GOVERNMENT FINANCE STATISTICS EXPENSE Part 2 This lecture discusses how the Classification of the Functions of Government (COFOG) is used in classifying government outlays
GOVERNMENT FINANCE STATISTICS COFOG CLASSIFICATION OF OUTLAYS • The UN/OECD Classification of Functions of Government (COFOG) provides a classification pertaining to outlays by governments on functions that experience has shown to be of general interest and amenable to a wide variety of analytic applications. • In GFS, COFOG is used for the classification of government outlays, which are defined as expense transactions plus transactions in nonfinancial assets (net acquisition of nonfinancial assets). • In GFS, COFOG is a classification of transactions, it excludes other economic flows or stocks. • All outlays for a particular function are collected in one category of COFOG regardless of how the outlays are implemented.
GOVERNMENT FINANCE STATISTICS COFOG DIVISIONS AND GFS CODES
GOVERNMENT FINANCE STATISTICS GUIDANCE ON COMPILING COFOG STATISTICS • Consumption of fixed capital may be difficult to allocate by function. • Volume indicators should be used to split an item of government outlays • if it relates to more than one function. • Foreign aid for environmental protection
GOVERNMENT FINANCE STATISTICS GUIDANCE ON COMPILING COFOG STATISTICS (cont’d) • Fight against discrimination. • Government support of sustainable energy. • Water management. • Schooling to help people find jobs.
GOVERNMENT FINANCE STATISTICS GUIDANCE ON COMPILING COFOG STATISTICS (cont’d) • Retirement homes with nurses. • Ambulance services operated by hospitals. • Commodity reserves.
GOVERNMENT FINANCE STATISTICS GUIDANCE ON COMPILING COFOG STATISTICS (cont’d) • Disinfestations. • Lump sum received by some employees when retiring. • Construction of stadiums for international events.
GOVERNMENT FINANCE STATISTICS COMPLETE CODING FOR COFOG HEALTH 707 Health 7071 Medical products, appliances, and equipment 70711 Pharmaceutical products 70712 Other medical products 70713 Therapeutic appliances and equipment 7072 Outpatient services 70721 General medical services 70722 Specialized medical services 70723 Dental services 70724 Paramedical services 7073 Hospital services 70731 General hospital services 70732 Specialized hospital services 70733 Medical and maternity center services 70734 Nursing and convalescent home services 7074 Public health services 7075 R&D Health 7076 Health n.e.c.
GOVERNMENT FINANCE STATISTICS COMPLETE CODING FOR COFOG • Detailed description of the classification categories and principles for the application of COFOG in GFS is provided in Annex to Chapter 6, Page 79 of the GFS Manual: • http://www.imf.org/external/pubs/ft/gfs/manual/pdf/all.pdf • The history, methodology, and application of COFOG is covered in the Eurostat Manual on sources and methods for the compilation of COFOG Statistics, 2007 Edition: • http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-RA-07-022/EN/KS-RA-07-022-EN.PDF
GOVERNMENT FINANCE STATISTICS ANALYTIC USES OF COFOG • COFOG permits trends in government outlays on particular functions or purposes to be examined over time. • COFOG is also used for making international comparisons of the extent to which governments are involved in economic and social functions. • COFOG can be used to distinguish between the individual and collective • services provided by general government. • COFOGis also used in recording outlays in Millennium Development Goals programs.
GOVERNMENT FINANCE STATISTICS CROSS-CLASSIFICATION OF FUNCTIONAL AND ECONOMIC CLASSIFICATIONS OF EXPENSE • A cross-classification of COFOG with categories of the economic classification of expense provides a useful analysis for fiscal policy debate.
GOVERNMENT FINANCE STATISTICS COLLECTIVE AND INDIVIDUAL GOODS