Proposal for a Regulation of the European Parliament and of the Council on quarterly financial accounts for general government
Date: 2003-05-08
Institutions: European Commission
Subjects: EU statistics, Economic and Monetary Union, data collection, financial statistics, public accounting, public administration, publication of accounts

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 8.5.2003
COM(2003) 242 final

2003/0095 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE
COUNCIL

on quarterly financial accounts for general government

(presented by the Commission)

EXPLANATORY MEMORANDUM

The  objective  of  this  Regulation  is  to  make  available,  from  2005  onwards,  a  full  set  of
quarterly financial accounts for general government.

The structure of the attached Regulation follows the existing Regulation (EC) No 1221/2002
of  the  European  Parliament  and  of  the  Council  of  10  June  2002  on  quarterly  non-financial
accounts  of  government  to  some  extent.  This  specifically  refers  to  the  time  pattern  that
national data for all Member States will be available with sufficient quality in the course of
2005.  Furthermore,  for  almost  all  definitions  reference  is  made  to  the  Council  Regulation
(EC)  No  2223/96  of  25  June  1996  on  the  European  System  of  National  and  Regional
Accounts in the Community (ESA 95) and stock should be taken on the sources and methods
used to compile the quarterly data.

The Recitals 1, 3 and 4 cover points especially relevant to financial accounts of government:
the  appropriateness  of  using  ESA  95  definitions,  the  general  need  of  data  on  government
financial transactions and balance sheets to support monetary policy and the specific need of
from-whom-to-whom data to allow a detailed analysis of government financing and financial
investment  by  counterpart  sector  and  instrument.  These  Recitals  refer  to  the  view  that
Member  States  have  always  indicated  to  compile  and  disseminate  quarterly  public  financial
accounts for the purpose to present a complete set of sectoral accounts for the government and
to strengthen the statistical basis of an integrated system of financial accounts, preferably on
the European level for monetary and for fiscal policy purposes.

As  a  reminder,  the  special  Economic  and  Financial  Committee  report,  endorsed  by  the
Council  (Ecofin)  on  18  January  1999,  stressed  the  importance  of  quarterly  data  for  the
surveillance  and  co-ordination  of  economic  policies  in  the  context  of  the  third  phase  of
European  monetary  union  and  completing  the  single  market.  In  the  report,  short-term
financial statistics were seen as a priority, since they are crucial for the accurate definition and
monitoring  of economic policy, and notably  as  a key  factor in the EMU  policy  mix.  It  also
clearly  stated  that  the  final  aim  was  the  provision  of  complete  quarterly  accounts  within  a
reasonable period (later agreed as three months), but following a step-by-step approach.

The  Articles  cover  the  framework  of  data  supply  (Articles  1,  3  to  7)  including  readily
available information on sources and methods used to compile the quarterly data (Article 8)
and  specific  quality  aspects  (Articles  2  and  9).  The  series  to  be  reported  are  described  in
Articles 3 to 5. Article  3 lists the various  categories  of financial instruments  as  defined  and
codified  in  ESA  95,  while  Article  4  specifies  the  government  sector  and  its  sub-sectors  for
which quarterly data are to be provided. Article 5 indicates that only consolidated data shall
be transmitted for all government sub-sectors, but consolidated and non-consolidated data for
the sector  as  a  whole.  Finally,  this  article  also  refers  to  the  quarterly  data,  which  should  be
provided  as  from-whom-to-whom  information.  A  detailed  list  of  this  specific  data  set  is
described in the Annex to the Regulation. These data would enable a comprehensive analysis
of who is financing whom, to which amount and with which instruments.

The Regulation specifies that data must be based as far as possible on information provided
directly by sources within general government. Thus, it does not rule out the use of estimates,
but  these  should  be  exceptional  and  have  a  limited  impact  on  the  figures.  However,  an
exception  is  made  for  data  on  unquoted  shares  and  other  equity  where  there  are  major
difficulties  in  some  countries,  and  interpolation  or  extrapolation  are  considered  acceptable
alternatives to direct quarterly data.

2

According  to  Article  6.3  the  Regulation  foresees  that  the  Commission  (Eurostat)  may  grant
derogations  for  the  starting  date  of  the  data  transmitted  for  the  state  and  local  government
sub-sectors,  not  exceeding  two  years  (between  mid-2003  and  mid-2005).  Moreover,  the
quarterly  data  to  be  transmitted  shall  cover  back  data  from  the  first  quarter  of  1999  for
transactions and from the fourth quarter of 1998 for balance sheet items, as outlined in Article
7. Back data can be based on "best estimates" if necessary.

