Module H5 Session 12
Session 12. GDP by expenditure and GFS
Learning objectives
At the end of this session the students will be able to


analyse the expenditure components of GDP
explain what Government Finance Statistics consist of.
Expenditure components of GDP
In the previous session, we studied GDP from the production approach. In this session
we study the expenditure components.
The expenditure approach is based on the fact that everything that is produced (or
imported) has to be used in three possible ways: for consumption, for capital formation, or
for export. This is another version of the SNA goods and services account:
Code
P7
Supply
Imports of goods/services
Gross domestic product
499
1,854
Code
P3/4
P5
P6
Total supply
2,353
Use
Private final consumption
Government final consumption
Fixed capital formation
Change in inventories
Exports of goods & services
Total use
1,243
156
386
28
540
2,353
Expenditures on goods and services, including imports, can be expressed (in principle) in
both current and constant prices. Definitions are given in Annex C of the handout for
session 9. Final consumption is here divided between “Private” and “Government”
expenditure on goods and services. In the case of government, the expenditure will be
mainly on the services (for example public administration, education and health) which are
produced by civil servants and others working in the public sector. Because most of these
services are not sold, they are valued at cost, i.e., the intermediate consumption,
compensation of employees and estimated consumption of fixed capital incurred in
producing them.
The tables on the next page come from Mozambique.
SADC Course in Statistics
Module H5 Session 12 – Page 1
Module H5 Session 12
Gross domestic product – the expenditure view
Values in 10^6 MTn, at current prices
Description
TOTAL SUPPLY
1996
44,441
1997
52,095
1998
59,997
1999
71,520
2000
80,414
2001
101,762
GROSS DOMESTIC PRODUCT
32,719
39,819
46,912
51,913
58,355
76,545
IMPORTS
Goods
Services
11,722
10,137
1,586
12,276
10,350
1,925
13,085
10,549
2,536
19,607
16,151
3,456
22,060
17,527
4,533
25,217
20,012
5,205
TOTAL DEMAND
44,441
52,095
59,997
71,520
80,414
101,762
CONSUMPTION
Private consumption
Government consumption
33,317
30,692
2,625
39,390
35,735
3,655
43,714
38,822
4,892
47,224
40,857
6,367
53,404
46,722
6,682
65,741
55,415
10,326
GROSS CAPITAL FORMATION
Gross fixed capital formation
Changes in inventories
7,141
6,617
524
8,194
8,197
-3
11,360
8,602
2,758
19,041
10,378
8,663
19,575
18,061
1,514
19,818
15,287
4,531
EXPORTS
Goods
Services
3,982
2,464
1,519
4,510
2,839
1,671
4,923
3,315
1,608
5,256
3,551
1,704
7,436
5,261
2,174
16,203
13,041
3,161
Values in 10^6 MT, at constant 1996 prices
Description
TOTAL SUPPLY
1996
44,441
1997
48,104
1998
53,685
1999
61,919
2000
62,346
2001
64,606
GROSS DOMESTIC PRODUCT
32,719
36,341
40,932
44,018
44,873
50,751
IMPORTS
Goods
Services
11,722
10,137
1,586
11,764
9,882
1,882
12,753
10,344
2,409
17,901
14,829
3,072
17,474
14,038
3,436
13,855
10,968
2,887
TOTAL DEMAND
44,441
48,104
53,685
61,919
62,346
64,606
CONSUMPTION
Private consumption
Government consumption
33,317
30,692
2,625
36,036
32,860
3,176
38,641
34,803
3,838
40,640
36,418
4,222
41,010
36,296
4,714
42,369
36,844
5,525
GROSS CAPITAL FORMATION
Gross fixed capital formation
Changes in inventories
7,141
6,617
524
7,743
7,695
47
10,264
7,693
2,571
16,569
8,919
7,650
15,122
14,004
1,118
12,818
10,674
2,143
EXPORTS
Goods
Services
3,982
2,464
1,519
4,326
2,668
1,658
4,780
3,229
1,551
4,710
3,199
1,511
6,215
4,607
1,608
9,420
8,241
1,179
Source: INS Mozambique http://www.ine.gov.mz
Exercise 1
Based on the above estimates from Mozambique and using Excel, make tables showing the
following statistics:


the share of each expenditure component in the GDP (at current market prices)
divide each current price figure by the corresponding GDP
the growth rates (at constant prices) for each component (except inventoris)
divide each constant price figure by the figure in the previous year and subtract 1.
Describe briefly the main developments in the period covered.
SADC Course in Statistics
Module H5 Session 12 – Page 2
Module H5 Session 12
Government finance statistics (GFS)
Government Finance Statistics (GFS) is an internationally accepted system for presenting
data on the financial activities of government in a format suitable for economic analyses,
planning, and policy determination. It is also a step on the way to providing data on the
government sector that are needed in the national accounts.
