Appendix 5. Regional Arrangements

Sage De Clerck, and Tobias Wickens
Published Date:
March 2015
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This appendix describes various regional arrangements for monetary and economic cooperation and the implications of these arrangements for government finance statistics.


A5.1 This appendix addresses the main issues for GFS that arise from regional arrangements. Regional arrangements involve coordination of institutional units in several countries for a particular monetary or economic purpose. These arrangements are often supported by regional organizations that operate across borders that need harmonized macroeconomic statistics to monitor economic development and the progress toward meeting the goals of the regional arrangement. The statistical issues that may arise in compiling harmonized data tend to be the same as those addressed in the GFS framework: definitions, coverage, time of recording, frequency, classifications, and presentation formats. An effective way of achieving this harmonization is by using a common methodology, such as the GFSM 2014.

A5.2 Where regional arrangements create regional organizations by means of an intergovernmental legal arrangement (e.g., a treaty), these institutions are classified as an international/regional organization if they satisfy the criteria to be an institutional unit and satisfy the criteria to be an international organization.1 Regional organizations are created for many purposes, including supporting, guiding, and even governing aspects of the economic relationships or integration processes among the region’s economies. Regional organizations can be financial (e.g., regional central or development banks) or nonfinancial (e.g., administrative or economic organizations).

A5.3 Regional arrangements tend to strengthen economic relations among the governments of the participating countries and between the regional organizations and the governments of the participating countries. As these economic relations can lead to significant flows and stock positions, it is important to have guidelines on their recording in GFS.

A5.4 This appendix presents the major types of regional arrangements, and points out the main GFS issues observed in each case. The appendix then examines using GFS under regional arrangements and, finally, it analyzes the requirements for harmonization to promote optimal coordination of policies and consistency in data.

Types of Regional Arrangements

A5.5 In the course of the last decades, numerous regional arrangements have been set up with various degrees of cooperation and integration between the participating countries. Such regional arrangements include:

  • Customs unions, which have common tariff and other trade policies with nonmember economies

  • Economic unions, which harmonize certain economic policies to foster greater economic integration

  • Monetary and currency unions, which provide for a single monetary policy and the use of a single currency across an area.

Custom Unions

A5.6 A custom union is a form of regional arrangement whereby agreement exists on a common tariff (custom duties) vis-à-vis the other economies, while the movement of goods within the arrangement tends to be duty-free, although it may exclude exemptions in certain sectors.2 This type of arrangement is different from bilateral cooperation agreements between two countries in commercial areas that have little impact, if any, on GFS.3

A5.7 In compiling GFS for members of a customs union, the main issue is the recording of custom duties in the accounts of the member governments participating in the union. Duties on imports from countries outside the customs union are usually collected on a mutually agreed basis at custom union entry points. As these entry points may be concentrated in one or a small group of members of the customs union, revenue-sharing formulas among member countries are implemented. Recording customs duties in the GFS of individual members of the customs union is thus affected by the institutional and administrative organization of the customs union.

A5.8 The following paragraphs set out four possible types of regional arrangements:4

  • A designated agency levies,5 collects, and distributes the proceeds from the duties.

  • A designated agency levies and distributes duties, but member governments collect duties on behalf of the designated agency.

  • Member governments have collective rights (i.e., the right is shared by everyone in the group) to levy, collect, and distribute the duties.

  • Member governments have collective rights to levy the duties, but only one member collects and distributes the duties.

A5.9 In all four scenarios where there are economic arrangements involving a small group of economies, it is recommended that the governments involved agree on common, appropriate recording procedures to avoid bilateral asymmetries.6 The required information should be readily available from customs services. If a portion of the amount of customs duties is retained as collection fees (regardless of how the amount is calculated by the collecting agency or government), these fees should be recorded gross of the grants expense when the customs pool is distributed to the members. The retained amount should be recorded as incidental sales by nonmarket establishments (1423) in the accounts of the collecting agency or government, and use of goods and services (22) in the accounts of the member government receiving the grants.

