## 1. Priority Recommendations

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**Canonical URL:** [1. Priority Recommendations](https://www.imf.org/-/media/files/publications/cr/2019/1mysea2019004.pdf)

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---

### Summary of mission outcomes and progress
- A technical assistance (TA) mission was conducted by Mr. Hendrik Tillmann-Zorn during March 4–8, 2019, following remote support during December 17–22, 2018; missions are part of the second three-year GFS capacity development project funded by the Government of Japan (JSA).
- Mission objectives:
  - Assist authorities to prepare accrual-based GFS for the budgetary central government from the accounting system.
  - Broaden sectoral coverage of GFS and Public Sector Debt Statistics (PSDS) to consolidated central government, general government and nonfinancial public sector levels.
  - Strengthen MOF–DOSM collaboration to improve data consistency, with emphasis on public investment data.
- Key achievements:
  - Final steps towards bridging the accrual-based Chart of Accounts (COA) to GFS classification completed; a compilation sheet was developed to facilitate largely automated compilation of a comprehensive set of GFS tables from the system (see Attachment I—BCG GFS Compilation incl. Bridge Table (Draft Annual 2018 Data)).
  - Test GFS tables for (preliminary) 2018 annual data have been prepared and flow classifications were verified and quality checked; when final accounts become available (expected after 2019: Q1), limited final checks and adjustments will be required to confirm integrity and balancing.
  - Progress in expanding sectoral coverage: draft GFS tables covering the statement of operations with data from 2018 were compiled for extrabudgetary central government and local government; a revised survey for nonfinancial public corporations is planned for 2019: Q2; state government survey data require additional analytical work but partial integration to compile consolidated general government GFS is deemed feasible soon.
  - Improved collaboration between MOF and DOSM on public sector investment measures and transparency on different measures employed for public investment.
  - Resolved remaining technical issues for PSDS compilation for budgetary central government per World Bank-IMF debt database template; Malaysia will begin to disseminate PSDS for this subsector on a regular basis.
- Overall impact:
  - Shift to accrual-based accounting and expanded GFS coverage will provide richer fiscal stocks and flows information for policymaking and analysis.
  - Mission encourages FPO (MOF) and DOSM to develop reports and analytical insights to leverage opportunities.

### Table of priority recommendations (from Table 1)
- Target Date: June 2019
  - Priority Recommendation: Compile budgetary GFS from (final) accrual data and investigate balancing of nonfinancial and financial data when the accounts are closed.
  - Responsible Institutions: MOF with support of AG
- Target Date: December 2019
  - Priority Recommendation: Continue the alignment of different measures for public investment and implement the respective changes required in the data collection from extrabudgetary units, subnational governments and nonfinancial public corporations.
  - Responsible Institutions: MOF in alignment with DOSM
- Target Date: December 2020
  - Priority Recommendation: Implement revised surveys and compile GFS for other levels of government and the nonfinancial public corporations.
  - Responsible Institutions: MOF

### Recommendations for Budgetary Central Government GFS (Table 2 and text)
- Near-term operational recommendations:
  - Target Date: June 2019 — Compile budgetary GFS from (final) accrual data and investigate nonfinancial and financial data when accounts are closed. Responsible: MOF with support of AG.
  - Target Date: December 2019 — Compile budgetary central government GFS for internal purposes and review options to change the structure of fiscal reports to leverage the richer information for analysis and decision making. Responsible: MOF.
- Technical findings and guidance:
  - A compilation system for accrual-based GFS for the budgetary central government (BCG) was developed using preliminary trial balances from the AG department; coding of the COA to GFS classifications was completed, tested, and quality-checked.
  - Processing of incomplete annual data for year 2018 used plausibility checks for key aggregates; some opening balances for various stocks were outstanding, preventing checking of the statistical discrepancy (net lending/net borrowing versus net financing).
  - Final data availability (when December accounts are closed and opening stocks integrated) will allow integrity testing and checking of balancing aggregates—mission recommends verifying internal consistency (revenue less expense less net acquisition of nonfinancial assets = net acquisition of financial assets less net incurrence of liabilities).
  - Authorities do not plan to disseminate accrual-based GFS for BCG before the first publication of accrual based financial statements (expected in year 2021); mission encourages production of accrual-based GFS for internal use and fiscal surveillance as soon as possible.
  - Further improvements envisaged: capture trust funds with macroeconomically significant transactions, refine treatment of Public-Private-Partnerships, and improve presentation for such transactions.
  - The developed GFS compilation system can be adapted to process cash data to produce the statement of sources and uses of cash; authorities encouraged to use primary cash-basis accounting data to replace current GFS procedures based on secondary sources, using a transition table to reconcile cash-based COA to accrual-based COA.
  - Improve COFOG coding accuracy and simplify compilation efforts: current GFS derives COFOG indirectly from budget allocation to economic sectors; DOSM employs detailed program-level COFOG coding—review and integration of program-level trial balance data is recommended to use the same bridge table for budgetary GFS compilation.

