Regional Arrangements 339
needed to monitor the progress with the implementa-
tion of fi scal coordination objectives.
Harmonization Requirements for GFS in Economic or Monetary Unions
A5.41 Th e harmonization of GFS in the context
of economic and monetary unions is important. It
may be useful to introduce guidelines additional to
the GFSM for economic and monetary unions. Ad-
ditional guidelines could provide “rulings” or “fi scal
policy rules” on specifi c transactions, aggregates, or
balancing items that may occur in the member coun-
tries of the regional arrangement. It may also be use-
ful to further clarify existing guidelines on concepts
and defi nitions where it is observed that countries in
a union interpret these guidelines diff erently, or appli-
cation of these guidelines poses practical problems for
members. Some examples of harmonizing regional
arrangements are presented in Box A5.1.
A5.42 A common reason for fi scal data not being
comparable across countries is the delineation of the
general government sector. In most countries, there
are borderline cases relating to units selling goods or
service as their principal activity with various levels
of fi nancial support from government units (in the
form of subsidies, grants, and other current transfers).
Agreement on precise guidelines for the classifi cation
and sectorization of such units is an important factor
in ensuring comparable data. When in doubt about
these classifi cations, an appropriate dispute resolution
mechanism should exist. In this context, the concept
of economically signifi cant prices might be clarifi ed
with a practical perspective. It is also recommended
to publish institutional lists of general government
and public sector units of individual countries to
show transparently which units are included in the
general government and public sectors.
A5.43 Another possible reason for data not being
comparable across countries is the time of record-
ing of economic events. In many countries, govern-
ment units still apply the cash basis of accounting.
International statistical guidelines and accounting
standards have adopted the accrual basis of record-
ing. Although an increasing number of governments
have adopted accrual recording, many countries still
use various mixes of source data based on cash- and
accrual-based accounts. Th e diff erences in time lags
between the economic events and the associated cash
fl ows could distort the assessment of fi scal stance
during a given year if a cash basis of accounting is
mainly used. It is, therefore, preferable that fi scal tar-
gets include both cash and accrual measures. If no
accrual source data are available, the countries in a
union should agree on the methodology used to es-
timate the adjustments to convert cash data into ac-
crual data. In practice, the adjustments required are
especially relevant for taxes, social contributions, and
interest.
A5.44 Attaining comparability in the measure-
ment of gross and net debt across all countries in an
economic or monetary union may be diffi cult in
practice. In this Manual and the PSDS Guide, all debt
instruments issued by government units are consid-
ered to be part of the coverage of debt (see paragraphs
7.236–7.245). Where the defi nition of gross and net
debt in a union departs from international agreed
defi nitions of debt, the data should be clearly labeled,
and any departure from the required coverage and
standard defi nition should be disclosed to the users of
the data. Debt instruments excluded from the union
defi nition of debt could be shown in memorandum
items to allow comparability between data of the
union members and other countries and to avoid the
problem of “hidden” liabilities.