For the European Parliament For the Council

This Regulation shall be binding in its entirety and directly applicable in all Member States.

It shall apply from 1 September 2024.

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

The legal acts set out in Annex 3 to this Regulation are repealed.

Annex B to Regulation (EU) No 549/2013 shall be replaced by Annex 2 to this Regulation.

Annex A to Regulation (EU) No 549/2013 shall be amended by the text set out in Annex 1 to this Regulation.

(10)Since the objective of this Regulation, namely the creation of common statistical standards that permit the production of harmonised national accounts data, cannot be sufficiently achieved by the Member States and can therefore be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve that objective.

(9)This Regulation shall enter into force on 1 September 2024 to coincide with the agreed timing for harmonised national accounts benchmark revisions in Member States. This does not prevent Member States from compiling their statistics in accordance with the amended annexes before that general application date.

(8)Following the entry into force of Regulation (EU) No 549/2013 and of Regulation (EU) 2019/516 of the European Parliament and of the Council, eleven legal acts based on the previous European System of Accounts, established by Council Regulation (EC) No 2223/96, are no longer relevant. The measures set out in this Regulation should replace those of Regulations (EC) No 359/2002, (EC) No 1267/2003, (EC) No 1392/2007, (EC) No 400/2009, (EC) No 1221/2002, (EC) No 501/2004 and (EC) No 1161/2005 of the European Parliament and of the Council, Council Regulation (EC) No 1222/2004 and Regulation (EC) No 264/2000 and Decisions 2002/990/EC and 98/715/EC of the Commission. Those acts should therefore be repealed.

(7)Regulation (EU) No 549/2013 should therefore be amended accordingly.

(6)The 49th Session of the United Nations Statistical Commission considered and endorsed the revised classification for the Classification of Individual Consumption by Purpose (COICOP 2018), as the internationally accepted standard. Regulation (EU) No 549/2013 makes reference to the previous classification (COICOP 1999) in both Annex A and Annex B, and therefore those references should be updated.

(5)The transmission programme of national accounts data should be updated to take into account changing user needs and new policy priorities, and the development of new economic activities in the Union.

(4)Annex B to Regulation (EU) No 549/2013 (the “transmission programme”) provides for a set of tables of national accounts data to be transmitted for Union purposes within specified time limits.

(3)During the application of Regulation (EU) No 549/2013, minor textual inconsistencies have been identified in Annex A to that Regulation, and those inconsistencies should be corrected.

(2)Annex A to Regulation (EU) No 549/2013 provides for the methodology for the drawing up of the accounts of the Member States.

(1)Regulation (EU) No 549/2013 of the European Parliament and of the Council , which established the revised European System of Accounts (ESA 2010), contains the reference framework of common standards, definitions, classifications and accounting rules for drawing up the accounts of the Member States for the statistical requirements of the Union, in order to obtain comparable results between Member States.

Acting in accordance with the ordinary legislative procedure,

Having regard to the opinion of the European Central Bank ,

After transmission of the draft legislative act to the national parliaments,

Having regard to the proposal from the European Commission,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 338 (1) thereof,

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

amending Regulation (EU) No 549/2013 and repealing 11 legal acts in the field of national accounts

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

In addition, the proposal takes the opportunity to repeal 11 legal acts which relate to the former European System of Accounts (ESA 1995) and are no longer relevant since ESA 2010 has been implemented.

The proposal also provides for the improvement of the availability of metadata accompanying national accounts data, and to strengthen the consistency of data between tables, particularly for quarterly data.

·Providing a legislative basis for the voluntary transmission of statistics which had been transmitted by Member States on a gentlemen’s agreement basis in the past, for example GDP and employment flash estimates at t+30 and t+45 days delay.

·Strenghening the consistency across tables, notably by amending the deadline arrangements for transmission of quarterly non-financial sector accounts data.

·Improvement of the timeliness of the transmission of some tables, for example the transmission of annual financial accounts at t+4 months delay and the transmission of COFOG data at t+11 months delay. The latter is expected to facilitate its use in policy processes.

·Providing an updated legislative basis for the transmission of quarterly non-financial accounts for general government at t+3 months delay. The data is being transmitted by Member States on a voluntary basis.

