Government Finance Statistics Manual 2014

208 Government Finance Statistics Manual 2014

7.237 From the foregoing list, it follows that all li-

abilities included in the GFS balance sheet are consid-

ered debt, except for liabilities in the form of equity

and investment fund shares and fi nancial derivatives

and employee stock options. Equity and investment

fund shares are not debt instruments because they

entitle the holders to dividends and a claim on the re-

sidual value of the unit. Financial derivatives are not

debt instruments because they do not supply funds or

other resources, but rather shift the exposure to risks

from one party to another.

7.238 As recommended in the PSDS Guide, debt

instruments should be valued on the reference date at

nominal value, and, for traded debt securities, at mar-

ket value as well. Both valuation bases provide useful

information about debt. If the nominal and market

values of debt instruments are not available, gross

debt is at face value. Deviations from these valuation

principles should always be specifi ed in the footnotes

to the balance sheet.

7.239 Th ese valuations of gross debt are discussed,

in turn, in paragraphs 7.240–7.242. For more details

on valuation, see paragraphs 3.107–3.129.

Gross debt at market value (6M3)

7.240 Gross debt at market value (6M3) means that

debt securities are valued at market prices; insurance,

pension, and standardized guarantee schemes are val-

ued according to principles that are equivalent to mar-

ket valuation; and all other debt instruments are valued

at nominal prices, which are considered to be the best

generally available proxies of their market prices.

Gross debt at nominal value (6M4)

7.241 Gross debt at nominal value means that debt

securities are valued at their nominal values. Th e

nominal value of a debt instrument at any moment in

time is the amount that the debtor owes to the credi-

tor. Th is is a measure of value from the viewpoint of

the debtor.

Gross debt at face value (6M35)

7.242 Th e face value of a debt instrument is the

undiscounted amount of principal to be repaid at (or

before) maturity and has been called nominal value in

some cases. Th e use of face value as a proxy for nomi-

nal value in measuring the gross debt position can re-

sult in an inconsistent approach across all instruments

and is not recommended, unless nominal and market

values are not available.

Net debt

7.243 Net debt is calculated as gross debt minus

fi nancial assets corresponding to debt instruments.^66

Financial assets corresponding to debt instruments

are:

• Monetary gold and Special Drawing Rights
  (SDRs)


• Currency and deposits


• Debt securities


• Loans


• Insurance, pension, and standardized guarantee
  schemes [GFS]


• Other accounts receivable.
  7.244 Monetary gold, as defi ned in the 2008 SNA
  and this Manual, includes elements of a debt instru-
  ment (unallocated gold accounts) and a nondebt in-
  strument (gold bullion). In principle, the gold bullion
  element of monetary gold should be excluded from
  the calculation of net debt. However, in practice, the
  total amount for monetary gold may have to be used
  in the net debt calculation because compilers of public
  sector debt statistics may not be able to exclude the
  gold bullion element.
  7.245 Net debt can be calculated at market value
  (6M36), nominal value (6M37), and face value (6M38).

Concessional loans

7.246 Loans with concessional interest rates could

be seen as providing a benefi t to the borrower in the

form of a transfer equal to the diff erence between the

actual interest payable and the amounts that would

(^66) Th is category calculates net debt as total debt liabilities minus
all fi nancial assets corresponding to debt instruments. For some
purposes, it may be useful to net individual debt instruments
against their corresponding fi nancial assets. For other purposes,
it may be useful to calculate debt net of highly liquid assets. How-
ever, in most cases, a one-on-one netting of a debt instrument
against its corresponding fi nancial asset may not be analytically
useful because, typically, specifi c types of assets are not earmarked
to repay specifi c types of liabilities. Debt net of highly liquid as-
sets is, in most cases, equal to gross debt minus fi nancial assets in
the form of currency and deposits. However, in some cases, debt
securities held for debt management purposes could be included
as highly liquid fi nancial assets.