### Expansion of institutional/sectoral coverage — findings and recommendations
- Current status:
  - Malaysia’s GFS is limited to the budgetary central government (BCG); only high-level aggregates exist for broader sectoral coverage and these measures do not follow international standards.
- Survey redesign and coverage expansion:
  - Mission assessed options and made concrete proposals to redesign surveys for statutory bodies (extrabudgetary units), local governments, state governments, and nonfinancial public corporations (NFPC) to meet GFS and PSDS needs.
  - Concerns with current surveys: inconsistent use of totals and “of which” items, undefined relationships to accounting aggregates, and potential for unintentional data entry mistakes.
  - For extrabudgetary central government (EBCG) and local government (LG): draft GFS tables covering statement of operations for 2018 were compiled; with amendments, inclusion into consolidated general government is realistic.
  - For NFPC: current survey covers the 28 largest nonfinancial corporations at the group level and likely captures the bulk of economic and quasi-fiscal activity; a revised survey (planned for 2019: Q2) is necessary to produce reliable GFS.
- Survey design principles for NFPC:
  - Use accounting terms in surveys instead of statistical terms to facilitate completion and reconciliation with published audited financial statements.
  - Structure surveys starting from published accounting totals (e.g., revenue, expense, change of “noncurrent” assets and liabilities, and “current” assets and liabilities); include pre-listed key items and residual “other” categories with option to provide details.
  - Build surveys around balancing items—(net) operative income and (net) comprehensive income—because companies present different breakdowns and gross/net reporting; consistent reporting of these balancing items is essential to check integrity (e.g., link between comprehensive income and changes in equity).
  - Use accounting distinctions “noncurrent” and “current” assets and liabilities to structure the survey, and map these groupings to GFS classifications; mission developed a draft revision (see Attachment III—NFPC Survey Redesign 2019).
  - Analysis of nine large companies’ financial statements was undertaken to capture accounting terms and group them per quantitative importance and GFS classification (Attachment II—NFPC Financial Statement Analysis 2017).

