatment of Retained Earnings). - Related guidance referenced: - GN D.16 on Treatment of Retained Earnings - GN F.2 on Asymmetric Treatment of Retained Earnings - SNA/BPM Issue Note on retained Earnings --- ### 2.30 Methodological guidance on compilation and analyzing SOE data ### Background/Issues - There is increasing demand from users for transparent fiscal information on the activities and balance sheets of public corporations. - Although the GFSM 2014 discusses the compilation of fiscal statistics for the public sector, including public corporations, it is relatively silent in terms of guidance on how to compile and analyze fiscal statistics for public corporations. - Some information is provided throughout the GFSM 2014 with respect to which transactions and stocks would and would not be relevant to public corporations (for example, taxes can only be collected by government units), but this is not drawn together in one place. - The GFSM 2014 is silent in other respects—for instance as to whether COFOG should be applied to the spending of public corporations, and if so how. - The title of the manual (“government finance statistics”) and the general government focus of many data collection templates leads to a lack of clarity on whether, and how, to report operations and financial positions of public corporations. ### Expected Outcomes - Discussion note exploring the compilation and presentation of GFS for public corporations with a view to providing recommendations on how and whether this should be discussed in the updated GFSM. - The discussion note will consider whether additional “of which” breakdowns of the GFS transaction and stock classifications might be useful to facilitate the analysis of interactions between government and public corporations. --- ### 2.31 GFS within fiscal analysis and policymaking ### Background/Issues - The Annex of Chapter 4 of the GFSM 2014 briefly discusses using GFS within fiscal analysis and highlights certain fiscal indicators. - There is no more detailed discussion in the GFSM 2014 on how the GFS can support the analysis of fiscal risks and sustainability. - There is no discussion on the connection of GFS to the budgetary cycle and forecasts. - Users have indicated interest in more information on fiscal analysis using GFS, in particular with respect to public financial management, considerations when including public corporations within the fiscal statistics (see proposed research project 2.30), and how to deal with provisions and contingent liabilities, such as guarantees, which are recorded outside of the main GFS framework. ### Expected Outcomes - Discussion note exploring resources and techniques for using GFS in fiscal analysis and GFS-based policymaking with a view to providing recommendations on how and whether this should be discussed in the updated GFSM. --- ### 2.32 Balance Sheet Analysis ### Background/Issues - IMF surveillance applies a Balance Sheet Approach (BSA) to analyze sustainability, as well as detect sector vulnerabilities and solvency or credit risks. - Although the BSA is founded on integrated balance sheets, such as those in the GFS framework, the GFSM 2014 only includes passing references to the BSA and includes very little detail on how the BSA is used in fiscal analysis. ### Expected Outcomes - Discussion note which briefly discusses the BSA as it is applied to the public sector with a view to providing recommendations on how and whether this should be discussed in the updated GFSM. --- _Source: https://www.imf.org/-/media/files/data/statistics/gfsm/list-of-research-projects-for-updating-the-gfsm-2014.pdf_