As indicated in  Article 8  Member States  have  to  provide  the  Commission  (Eurostat)  with  a
description of the sources and methods used to compile the quarterly data starting mid-2003.
In parallel, the Commission (Eurostat) shall, by end-2005 at the latest, submit to the European
Parliament  and  Council  a  report  containing  an  assessment  of  the  reliability  of  the  quarterly
data delivered by the Member States.

The  proposal  of  Regulation  is  the  result  of  work  carried  out  jointly  by  Eurostat  and  the
European  Central  Bank  with  national  experts.  Since  February  2000,  a  Joint  Eurostat/ECB
Task  Force  on  Quarterly  Financial  Accounts  for  the  Government  Sector  has  held  regular
meetings.  The  Task  Force  was  mandated  by  the  Committee  on  Monetary,  Financial  and
Balance  of  Payments  Statistics  (CMFB)  to  develop  quarterly  financial  accounts  for  the
government sector and its sub-sectors of EU Member States. In addition the Task  Force has
conducted various test data transmissions of quarterly national financial accounts from the EU
Member States to Eurostat and to the ECB

Based on a sufficient coverage of the data regularly transmitted by Member States from mid-
2003 onwards it might be feasible to compile euro area and EU financial transaction accounts
and balance sheets, first, for central government and social security funds and, later, for other
government sub-sectors. These data on specific sub-sector accounts for the euro area might be
used to integrate them into the ECB’s quarterly Monetary Union financial accounts (MUFA).

Linking the two Regulations, the Regulation on non-financial accounts and the Regulation on
financial  accounts  for  the  government  sector  will  allow  incorporating  saving  and  non-
financial investment, but also other real variables like the various components of government
revenue and expenditure. At the end, it will lead to a much-enriched analysis linking financial
and  non-financial  developments,  which  enables  for  the  government  sector  a  detailed
assessment  of  fiscal  policy  impulses,  of  specific  traces  of  the  ECB  monetary  policy
transmission process related to government, and of related income and wealth effects. A full
integration  of  the  real  and  financial  variables  also  of  other  sectors,  however,  would  require
more  complete  financial  and  non-financial  accounts  by  sector.  This  extension  is  part  of  the
ECB/European Commission (Eurostat) Action Plan on EMU statistical requirements.

3

2003/0095 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on quarterly financial accounts for general government

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular
Article 285 thereof,

Having regard to the proposal from the Commission,1

Having regard to the opinion of the European Central Bank,2

Acting in accordance with the procedure laid down in Article 251 of the Treaty,3

Whereas:

(1)

(2)

(3)

1

2

3

4

Council  Regulation  (EC)  N°  2223/96  of  25  June  1996  on  the  European  system  of
national  and  regional  accounts  in  the  Community4  (ESA 95)  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
Community, in order to obtain comparable results between Member States.

The report by the Monetary Committee on information requirements, endorsed by the
ECOFIN Council on  18  January 1999,  underlined that, for  the  proper  functioning  of
economic  and  Monetary  Union  and  the  single  market,  effective  surveillance  and  co-
ordination  of  economic  policies  are  of  major  importance  and  that  this  requires  a
comprehensive  statistical  information  system  providing  policy-makers  with  the
necessary  data  on  which  to  base  their  decisions.  That  report  also  stated  that  high
priority should be  given to short-term public finance statistics for Member States,  in
particular those participating in economic and Monetary Union, and that the objective
was the compilation of quarterly  government financial  accounts following a step-by-
step approach.

Quarterly national data of financial accounts (transactions and balance sheets) for the
government  sector  make  up  a  large  proportion  of  all  financial  transactions  and
financial balance sheets in the euro area and provide important information to support
the conduct of monetary policy. In this respect and for its own purpose the Governing
Council  of  the  European  Central  Bank  has  adopted  regulations  and  guidelines  to

OJ C , , p. .
OJ C , , p. .
OJ C , , p. .
OJ N°L310, of 30.11.96, p.1.

4

                                                
(4)

(5)

(6)

(7)

safeguard  the  transmission  of  infra-annual  data  on  financial  statistics  and  national
financial accounts to the European Central Bank.

Counterpart  sector  information  on  government  financial  transactions  and  balance
sheets  is  required  to  enable  comprehensive  analysis  of  government  financing  and
financial investment by counterpart sector and by instrument.

The  Commission  Regulation  264/2000  of  3  February  2000  and  the  Regulation  (EC)
No  1221/2002  of  the  European  parliament  and  of  the  Council,  of  10  June  2002,
specify  the  non-financial  quarterly  data  for  general  government  that  shall  be
transmitted to the Commission (Eurostat) by Member States.