### Data availability matrix and immediate data needs (Table 3 summary)
- Data availability summary for GFS with expanded coverage (notation preserved as in source):
  - Flows — Revenue:
    - BCG: ✓ (a)
    - EBCG: ✓ (a)
    - SG: ✓ (c)
    - LG: ✓ (a)
    - NFPC: ✓ (a) with limited GFS detail; survey revision
  - Flows — Expense:
    - BCG: ✓ (a)
    - EBCG: ✓ (a)
    - SG: ✓ (c)
    - LG: treatment of trust funds to be refined
    - NFPC: ✓ (a) with limited GFS detail; survey revision
  - Flows — Net Investment in Nonfinancial Assets:
    - BCG: ✓ (a)
    - EBCG: ✓ (a) survey revision per GFS; currently only total “development expenditure” by sector
    - SG: ✓ (a)
    - LG: ✓ (a)
    - NFPC: survey revision per GFS
  - Flows — Net Acquisition of Financial Assets:
    - BCG: ✓ (a)
    - EBCG: (✓) (a) survey revision per GFS
    - SG: Only loans (3214); equity (3215) and cash/deposits (3212) to be added to surveys
    - LG: ✓ (a)
    - NFPC: ✓ (a) survey revision per GFS
  - Flows — Net Incurrence of Liabilities:
    - BCG: ✓ (a)
    - EBCG: (✓) (a) survey revision per GFS
    - SG: (✓) (c) main liabilities (loans) indirectly available; only borrowing from or with consent from federal government
    - LG: ✓ (a)
    - NFPC: ✓ (a) survey revision per GFS/PSDS
  - Stocks — Nonfinancial Assets:
    - BCG: ✓ (a)
    - EBCG: (✓) (a) survey revision per GFS; estimate/separate survey required
    - SG: (✓) (a) survey revision per GFS
    - LG: (✓) (a) survey revision per GFS
    - NFPC: ✓ (a) survey revision per GFS
  - Stocks — Financial Assets:
    - BCG: ✓ (a)
    - EBCG: (✓) (a) survey revision per GFS; estimate/separate survey required
    - SG: (✓) (a) survey revision per GFS
    - LG: (✓) (a) survey revision per GFS
    - NFPC: ✓ (a) survey revision per GFS
  - Stocks — Liabilities:
    - BCG: ✓ (a)
    - EBCG: (✓) (a) (✓) (c) (✓) (a) — main liabilities (loans) indirectly available; only borrowing from or with consent from federal government
    - SG: survey revision per GFS/PSDS
    - LG: survey revision per GFS/PSDS
    - NFPC: survey revision per GFS
- Immediate implication:
  - Survey revisions are required across EBCG, SG, LG, and NFPC to meet GFS/PSDS requirements, particularly to add specific financial asset categories (e.g., equity (3215), cash/deposits (3212)) and to capture liabilities comprehensively.

### Implementation sequencing and timing
- Short-term (by June 2019):
  - Compile budgetary GFS from final accrual data; investigate balancing of nonfinancial and financial data when accounts are closed.
- Medium-term (by December 2019):
  - Align measures for public investment and implement data collection changes for extrabudgetary units, subnational governments, and NFPCs; compile budgetary central government GFS for internal use and consider changing structure of fiscal reports.
- Longer-term (by December 2020):
  - Implement revised surveys and compile GFS for other levels of government and the NFPC sector.

### Expanded data for public nonfinancial corporations (NFPC)
- Findings:
  - The revised survey will enable compilation of GFS tables for the nonfinancial public sector.
  - The structure and detail will facilitate broader and richer analysis of economic activity in this sector, including sensible assessment of financing transactions and balance sheet structure.
  - More detail will be available to understand drivers of operational results and to support sounder analysis of the financial impact on the government and the public sector’s sustainability.
- Recommendation:
  - Review, amend and implement the revised surveys for NFPC, local governments and statutory bodies. Target Date: July 2019. Responsible Institution: MOF.

### Extrabudgetary units of central government (statutory bodies)
- Findings:
  - Existing survey structure already provides nearly all necessary detail to compile GFS.
  - Authorities already consolidate survey results for internal statistical compilation.
  - A draft compilation of GFS data was successfully prepared; a draft revised survey for statutory bodies was prepared.
- Recommendation:
  - Compile draft GFS for all GFS subsectors excl. the financial corporations sector (incl. restricted set of tables for state governments). Target Date: December 2010. Responsible Institution: MOF.

### Subnational governments (state and local governments)
- Findings:
  - Draft GFS transactions tables (table 1, 2, and 3) for local governments were compiled for 2016–2018.
  - Preliminary GFS coding for state governments was prepared for 1998–2019.
  - Local governments use accrual accounting standards; the mission suggested including a request for balance sheet information for local governments going forward.
  - State governments report on a cash basis; some limited stock information for financial assets and liabilities could also be collected.
- Recommendation:
  - Assess the structure of accounting data available for state governments (incl. possible secondary sources for larger entities). Target Date: December 2019. Responsible Institution: MOF.

### Integration of state government data and feasibility of general government GFS
- Findings:
  - Availability of certain source data breakdowns from accounting systems at the state level are unclear.
  - States can only borrow from the federal government level, limiting the overall fiscal risk of this sector.
  - Partial integration of available data should facilitate general government GFS on the basis of estimation despite incomplete coverage of source data.
- Recommendation:
  - First collect information on the underlying accounting systems before expanding and restructuring the transactional coverage of the survey.

