Posted by Claudia Dziobek and Phebby Kufa, Statistics Department, IMF
A state-of-the-art fiscal data presentation should follow a balance sheet approach similar to the private sector accounting. The main principles are laid out in the Government Finance Statistics Manual 2001 (GFSM 2001). Some policy makers and fiscal analysts assume incorrectly that theGFSM 2001 requires onlythe accrual-recorded data, which may imply substantial reform of the fiscal reporting and government accounting system.
This assumption is only partially true. The GFSM 2001 in fact requires both, cash and accrual-based data. The misconception has contributed to delays in phasing-in the GFSM 2001 framework for various purposes e.g. budgeting, auditing, or macroeconomic analysis.
A new flyer on Government Finance Statistics: Cash and Accrual Data was prepared to address this misconception. It explains why both the cash-recorded and accrual-recorded data are needed for fiscal management. Cash-recorded data are used to produce a cash flow statement, which explains changes in the stock of cash and deposits, helps control payments, and determines the cash-financing gap. Accrual-recorded data are presented in an operation statement, which links in with the balance sheet. These accrual-based data better capture economic events and are needed for macroeconomic analysis.
The GFSM 2001 lays out the framework in detail for both the cash-recorded and the accrual-recorded data, and it is the relevant international standard now introduced in IMF staff papers. The IMF’s databases are structured to show both cash and accrual based data when countries publish this information.
Download GFS Cash Accrual Pamphlet
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