A5.10 Tax attribution rules (see paragraphs 5.33–5.38) should be used to determine the attribution of customs duties revenue and the transfers associated with sharing the revenue pool among the members. The recording of such customs duties and grant transfers for four types of arrangements are discussed in paragraphs A5.11–A5.18.

A designated agency levies, collects, and distributes the proceeds from the duties

A5.11 In this case, the designated agency has the right to levy and collect the customs duties and distribute the proceeds. If the designated agency is recognized as an institutional unit, it may satisfy the criteria to be an international organization (see paragraphs 2.16–2.21), in which case all the transactions described should be between this international organization and the member governments. Otherwise it would be a resident of one member country, in which case all the transactions described should be between that government and all the other member governments. If the designated agency is not a separate institutional unit, it should be classified with the government unit that controls it.

A5.12 The customs duty revenue is attributed to the designated agency and should be recorded as customs and other import duties (1151) at the time the underlying economic event occurs (e.g., imports of goods or services) that gives rise to the customs duties, along with a counterpart entry increasing currency and deposits (3202) or other accounts receivable (3208).

A5.13 A revenue-sharing agreement may determine that the designated agency is to distribute the revenue pool to the participating national governments on the basis of an underlying economic event (e.g., imports of goods or services). In this case, revenue in the form of a grant (13), with a counterpart entry in other accounts receivable (3208), is recorded in the accounts of the member countries at the time the underlying economic event occurs. In the accounts of the designated agency, an equal amount of expense in the form of a grant (26) with a counterpart entry in other accounts payable (3308) should be recorded. Depending on the sector classification of the designated agency, the grant revenue should be recorded as either current grants from international organizations (1321) or current grants from foreign governments (1311), while the grant expense should be classified as grants to foreign governments (261) or grants to other general government units (263). The size of the grant depends on the nature of the revenue-sharing agreement. However, these revenue distributions may display an element of income redistribution among the members of a regional arrangement. That is, the distributions are not based on underlying economic events but are rather made to an agreed and negotiated formula. In this case, the grant should be recorded at the time the member economy acquires an unconditional claim on the designated agency. At the time of distribution, the member economies extinguish the other accounts receivable (3208), with a corresponding increase in the financial asset currency and deposits (3202). Conversely, the designated agency would record a decrease in other accounts payable (3308) and a decrease in the financial asset currency and deposits (3202).

A designated agency levies and distributes duties but member governments collect duties on behalf of the designated agency

A5.14 If national governments act as collecting agents on behalf of the designated agency for the customs duties from importers in their own economy, the collecting national government should record only transactions in financial assets and liabilities when the economic event occurs. A liability in the form of other accounts payable (3308) to the designated agency should be recorded, with a counterpart entry in currency and deposits (3202) or other accounts receivable (3208). Because the customs duty revenue is attributed to the designated agency, they should record a financial claim on the member collecting the customs duties, in the form of other accounts receivable (3208) as the revenue in the form of customs duties accrues. When the collecting national government makes the payment to the designated agency, this member government records a reduction in financial assets in the form of currency and deposits (3202), with a counterpart entry to extinguish the liability in the form other accounts payable (3308).

A5.15 Distributions of the revenue pool by the designated agency are treated as described in paragraph A5.13.

Member governments have collective rights to levy, collect, and distribute the duties

A5.16 If member governments have collective rights to levy the customs duties under the customs union agreement, the custom duty revenue is attributed to the member governments according to the underlying economic activity that gives rise to the customs duties. The total customs duty revenue attributed to each member government is in proportion to the respective underlying economic activity that gives rise to the customs duties. Each member government records customs duties due on their imports on an accrual basis (i.e., when the underlying economic event occurred), regardless of how the revenue pool is to be shared or where the customs duties are collected. Should the customs union agreement provide for any member government to receive a larger share of the customs pool than is evidenced by the underlying economic activities, a grant revenue (131) / expense (261) should be recorded between member governments at the time the unconditional claims are established, with a corresponding entry in other accounts receivable (3208)/payable (3308).