### Consolidation (central government, general government, nonfinancial public sector)
- Findings:
  - Consolidation eliminates intra- and inter-sectoral flows and debtor-creditor relationships within the same sector, producing more meaningful cross-country comparisons and liabilities analysis.
  - Consolidated balance sheets produce more meaningful information on financial assets and (debt and non-debt) liabilities with other economic sectors.
- Central government:
  - Consolidation should be achievable with reasonable effort by combining federal government data with statutory bodies; transfers and lending positions are readily available from the federal government’s accounting system.
- General government:
  - Consolidation requires reconciliation of lending between federal, state and local governments and from state governments to statutory bodies.
  - Issues may arise due to different accounting bases (cash for state governments vs. accrual for other subsectors).
  - Main gaps likely on the balance sheet of the states, possibly requiring separate data collection or estimation.
  - Most loan liabilities should be subject to consolidation because state governments borrow only from or with consent from the federal government.
- Nonfinancial public sector:
  - Consolidation is possible but will require more detailed analysis to eliminate borrowing flows and subsidies between general government and public nonfinancial corporations and to net out the equity position of the general government.
  - For the time being, report the nonfinancial public corporations sector separately and provide supplementary information on subsidies, grants, lending activities, and public guarantees to support fiscal analysis and risk assessments.

### Preliminary assessment of consolidation options (summary)
- Consolidated central government:
  - Already possible, with main grants and lending from federal government separately identifiable in GFMIS and survey data.
  - Survey revision will improve asset and liability breakdown as per GFS for statutory bodies.
- General government:
  - Requires reconciliation of lending across layers and attention to differing accounting bases; the main gaps are likely on state balance sheets.
- Nonfinancial public sector:
  - Should be possible but will require more detailed analysis before full consolidation.

### Consistency of investment data
- Findings:
  - The mission prepared an overview of different investment measures used by MOF and DOSM to strengthen conceptual consistency.
  - GFS framework offers a clear structure for classifying nonfinancial and financial assets and would make respective statistics more user friendly.
  - Specific investment measures can be defined with explicit reference to international standards and subsets can be classified by instrument (e.g., fixed assets; fixed assets + land; or fixed assets + investment in equity and investment fund shares, debt securities and loans).
- Recommendation:
  - Review the employed investment definitions vis-à-vis international standards and consider aligning the investment aggregates across different publications. Target Date: December 2020. Responsible Institutions: MOF and DOSM.

### Results-Based Management Framework (selected milestones and status as of April 2019)
- Objective:
  - Strengthen compilation and dissemination of data on macroeconomic and financial statistics according to relevant internationally accepted statistical standards.
- Selected milestones, Target Completion Dates, Comments:
  - Build full GFS bridge tables linking the revised Chart of Accounts to GFSM 2014 from the GFMIS (cash and accruals). Target Completion Date: June 30, 2019. Status: Largely completed. Remaining steps require (preliminary) accounting data in the new COA structure, expected in 2019: Q2.
  - Build full GFS bridge tables linking financing data from revised COA to GFSM 2014 from the GFMIS; reconcile with other financing sources (Central Bank and debt data). Target Completion Date: June 30, 2019. Status: Largely completed. Remaining steps require (preliminary) accounting data in the new COA structure, expected in 2019: Q2.
  - Business process documentation identifying compilation tables for current GFS data production and full linkages with accounting source data from the GFMIS. Target Completion Date: December 31, 2019. Status: Postponed until new GFS compilation process for budgetary central government from primary data is finalized (data provision from AG pending); for other government levels: postponed until new survey design is finalized and implemented.
  - Develop an updated survey to collect Provincial GFS reflecting the revised COA; apply first to the largest Provincial government and extend thereafter. Target Completion Date: March 31, 2019. Status: Completed.

