WRITTEN QUESTION E-3526/01 by Christopher Huhne (ELDR) to the Commission. Current expenditure and public spending.
Date: 2002-01-08
Institutions: European Parliament, Provisional data
Subjects: EU Member State, European accounting system, public administration, public expenditure, public finance

C 160 E/134

Official Journal of the European Communities

EN

4.7.2002

and Security Act and the General Laws Amendment Act (both of which violate the norms and standards
for free and fair elections as agreed by SADC Parliamentarians in March 2001) and the proposed
legislation to regulate the media.

The Council took note of the assurances given by Zimbabwe at the consultations on 11 January and
confirmed in the letter from Foreign Minister Mudenge of 18 January 2002 that the Government of
Zimbabwe will i. a. do its utmost to stop violence, that the elections will be free and fair, that international
election observers including those of EU Member States will be invited, that national and international
Journalists will be allowed to cover the elections,
the Government of Zimbabwe upholds the
independence of the judiciary and that there will be no more occupation of farms or properties. The
Council however remains concerned that serious violations of human rights continue to occur and that
little progress has been made in allowing access for international election observers and for media. The
Council underlined that the Government of Zimbabwe is judged by its actions on the ground.

that

The Council will continue to co-ordinate with international partners, especially the SADC partner countries
of Zimbabwe.

The EU concludes that the essential elements defined in Article 9 of the Cotonou Agreement are not being
respected. It regrets that despite all efforts so far, the Article 96 consultations have not remedied this
situation.

Therefore the EU has decided it will close the Article 96 consultations and implement targeted sanctions if:

3 the Government of Zimbabwe prevents the deployment of an EU observation mission starting by
3 February 2002, or if it later prevents the mission from operating effectively. Likewise,
if the
Government of Zimbabwe prevents the international media from having free access to cover the
election; or

3 there is a serious deterioration in the situation on the ground, in terms of a worsening of the human

rights’ situation or attacks on the opposition; or

3 the election is assessed as not being free and fair.

(2002/C 160 E/169)

WRITTEN QUESTION E-3526/01

by Christopher Huhne (ELDR) to the Commission

(8 January 2002)

Subject: Current expenditure and public spending

reports suggest

Recent
expenditure from measured public spending in certain Member States.

that certain financial operations have had the effect of removing current

Will the Commission indicate its policy towards such off-budget items, and will
operations in Member States of which it is aware and describe its accounting treatment in each case?

it further list those

Answer given by Mr Solbes Mira on behalf of the Commission

(14 March 2002)

Eurostat, the Statistical Office of the Commission, is closely following developments in public accounts in
Member States, and monitors these trends according to the rules of the European System of National and
Regional Accounts (1) (ESA95).

Possible financial operations in Member States having the effect of
impacting general government
expenditure (2) would be monitored along the ESA95 principles, with a view to ensuring that these
principles are correctly applied and that this type of transactions are correctly classified and recorded.

4.7.2002

EN

Official Journal of the European Communities

C 160 E/135

ESA95 is a comprehensive system of national accounting. It notably gives a precise definition of the
expenditures of the general government sector. Member States must follow the accounting rules described
in ESA95.

In cases of difficulties in interpreting ESA95 rules concerning for example off budget items, Eurostat
organises meetings and consultations with Member States in order to reach an agreement on a correct and
homogeneous interpretation.

(1) Council regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in

the Community (OJ L 310, 30.11.1996).

(2) The definition of general government expenditure and revenue is provided in the Commission Regulation (EC) No
to general

1500/2000 of 10 July 2000 implementing Council Regulation (EC) No 2223/96 with respect
government expenditure and revenue, OJ L 172, 12.7.2000.

(2002/C 160 E/170)

WRITTEN QUESTION E-3527/01

by Christopher Huhne (ELDR) to the Commission

(8 January 2002)

Subject: Capital and current spending

How does

1.
spending undertaken under
arrangements such as the Private Finance Initiative or Public Private Partnerships when entering them
into the public accounts for Maastricht comparability purposes?

the Commission currently treat capital and current

2. What is the impact, if any, on both the flow and stock accounts (if stocks are measured)?

3.

4.

Has the Commission changed this treatment recently?

Is it considering a change in treatment?

Answer given by Mr Solbes Mira on behalf of the Commission

(19 March 2002)

1.
Partnership-type arrangements between the public sector and private enterprise may take many
different forms. Private ownership may be introduced into state-owned businesses, or private sector
expertise and finance may be used to exploit the commercial potential of government assets. There can
also be arrangements whereby the public sector contracts to purchase services long-term,
to take
advantage of private sector skills, and where the risk of financing and making a return on capital is with
the private sector. The service may include maintaining, enhancing or constructing the necessary
infrastructure.

General guidance on how capital and current spending should be treated statistically in such arrangements
is found in the Eurostat ‘ESA95 Manual on government deficit and debt’. The key question is the extent to
which risk is transferred from the government sector to the corporation sector. This helps to determine in
which sector expenditure on the infrastructure should be recorded, and how payment flows between the
two sectors should be recorded. Broadly speaking, the most significant impact on government finances is
that many of
these arrangements have the effect of spreading the cost of capital spending (fixed
investment) over their period of use, thus avoiding a higher initial cost to the government. A description
of the type of impact is given in the answer to question 2 below.

2.
The type of impact of such arrangements on flows (affecting the government deficit/surplus as
measured according to Community methodology) and on stocks (affecting the government debt) is as
follows.

the risk is mainly with the corporation,

If
the fixed investment should not be recorded with the
government, so the government deficit improves accordingly. However, the arrangements may involve
regular service payments from government to the corporation, which would increase the deficit by these
amounts over the contract period. There is not normally an impact on government debt (although a higher