A5.17 It is possible that the ports of entry for the customs union are situated in one or a small group of member economies. If so, there could be a discrepancy between the customs duty revenue collected by a member state and that member’s share of the customs pool. In these circumstances, an increase in liabilities in the form of an other accounts payable (3308) is recorded for the collecting government at the time that such a claim can be established, with the corresponding increase in financial assets in the form of currency and deposits (3202) for the collecting government. The differences between the customs revenue collected by each of the customs union members and the total of each member’s share of the customs pool should sum to zero across the customs union, as the customs revenue collected by the customs union equals the revenue to be shared among member governments.

Member governments have collective rights to levy the duty, but only one member collects and distributes the duties

A5.18 If member governments have collective rights to levy the duty, the tax revenue is attributed to the member governments according to the underlying economic activity that gives rise to the customs duties. If one of the member governments collects all the customs revenue, the recording is as described in paragraphs A5.16–A5.17. In this case, however, only the collecting government will record an increase in liabilities in the form of other accounts payable (3308), as all other economies will have claims in the form of other accounts receivable (3208) on the collecting economy for their share of the customs revenue.

Economic Unions


A5.19 For statistical purposes, an economic union is a union to which two or more economies belong. Economic unions are established by means of an intergovernmental legal agreement among sovereign countries or jurisdictions with the intention of fostering greater economic integration. In an economic union, some of the legal and economic characteristics associated with a national economic territory are shared among the different countries or jurisdictions. These elements include: (i) the free movement of goods and services within the economic union and a common tax regime for imports from nonmember economies (free trade zone); (ii) the free movement of financial resources within the economic union; and (iii) the free movement of (individual and legal) persons within the economic union.7 Also, in an economic union, specific regional organizations are created to support the functioning of the economic union. Some form of cooperation and coordination in fiscal and monetary policy usually exists within an economic union.

A5.20 This type of regional arrangement represents greater cooperation than in a customs union agreement (which may have been a first step) because the members agree to harmonize a significant part of the conditions in which economic activity is undertaken over the whole union territory. The main example is the European Union (EU). The EU takes the form of common legislation in some areas, most notably in competition or product norms. Harmonization of taxes is also being envisaged in some areas. The aim of such unions is to unify markets by enlarging their size, improving efficiency, and developing specialization. Economic unions usually achieve a large, if not total, freedom of circulation for goods, services, capital, and individuals by removing the obstacles to such movements.

A5.21 Economic unions may also cover common policies in other fields. These may take a range of forms, from simple coordinated policy measures to a strongly harmonized framework and even to a centralized, direct management by supranational bodies having an autonomous budget and strict policy rules.

A5.22 An economic union requires specific entities endowed with the authority to manage an autonomous budget. These entities may have more or less autonomy to perform their tasks, in accordance with the institutional arrangements agreed between the members of the union.

A5.23 There may be significant grants payable and receivable between member states of an economic union to support certain economic activities or to develop the region. Nevertheless, the size of common budgets observed in existing economic unions is much smaller than member states’ budgets. The flows involved are a small portion of total revenue and expense of the individual member states.8 All requirements related to fiscal policy are generally seen as cooperation/coordination arrangements rather than effective common fiscal policies.

Residence in an economic union

A5.24 The economic territory of an economic union consists of the economic territory of the member countries or jurisdictions, and the regional institutions that comprise the same, or a subset of the same, economies and are set up to manage the functioning of the economic union.

A5.25 Being a resident of an economy of an economic union implies being a resident of the economic union. Regional organizations that operate within the boundaries of the economic union territory are also residents of the union. However, regional organizations whose membership of economies is not the same as, nor a subset of, those in the economic union should be regarded as nonresidents of the economic union.9

Recording some specific transactions related to regional organizations

A5.26 The common budget of the union that is managed by a regional organization may be funded by different types of sources. The main sources are taxes and grants. For example, in the EU, the majority of EU budget resources is based on gross national income (GNI) and value-added tax revenues of individual countries.