·Expanding the availability of Government Finance Statistics, notably in respect of interactions with the institutions and bodies of the EU and the structure of government debt.

Given the importance of national accounts data for policy purposes and broader user needs in the European Union, developments in the needs of these users must be taken into account. The proposal reflects these evolving user needs and in particular the following:

ii) Amendments to Annex B (the transmission programme of ESA 2010)

The opportunity is also taken to update Annex A to correct minor textual inconsistencies that have been identified during its implementation in Member States.

The national accounts are based on internationally recognised statistical classifications, which ensure the comparability of data between countries. These classifications are periodically updated to improve their relevance for users. The Classification of Individual Consumption by Purpose (COICOP), was updated in 2018 and the references in Annex A to COICOP must be amended to reflect the updated classification.

i) Amendments to Annex A (the conceptual basis of ESA 2010)

The proposal relates to an amendment of Regulation (EU) No 549/2013 in two respects:

•Detailed explanation of the specific provisions of the proposal

As the proposed amendments are based on the existing voluntary data transmissions and those based on gentlemen’s agreements, implementation would be limited to including the new provisions in the legislation, and will be monitored as legally required.

Since the proposal only affects the national accountants in Member States, businesses are unaffected by the proposal.

The proposal meets the simplification objectives of the REFIT programme partly by synchronising data transmission for GNI own resources with data transmission for other national accounting purposes, partly by switching to ESA 2010 for own resources in order to avoid Member States producing a double set of accounts, one on ESA 2010 and one on ESA 95.

No impact assessment was conducted, as the proposal does not have significant economic, social or environmental consequences and imposes no additional burden on businesses or the public.

The European Statistical System Committee (ESSC) adopted an opinion at its meeting on 29 October 2021.

The issues underlying the proposal were discussed in meetings of the Directors of Macroeconomic Statistics (DMES), and its sub-groups, over 2020-21 and two rounds of written consultations were carried out. The input of major stakeholders in the European Commission services and outside (for example, the European Central Bank) was obtained. Furthermore there was a discussion with the Economic and Financial Committee’s Sub-Committee on Statistics in June 2021.

•Collection and use of expertise

Considering that the proposed amendment of Regulation (EU) No 549/2013 would not have any significant impact on society or the economy (see the explanation below), the Commission (Eurostat) consulted the European Statistical System Committee, as the national statistical institutes (NSIs) are responsible for coordinating all activities relating to European statistics at national level.

A “Report from the Commission to the European Parliament and the Council on the application of ESA 2010” was adopted on 29 June 2018 (COM(2018)506 final). In addition, several expert meetings have taken place with Member States and major stakeholders. In particular, the main stakeholders of ESA 2010 are Commission services, Member States, and EU and international organisations like the ECB and the OECD, which have been closely involved in developments and discussions. There is a consensus among practitioners that minor changes in the ESA 2010 Regulation are necessary. This became evident after Eurostat carried out a prioritisation survey at the beginning of 2018 and was confirmed in the conclusions of several subsequent expert groups on national accounts, particularly of the Directors of Macroeconomic Statistics and the dedicated task force on ESA 2010 cross-domain consistency.

Based on Commission standards, Eurostat’s system for evaluating existing legislation, including the evaluation of the European Statistical Programme was followed, and formed a central part of the whole process. In addition, user surveys are conducted every year in order to obtain better knowledge about users, their needs and their satisfaction with the services provided by Eurostat. Evaluation results are used by Eurostat to improve the process of producing statistical information and its statistical output. They feed into various strategic plans, such as the work programme and the management plan.

Given the objectives and content of the proposal and the fact that this is a proposal amending an existing regulation, a regulation is the most appropriate instrument.

In accordance with the principle of proportionality, the regulation proposed confines itself to the minimum required to achieve its objective and does not go beyond what is necessary for that purpose.

The proposal complies with the proportionality principle. The need to update the link to a key classification, and to address user needs in the transmission programme, can be met through a limited amendment to Regulation (EU) No 549/2013.

The Union may therefore adopt measures in this area in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty

The proposal for this Regulation has been drafted with a view to retaining the relevance of the ESA 2010 with respect to its conceptual basis and to its transmission programme. Member States acting independently cannot sufficiently achieve the objectives of the proposed action with the view of ensuring comparability, reliability and exhaustiveness. Action can be taken more efficiently at EU level, on the basis of an EU legal act.