*Source: 1mysea2019004 - 1. Priority Recommendations (PDF).*

### 1. Priority Recommendations _____________________________________________________________________ 6

### 1. Priority Recommendations

### Summary of mission outcomes and progress
- A technical assistance (TA) mission was conducted by Mr. Hendrik Tillmann-Zorn during March 4–8, 2019, following remote support during December 17–22, 2018; missions are part of the second three-year GFS capacity development project funded by the Government of Japan (JSA).
- Mission objectives: assist authorities to prepare accrual-based GFS for the budgetary central government from the accounting system; broaden sectoral coverage of GFS and Public Sector Debt Statistics (PSDS) to consolidated central government, general government and nonfinancial public sector levels; strengthen MOF–DOSM collaboration to improve data consistency, with emphasis on public investment data.
- Key achievements:
  - Final steps towards bridging the accrual-based Chart of Accounts (COA) to GFS classification completed; a compilation sheet was developed to facilitate largely automated compilation of a comprehensive set of GFS tables from the system (see Attachment I—BCG GFS Compilation incl. Bridge Table (Draft Annual 2018 Data)).
  - Test GFS tables for (preliminary) 2018 annual data have been prepared and flow classifications were verified and quality checked; when final accounts become available (expected after 2019: Q1), limited final checks and adjustments will be required to confirm integrity and balancing.
  - Progress in expanding sectoral coverage: draft GFS tables covering the statement of operations with data from 2018 were compiled for extrabudgetary central government and local government; a revised survey for nonfinancial public corporations is planned for 2019: Q2; state government survey data require additional analytical work but partial integration to compile consolidated general government GFS is deemed feasible soon.
  - Improved collaboration between MOF and DOSM on public sector investment measures and transparency on different measures employed for public investment.
  - Resolved remaining technical issues for PSDS compilation for budgetary central government per World Bank-IMF debt database template; Malaysia will begin to disseminate PSDS for this subsector on a regular basis.
- Overall impact: shift to accrual-based accounting and expanded GFS coverage will provide richer fiscal stocks and flows information for policymaking and analysis; mission encourages FPO (MOF) and DOSM to develop reports and analytical insights to leverage opportunities.

### Table of priority recommendations (from Table 1)
- Target Date: June 2019
  - Priority Recommendation: Compile budgetary GFS from (final) accrual data and investigate balancing of nonfinancial and financial data when the accounts are closed.
  - Responsible Institutions: MOF with support of AG
- Target Date: December 2019
  - Priority Recommendation: Continue the alignment of different measures for public investment and implement the respective changes required in the data collection from extrabudgetary units, subnational governments and nonfinancial public corporations.
  - Responsible Institutions: MOF in alignment with DOSM
- Target Date: December 2020
  - Priority Recommendation: Implement revised surveys and compile GFS for other levels of government and the nonfinancial public corporations.
  - Responsible Institutions: MOF

### Recommendations for Budgetary Central Government GFS (Table 2 and text)
- Near-term operational recommendations:
  - Target Date: June 2019 — Compile budgetary GFS from (final) accrual data and investigate nonfinancial and financial data when accounts are closed. Responsible: MOF with support of AG.
  - Target Date: December 2019 — Compile budgetary central government GFS for internal purposes and review options to change the structure of fiscal reports to leverage the richer information for analysis and decision making. Responsible: MOF.
- Technical findings and guidance:
  - A compilation system for accrual-based GFS for the budgetary central government (BCG) was developed using preliminary trial balances from the AG department; coding of the COA to GFS classifications was completed, tested, and quality-checked.
  - Processing of incomplete annual data for year 2018 used plausibility checks for key aggregates; some opening balances for various stocks were outstanding, preventing checking of the statistical discrepancy (net lending/net borrowing versus net financing).
  - Final data availability (when December accounts are closed and opening stocks integrated) will allow integrity testing and checking of balancing aggregates—mission recommends verifying internal consistency (revenue less expense less net acquisition of nonfinancial assets = net acquisition of financial assets less net incurrence of liabilities).
  - Authorities do not plan to disseminate accrual-based GFS for BCG before the first publication of accrual based financial statements (expected in year 2021); mission encourages production of accrual-based GFS for internal use and fiscal surveillance as soon as possible.
  - Further improvements envisaged: capture trust funds with macroeconomically significant transactions, refine treatment of Public-Private-Partnerships, and improve presentation for such transactions.
  - The developed GFS compilation system can be adapted to process cash data to produce the statement of sources and uses of cash; authorities encouraged to use primary cash-basis accounting data to replace current GFS procedures based on secondary sources, using a transition table to reconcile cash-based COA to accrual-based COA.
  - Improve COFOG coding accuracy and simplify compilation efforts: current GFS derives COFOG indirectly from budget allocation to economic sectors; DOSM employs detailed program-level COFOG coding—review and integration of program-level trial balance data is recommended to use the same bridge table for budgetary GFS compilation.

