The Government Finance Statistics Analytic Framework 71
In each section, reference is made to the chapter that
contains more detailed information.
Revenue and Expense.
4.23 Revenue is an increase in net worth resulting
from a transaction.^8 Th e major types of revenue are
taxes (11), social contributions (12), grants (13), and
other revenue (14).^9 Th e detailed classifi cation of rev-
enue is described in Chapter 5. Th e disposal of a non-
fi nancial asset by sale or barter is not revenue because
it has no eff ect on net worth. Rather, it changes the
composition of the balance sheet by exchanging one
asset (the nonfi nancial asset) for another (the pro-
ceeds of the sale). Similarly, amounts receivable from
loan repayments and loan disbursements are not rev-
enue. Th ese are transactions in assets or liabilities as
described in Chapters 8 and 9.
4.24 Expense is a decrease in net worth result-
ing from a transaction.^10 Th e major types of expense
are compensation of employees (21), use of goods
and services (22), consumption of fi xed capital (23),
interest (24), subsidies (25), grants (26), social ben-
efi ts (27), and other expense (28). In addition, ex-
pense can be classifi ed according to the functions
of government, such as health or social protection.
Th e economic and functional classifi cations of ex-
pense are described in Chapter 6. Th e acquisition
of a nonfi nancial asset by purchase or barter is not
an expense because it has no eff ect on net worth.
Rather, it changes the composition of the balance
sheet by acquiring one asset (the nonfi nancial asset)
against the disposal/reduction in another asset or
by incurring a liability (the payable for the asset).
Similarly, amounts payable on loans extended and
repayments on loans incurred are not classifi ed as
expense. Th ese are transactions in assets or liabili-
ties as described in Chapter 8 and 9.
(^8) In general, transactions that increase net worth result from
current operations. Capital transfers are an exception. Capital
transfers are defi ned in paragraph 3.16. In GFS, capital transfers
receivable are classifi ed as revenue because they increase the
recipient’s net worth and they are oft en indistinguishable from
current transfers in their eff ect on government operations.
(^9) Th e numbers in parentheses aft er each classifi cation category are
the GFS classifi cation codes. Appendix 8 provides all classifi cation
codes used in the GFS system.
(^10) As with revenue, transactions that decrease net worth result
mainly from current operations. Capital transfers payable or
otherwise obligated are an exception. See footnote 8.
Transactions in Nonfi nancial Assets^11
4.25 Th e second section of the Statement of Opera-
tions (see Table 4.1) records transactions that change
a government’s net investment in nonfi nancial assets.
Nonfi nancial assets are economic assets other than
fi nancial assets. Nonfi nancial assets are stores of value
and provide benefi ts either through their use in the
production of goods and services or in the form of
property income and holding gains. Th ese assets are
classifi ed as fi xed assets (311), inventories (312), valu-
ables (313), and nonproduced assets (314). Th e classifi -
cation of nonfi nancial assets is described in Chapter 7
and transactions in nonfi nancial assets are discussed
in Chapter 8.
Transactions in Financial Assets and Liabilities
4.26 Th e third section of the Statement of Opera-
tions (see Table 4.1) records fi nancing transactions,
which are transactions that change a government’s
holdings of fi nancial assets and liabilities (fi nancial as-
sets and liabilities are defi ned in paragraphs 3.48 and
3.45, respectively). Th e classifi cation of fi nancial as-
sets and liabilities is described in Chapter 7 and trans-
actions in fi nancial assets and liabilities are discussed
in Chapter 9.
4.27 Transactions in fi nancial assets can be clas-
sifi ed in multiple ways; for ease of presentation,
Table 4.1 indicates a classifi cation of fi nancial assets
according to whether the counterpart liability was in-
curred by a resident (indicated by “domestic” in the
table) or a nonresident (indicated by “external”) and
similarly for the classifi cation of liabilities.
4.28 Th ere are additional classifi cations of transac-
tions in fi nancial assets and liabilities in GFS. Th e fi rst
classifi cation is based on the type of fi nancial instru-
ments involved in the transactions. Th e instruments
are: monetary gold and SDRs; currency and depos-
its; debt securities; loans; equity and investment fund
shares or units; insurance, pension, and standardized(^11) Th is section deals only with the net investment in nonfi nancial
assets (acquisitions minus disposals of nonfi nancial assets, minus
consumption of fi xed capital) by the reporting unit or sector.
Government or public sector institutional units may also facilitate
public capital formation by transferring funds to other govern-
ments or to public corporations with a requirement that the
funds be used to acquire nonfi nancial assets. Rather than being
considered transactions in nonfi nancial assets, these transactions
are included in capital transfers, either as capital grants or other
expense, as relevant.