A5.27 Direct levies for the account of the common budget—in practice often collected by member governments—are recorded as taxes of the common budget in accordance with the tax attribution principle (see paragraphs 5.33–5.40). Such revenue cannot be considered as part of government revenue of the member economy because they are collected by the member economy on behalf of the union. In accordance with the accrual basis of recording, the collection of the taxes will give rise to other accounts payable (3308) for the collecting member government, and other accounts receivable (3208) in the accounts of the regional organization, at the time the taxes accrue to the international organization. These tax flows must be recorded gross of any collection fees. If there are specific provisions related to collection fees (based on actual expenses, a forfeited amount, or a percentage), the latter should be considered as revenue generated by incidental sales by nonmarket establishments (1423) in the accounts of the member government, and an expense for use of goods and services (22) in the accounts of the regional organization.

A5.28 The union agencies may also be financed directly by contributions from the members, according to agreed criteria. Such contributions may be agreed portions of certain taxes and fees. These taxes and other revenues are attributed to the member governments and are not collected on behalf of the union, but for their own account. Therefore, the respective member governments record the full collectable amount as taxes and other revenues in their accounts, and a subsequent grant payable to the regional organization.

A5.29 Expense of the regional organization covers its administrative and operating costs, but also costs associated with executing common policies for the benefit of the members of the union. Administrative and operating costs impact mainly the economy where the regional organization is physically located. These amounts are usually not significant and, where a common budget is developed, they represent a small portion of total expense of the regional organization. Of these, a small part could possibly be transactions with the host government and should be recorded in the government accounts of the member in accordance with the economic nature of the transaction.

A5.30 Expense associated with executing common policies for the benefit of the members of the economic union impacts specific categories of beneficiaries in the respective member countries. To accurately record these transactions, the ultimate beneficiary and nature of the expense should be identified regardless of the practical and/or institutional arrangements for channeling the amounts payable from union agencies to these economic beneficiaries.

  • Where such expenses from the union budget managed by the regional organization cover costs directly benefiting the recipient member government units (in the context of a given program—e.g., projects for infrastructures, research and development), revenue in the form of grants from international organizations (132) should be recorded in the member government accounts when all conditions have been met.

  • Where member government units act as agents on behalf of the union, all transactions conducted on behalf of the union should, over time, be neutral on the member government revenue and expense.10 For example, if the member government receives amounts from the regional organization to distribute on behalf of the union to beneficiaries, only transactions in financial assets and liabilities should be recorded in the member government accounts. The national government records the incurrence of a liability for amounts received, classified as other accounts payable (3308) that are distributable to other economic beneficiaries. The actual distribution to the ultimate beneficiary reduces this account payable by the government unit. For the beneficiary, these amounts should be recorded as the appropriate category of revenue receivable—usually some kind of transfer receivable such as grants (13), subsidies (14411), or transfers not elsewhere classified (144). The regional organization would record the amounts payable in the corresponding categories of expense such as grants (26), subsidies (25), or transfers not elsewhere classified (282).

  • Amounts distributable by government, acting as an agent for the union, may take the form of reimbursements claimed by the final beneficiary. These claims are usually on the basis of documents evidencing spending by the beneficiaries. Any amounts distributed by government on the basis of such claims by the beneficiaries give rise to a financial claim of government on the regional organization, notably other accounts receivable (3208), while the regional organization incurs a liability, other accounts payable (3308). Where the member government is acting on behalf of nongovernment units, it is possible that the member government anticipates repayments from the common union budget. Such anticipated repayments are also recorded as transactions in financial assets and liabilities, notably other accounts receivable/payable (3208/3308) between the government and the regional organization.

