GOVERNMENT FINANCE STATISTICS-QUARTERLY DATA – NOTES ON METHODOLOGY
NOTES ON METHODOLOGY
Basic concepts and definitions
The general government sector (S.13) includes all institutional units that are other non-market producers, whose output is intended for individual and collective consumption and mainly financed by compulsory payments made by units belonging to other sectors and/or all institutional units principally engaged in the redistribution of national income and wealth.
The general government sector consists of three sub-sectors: the central government (S.1311), the local government (S.1313) and the social security funds sub-sector (S.1314). The central government comprises departments of government administration and other central government agencies, authorities and institutions whose jurisdiction covers the entire economic territory, apart from the administration of the social security funds sub-sector. It also includes non-profit institutions that are controlled and chiefly financed by the central government.
The central government in this EDP Report includes central government budgetary users, extra-budgetary users (Hrvatske vode (Croatian Waters), Environmental Protection and Energy Efficiency Fund, Hrvatske ceste (Croatian Roads), the Croatian Privatization Fund until 31 March 2011, the Government Asset Management Agency until 30 September 2013, the Restructuring and Sale Centre and the State Office for State Property Management as its legal successors) together with the State Agency for Deposit Insurance and Bank Resolution (since 2021 under the name Croatian Deposit Insurance Agency). In 2020, four public corporations, already previously classified in S.1311, also became extra-budgetary users: Hrvatske autoceste d. o. o. (HAC), Autocesta Rijeka-Zagreb d. d. (ARZ), HŽ Infrastruktura d. o. o. (HŽI) and HŽ Putnièki prijevoz d. o. o. (HŽPP). At the end of 2020, ARZ was incorporated into HAC.
The central government subsector also includes other public units, which are not part of the Register of Budgetary and Extra-Budgetary Users but are classified into the mentioned sector on the basis of ESA 2010 qualitative or quantitative criteria, e.g., government-controlled units that had failed the MNM test.
Examples of this group of units are the Croatian Radio-Television (HRT), the Croatian Bank for Reconstruction and Development (HBOR), the Croatian Energy Market Operator (HROTE), the Agency Alan, the Croatian National Tourist Board, central state port authorities, etc. Some units, initially classified in this status, became budgetary users in the meantime, e.g., the Croatian Energy Regulatory Agency (HERA), the Croatian Regulatory Authority for Network Industries (HAKOM), etc., while the central state port authorities have become budgetary users since 2021.
The local government subsector includes the total coverage of budgets of local units (the City of Zagreb, 20 counties, 127 cities and 428 municipalities) and their budgetary users (e.g., hospitals, schools, kindergartens). Besides that, S.1313, similar to other local self-government bodies, includes 20 extra-budgetary users of local and regional self-government units’ budgets: county road authorities and other units outside the Register of Budgetary and Extra-Budgetary Users, classified into S.1313 according to the ESA 2010 qualitative or quantitative criteria, such as units in liquidation as well as other units controlled by local government that had failed the MNM test. Some examples of this set of units are development agencies, county port authorities, tourist boards, part of utility service companies, the Zagreb Electric Tram (ZET), etc.
The social security funds sub-sector includes all public sector institutional units mainly engaged in administrating social insurance systems. Therefore, it consists of the Croatian Health Insurance Fund, the Croatian Pension Insurance Institute and the Croatian Employment Service.
The sector classification of institutional units is available on the website of the Croatian Bureau of Statistics.
The government deficit (surplus) means the net borrowing / net lending (B.9) of the general government sector (S.13) and its subsectors: the central government sector (S.1311), the local government sector (S.1313), and the social security funds sector (S.1314). It is defined in ESA 2010 as the difference between the total revenue and the total expenditure.
Legal framework
Quarterly non-financial accounts for the general government sector are compiled in accordance with the methodology of the European System of National and Regional Accounts (ESA 2010) established by Regulation (EU) No 549/2013 of the European Parliament and of the Council of 21 May 2013 on the European System of National and Regional Accounts in the European Union, together with its amendments and the accompanying methodological guidelines.