The subsidiarity principle applies insofar as the proposal does not fall within the exclusive competence of the Union.

Article 338 of the Treaty on the Functioning of the European Union (TFEU) provides the legal basis for European statistics. Acting in accordance with the ordinary legislative procedure, the European Parliament and the Council adopt measures to ensure that statistics are produced where this is necessary to enable the Union to perform its role. Article 338 TFEU sets out the requirements for producing European statistics necessary for the performance of the activities of the Union, which must meet certain standards of impartiality, reliability, objectivity, scientific independence, cost-effectiveness and statistical confidentiality without entailing excessive burdens on economic operators.

The national accounts data which are prepared and transmitted under Regulation (EU) No 549/2013 are widely used for Union policy purposes and the revisions proposed will enhance the availability of data for users.

The proposal is fully consistent with existing statistical provisions in Union legislation.

•Consistency with existing policy provisions in the policy area

In addition, the Commission believes that it is opportune to repeal 11 legal acts relating to the previous European System of Accounts (ESA 1995), as these acts are no longer relevant.

The Commission therefore believes that it is appropriate to amend Regulation (EU) No 549/2013 to update references to the COICOP classification and to update the transmission programme to reflect new user needs

Regulation (EU) No 549/2013, which established the revised European System of Accounts (ESA 2010), includes a conceptual basis (Annex A) and a transmission programme of data to be transmitted to Eurostat (Annex B). Since the introduction of ESA 2010 in 2014, there has been an evolution in a key statistical classification upon which it is based (a new Classification of Individual Consumption by Purpose, or COICOP) and also an evolution in the needs of users for national accounts data.

•Reasons for and objectives of the proposal

amending Regulation (EU) No 549/2013 and repealing 11 legal acts in the field of national accounts

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

EUROPEAN COMMISSION Brussels, 10.12.2021 COM(2021) 776 final ANNEX to the Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 549/2013 and repealing 11 legal acts in the field of National Accounts



ANNEX 1 Annex A to Regulation (EU) No 549/2013 is amended as follows: 1.Paragraph 1.51(b) is replaced by the following: “(b) expenditures on weapon systems that meet the general definition of assets have been classified as fixed capital formation, rather than intermediate consumption;” 2.Paragraph 1.51 (h) is replaced by the following: “(h) the treatment of super dividends paid by public corporations has been clarified, i.e. they are to be considered as exceptional payments and treated as withdrawals from equity;” 3.Diagram in paragraph 1.118 is labelled: “Diagram 1.1 - A diagram of the sequence of accounts” 4.In Paragraph 3.98 the following text “ Final consumption expenditure (P.3) by government includes two categories of expenditures, similar to those by NPISHs:” is replaced by the following: “Final consumption expenditure (P.3) by general government includes two categories of transactions, similar to those by NPISHs:” 5.Paragraph 3.105 is replaced by the following: “Alternatively individual consumption expenditure of general government corresponds to division 15 of the classification of individual consumption by purpose (Coicop), which includes the following groups: 15.1 Housing (equivalent to COFOG group 10.6) 15.2 Health (equivalent to COFOG groups 7.1 to 7.4) 15.3 Recreation and culture (equivalent to COFOG groups 8.1 and 8.2) 15.4 Education (equivalent to COFOG groups 9.1 to 9.6) 15.5 Social protection (equivalent to COFOG groups 10.1 to 10.5 and group 10.7).”