### Expansion of institutional/sectoral coverage (Section B) — findings and recommendations
- Current status:
  - Malaysia’s GFS is limited to the budgetary central government (BCG); only high-level aggregates exist for broader sectoral coverage and these measures do not follow international standards.
- Survey redesign and coverage expansion:
  - Mission assessed options and made concrete proposals to redesign surveys for statutory bodies (extrabudgetary units), local governments, state governments, and nonfinancial public corporations (NFPC) to meet GFS and PSDS needs.
  - Concerns with current surveys: inconsistent use of totals and “of which” items, undefined relationships to accounting aggregates, and potential for unintentional data entry mistakes.
  - For extrabudgetary central government (EBCG) and local government (LG): draft GFS tables covering statement of operations for 2018 were compiled; with amendments, inclusion into consolidated general government is realistic.
  - For NFPC: current survey covers the 28 largest nonfinancial corporations at the group level and likely captures the bulk of economic and quasi-fiscal activity; a revised survey (planned for 2019: Q2) is necessary to produce reliable GFS.
- Survey design principles for NFPC:
  - Use accounting terms in surveys instead of statistical terms to facilitate completion and reconciliation with published audited financial statements.
  - Structure surveys starting from published accounting totals (e.g., revenue, expense, change of “noncurrent” assets and liabilities, and “current” assets and liabilities); include pre-listed key items and residual “other” categories with option to provide details.
  - Build surveys around balancing items—(net) operative income and (net) comprehensive income—because companies present different breakdowns and gross/net reporting; consistent reporting of these balancing items is essential to check integrity (e.g., link between comprehensive income and changes in equity).
  - Use accounting distinctions “noncurrent” and “current” assets and liabilities to structure the survey, and map these groupings to GFS classifications; mission developed a draft revision (see Attachment III—NFPC Survey Redesign 2019).
  - Analysis of nine large companies’ financial statements was undertaken to capture accounting terms and group them per quantitative importance and GFS classification (Attachment II—NFPC Financial Statement Analysis 2017).

### Data availability matrix and immediate data needs (Table 3 summary)
- Data availability summary for GFS with expanded coverage (notation preserved as in source):
  - Flows — Revenue:
    - BCG: ✓ (a)
    - EBCG: ✓ (a)
    - SG: ✓ (c)
    - LG: ✓ (a)
    - NFPC: ✓ (a) with limited GFS detail; survey revision
  - Flows — Expense:
    - BCG: ✓ (a)
    - EBCG: ✓ (a)
    - SG: ✓ (c)
    - LG: treatment of trust funds to be refined
    - NFPC: ✓ (a) with limited GFS detail; survey revision
  - Flows — Net Investment in Nonfinancial Assets:
    - BCG: ✓ (a)
    - EBCG: ✓ (a) survey revision per GFS; currently only total “development expenditure” by sector
    - SG: ✓ (a)
    - LG: ✓ (a)
    - NFPC: survey revision per GFS
  - Flows — Net Acquisition of Financial Assets:
    - BCG: ✓ (a)
    - EBCG: (✓) (a) survey revision per GFS
    - SG: Only loans (3214); equity (3215) and cash/deposits (3212) to be added to surveys
    - LG: ✓ (a)
    - NFPC: ✓ (a) survey revision per GFS
  - Flows — Net Incurrence of Liabilities:
    - BCG: ✓ (a)
    - EBCG: (✓) (a) survey revision per GFS
    - SG: (✓) (c) main liabilities (loans) indirectly available; only borrowing from or with consent from federal government
    - LG: ✓ (a)
    - NFPC: ✓ (a) survey revision per GFS/PSDS
  - Stocks — Nonfinancial Assets:
    - BCG: ✓ (a)
    - EBCG: (✓) (a) survey revision per GFS; estimate/separate survey required
    - SG: (✓) (a) survey revision per GFS
    - LG: (✓) (a) survey revision per GFS
    - NFPC: ✓ (a) survey revision per GFS
  - Stocks — Financial Assets:
    - BCG: ✓ (a)
    - EBCG: (✓) (a) survey revision per GFS; estimate/separate survey required
    - SG: (✓) (a) survey revision per GFS
    - LG: (✓) (a) survey revision per GFS
    - NFPC: ✓ (a) survey revision per GFS
  - Stocks — Liabilities:
    - BCG: ✓ (a)
    - EBCG: (✓) (a) (✓) (c) (✓) (a) — main liabilities (loans) indirectly available; only borrowing from or with consent from federal government
    - SG: survey revision per GFS/PSDS
    - LG: survey revision per GFS/PSDS
    - NFPC: survey revision per GFS
- Immediate implication: survey revisions are required across EBCG, SG, LG, and NFPC to meet GFS/PSDS requirements, particularly to add specific financial asset categories (e.g., equity (3215), cash/deposits (3212)) and to capture liabilities comprehensively.

