METAC Workshop March 14-17, 2016 Beirut, Lebanon National Accounts Compilation Issues Session 8.2: Government final consumption expenditures

Topics Definition Classification Expenditures – Individual goods and services – Collective services – Social transfers in kind Data sources and procedures

Government final consumption expenditures … can be derived as follows: value of all types of output of general government less the value of production for own account capital formation; less the values of sales of goods and services at both economically insignificant prices and at economically significant prices; plus government purchases of goods and services from market producers and provided free to households for their final consumption.

Classification … classified in several ways: according to whether the goods or services have been produced by market or non-market producers; according to whether the expenditures are on collective services or individual goods or services; by function or purpose according to the classification of the functions of government (COFOG); or by type of good or service according to the CPC (the case with SUT).

Expenditures on goods and services provided by market producers … purchases of goods and services produced by market producers that are supplied directly to households… … as social transfers in kind; The expenditures are treated as final consumption expenditure and not intermediate consumption of the government. Examples: – purchase of food to be distributed to the victims of flood; – purchase of blankets to be distributed to the homeless; – purchases of certain medicines and payment for certain health services provided by private clinics to households.

Expenditures on individual goods and services … divided into those incurred for the benefit of individual households and those incurred for the benefit of the community as a whole. Individual goods and services: – … individuals or households accept the provision of the good or service and take necessary action to make it possible: … attending school or clinic; – … the acquisition of an individual good or service by one household, person or group of persons brings no benefit to the rest of the community – Social transfers in kind, split into: Non- market services produced by the government Market goods and services purchased by the government

Expenditures on collective goods and services … are delivered simultaneously to every member of the community or to particular sections of the community, such as those in a particular region of a locality; … does not require the explicit agreement or active participation of all the individuals concerned; … consist mostly of the provision of security and defense, the maintenance of law and order, legislation and regulation, the maintenance of public health, the protection of the environment, etc. … … and constitute the actual final consumption expenditures of the government.

Individual or Collective services Borderline cases – Expenditures in connection with individual services, such as health and education, are to be treated as collective when they are concerned with the formulation and administration of government policy: setting and enforcement of public standards, regulation, licensing or supervision of producers, etc. Examples: Ministry of Health, and Ministry Education provides collective services

Individual or Collective services

Data sources and procedures Source data Government Finance Statistics Statement of Revenue and Expenditure of national and local government National Budget Statement Budget documents (Demand for Grants) of Central Government (all Ministries), all Province and all Local bodies Compilation procedures: cost approach 2008 SNA requirement on the treatment of military weapons reduce the value of government output and collective services provided by the government

References 2008 SNA, Chapter

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