# Annex 3. Economic classification of expenditures

**Table A3.1 Economic classification of government expenditures—Current expenditures**

|**Category/Subcategory**|**Definitions (from IMF)**|
|---|---|
|**Compensation of**<br>**employees**|Consists of all compensation of government employees including_social contributions_(212) by employers. It<br>_includes_payments in cash or in kind. Social contributions paid by deduction from employees’ wages and<br>salaries are included in this category.<br>Wages and salaries also exclude social benefits paid by employers in the form of children’s, spouse’s, family,<br>education, or other allowances in respect of dependents; payments made at full or reduced wage or salary<br>rates to workers absent from work because of illness, accidental injury, or maternity leave; and severance<br>payments to workers, or their survivors, who lose their jobs because of redundancy, incapacity, or accidental<br>death. These social benefits are included in_employer social benefits_.<br>Social contributions are payments, actual or imputed, made by general government units to social insurance<br>schemes to obtain entitlement to social benefits for their employees, including pensions and other retirement<br>benefits.<br>|
|**Use of goods and services**|**Maintenance**<br>Routine and periodic spending to keep the value of the asset and its<br>functioning.|
||**Other**<br>All other expenditure on goods and services.|
|**Consumption of fixed**<br>**capital**|<br>Consumption of fixed capital [GFS] is the decline in the value of the stock of fixed assets during the<br>accounting period as a result of physical deterioration, normal obsolescence, and normal accidental damage.<br>Consumption of fixed capital related to fixed assets used in own account capital formation is excluded from<br>this category and included as part of the value of the asset produced. It is always a noncash expense.<br>_Note for the user:_Consumption of fixed capital is a forward-looking measure because its value is based on<br>future events rather than past events. Countries might not report this figure for their public assets because<br>they do not keep valuation of asset stock. Hence, it will be expected to be blanks in all entries. Creating an<br>inventory of assets is not part of the task.|
|**idies**<br>**To public**<br>**corporations**|Subsidies are current transfers that government units pay to enterprises either on the basis of the levels of<br>their production activities or on the basis of the quantities or values of the goods or services that they<br>produce, sell, or import. Included are transfers to public corporations that are intended to compensate for<br>operating losses.|
|**Subs**<br>**To private**<br>**enterprises**|Subsidies are current transfers that government units pay to enterprises either on the basis of the levels of<br>their production activities or on the basis of the quantities or values of the goods or services that they<br>produce, sell, or import. Included are transfers to private enterprises that are intended to compensate for<br>operating losses.|
|**Grants and transfers**<br>**(current)**|Grants are noncompulsory transfers, in cash or in kind, paid to foreign governments. Grants are<br>noncompulsory transfers, in cash or in kind, paid to an international organization. Grants are noncompulsory<br>transfers, in cash or in kind, paid to other general government units. These include transfers to local<br>governments as conditional grants for current expenditures. Grants are noncompulsory transfers, in cash or in<br>kind, paid to resident nongovernment units.|
|**Other current expenditure**|Other expenditures includes all expense transactions not elsewhere classified. Transactions recorded here<br>include property expenditures, interest; taxes, fines, and penalties imposed by one government on another;<br>current transfers to nonprofit institutions serving households; capital transfers other than capital grants; social<br>benefits; and nonlife insurance premiums and claims.|

Source: This appendix is an abstract of the Government Financial Statistics Manual 2001 (GFSM 2001)—for full text check http://www.imf.org/external/pubs/ft/gfs/manual/.

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