The compilation is further based on the requirements of European legislation governing the reporting of fiscal statistics and national budgetary frameworks, in particular Council Regulation (EC) No 479/2009 on the application of the Protocol on the excessive deficit procedure and Council Directive (EU) 2024/1265 on requirements for budgetary frameworks of the Member States.
The compilation also follows the relevant Eurostat methodological guidelines, including the Manual on Government Deficit and Debt (MGDD), ensuring consistent application of the ESA 2010 methodology and international comparability of the data.
Data sources
For the compilation of quarterly non-financial accounts of the general government sector in accordance with ESA 2010, administrative data sources derived from the budgetary and financial reporting system are used, together with specific financial reports of units classified within the general government sector. Data sources differ by subsector, considering the institutional arrangements, data availability and the accounting basis applied in the preparation of financial statements.
Main Data Sources
The main data sources include quarterly financial statements of the state budget and state budgetary and extra-budgetary users provided by the Ministry of Finance; quarterly state budget execution data from the State Treasury Information System (SAP), broken down by economic and programme classification; annual financial statements of entities applying non-profit accounting; annual financial statements of enterprises reclassified into the general government sector; and financial reports of entities operating under specific legislation, for which the structure and content of financial statements are prescribed by the competent supervisory authorities.
For entities applying non-profit or business accounting for which quarterly data are not available, the latest available annual financial statements from the Financial Agency (FINA) database are used for estimation purposes.
S.1311 – Central government
The primary data source for the central government subsector (S.1311) consists of the financial statements of the state budget and state budgetary and extra-budgetary users, primarily the cumulative PR-RAS reports, i.e. financial plan execution reports.
As a supplementary source, state budget execution data from the State Treasury Information System (SAP), classified by economic and programme classification, are used to verify consistency, perform quality checks and complement specific transaction categories, following adjustments to ensure consistency with the institutional coverage of the subsector.
During the compilation process, transactions relating to institutional units belonging to other subsectors of general government are excluded from the State Treasury data, particularly those relating to the Croatian Employment Service (HZZ) and the Croatian Pension Insurance Institute (HZMO), which are classified within the social security funds subsector (S.1314).
S.1313 – Local government
For the local government subsector (S.1313), the primary data source consists of cumulative quarterly PR-RAS financial statements submitted by local and regional self-government units and their budgetary users.
For institutional units classified within this subsector that apply non-profit or business accounting and do not prepare quarterly financial statements, the latest available annual financial statements from the Financial Agency (FINA) database are used as the basis for estimating quarterly values.
S.1314 – Social security funds
For the social security funds subsector (S.1314), the primary data source consists of cumulative PR-RAS financial statements of the social security funds.
Where applicable, supplementary sources include financial plan execution data from the State Treasury Information System (SAP) and operational reports prepared on a modified accrual basis. These data are used for quality assurance, consistency checks and the completion of specific transaction categories during the compilation process.
Additional Data Sources
In addition to the primary administrative data sources derived from the budgetary and financial reporting system, the compilation of quarterly non-financial accounts for the general government sector also relies on additional administrative data sources to ensure the completeness, quality and methodological consistency of the data with the requirements of ESA 2010.
Detailed monthly data provided by the Ministry of Finance are used for the compilation of tax revenue, including data from the Tax Administration on tax collections and reports from the Financial Agency (FINA) on tax revenue cash flows. These sources enable the estimation of tax revenue on a time-adjusted cash basis, in accordance with the ESA 2010 methodology and the Manual on Government Deficit and Debt (MGDD). Additional information is obtained on contributions to the European Union budget, rescheduling of tax liabilities and other information necessary for the correct recording of individual tax categories. Administrative data from the competent institutions responsible for collecting specific parafiscal charges and fees are also used for recording these revenues.
Data on accrued interest for all general government subsectors are obtained from the Croatian National Bank, while data on interest relating to loans granted by the Croatian Bank for Reconstruction and Development (HBOR) are collected through dedicated statistical reports. Transactions related to the European Union budget are recorded using data provided by the Ministry of Finance on contributions to the EU budget and receipts from EU funds.
Administrative data from the Croatian National Bank and other competent institutions are also used for recording specific capital transfers and other particular transactions, including debt assumptions, capital injections, called government guarantees, and transactions related to the EU Emissions Trading System (ETS) and other special government programmes.