Articles  2  and  3  of  Regulation  (EC)  No  2223/96  of  25  June  1996  lay  down  the
conditions  under  which  the  Commission  may  adopt  amendments  to  the  ESA 95
methodology  in  order  to  clarify  and  improve  its  contents.  The  compilation  of
government quarterly financial accounts will  require  additional resources in Member
States, and cannot therefore be dealt with by a Commission Decision but should rather
be adopted by a specific Regulation of the European Parliament and of the Council.

The Statistical Programme Committee (SPC) set up by Council Decision 89/382/EEC,
Euratom,5  and  the  Committee  on  Monetary,  Financial  and  Balance  of  Payments
Statistics (CMFB) set up by Council Decision 91/115/EEC,6 have declared themselves
in favour of the draft of this Regulation.

HAVE ADOPTED THIS REGULATION:

Article 1

Purpose

The purpose of this Regulation is to list and define the main characteristics of the European
System of Accounts (ESA 95) categories of financial transactions and of financial assets and
liabilities  for  the  general  government  sector  and  for  each  of  the  sub-sectors  within  general
government,  to  be  transmitted  to  the  Commission  (Eurostat)  quarterly  following  a  step-by-
step approach.

Article 2

Compilation of quarterly data: sources and methods

1.

With  a  view  to  achieving  high-quality  statistics,  quarterly  data  for  financial
transactions and for financial assets and liabilities shall be based as far as possible on
information  directly  available  within  general  government.  However,  quarterly  data
on unquoted shares (AF.512) and other equity (AF.513), as defined and codified in
ESA  95  and  held  by  general  government  units,  may  be  estimated  by  interpolating
and extrapolating information on the respective annual data.

5

6

OJ, N°L181, of 28.6.89, p.47.
OJ, N°L59, of 6.3.91, p.19.

5

                                                
2.

3.

4.

The compilation  of  quarterly  data  for  financial  transactions  and  for  financial  assets
and liabilities shall comply with the ESA 95 rules, especially concerning the sectoral
classification of institutional units, consolidation rules, the classification of financial
transactions and financial assets and liabilities, the time of recording,  and valuation
rules.

The quarterly data and the corresponding annual data transmitted to the Commission
in accordance with Regulations 2223/96 shall be mutually consistent.

The quarterly data on financial assets and liabilities are the outstanding amounts of
financial assets and liabilities at the end of each quarter.

Article 3

Transmission of quarterly data on financial transactions, financial assets and liabilities

1.

Member  States  shall  transmit  to  the  Commission  (Eurostat)  quarterly  data  on
financial  transactions  (F.)  and  on  financial  assets  and  liabilities  (AF.)  for  the
following list of instruments as defined and codified in ESA 95:

a) monetary gold and special drawing rights (SDRs) (F.1 and AF.1)

b) currency and deposits (F.2 and AF.2)

c) short-term securities other than shares, excluding financial derivatives (F.331 and
AF.331)

d) long-term securities other than shares, excluding financial derivatives (F.332 and
AF.332)

e) financial derivatives (F.34 and AF.34)

f) short-term loans (F.41 and AF.41)

g) long-term loans (F.42 and AF.42)

h) shares and other equity (F.5 and AF.5)

i) net equity of households  in  life insurance reserves and  in  pension funds  reserves
(F.61 and AF.61)

j) prepayments of insurance premiums and reserves for outstanding claims (F.62 and
AF.62)

k) other accounts receivable / payable (F.7 and AF.7).

2.

Member  States  shall  also  transmit  to  the  Commission  (Eurostat)  quarterly  data  for
the central government sub-sector S.1311) as referred to in Article 4 as follows:

a)  quoted  shares  (F.511  and  AF.511),  in  respect  of  financial  asset  transactions  and
financial assets

b) currency (F.21 and AF.21), in respect of liability transactions and liabilities.

6

Article 4

Coverage of the general government sector and sub-sectors

Member  States  shall  transmit  quarterly  data  for  the  general  government  sector  and  its  sub-
sectors as defined and codified in ESA 95, as General government (S.13), comprising:

–  central government (S.1311)

–  state government (S.1312)

–  local government (S.1313)

–  social security funds (S.1314).

1.

2.

3.

1.

2.

3.

Article 5

Nature of the quarterly data covered by the transmission

Quarterly data referred to in Article 3 shall be transmitted on a consolidated basis for
the general government sub-sectors as referred to in Article 4.

Quarterly data referred to in Article 3 shall be transmitted on both a consolidated and
a  non-consolidated  basis  for  the  general  government  sector  (S.13)  as  referred  to  in
Article 4.

