GOVERNMENT FINANCE STATISTICS

Copyright 2010, The World Bank Group. All Rights Reserved.

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GOVERNMENT FINANCE STATISTICS

EXPENSE

Part 2

This lecture discusses how the Classification of the Functions of Government (COFOG) is used in classifying government outlays


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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.

COFOG CLASSIFICATION OF OUTLAYS


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COFOG Division GFSM 2001 Code

1 General public services 701

2 Defense 702

3 Public order and safety 703

4 Economic affairs 704

5 Environment protection 705

6 Housing and community amenities 706

7 Health 707

8 Recreation, culture, and religion 708

9 Education 709

10 Social protection 710

COFOG DIVISIONS AND GFS CODES


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• 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

GUIDANCE ON COMPILING COFOG STATISTICS


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• Fight against discrimination.

• Government support of sustainable energy.

• Water management.

• Schooling to help people find jobs.


GUIDANCE ON COMPILING COFOG STATISTICS (cont’d)


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• Retirement homes with nurses.

• Ambulance services operated by hospitals.

• Commodity reserves.



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• Disinfestations.

• Lump sum received by some employees when retiring.

• Construction of stadiums for international events.



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707 Health7071 Medical products, appliances, and equipment

70711 Pharmaceutical products70712 Other medical products70713 Therapeutic appliances and equipment

7072 Outpatient services70721 General medical services70722 Specialized medical services70723 Dental services70724 Paramedical services

7073 Hospital services70731 General hospital services70732 Specialized hospital services70733 Medical and maternity center services70734 Nursing and convalescent home services

7074 Public health services7075 R&D Health7076 Health n.e.c.

COMPLETE CODING FOR COFOG HEALTH


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• 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

COMPLETE CODING FOR COFOG


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• 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 collectiveservices provided by general government.

• COFOG is also used in recording outlays in Millennium Development Goals programs.

ANALYTIC USES OF COFOG


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• A cross-classification of COFOG with categories of the economic classification of expense provides a useful analysis for fiscal policy debate.

CROSS-CLASSIFICATION OF FUNCTIONAL AND ECONOMIC CLASSIFICATIONS OF EXPENSE

Copyright 2010, The World Bank Group. All Rights Reserved.12

COLLECTIVE AND INDIVIDUAL GOODS

Collective goods Individual goods

In cash: In cash:

Foreign aid transfers Social cash transfers

General purpose and block grants

Interest

In kind: In kind:

General governance services Health

Basic research Non-mkt recreation, cult. and religion

Defence Education

Public order and safety Social services

Infrastructure and network services Market subsidies

Env. prot., dev. and com. services

Service regulation


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GOVERNMENT FINANCE STATISTICS