6.Paragraph 3.124 is replaced by the following: “Definition: gross fixed capital formation (P.51g) consists of resident producers’ acquisitions, less disposals, of fixed assets during a given period plus certain additions to the value of non-produced assets realised by the productive activity of producer or institutional units. Fixed assets are produced assets used in production for more than one year.” 7.Paragraph 3.132(c) is replaced by the following: “(c) computer software and databases to be used in production for more than one year;” 8.Paragraph 3.138 is replaced by the following: “Costs of ownership transfer can apply to both produced assets, including fixed assets, and non-produced assets, such as land. These costs are included in the purchasers’ prices in the case of produced assets. They are separated from the purchases and sales themselves in the case of land and other non-produced assets, and recorded under a separate heading (P.512) in the classification of gross fixed capital formation.” 9.In paragraph 3.181 the text, “The transfer of existing goods is recorded as a negative expenditure (acquisition) for the seller and a positive expenditure (acquisition) for the purchaser”, is replaced by the following: “The transfer of existing goods is recorded as a negative expenditure (disposal) for the seller and a positive expenditure (acquisition) for the purchaser.” 10.In paragraph 4.40 the following text is deleted: “Other subsidies on production (D.39) are recorded as resources in the generation of income accounts of the industries or sectors which receive them.” 11.Paragraph 4.50 is replaced by the following: “Interest is recorded on an accrual basis, that is, interest is recorded as accruing continuously over time to the creditor on the amount of principal outstanding. The interest accruing in each accounting period must be recorded whether it is actually paid or added to the principal outstanding. When it is not paid, the increase in the principal is recorded in the financial account as an acquisition of a financial asset by the creditor and an equal acquisition of a liability by the debtor.” 12.In paragraph 4.82 the text, “In some cases, the liability to pay income taxes can only be determined in a later accounting period than that in which the income accrues. Some flexibility is therefore needed concerning the point in time at which such taxes are recorded. Income taxes deducted at source, such as PAYE taxes and regular prepayments of income taxes, may be recorded in the periods in which they are paid and any final tax liability on income can be recorded in the period in which the liability is determined.”, is replaced by the following: “In some cases, the liability to pay income taxes can only be determined in a later accounting period than that in which the income accrues. Some flexibility is therefore needed concerning the point in time at which such taxes are recorded. Income taxes retained at source, such as Pay-As-You-Earn (PAYE) taxes and regular prepayments of income taxes, may be recorded in the periods in which they are paid and any final tax liability on income can be recorded in the period in which the liability is determined.” 13.Paragraph 4.93(a) is replaced by the following: “(a) social contributions paid by persons who are not legally obliged to contribute to a social security Fund;” 14.Paragraph 5.117 is replaced by the following: “The distinction between transactions in loans (F.4) and transactions in deposits (F.22) is that a creditor offers a non-standardised non-negotiable contract in the case of a loan, but not in the case of a deposit.” 15.Paragraph 5.235 is replaced by the following:

“FISIM accrued but not yet paid is included with the corresponding financial instrument and prepayment of insurance premiums is included in insurance technical reserves (F.61); in neither case is there an entry in trade credits and advances.” 16.Paragraph 5.236(c) is replaced by the following: “(c) rental of buildings accruing over time; and” 17.Paragraph 7.88 is replaced by the following: “The market value of forwards can switch between positive (asset) and negative (liability) positions depending on price movements in the underlying items and thus they can switch being assets and liabilities for the writers and holders. Some forwards operate on margin payments, where profits or losses are settled daily; in these cases the balance sheet value will be zero.” 18.In Chapter 8, Table 8.1 is replaced by the following: “Table 8.1 — Synoptic presentation of the accounts, balancing items and main aggregates Accounts Balancing items Main aggregates Full sequence of accounts for institutional sectors Current accounts I. Production account I. Production account B.1g Value added, gross Gross domestic product (GDP) II. Distribution and use of income accounts II.1 Primary distribution of income accounts II.1.1 Generation of income account B.2g B.3g Operating surplus, gross Mixed income, gross II.1.2 Allocation of primary income account II.1.2.1 Entrepreneurial income account B.4g Entrepreneurial income, gross II.1.2.2 Allocation of other primary income account B.5g Balance of primary incomes, gross Gross national income (GNI) II.2 Secondary distribution of income account B.6g Disposable income, gross Gross national disposable income II.3 Redistribution of income in kind account B.7g Adjusted disposable income, gross II.4 Use of income account II.4.1 Use of disposable income account B.8g Saving, gross Gross national saving II.4.2 Use of adjusted disposable income account Accumulation accounts III. Accumulation accounts III.1 Capital account III.1.1 Change in net worth due to saving and capital transfers account B.101 Change in net worth due to saving and capital transfers III.1.2 Acquisition of non-financial assets account B.9 Net lending/net borrowing III.2 Financial account B.9F Net lending/net borrowing III.3 Other changes in assets account III.3.1 Other changes in volume of assets account B.102 Changes in net worth, due to other changes in volume of assets III.3.2 Revaluation accounts B.103 Changes in net worth due to nominal holding gains/losses III.3.2.1 Neutral holding gains/losses account B.1031 Changes in net worth due to neutral holding gains/losses III.3.2.2 Real holding gains/losses account B.1032 Changes in net worth due to real holding gains/losses Balance sheets IV. Balance sheets IV.1 Opening balance sheet B.90 Net worth National worth IV.2 Changes in balance sheet B.10 Changes in net worth, total Changes in national worth IV.3 Closing balance sheet B.90 Net worth National worth Transaction accounts 0. Goods and services account Rest of the world account (external transactions account) Current account V. Rest of the world account V.I External account of goods and services B.11 External balance of goods and services External balance of goods and services V.II External account of primary income and current transfers B.12 Current external balance Current external balance Accumulation accounts V.III External accumulation accounts V.III.1 Capital account V.III.1.1 Changes in net worth due to current external balance and capital transfers account B.101 Changes in net worth due to current external balance and capital transfers V.III.1.2 Acquisition of non-financial assets account B.9 Net lending/net borrowing V.III.2 Financial account B.9F Net lending/net borrowing Net lending/net borrowing V.III.3 Other changes in assets account V.III.3.1 Other changes in volume of assets account B.102 Changes in net worth, due to other changes in volume of assets V.III.3.2 Revaluation accounts B.103 Changes in net worth, due to nominal holding gains/losses Balance sheets V.IV External assets and liabilities account V.IV.1 Opening balance sheet B.90 Net worth Net external financial position V.IV.2 Changes in balance sheet B.10 Changes in net worth V.IV.3 Closing balance sheet B.90 Net worth Net external financial position ” 19.Paragraph 9.61 is replaced by the following: “However, the analytical properties of product-by-product tables and industry-by-industry tables do not differ significantly. The differences between product-by-product tables and industry-by-industry tables are caused by the existence of a generally limited amount of secondary production. In practice, analytical uses of input-output tables implicitly assume an industry technology, no matter how the tables have originally been compiled. Furthermore, in practice, any product-by-product table is a manipulated industry-by-industry table, as it still contains all the KAU and enterprise characteristics of the supply and use tables.” 20.Paragraph 10.27 is replaced by the following: “For transactions in services it is frequently more difficult to specify the characteristics which determine the physical units, and differences of opinion may arise concerning the criteria to be used. This difficulty may concern important industries such as financial intermediation services, wholesale and retail trade, services to enterprises, education, research and development, health or recreation. The choice of physical units for such activities is presented in Handbook on prices and volume measures in national accounts (20).” Footnote 20 to paragraph 10.27 is replaced by the following: “Eurostat, Handbook on prices and volume measures in national accounts, 2016.” 21.Footnote 22 to paragraph 10.56 is replaced by the following: “Eurostat-OECD, Eurostat-OECD Methodological manual on purchasing power parities, 2012.” 22.In paragraph 14.06 the text, “FISIM calculations concentrate on subsectors S.122 and S.125; by convention, FISIM are not calculated for the central bank (see part VI).” is replaced by the following: “FISIM calculations concentrate on subsectors S.122 and S.125; by convention, FISIM are not calculated for the central bank (see paragraph 14.16).”