Quarterly data with breakdown by counterpart sector shall be provided for the subs-
sectors central government (S.1311) and social security funds (S.1314) as referred to
in Article 4 and described in the Annex to this Regulation.

Article 6

Timetable for the transmission of quarterly data

Quarterly  data  as  referred  to  in  Articles  3,  4  and  5  shall  be  transmitted  to  the
Commission  (Eurostat)  at  the  latest  by  three  months  after  the  end  of  the  quarter  to
which the data relate.

Any revision of quarterly data for previous quarters shall be transmitted at the same
time.

The first transmission of quarterly data referred to in Articles 3, with the exception of
other accounts receivable/payable (F.7 and AF.7), 4 and 5 shall be according to the
following timetable:

a)

for  the  central  government  sub-sector  (S.1311)  and  for  the  social  security  funds
sub-sector (S.1314), no later than 30 June 2003;

b)

for the state government (S.1312) and local government (S.1313) sub-sectors:

-i)no later than 30 June 2003 for the transactions in liabilities and liabilities as
detailed  under  Article  3  (paragraph  1);  the  Commission  may  grant  a

7

derogation,  not  exceeding  two  years,  for  the  starting  date  of  transmission  of
these  data,  in  so  far  as  the  national  statistical  systems  require  major
adaptations;

-ii)no later than 30 June 2005 for the transactions in financial assets and assets
as detailed under Article 3 (paragraph 1).

c)

for the general government sector (S.13), no later than 30 June 2005.

The  first  transmission  to  the  Commission  (Eurostat)  of  quarterly  data  for  other
accounts receivable/payable (F.7 and AF.7) for the general government sector (S.13)
and its sub-sectors as referred to in Article 4 shall be no later than 30 June 2005.

Article 7

Provisions relating to back data

Quarterly data referred to in Article 6 shall cover back data for financial transactions
from the first quarter of 1999 and financial balance sheets from the fourth quarter of
1998  according  to  the  timetable  specified  in  Article  6  (paragraphs  3  and  4)  for  the
first transmission of data.

Where  necessary,  back  data  may  be  based  on  "best  estimates",  respecting  in
particular the provisions of Article 2 (paragraphs 2 and 3).

Article 8

Implementation

Member  States  shall  provide  the  Commission  (Eurostat)  with  a  description  of  the
sources  and  methods  used  to  compile  the  quarterly  data  referred  to  in  Article  3
(initial description), when they first start to transmit quarterly data  according to the
timetable referred to in Article 6 (paragraphs 3 and 4) .

Member States shall inform the Commission (Eurostat) of any changes to this initial
description when they communicate the revised data.

The Commission (Eurostat) shall keep  the  Statistical  Programme  Committee  (SPC)
and  the  Committee  on  Monetary,  Financial  and  Balance  of  Payments  Statistics
(CMFB) informed of the sources and methods used by each Member State.

4.

1.

2.

1.

2.

3.

Article 9

Report

On the basis of the results referred to in Articles 3, 4, and 5, and after consulting the SPC and
the CMFB, the Commission shall, by 31 December 2005 at the latest, submit to the European
Parliament and the Council a report containing an assessment of the reliability of the quarterly
data delivered by Member States.

8

Article 10

Entry in force

This Regulation shall enter into force on the 20th day following its publication in the Official
Journal of the European Union.

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

Done at Brussels,

For the European Parliament
The President

For the Council
The President

9

ANNEX
Breakdown by counterpart sector7

Central government (S.1311) and social security funds (S.1314)
financial transactions and financial balance sheets8

Counterpart sector / sub-sector

Non-financial
corporations
(S.11)

Financial 
(S.12)

corporations

Category / sub-category

Rest  of
the
world
(S.2)

Households
including
non-profit
institutions
serving
households
(S.14+S.15)

Total

Insurance
corporations
and  pension
funds (S.125)

Financial assets

securities  other 

Short-term 
than
shares, excluding financial derivatives
(F.331 and AF.331)

securities  other 

Long-term 
than
shares, excluding financial derivatives
(F.332 and AF.332)

Short-term 
(F.41 and AF.41)

Long-term 
(F.42 and AF.42)

loans

loans

Shares  and  other  equity  (F.5  and
AF.5)

Liabilities

Short-term 
(F.41 and AF.41)

Long-term 
(F.42 and AF.42)

loans

loans

7

8

Framed boxes indicate the reporting requirements
The  codes,  taken  from  ESA  95,  indicate:  S:  sectors/sub-sectors;  F:  financial  transactions;  and  AF:
financial balance sheet items.

10