Accounting of Expenditure in the National Accounts
Public expenditure is accounted in accordance with the “accrual” principle. Therefore, transactions are recorded when economic value is created, transformed, or extinguished, or when claims and obligations arise, are transformed, or are cancelled, but not when there is a payment. In the National Accounts, expenditure is classified as follows: expenditure with staff, intermediate consumption, social benefits (in kind or in cash), interest and other current expenditure, or capital expenditure (gross fixed capital formation and other capital expenditure). Expenditure from court decisions with retroactive effects is accounted in the year when the decision is definitive. In the recording of interest from public debt, are accounted the interest that would be paid in the period and not the ones effectively paid. This means that interest are recorded based on the principle of economic specialization (recorded as continuously maturing over time in favour of the creditor based on the amount of the capital in debt). When they are not effectively paid, the increase of capital should be recorded in the financial account as a new acquisition of that type of financial asset.
- ESA 2010 European System of Accounts 2010. https://ec.europa.eu/eurostat/cache/metadata/Annexes/nasa_10_f_esms_an1.pdf
- Eurostat (2016) Manual of government deficit and debt. https://ec.europa.eu/eurostat/documents/3859598/7203647/KS-GQ-16-001-EN-N.pdf/5cfae6dd-29d8-4487-80ac-37f76cd1f012. Accessed 1 Nov 2016