23.In Chapter 15, Table 15.4 is replaced by the following: “ Type of transaction / other economic flow Type of use/purchase and type of asset and type of payment Intermediate consumption Operating lease of produced assets, e.g. machines and intellectual property rights Regular payments by corporations for the delivery of water FISIM services related to the provision of a financial lease Consumption of fixed capital Only for produced assets, and for the economic owner Final consumption expenditure Operating lease of consumer durables Purchase of consumer durables, including when financed by a financial lease, or through a hire purchase agreement Purchase of non-financial assets Fixed capital formation Purchase of produced assets (including when financed via a financial lease) Acquisition of natural resources Purchase of a natural resource including the right to use to extinction Purchase of the right to use a natural resource for an extended period e.g. a fishing quota Acquisition of other non-produced assets Transferable time-share arrangements Purchase of a contract transferable to a third party Contracts for future production, for example contracts with footballers and writers Payment as property income Resource lease, i.e. payment for short-term use of natural resource Rent Regular payments for the right to extract water Financial lease, i.e. purchase of a non-financial asset financed simultaneously by a loan Income transfer Permits issued by government to undertake a specific activity not dependent on qualifying criteria, or with a disproportionate charge compared to the costs of administering the permit scheme Emission permits issued by the government to control total emissions Other taxes on production Financial transaction: loan Financial lease, i.e. purchase of a non-financial asset financed simultaneously by a loan Other change in volume of assets Exhaustion of natural resources by the owner Illegal logging, fishing or hunting (uncompensated seizure of cultivated assets or natural resources) Change in the price of assets Expiry of contracts, licences and permits recorded as assets ” 24.In paragraph 15.27 the text, “This asset (category AN.222) is only recognised if its value, the benefits to the holder in excess of the value accruing to the issues, is realisable through transferring the asset. Such permits are first observed through economic appearance of assets (category K.1, see point (g) of paragraph 6.06). If the value of the asset is not realised it will tend towards zero as the lease period ends.”, is replaced by the following: “This asset (category AN.222) is only recognised if its value, the benefits to the holder in excess of the value accruing to the issuer, is realisable through transferring the asset. Such permits are first observed through economic appearance of assets (category K.1, see point (g) of paragraph 6.06). If the value of the asset is not realised it will tend towards zero as the lease period ends.” 25.Paragraph 15.32 is replaced by the following: “When governments restrict the number of cars entitled to operate as taxis or limit the number of casinos by issuing permits, for example, they are in effect creating monopoly profits for the approved operators and recovering some of the profits as the fee. Such fees are recorded as other taxes on production. This principle applies to all cases where government issues permits to limit the number of units operating in a particular field where the limit is fixed arbitrarily and is not dependent only on qualifying criteria.” 26.Paragraph 15.35 is replaced by the following: “The permit to undertake specific activities as an asset first appears in the other changes in the volume of assets account. Changes in value, both up and down, are recorded in the revaluation account of the acquirer.” 27.In Chapter 16, Table 16.1 is replaced by the following: “ Uses Resources S.1 S.15 S.14 S.13 S.12 S.11 S.11 S.12 S.13 S.14 S.15 S.1 Corresponding entries of the Corresponding entries of the Total Goods and services account Rest of the world account Total economy NPISHs Households General government Financial corporations Non-financial corporations Transactions and balancing items Non-financial corporations Financial corporations General government Households NPISHs Total economy Rest of the world Goods and services account Total External account 0 0 P.62 Exports in services 0 0 0 0 P.72 Imports in services 0 0 Production account 6 6 P.1 Output 6 6 6 4 0 4 0 3 0 0 1 P.2 Intermediate consumption 4 4 Distribution of primary income account 6 6 6 D.441 Property income attributable to insurance policy holders 5 0 0 1 0 6 0 6 Secondary distribution of income account 44 1 43 0 31 4 0 8 D.711 Net non-life insurance premiums 44 44 44 45 0 45 45 D.721 Non-life insurance claims 6 0 1 35 0 42 3 45 Use of disposable income account 2 2 2 P.3 Final consumption expenditure 2 2 Financial balance sheet (opening) 74 0 74 40 0 9 25 AF.61 Non-life insurance technical reserves 74 74 74 Financial balance sheet (closing) 81 0 81 0 44 0 11 25 AF.61 Non-life insurance technical reserves 81 81 81 Financial transaction 7 0 7 0 4 0 2 1 F.61 Non-life insurance technical reserves 7 7 7 Revaluation account 0 0 0 0 0 0 0 0 AF.61 Non-life insurance technical reserves 0 0 0 ” 28.Paragraph 17.148 is replaced by the following: “If government assumes the responsibility for pension provision for the employees of a non-government unit through an explicit transaction, any payment by the non-government unit needs to be recorded as pre-paid social contributions (F.89). There is further discussion of this type of arrangement in paragraphs 20.273 to 20.275.” 29.Paragraph 17.165 is replaced by the following: “The discount rate applied to estimates of future pension benefits in the case of accrued-to-date entitlements is one of the most important assumptions to be made in the modelling of pension schemes, since its accumulated impact over many decades can be very large. The discount rate from a chosen approach may change over time, which would lead to revaluations in the accounts.” 30.Footnote 29 to paragraph 18.26 is replaced by the following: “United Nations, International merchandise trade statistics: Concepts and definitions, 2010.”

