POSSIBLE WAYS TO IMPLEMENT A DATASET TO ANALYSE THE
QUALITY OF PUBLIC EXPENDITURE
Economic Policy CommitteePaper completed: November 2004Synopsis
The quality of public finances is a broad concept with many facets. The aim of the new EPC Working
Group on Quality of Public Finances (WGQPF) is to analyse the links between public finances and long
term growth. However, the lack of a coherent set of data prevents an in-depth analysis of the different
activities of government. The 2004 implementation report of the BEPGs highlights this lack of timely
and comprehensive data as a main obstacle for analysing trends in the composition of total public
expenditure.
The European Commission, the OECD and the WGQPF view the Classification of Functions of
Government (COFOG) as the most useful dataset in this respect, as it covers all different public
expenditures and allows to identify the government’s expenditure for each function. At the moment, the
highly aggregated data of COFOG-divisions (1st level) cannot give an appropriate picture of the issues
relevant in the discussion on quality of public finances.
Against that background, the paper proposes an expansion of ESA95 TP table 11 from COFOG-divisions
to COFOG-groups (for general government sector) and also some further breakdowns for transactions.
The WGQPF also takes into account possible government data extension through additional modules
and, on a more academic level, changes in definitions.
Building on this proposal, the paper tackles specific questions of a comprehensive delivery of data and
the important implementation issue. The needs for uniformity of public expenditure data availability, of
time specification and timeliness across countries are briefly addressed. The question of the
implementation in the short run and more tentative reflections on possible medium-/long-term work are
treated. The main argument is that the proposed approach is very operational and can be rapidly followed
by the majority of countries.
On the basis of a specific survey conducted among countries participating in the WGQPF, the current
data situation in the Member States is assessed, referring to data available in the required format or which
could easily be elaborated, with or without additional efforts. The main conclusion is that relevant
improvements can be carried out, although not immediately and provided a commitment is given by the
ECOFIN Council and additional resources are assigned to data producers.