### Implementation sequencing and timing
- Short-term (by June 2019): compile budgetary GFS from final accrual data; investigate balancing of nonfinancial and financial data when accounts are closed.
- Medium-term (by December 2019): align measures for public investment and implement data collection changes for extrabudgetary units, subnational governments, and NFPCs; compile budgetary central government GFS for internal use and consider changing structure of fiscal reports.
- Longer-term (by December 2020): implement revised surveys and compile GFS for other levels of government and the NFPC sector.

*Source: 1mysea2019004 - 1. Priority Recommendations (PDF).*

### 21.      When implemented, a much broader set of statistical data will be available for the

### 21. When implemented, a much broader set of statistical data will be available for the analysis of public nonfinancial corporations.

### Expanded data for public nonfinancial corporations (NFPC)
- Findings:
  - The revised survey will enable compilation of GFS tables for the nonfinancial public sector.
  - The structure and detail will facilitate broader and richer analysis of economic activity in this sector, including sensible assessment of financing transactions and balance sheet structure.
  - More detail will be available to understand drivers of operational results and to support sounder analysis of the financial impact on the government and the public sector’s sustainability.
- Recommendation:
  - Review, amend and implement the revised surveys for NFPC, local governments and statutory bodies. Target Date: July 2019. Responsible Institution: MOF.

### Extrabudgetary units of central government (statutory bodies)
- Findings:
  - Existing survey structure already provides nearly all necessary detail to compile GFS.
  - Authorities already consolidate survey results for internal statistical compilation.
  - A draft compilation of GFS data was successfully prepared; a draft revised survey for statutory bodies was prepared.
- Recommendation:
  - Compile draft GFS for all GFS subsectors excl. the financial corporations sector (incl. restricted set of tables for state governments). Target Date: December 2010. Responsible Institution: MOF.

### Subnational governments (state and local governments)
- Findings:
  - Draft GFS transactions tables (table 1, 2, and 3) for local governments were compiled for 2016–2018.
  - Preliminary GFS coding for state governments was prepared for 1998–2019.
  - Local governments use accrual accounting standards; the mission suggested including a request for balance sheet information for local governments going forward.
  - State governments report on a cash basis; some limited stock information for financial assets and liabilities could also be collected.
- Recommendation:
  - Assess the structure of accounting data available for state governments (incl. possible secondary sources for larger entities). Target Date: December 2019. Responsible Institution: MOF.

### Integration of state government data and feasibility of general government GFS
- Findings:
  - Availability of certain source data breakdowns from accounting systems at the state level are unclear.
  - States can only borrow from the federal government level, limiting the overall fiscal risk of this sector.
  - Partial integration of available data should facilitate general government GFS on the basis of estimation despite incomplete coverage of source data.
- Recommendation:
  - First collect information on the underlying accounting systems before expanding and restructuring the transactional coverage of the survey.