Compilation process in accordance with ESA 2010
The conversion of data compiled under national accounting rules into the transaction categories defined by ESA 2010 is carried out through the application of appropriate bridge tables.
The compilation process uses bridge tables linking the Budget Chart of Accounts to ESA 2010 categories, bridge tables between the accounting classifications of non-profit institutions and ESA 2010 categories, bridge tables between business accounting classifications and ESA 2010 categories, as well as bridge tables for enterprises and banks reclassified to the general government sector.
By applying these bridge tables, individual items from the original financial statements are reclassified into the corresponding ESA 2010 transaction categories, thereby ensuring compliance with the methodological requirements of the European System of National and Regional Accounts.
During the compilation process, appropriate methodological and statistical adjustments are applied to ensure that administrative and accounting data are fully aligned with the concepts of national accounts. These adjustments include changes to institutional coverage, timing of recording, sector classification and economic classification of transactions. Where relevant administrative data sources are available, transactions are compiled directly. For specific categories, estimates, extrapolations and imputations are applied using historical time series, available administrative data and other relevant indicators. In addition, the compilation incorporates methodological adjustments required by ESA 2010, including the imputation of Financial Intermediation Services Indirectly Measured (FISIM), the treatment of research and development as capital formation, and the capitalisation of software produced for own final use.
Revision policy
Quarterly national accounts are subject to regular and ad hoc revisions in accordance with the Revision Policy for National Accounts and Government Finance Statistics / Excessive Deficit Procedure (EDP) Statistics, as well as the methodological requirements of ESA 2010 and EDP/GFS statistical standards. Revisions may result from the subsequent availability of administrative data, methodological improvements, changes in data sources or the alignment of quarterly estimates with annual government finance statistics and national accounts. All revisions are implemented in a manner that ensures the consistency of time series and the methodological soundness and comparability of data over time.
Definitions of key revenue and expenditure categories
In accordance with the ESA 2010 methodology, the non-financial accounts of the general government sector are compiled by recording transactions of institutional units according to their economic nature and their impact on net lending (+) / net borrowing (–) (B.9).
Net lending (+) / net borrowing (–) (B.9) represents the difference between the total revenue and total expenditure of the general government sector and its subsectors. It indicates either the amount of financial resources available for financing other sectors of the economy or the amount of financing that must be obtained through borrowing to cover non-financial transactions. A positive balance represents net lending (a surplus of financial resources after the execution of all non-financial transactions), while a negative balance represents net borrowing (a deficit, i.e. the need for additional financing).
Total revenue comprises all transactions that have a positive impact on net lending/net borrowing (B.9). It includes taxes (D.2, D.5 and D.91), social contributions (D.61), sales of goods and services (P.11, P.12 and P.131), other current revenue (D.3, D.4 and D.7), and other capital revenue (D.92 and D.99). During compilation, appropriate methodological adjustments are applied to align available administrative and accounting data with the concepts and recording principles laid down in ESA 2010.
Total expenditure comprises all transactions that have a negative impact on net lending/net borrowing (B.9). It includes intermediate consumption (P.2), compensation of employees (D.1), interest (D.41), social benefits other than social transfers in kind (D.62), social transfers in kind via market producers (D.632), subsidies (D.3), other current expenditure (D.29, D.4 excluding D.41, D.5, D.7 and D.8), together with capital expenditure, comprising gross capital formation (P.5), acquisitions less disposals of non-produced non-financial assets (NP), investment grants (D.92), and other capital transfers (D.99).
Compensation of employees (D.1) is the total remuneration, in cash or in kind, payable by an employer to an employee in return for work performed. It comprises wages and salaries together with employers' social contributions. Actual employers' social contributions (D.121) are payments made by employers to social security schemes and other employment-related schemes on behalf of their employees in order to secure entitlement to social benefits. Imputed employers' social contributions (D.122) represent direct payments made by employers to employees or former employees without involving insurance corporations or autonomous pension funds and without creating dedicated funds or reserves, for example wage compensation during periods of sick leave.