  • When governments’ claims on the regional organization for amounts reimbursed on the regional organization’s behalf are not fully redeemed by the regional organization, the member government’s recording depends on the circumstances:

    • The member government could decide to cover the expense made by final beneficiaries from the member government budget sources. The expense is recorded with a counterpart entry in the reduction of the claims on the regional organization. Such an expense should be classified according to the economic nature of the transfer—usually some type of transfer payable such as grants (26), subsidies (25), or transfers not elsewhere classified (282). The time of recording the expense is determined by the time of the government decision to cover the expense.

    • The regional organization could indicate that a reimbursement by the member country should not have been made. The member government could recover the funds from the beneficiaries, or record the amount as expense of the member country.

A5.31 Full coverage of data for an economic union requires that these data include data from member countries as well as from the union agencies. Furthermore, to consolidate the accounts of the union—that is, eliminating all the flows and stock positions among member countries and the union agencies—sectors of the counterparties should be available for data on transactions, stock positions, and other economic flows. Compiling union accounts will allow an analysis of the whole union’s flows and stock positions. This will also allow monitoring of the contributions of individual members to the union and measure the impact of the union on each member economy through redistribution mechanisms.

Monetary and Currency Unions

A5.32 A monetary union exists where there is the presence of a single monetary policy among economies, established by an intergovernmental legal agreement. In a monetary union, the decision-making related to monetary policy is transferred to a centralized body. There are different models—for instance, a single central bank for the whole union (possibly having only branches in the national economies)11 or a federal-like system where national central banks still exist, keeping some specific activities not directly linked to monetary policy.12

A5.33 However, the core characteristic of a monetary union is that the monetary policy is exclusively conducted at the union level. There is a single set of intervention rates, and the national central banks (or branches) may in no way autonomously adjust the monetary policy to national conditions. They may, however, perform some specific tasks in the implementation process of the monetary policy, such as the management of collaterals that may be required for access to central bank liquidity and the delivery of banknotes in the different economies.13

A5.34 If a monetary union replaces national currencies with a common currency, they form a currency union. For statistical purposes, a currency union is defined as a union to which two or more economies belong and that has a regional central decision-making body, commonly a currency union central bank, endowed with the legal authority to conduct a single monetary policy and issue the single currency of the union.

A5.35 Monetary and currency unions do not raise specific issues for GFS, even in cases where a single, common central bank is a substitute for a domestic central bank in the context of the relationships between central bank and government. The currency union central bank is an institutional unit in its own right, owning assets and incurring liabilities, and is nonresident of any currency union member economy but resident in the currency union (see paragraph 2.21). Distributions of profits of such regional central banks should be classified as income on the financial asset to which member economies’ subscriptions are attributed.

Using the GFSM Statistical Framework under Regional Arrangements

A5.36 Participation in regional economic arrangements may require some cooperation and coordination of fiscal policies. However, it is only in the context of monetary unions where such cooperation and coordination are generally viewed as an indispensable element for ensuring its optimal functioning.

A5.37 In a monetary union, there is one single monetary policy that interacts with fiscal policies primarily carried out at the national level of each member country. At the same time, fiscal conditions may impact monetary policies.

A5.38 Therefore, to conduct proper monetary policies, monitor macroeconomic imbalances in member economies, and consolidate accounts for the union, fiscal statistics should be compiled in a consistent manner for all members of the union. Consistency in compiling fiscal data will allow the accurate measurement of differences in aggregates such as the tax burden, the share of government expense to GDP, the respective weight of different types of taxes in the total tax burden, the composition of expense, the implementation of budgetary rules, etc.

