The Government Finance Statistics Analytic Framework 69
policy decisions on the net worth of the sector, on its
demand for credit, and on its ability to invest in assets.
4.10 Th e Statement of Other Economic Flows tabu-
lates changes to stock positions of assets, liabilities,
and net worth that come about for reasons other
than transactions. More specifi cally, holding gains
and losses represent changes to stock positions that
arise from price movements, including exchange
rate movements.^5 Other changes in the volume of as-
sets represent changes to stock positions arising from
events such as the discovery of new assets/liabilities
(e.g., mineral deposits), depletion or destruction of
assets, or reclassifi cation of assets/liabilities.
4.11 Th e Balance Sheet records the stock positions
of assets, liabilities, and net worth of the sector or sub-
sector at the end of each reporting period.
4.12 Th e Statement of Sources and Uses of Cash re-
cords cash infl ows and outfl ows using a classifi cation
similar to that of the Statement of Operations, but with
a focus on the net change in cash fl ows arising from
transactions during the reporting period.
4.13 In addition to the core statements of the GFS
framework, two supplementary statements are in-
cluded in the framework due to their analytic useful-
ness. Th ese statements are the:
- Statement of Total Changes in Net Worth
- Summary Statement of Explicit Contingent Liabil-
ities and Net Implicit Obligations for Future Social
Security Benefi ts.
4.14 Th e Statement of Total Changes in Net Worth
combines the revenue and expense transactions
from the Statement of Operations with the State-
ment of Other Economic Flows in one statement. In
its summary format, this supplementary statement
serves to highlight the total changes in net worth of
government.
4.15 Th e Summary Statement of Explicit Contin-
gent Liabilities and Net Implicit Obligations for Future
Social Security Benefi ts summarizes the explicit and
implicit guarantees outstanding. Contingent liabilities
create fi scal risks and may arise from deliberate public
policy or from unforeseen events. Th e stock positions
of explicit and some implicit contingent liabilities are
recorded as memorandum items to the GFS balance
sheet (see paragraphs 7.251–7.261). For details on
(^5) “Holding gains” is used as a short form of the more general term
“holding gains and losses.”
the recording of contingent liabilities, also see para-
graphs 7.251–7.259 and the PSDS Guide, paragraphs
4.3–4.26.
Th e Statement of Operations
4.16 Th e Statement of Operations (see Table 4.1)
presents details of transactions in revenue and ex-
pense, as well as the net investment in nonfi nancial
assets, the net acquisition of fi nancial assets, and the
net incurrence of liabilities.^6 Revenue is defi ned as
the increase in net worth resulting from transactions,
and expense as the decrease in net worth resulting
from transactions. Th e net investment in nonfi nan-
cial assets equals the acquisitions minus disposals of
fi xed assets, minus consumption of fi xed capital, plus
changes in inventories, plus the net acquisition (ac-
quisitions minus disposals) of valuables and nonpro-
duced assets.
4.17 Two important analytic balances are derived
in the Statement of Operations. Revenue minus ex-
pense equals the net operating balance, refl ecting the
total change in net worth due to transactions. Th e sub-
sequent deduction of the net investment in nonfi nan-
cial assets results in net lending (+) / net borrowing (–),
which is also equal to the net result of transactions in
fi nancial assets and liabilities. In addition to these bal-
ances, the annex to Chapter 4 describes a number of
other important fi scal indicators that could be derived
from GFS and that are used in fi scal analysis.
4.18 Th e net operating balance is a summary mea-
sure of the sustainability of the reporting sector or
subsector’s operations. It is comparable to the national
accounts concept of saving plus net capital transfers
receivable. Th e net operating balance as defi ned here
excludes gains and losses resulting from changes in
price levels and other changes in the volume of as-
sets. Th e component of the change in net worth that(^6) As explained in paragraph 3.69, the Statement of Operations
is intended to be compiled using the accrual basis of recording
transactions. It is recognized, however, that many governments
may be able to compile statistics only on the cash or partial
accrual basis for some time. If only cash data are available, the
classifi cation of cash fl ows shown in Table 4.2 should be used.
Otherwise, with accrual or partial accrual (noncash) source data,
the classifi cation of transactions shown in Table 4.1 should be
used. With the exception of consumption of fi xed capital, in-kind
and imputed transactions, and other accounts receivable/payable,
all of the line items in Table 4.1 can be applied to both cash and
accrual data. However, the benefi ts of the fully integrated GFS
framework can be derived only when using the accrual basis of
recording.