Taxes on production and imports (D.2) are compulsory, unrequited payments, in cash or in kind, levied by general government or by the institutions of the European Union in relation to the production and import of goods and services, the employment of labour, or the ownership or use of land, buildings and other assets used in production. These taxes are independent of the profitability of producers. They are divided into taxes on products (D.21), payable per unit of a good or service or as a percentage of the transaction price or value, including value added tax (VAT) (D.211), import duties excluding VAT (D.212), other taxes on products (D.214), and other taxes on production (D.29), which arise from participation in the production process irrespective of the quantity or value of output.
Subsidies (D.3) are current unrequited payments made by general government to resident producers with the objective of influencing production levels, product prices or the remuneration of factors of production. Under ESA 2010, they are classified into subsidies on products (D.31) and other subsidies on production (D.39).
Property income (D.4) arises when the owners of financial assets or natural resources place these assets at the disposal of other institutional units. Income derived from financial assets constitutes investment income, whereas income derived from natural resources is recorded as rent. Property income includes interest (D.41), distributed income of corporations (D.42), reinvested earnings on foreign direct investment (D.43), other investment income (D.44), and rent (D.45).
Current taxes on income and wealth (D.5) comprise compulsory, unrequited payments, in cash or in kind, levied periodically on the income and wealth of institutional units, together with certain periodic taxes that are not directly related to income or wealth. They are classified into taxes on income (D.51) and other current taxes (D.59).
Social contributions (D.61) include actual employers' social contributions (D.611) and households' social contributions (D.613). Employers' contributions are payments made by employers to social security schemes on behalf of employees in order to secure entitlement to social benefits, while households' contributions are paid by employees, self-employed persons and unemployed persons on their own behalf.
Social benefits other than social transfers in kind (D.62) comprise social security benefits in cash (D.621), other social insurance benefits (D.622), and social assistance benefits in cash (D.623).
Social transfers in kind (D.63) comprise individual goods and services provided by general government to households free of charge or at economically insignificant prices. They are divided into social transfers in kind from non-market production (D.631), provided directly to beneficiaries, and social transfers in kind via market producers (D.632), provided through reimbursements to households or through the purchase of services from market producers.
Other current transfers (D.7) represent income redistribution transactions that are not included in other categories and may represent receivables or payables. They include net non-life insurance premiums (D.71), non-life insurance claims (D.72), current international cooperation (D.74), miscellaneous current transfers (D.75), and European Union own resources based on VAT and gross national income (D.76), including the contribution based on non-recycled plastic packaging waste.
Capital transfers (D.9) represent transactions related to the acquisition or transfer of assets and result in a corresponding change in the financial or non-financial assets of institutional units. They comprise capital taxes (D.91), investment grants (D.92), and other capital transfers (D.99). Capital taxes refer to taxes on property and net worth that are levied irregularly and at longer intervals, including inheritance and gift taxes.
Output (P.1) represents the total value of goods and services produced during the accounting period. According to ESA 2010 methodology, a distinction is made between market output (P.11), output for own final use (P.12), and non-market output (P.13), which includes payments for non-market output (P.131) and other non-market output (P.132).
Intermediate consumption (P.2) consists of goods and services used as inputs in the production process, excluding consumption of fixed capital.
Final consumption expenditure (P.3) refers to the expenditure of resident institutional units on goods and services intended to satisfy individual and collective needs. General government consumption comprises the value of general government own output, increased by social transfers in kind and reduced by sales of goods and services.
Gross capital formation (P.5) comprises gross fixed capital formation (P.51g), changes in inventories (P.52) and acquisitions less disposals of non-produced non-financial assets (P.53).
Consumption of fixed capital (P.51c) represents the decline in the value of fixed assets as a result of physical deterioration, expected obsolescence or normal accidental damage over time.
Non-produced non-financial assets (NP) comprise natural resources, contracts, licences and other assets that are not created through a production process.
Abbreviations
EDP excessive deficit procedure
ESA European System of Accounts
Eurostat Statistical Office of the European Union
EC European Community
HŽ Croatian Railways
GFS Government Finance Statistics
VAT Value Added Tax
PR-RAS Report on Revenues and Expenditures, Receipts and Payments
MNM Market/non-market
mln million
... data not available
0,00 value not zero but less than 0.005 of the unit of measure used