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Excessive Deficit Procedure (EDP) context European system of accounts (ESA95) principles economic reality / risks and rewards Manual chapter on PPPs accounting for government sector
Application in practice
EDP context
EU fiscal rules for the Economic and Monetary Union and the Excessive Deficit Procedure (EDP) The EU Treaty sets governments fiscal targets according to national accounts rules
Deficit: net lending / net borrowing of general government Debt: main categories of liabilities of general government Comparability between EU Member States
EDP context
European Commission (Eurostat) legally responsible for assessing the quality of government deficit and debt data
Amendments / reservations to the notified data Regular EDP dialogue visits to Member States
EDP context
Methodological work on PPPs
Task Force convened in 2003 (with Member States, DG TREN, EIB) Financial Accounts Working Group Committee on Monetary, Financial and Balance of Payments Statistics (CMFB)
Statistical institutes and central banks + ECB Vote in 2004: 26 to 1
ESA95 principles
General government delimitation
Market / non-market Very different from the concept of public sector (accounting)
Economic reality takes precedence over legal form of a transaction (substance over form) Focus on risks and rewards
Financial vs. operating lease Securitisation (MGDD chapter: however new chapter has slightly shifted the role of risks and rewards) Other cases: e.g. repurchase agreements, recognition of equity stakes in entities
In the ESA95 meaning, in case of non-government users purchase, contracts are concessions instead of PPP
Users pay for the service, e.g. road toll Not regulated by the PPP decision
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What procedure in place for fees adjustment? According to which cost indexes?
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Transfer of the asset to government after the contract? For what price?
Partner / operator a 100% public owned corporation? Special monitoring needed
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Application in practice
Eurostat requires Member States to follow national developments Dialogue with National Statistical Institutes on statistical treatment of PPPs in government accounts Large number of PPPs recorded off-government balance sheet
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Application in practice
International comparison:
IPSASB work on service concession agreements (eventually new accounting standard?) Focus on notion of the control of the asset during the concession period and asset reversal IMF Emphasis of the legal ownership of the asset
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