A5.39 Where coordinated fiscal policies are agreed in a union, the scope of such fiscal cooperation/ coordination has consequences for the statistical reporting framework. Fiscal targets may be defined and monitored at the union level. Examples of such key variables are the level of gross/net debt, operating balance, net lending/net borrowing, or, in the case of the cash basis of recording, the cash surplus/deficit. Quantitative targets (or “reference values”) may be set at the union level, and these targets may be expressed as nominal amounts or ratios to gross domestic product.14

A5.40 Coordinated fiscal policies may also call for more disaggregated data. For instance, the calculation of primary balances requires that data on interest income and expense are available. Similarly, eliminating the influence of the business cycle on the level of revenue and expenditure by calculating the structural balance may require additional information (see annex to Chapter 4). In addition, measuring the outcome of specific economic objectives may require data on very detailed types of expenses, such as those related to social development goals or the government employee wage bill. The statistical framework for a union should be designed with a sufficient degree of detail, and should be applied by all members in a fully consistent manner, in order to capture the relevant information needed to monitor the progress with the implementation of fiscal coordination objectives.

Harmonization Requirements for GFS in Economic or Monetary Unions

A5.41 The 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. Additional guidelines could provide “rulings” or “fiscal policy rules” on specific transactions, aggregates, or balancing items that may occur in the member countries of the regional arrangement. It may also be useful to further clarify existing guidelines on concepts and definitions where it is observed that countries in a union interpret these guidelines differently, or application 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 fiscal 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 financial support from government units (in the form of subsidies, grants, and other current transfers). Agreement on precise guidelines for the classification and sectorization of such units is an important factor in ensuring comparable data. When in doubt about these classifications, an appropriate dispute resolution mechanism should exist. In this context, the concept of economically significant prices might be clarified 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 recording of economic events. In many countries, government units still apply the cash basis of accounting. International statistical guidelines and accounting standards have adopted the accrual basis of recording. 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. The differences in time lags between the economic events and the associated cash flows could distort the assessment of fiscal stance during a given year if a cash basis of accounting is mainly used. It is, therefore, preferable that fiscal targets 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 estimate the adjustments to convert cash data into accrual data. In practice, the adjustments required are especially relevant for taxes, social contributions, and interest.

A5.44 Attaining comparability in the measurement of gross and net debt across all countries in an economic or monetary union may be difficult in practice. In this Manual and the PSDS Guide, all debt instruments issued by government units are considered to be part of the coverage of debt (see paragraphs 7.236–7.245). Where the definition of gross and net debt in a union departs from international agreed definitions of debt, the data should be clearly labeled, and any departure from the required coverage and standard definition should be disclosed to the users of the data. Debt instruments excluded from the union definition 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.

Box A5.1Regional Arrangements in the Harmonizing of GFS

Customs Union of Belarus, Kazakhstan, and Russian Federation

The Customs Union between Belarus, Kazakhstan, and Russia came into existence in 2010. Common trade controls and external tariffs exist, and two regional organizations make decisions related to the union. These agencies are financed by transfers from member countries. Customs duties collected at the first point of entry are redistributed to members via special accounts of members in the respective treasuries and the central banks. While no specific harmonization effort for fiscal data was implemented, the importance of consistency in recording trade data and valuations, and recording collection and redistributions related to customs collections is being considered by the member countries.

Eastern Caribbean Currency Union

In 2012, a proposal to migrate from the existing reporting format (based on the GFSM 1986) to a presentation highlighting the integration of stocks and flow as recommended by the GFSM 2001 was endorsed by the Eastern Caribbean Central Bank and the member countries.

European Union

The excessive deficit procedure, defined by the Maastricht Treaty (article 104) and in force in the European Union since 1994, is a well-known regional arrangement in the compilation of fiscal data. The conceptual references for the debt and deficit aggregates are based on the European System of Accounts (ESA). The compilation practices and reporting requirements are legally binding in the European Union; regulations adopted by the European Commission form the basis for reporting. Eurostat issued the Manual on Government Deficit and Debt to aid member states in the application of ESA principles. This Manual addresses the most common statistical issues raised in the EU.