In principle, the statistics will cover the whole of “general government”. This includes not
only central government, but also provincial government and local authorities, and social
security funds. While most central government operations will normally be covered by the
recurrent and development budgets, the central government sector should include the
operations of semi-autonomous national organisations which may keep separate accounts..
The GFS classifies government income and expenditure into the following categories:
1 Revenue
11 Taxes
111 Taxes on income, profits, and capital gains
112 Taxes on payroll and workforce
113 Taxes on property
114 Taxes on goods and services
115 Taxes on international trade and
transactions
116 Other taxes
12 Social contributions
121 Social security contributions
122 Other social contributions
13 Grants
131 From foreign governments
132 From international organizations
133 From other general government units
14 Other revenue
141 Property income
142 Sales of goods and services
143 Fines, penalties, and forfeits
144 Voluntary transfers other than grants
145 Miscellaneous and unidentified revenue
2 Expense
21 Compensation of employees
211 Wages and salaries
212 Social contributions
22 Use of goods and services
23 Consumption of fixed capital
24 Interest [GFS]
25 Subsidies
251 To public corporations
252 To private enterprises
26 Grants
261 To foreign governments
262 To international organizations
263 To other general government units
27 Social benefits
271 Social security benefits
272 Social assistance benefits
273 Employer social benefits
28 Other expense
281 Property expense other than interest
282 Miscellaneous other expense
Source: http://www.imf.org/external/pubs/ft/gfs/manual/pdf/app4.pdf
There is also a classification of the financial flows involved (the borrowing and lending by
general government). Countries tend to modify these classifications to reflect the local
situation. While information on this basis will usually be available for the recurrent budget
SADC Course in Statistics
Module H5 Session 12 – Page 3
Module H5 Session 12
of central government, details of the development budget, and the operations of other
units and levels of government may not be so easily available.
The expenditures of government also need to be classified according to purpose. The
current top-level version of the international classification, COFOG, is as follows:
Classification of Outlays by Functions of Government (COFOG)
01 General public services
02 Defense
03 Public order and safety
04 Economic affairs
05 Environmental protection
06 Housing and community amenities
07 Health
08 Recreation, culture, and religion
09 Education
10 Social protection
Source: http://unstats.un.org/unsd/cr/registry/regcst.asp?Cl=4&Lg=1
Further details are given in the Annex.
Discussion topic
Identify a published statistical table that shows the revenue of central government. To
what extent do the categories correspond to the international classification on page 3?
In particular, where does VAT fit in to the international classification?
SADC Course in Statistics
Module H5 Session 12 – Page 4
Module H5 Session 12
Annex A: Classification of Outlays by Functions of
Government (COFOG)
01 General public services
011 Executive and legislative organs, financial
and fiscal affairs, external affairs
012 Foreign economic aid
013 General services
014 Basic research
015 R&D General public services
016 General public services n.e.c.2
017 Public debt transactions
018 Transfers of a general character between
different levels of government
02 Defense
021 Military defense
022 Civil defense
023 Foreign military aid
024 R&D Defense
025 Defense n.e.c.
03 Public order and safety
031 Police services
032 Fire protection services
033 Law courts
034 Prisons
035 R&D Public order and safety
036 Public order and safety n.e.c.
04 Economic affairs
041 General economic, commercial, and labor
affairs
042 Agriculture, forestry, fishing, and hunting
043 Fuel and energy
044 Mining, manufacturing, and construction
045 Transport
046 Communication
047 Other industries
048 R&D Economic affairs
049 Economic affairs n.e.c.
05 Environmental protection
051 Waste management
052 Waste water management
053 Pollution abatement
054 Protection of biodiversity and landscape
055 R&D Environmental protection
056 Environmental protection n.e.c.
SADC Course in Statistics
06 Housing and community amenities
061 Housing development
062 Community development
063 Water supply
064 Street lighting
065 R&D Housing and community amenities
066 Housing and community amenities n.e.c.
07 Health
071 Medical products, appliances, and
equipment
072 Outpatient services
073 Hospital services
074 Public health services
075 R&D Health
076 Health n.e.c.
08 Recreation, culture, and religion
081 Recreational and sporting services
082 Cultural services
083 Broadcasting and publishing services
084 Religious and other community services
085 R&D Recreation, cultural, and religion
086 Recreation, culture, and religion n.e.c.
09 Education
091 Pre-primary and primary education
092 Secondary education
093 Postsecondary nontertiary education
094 Tertiary education
095 Education not definable by level
096 Subsidiary services to education
097 R&D Education
098 Education n.e.c.
10 Social protection
101 Sickness and disability
102 Old age
103 Survivors
104 Family and children
105 Unemployment
106 Housing
107 Social exclusion n.e.c.
108 R&D Social protection
109 Social protection n.e.c.
Module H5 Session 12 – Page 5