70 Government Finance Statistics Manual 2014
is due to transactions can largely be attributed directly
to government policies since governments have direct
control over the decisions that lead to the interaction
with other units by mutual agreement. Th e same can-
not always be said for the other components of the
total change in net worth. For example, changes in
the market prices or events that impact on the volume
of assets or liabilities are not in the direct control of
government. Still, these risks need to be monitored
so that governments can manage them proactively to
minimize their potential fi scal impact.
4.19 Net lending (+) / net borrowing (–) is a sum-
mary measure indicating the extent to which gov-
ernment is either putting fi nancial resources at the
disposal of other sectors in the economy or abroad,
or utilizing the fi nancial resources generated by other
sectors in the economy or from abroad. It may there-
fore be viewed as an indicator of the fi nancial impact
of government activity on the rest of the economy
and the rest of the world. While this balancing item
is conceptually the same as in the 2008 SNA, amounts
reported as net lending/net borrowing may diff er to
the extent that a government maintains an unfunded
pension scheme for its employees (see paragraphs
5.95, 7.192–7.193 and Appendixes 2 and 7).
4.20 Th e gross operating balance as presented in the
Statement of Operations diff ers from the net operating
balance in that it does not include consumption of fi xed
capital as an expense. Consumption of fi xed capital can
be diffi cult to measure in practice and a satisfactory es-
timate may not be available. If so, the gross operating
balance may be more practical for analysis than the net
operating balance.^7 Th e net operating balance is, how-
ever, preferred in principle because it captures all costs
of operations during the reporting period.
4.21 Expenditure is the sum of expense and the
net investment in nonfi nancial assets and is presented
as an additional aggregate in the Statement of Opera-
tions. Th is aggregate is not infl uenced by the level of
consumption of fi xed capital and is therefore suitable
for international comparisons between countries even
if they cannot reliably measure consumption of fi xed
capital.(^7) Th e availability of data on consumption of fi xed capital has no
infl uence on net lending/net borrowing. Th e counterpart entry
for the expense recorded for consumption of fi xed capital reduces
the value of investment in fi xed assets—thereby neutralizing the
impact on net lending/net borrowing.
4.22 As illustrated in Table 4.1, the Statement of
Operations is divided into three sections that pres-
ent: revenue and expense transactions; transactions
in nonfi nancial assets; and transactions in fi nancial
assets and liabilities. Th e following paragraphs follow
this structure in providing an overview of the vari-
ous categories of transactions. Th ese defi nitions and
descriptions are not intended to be comprehensive.
Table 4.1 Statement of Operations
Transactions Affecting Net Worth:
1 Revenue
11 Taxes
12 Social contributions [GFS]
13 Grants
14 Other revenue
2 Expense
21 Compensation of employees [GFS]
22 Use of goods and services
23 Consumption of fi xed capital [GFS]
24 Interest [GFS]
25 Subsidies
26 Grants
27 Social benefi ts [GFS]
28 Other expense
NOB/GOB Net/gross operating balance (1–2)^1
Transactions in Nonfi nancial Assets:
31 Net/gross investment in nonfi nancial
assets^2
311 Fixed assets
312 Inventories
313 Valuables
314 Nonproduced assets
2M Expenditure (2+31)
NLB Net lending (+) / Net borrowing (–) [GFS]
(1–2–31 = 1–2M = 32–33)
Transactions in Financial Assets and Liabilities (Financing):
32 Net acquisition of fi nancial assets
321 Domestic^3
322 External^3
33 Net incurrence of liabilities
331 Domestic^3
332 External^3
(^1) The net operating balance equals revenue minus expense. The
gross operating balance equals revenue minus expense other
than consumption of fi xed capital.
(^2) The net investment in nonfi nancial assets equals acquisitions
minus disposals minus consumption of fi xed capital. The gross
investment in nonfi nancial assets equals acquisitions minus
disposals.
(^3) Classifi ed by instrument and/or sector of the counterparty (see
Tables 9.1 and 9.2).