At the 40th meeting of Mercosur economy ministers and central bank chairmen in December 1998, the need to have statistical data based on a common methodology in Mercosur was acknowledged. This common methodology materialized in 2000, as a result of the member countries’ decision to coordinate their macroeconomic policies with joint convergence targets. The preparation of harmonized statistics was agreed on, starting with six indicators: nominal fiscal balance of the national government, primary fiscal balance of the national government, net debt of the national government, net debt of the consolidated public sector, change of net debt of the consolidated public sector, price level, and the construction of a new indicator of the structural fiscal balance. Further efforts have been made since then in order to harmonize the Mercosur statistics according to international standards.

South African Development Community (SADC)

In 2010, participants from member countries of SADC endorsed a proposal by the SADC Secretariat to adopt the GFSM 2001 presentation of fiscal statistics, beginning in 2012. Preliminary work on converting the historical SADC fiscal database (based on the GFSM 1986) was completed, and countries made a commitment to begin compiling a Statement of Sources and Uses of Cash and a financial balance sheet.

West African Economic and Monetary Union (WAEMU) and Economic and Monetary Community of Central Africa (CEMAC)

In June 2009, the Council of Ministers of WAEMU adopted five regulations (directives) related to public finance management. One of the directives is related to the common reporting format of government fiscal operations known as Tableau des operations financières de l’État (TOFE). The TOFE directive is based on the GFSM 2001 methodology. The long-term objective of this directive is for member countries to produce comparable general government data for both flows and stocks. In December 2001, similar directives, including a TOFE directive, were adopted by the Council of Ministers of the CEMAC. In both monetary unions, a transition period was determined to fully implement the directives. (At the time of publishing this Manual, CEMAC was undertaking a revision of its public finance directives, one of which is related to common reporting formats for government fiscal operations.)

International organizations are discussed in paragraphs 2.16–2.21.

Examples of such arrangements are: the Mercosur, which comprises Argentina, Bolivia, Brazil, Paraguay, Uruguay, and Venezuela; and the Southern African Customs Union, which comprises Botswana, Lesotho, Namibia, South Africa, and Swaziland.

Bilateral trade agreements may also be observed between a regional arrangement and third countries or between regional arrangements. “Free trade agreements” generally fall under this category.

There could be other, less formal or less complete arrangements. In the case of Mercosur countries, for instance, duties have so far been recorded for each individual country as taxes on international trade and transactions, as goods from third countries transiting from one union member to another are regarded as imports and exports among different custom union members. In 2010, Mercosur members agreed on a customs code that will allow the final confirmation of a genuine customs union and the redistribution of customs duties among members.

To levy a tax implies that the agency has the authority to impose the tax, either as principal or through the delegated authority of a principal, and the agency has final discretion to set and vary the rate of the tax.

Member countries of the Central American Common Market (CACM) (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua) apply a common external tariff for products manufactured and imported from outside of the CACM. However, each CACM member is allowed to determine any product exceptions.

As noted in paragraph 2.11, an economy and, by extension, an economic union can include physical or legal (special) zones to which, to some extent, separate laws are applied.

In the European Union, the common budget amounted to about 1 percent of GDP of the union at the time of drafting this Manual.

See paragraphs 2.6–2.21 for a description of the use of the residence criteria in GFS.

In some cases, by agreement, a part of the expense, in the context of programs managed at the union level, may be financed by the member government; for this portion of the expense the impact on the member government finances will not be neutral.

This arrangement is applied in the case of the West African Economic and Monetary Union (WAEMU) and the Economic and Monetary Community of Central Africa (CEMAC). WAEMU includes Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo. CEMAC includes Cameroon, the Central African Republic, Chad, the Republic of Congo, Equatorial Guinea, and Gabon.

This arrangement is applied in the case of the European Monetary Union with the “Euro system” made up of the national central banks of the EU member states.

See the BPM6, Appendix 3.

In the case of the West African Economic and Monetary Union (WAEMU), these quantitative targets, called “convergence criteria,” are important for the multilateral surveillance exercised by the WAEMU Commission to ensure the convergence of the economic performance and policies of the member countries.

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