31.In paragraphs 20.57, 20.63, 20.65 the text, “(excluding social security)”, is replaced by the following: “(excluding social security funds)” 32.In paragraph 20.76 the table is replaced by the following: “ Total Revenue = total taxes D.2 + D.5 + D.91 + net social contributions D.61 + total sales of goods and services P.11 + P.12 + P.131 + other current revenue D.39 + D.4 + D.7 + other capital revenue D.92 + D.99 ” 33.Paragraph 20.77 is replaced by the following: “Total taxes comprise taxes on production and imports (D.2), current taxes on income and wealth, etc. (D.5) and capital taxes (D.91). Net social contributions consist of actual social contributions (employers' actual social contributions D.611 and households' actual social contributions D.613), employers' imputed social contributions (D.612) and households' social contribution supplements (D.614) less social insurance scheme service charges (D.61SC).” 34.In paragraph 20.84 the box 20.1 is replaced by the following: “ ESA resources ESA GFS revenue P.1 Output, of which Market output (P.11) Sales of goods and services Output for own final use (P.12) Sales of goods and services Non-market output (P.13), of which: — Payments for non-market output (P.131) Sales of goods and services — Non-market output, other (P.132) Not accounted for in Total revenue D.2 Taxes on production and imports (receivable) Total taxes D.3 Subsidies (receivable) Other current revenue D.4 Property income Other current revenue D.5 Current taxes on income and wealth Total taxes D.61 Social contributions Net social contributions D.7 Other current transfers Other current revenue D.91r Capital taxes (receivable) Total taxes D.92r Investment grants (receivable) Other capital revenue D.99r Other capital transfers (receivable) Other capital revenue ESA uses and capital transactions ESA GFS expenditure P.2 Intermediate consumption Intermediate consumption D.1 Compensation of employees Compensation of employees D.2 Taxes on production and imports (payable) Other current expenditure D.3 Subsidies (payable) Subsidies D.41 Interest Interest D.4 Property income (excluding D.41) Other current expenditure D.5 Current taxes on income Other current expenditure D.62 Social benefits other than social transfers in kind Social benefits other than ST in kind D.632 Social transfers in kind via market producers Social transfers in kind via market producers D.7 Other current transfers Other current expenditure D.8 Adjustment for the change in pension entitlements Other current expenditure P.31 Individual consumption expenditure on market output Social transfers in kind via market producers P.31 Individual consumption expenditure on non-market output Not accounted for in Total expenditure P.32 Collective consumption expenditure Not accounted for in Total expenditure P.5 Gross capital formation Capital expenditure NP Acquisition less disposal of non-produced assets Capital expenditure D.92p Investment grant (payable) Capital expenditure D.99p Other capital transfers (payable) Capital expenditure In the ESA central framework, net lending/net borrowing (B.9) is the balancing item of the capital account. The balancing item of general government in the ESA GFS presentation is identical to the net lending/net borrowing (B.9). This box explains why. The ESA central framework The first account is the production account, and therefore the first resource of an institutional sector in the ESA is its output. As the majority of services provided by government are not sold at economically significant prices and so are non-market, government output is measured by convention as the sum of production costs. Similarly, final collective consumption expenditure, consisting of services provided to the community by government such as general services, defence, safety and public order, are measured as the sum of production costs. Also by convention, collective consumption expenditure (P.32) is equal to the actual final consumption (P.4) of government. Final individual consumption expenditure of households provided directly by government on a non-market basis is also measured by its production costs. As a result, two types of flows are 'imputed' in the ESA accounts of government: (1)on the resources side, the non-market output, other (P.132) recorded in the production account; (2)on the uses side, the actual final consumption (P.4) and the social transfers in kind — non-market production (D.631). They are recorded in the redistribution of income in kind account, and in the use of adjusted disposable income account. Each imputed flow is equal to the sum of actual flows: the production costs. These two types of imputed flows, on the resource side and on the uses side, balance in the ESA sequence of accounts. The ESA GFS presentation of statistics The same basic transaction categories are used in the ESA GFS presentation, but mainly on the basis of actual monetary flows, to obtain the total revenue and the total expenditure of government. Only a selection of imputed flows is taken into account: imputed social contributions and capital transfers in kind. Eliminating from the resources side the non-market output (P.132) to obtain total revenue, and eliminating from the uses side the actual final consumption (P.4=P.32) and the social transfers in kind — non-market production (D.631) to obtain total expenditure, results in the same balancing item: the net lending/net borrowing (B.9). The only social transfers in kind that are accounted for in the GFS aggregate total expenditure of government are social transfers in kind provided to households via market producers (D.632), as they are subject to real payments of government units. Those transactions are also to be added to the sum of production costs (equal to non-market output, other — P.132) to obtain the final consumption expenditure of the general government. P.3 = P.132 + D.632 ” 35.Paragraph 20.90 is replaced by the following: “Subsidies received by government units consist only of other subsidies on production. When received by producing entities belonging to general government, subsidies on products are included in the valuation of the output and sales at basic prices.” 36.Paragraph 20.130 is replaced by the following: “The repurchase by a unit of a liability is recorded as redemption in liabilities and not as an acquisition of assets. Likewise, at a subsector or sector level, the purchase by a government unit of a liability issued by another unit of the subsector in question will be presented in the consolidated presentation, as redemption of liability by that subsector or sector.”