### Consolidation (central government, general government, nonfinancial public sector)
- Findings:
  - Consolidation eliminates intra- and inter-sectoral flows and debtor-creditor relationships within the same sector, producing more meaningful cross-country comparisons and liabilities analysis.
  - Consolidated balance sheets produce more meaningful information on financial assets and (debt and non-debt) liabilities with other economic sectors.
- Central government:
  - Consolidation should be achievable with reasonable effort by combining federal government data with statutory bodies; transfers and lending positions are readily available from the federal government’s accounting system.
- General government:
  - Consolidation requires reconciliation of lending between federal, state and local governments and from state governments to statutory bodies.
  - Issues may arise due to different accounting bases (cash for state governments vs. accrual for other subsectors).
  - Main gaps likely on the balance sheet of the states, possibly requiring separate data collection or estimation.
  - Most loan liabilities should be subject to consolidation because state governments borrow only from or with consent from the federal government.
- Nonfinancial public sector:
  - Consolidation is possible but will require more detailed analysis to eliminate borrowing flows and subsidies between general government and public nonfinancial corporations and to net out the equity position of the general government.
  - For the time being, report the nonfinancial public corporations sector separately and provide supplementary information on subsidies, grants, lending activities, and public guarantees to support fiscal analysis and risk assessments.

### Preliminary assessment of consolidation options (summary)
- Consolidated central government:
  - Already possible, with main grants and lending from federal government separately identifiable in GFMIS and survey data.
  - Survey revision will improve asset and liability breakdown as per GFS for statutory bodies.
- General government:
  - Requires reconciliation of lending across layers and attention to differing accounting bases; the main gaps are likely on state balance sheets.
- Nonfinancial public sector:
  - Should be possible but will require more detailed analysis before full consolidation.

### Consistency of investment data
- Findings:
  - The mission prepared an overview of different investment measures used by MOF and DOSM to strengthen conceptual consistency.
  - GFS framework offers a clear structure for classifying nonfinancial and financial assets and would make respective statistics more user friendly.
  - Specific investment measures can be defined with explicit reference to international standards and subsets can be classified by instrument (e.g., fixed assets; fixed assets + land; or fixed assets + investment in equity and investment fund shares, debt securities and loans).
- Recommendation:
  - Review the employed investment definitions vis-à-vis international standards and consider aligning the investment aggregates across different publications. Target Date: December 2020. Responsible Institutions: MOF and DOSM.

### Results-Based Management Framework (selected milestones and status as of April 2019)
- Objective:
  - Strengthen compilation and dissemination of data on macroeconomic and financial statistics according to relevant internationally accepted statistical standards.
- Selected milestones, Target Completion Dates, Comments:
  - Build full GFS bridge tables linking the revised Chart of Accounts to GFSM 2014 from the GFMIS (cash and accruals). Target Completion Date: June 30, 2019. Status: Largely completed. Remaining steps require (preliminary) accounting data in the new COA structure, expected in 2019: Q2.
  - Build full GFS bridge tables linking financing data from revised COA to GFSM 2014 from the GFMIS; reconcile with other financing sources (Central Bank and debt data). Target Completion Date: June 30, 2019. Status: Largely completed. Remaining steps require (preliminary) accounting data in the new COA structure, expected in 2019: Q2.
  - Business process documentation identifying compilation tables for current GFS data production and full linkages with accounting source data from the GFMIS. Target Completion Date: December 31, 2019. Status: Postponed until new GFS compilation process for budgetary central government from primary data is finalized (data provision from AG pending); for other government levels: postponed until new survey design is finalized and implemented.
  - Develop an updated survey to collect Provincial GFS reflecting the revised COA; apply first to the largest Provincial government and extend thereafter. Target Completion Date: March 31, 2019. Status: Completed.

*Source: 1mysea2019004 - 21. When implemented, a much broader set of statistical data will be available for the analysis of public nonfinancial corporations.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2019/1mysea2019004.pdf_