Two EU laws regulate the content and methods of compiling quarterly general government accounts and forwarding them to Eurostat:
Commission Regulation No. 264/2000/EC (03.02.2000) on the implementation of Council Regulation No. 2223/96 with respect to short-term public finance statistics;
Regulation (EC) No. 1221/2002 of the European Parliament and of the Council of 10 June 2002 on quarterly non-financial accounts for general government.
The quarterly non-financial accounts of general government are prepared in accordance with these laws, the methodology of ESA2010 and the procedures applied to annual statistics of the general government.
The statistical data concerning the general government sector may differ from cash-based data about state budget published by the Ministry for National Economy. Main differences:
in statistics, the general government sector is wider; beyond the institutions of the general government state-owned companies and non-profit institutions participating in the redistribution of national wealth are accounted here as well,
accrual, time-adjusted accounting is applied,
the accounting of certain transactions (privatization, procurement of military equipment, etc.) differs from cash-based accounting.
In accordance with compiling annual accounts the quarterly data are checked in the end of March and September.
Data sources
The Hungarian State Treasury (MÁK) prepares monthly reports on the revenues and expenditures of the central budget and the extrabudgetary funds, which are used by HCSO for the compilation of quarterly account of the general government. The data about revenues and expenditures of local governments are prepared quarterly and, following their processing and aggregation, forwarded to HCSO by MÁK. Monthly data are available about the revenues and expenditures of social security funds from MÁK.
Apart from some exceptions quarterly data are not available about corporations and non-profit institutions classified into general government. In case of these companies the quarterly data are estimated on the basis of previous year’s data or the target figures of the given year, taking into account the available data (e.g. budgetary transfers, data on gross fixed capital formation).
These cash-based data are classified in revenue or expenditure categories according the ESA2010 rules (endeavoring the consistency with annual general government accounts). The quarterly data are more aggregated than the annual ones, where many detailed tables enable the accurate classification of data in ESA categories. In cases when the quarterly data are not detailed enough, they are classified in different categories according to the shares of the previous year.
According to methodological rules the financial transactions (e.g. lending, stock share purchase) included in cash-based data concern financial accounts and the cash-based balance is modified by these items.
Converting cash-based data into accrual data
According to ESA2010 rules the economic processes must be accounted when events occurring, therefore cash-based data must be converted into accrual ones.
The below methods were applied to different revenue and expenditure categories:
Compensation of employees (wages and salaries and social security contributions): cash-based data adjusted by one month were used. I.e. February, March and April cash-based payments were used to calculate compensation of employees for quarter 1.
Interest: for the central government, an interest calculation, applied by the Government Debt Management Agency Ltd, is used to take into account accrued interests.
Taxes: regularly paid taxes are time adjusted. One month time adjustment is applied to the excise tax, energy tax, financial transaction fee, gambling tax, insurance tax, itemised tax of small taxpayers, tax of small enterprises,vocational training contribution as well as personal income tax. Two month time adjustment is applied to the telephone tax. Three month time adjustment is used for the taxes of medicial products.In case of VAT, tax payments are also adjusted by one month, and as for tax refunding, NAV (National Tax and Customs Administration) data are used based on tax declaration, given quarter specific refunding (reimbursement). Most local taxes, which must be paid twice a year, as well as taxes payable at the end of the year (e.g. corporation income tax, EVA - simplified entrepreneurial tax) are quarterly adjusted by estimating quarterly data using annual target data and using actual cash-based payments at the end of the year.
Social security contributions: monthly adjusted cash-based data are used
Subsidies: subsidies to railway companies adjusted by one month.
Agricultural National Subsidy: concerning the given year the quarterly data of the specific planned subsidy is taken into account.
In certain cases, following the compilation of cash-based and accrual data, further adjustments are required. These are connected to such transactions, which – concerning their cash-based accounting – are not meeting methodological rules. These are e.g. accounting corrections associated with Gripen-aircrafts, foreign debt cancellation related capital transfer imputations, imputed transfer to households related to early repayment of mortgage loans, corrections related to EU transfers etc.
Following this, data will be consolidated, i.e. government subsector and intra subsector transactions will not be taken account at the below operations: interests (D.41), other current transfers (D.7), investment grants (D.92) and other capital transfers (D.99).
In line with this, the revenue and expenditure balance will represent the ESA conform general government deficit.
Seasonally adjusted GDP data are used to calculate the deficit/GDP ratio. More »