37.Paragraph 20.158 is replaced by the following: “Taxes or subsidies paid by one government unit or entity to another are not to be consolidated. Taxes or subsidies on products cannot be consolidated in the system because there is no counterpart sector transactor in the ESA for such transactions; the relevant amounts are not separately recognised as expenditure and revenue (respectively) and are instead included in, or excluded from, the value of the intermediate consumption or of the sales.” 38.Paragraph 21.22 is replaced by the following: “The valuations of assets at fair value not only provide a better picture of the balance sheet than valuations at historic cost but they also generate more data on holding gains/losses.” 39.Paragraph 22.13 is replaced by the following: “In Coicop 15 main categories are distinguished: (a) food and non-alcoholic beverages; (b) alcoholic beverages, tobacco and narcotics; (c) clothing and footwear; (d) housing, water, electricity, gas and other fuels; (e) furnishings, household equipment and routine household maintenance; (f) health; (g) transport; (h) information and communication; (i) recreation, sport and culture; (j) education services; (k) restaurants and accommodation services; (l) insurance and financial services; (m) personal care, social protection and miscellaneous goods and services; (n) individual consumption expenditure of non-profit institutions serving households; and

(o) individual consumption expenditure of general government. The first 13 categories sum up total individual consumption expenditure by households. The last two identify individual consumption expenditure by the non-profit institutions serving households (NPISHs) and general government sectors, i.e. their social transfers in kind. Together all 15 items represent actual final consumption by households.” 40.Paragraph 22.14 is replaced by the following: “The individual consumption expenditure of NPISHs and general government is broken down into five common sub-categories reflecting major policy issues: housing, health, recreation and culture, education and social protection. These are also Coicop functions for the individual consumption expenditure by households; social protection is a sub-category of 13 personal care, social protection and miscellaneous goods and services. As a consequence, Coicop also shows for each of these five common sub-categories, the role of private households, government and non-profit institutions serving households. For example, it can describe the role of government in providing housing, health and education.” 41.Paragraph 22.16 is replaced by the following: “The classification of government expenditure by function (COFOG) is a major tool for describing and analysing government finance. The 10 major divisions distinguished are: (a) general public services; (b) defence; (c) public order and safety; (d) economic affairs; (e) environmental protection; (f) housing and community amenities; (g) health; (h) recreation, culture and religion; (i) education; and (j) social protection. The classification is used to classify individual and collective consumption expenditure by the government. However, it also serves to illustrate the role of other types of expenditure such as subsidies, investment grants and social benefits, for pursuing policy purposes.” 42.Paragraph 23.05 is replaced by the following: “Apart from COFOG and Coicop, the functional classifications include also COPNI (classification of the purposes of non-profit institutions serving households) and COPP (classification of outlays of producers by purpose). These classifications are used for functional analysis of the expenditure by corporations, government, households and non-profit institutions serving households and for functional satellite accounts.”