Hungary: Report on the Observance of Standards and Codes (ROSC)—Data Module—Substantive Update on the Government Finance Statistics

This Report on the Observance of Standards and Codes (ROSC) data module provides a substantive update on the assessment of Hungary’s government finance statistics against the Special Data Dissemination Standard, complemented by an assessment of data quality based on the IMF’s Data Quality Assessment Framework. Significant improvements in addressing the shortcomings identified in the original ROSC data module have been made. These improvements relate mainly to the institutional coverage of general government, consolidation of data, and so on. Significant progress has also been made toward the adoption of the Government Finance Statistics Manual 2001 framework.

Abstract

This Report on the Observance of Standards and Codes (ROSC) data module provides a substantive update on the assessment of Hungary’s government finance statistics against the Special Data Dissemination Standard, complemented by an assessment of data quality based on the IMF’s Data Quality Assessment Framework. Significant improvements in addressing the shortcomings identified in the original ROSC data module have been made. These improvements relate mainly to the institutional coverage of general government, consolidation of data, and so on. Significant progress has also been made toward the adoption of the Government Finance Statistics Manual 2001 framework.

I. Assessment by Dimension of Data Quality

0. Prerequisites of quality

The legal and institutional environment clearly assigns the responsibility for the compilation and dissemination of fiscal statistics to the Ministry of Finance (MOF). However, it does not establish a specific obligation for the MOF to disseminate statistics to the general public. The task of compiling and disseminating budget execution data and government finance statistics (GFS) on the central government and general government operations, is assigned to the Directorate of Fiscal and Financial Policy Affairs of the MOF, while the task of compiling and disseminating data on the central government debt is assigned to the Planning Department of the Government Debt Management Agency Ltd. (ÁKK). Staff resources are adequate to perform current tasks, but would be insufficient to implement the recommendations below. Computing resources, physical facilities and financing are commensurate with statistical programs. The resources used to compile budget execution data and GFS are not measured.

The budget execution data and the GFS reported to international organizations are generally relevant, as they meet the requirements of the Act on Public Finance and the various international standards, respectively. However, there is no systematic consultation with users. Finally, on other quality management, both the management and staff of the MOF firmly believe that the quality of budget execution data and statistics depends on the quality of the source data and compilation procedures, and make continuous efforts to improve them.

1. Assurances of integrity

The MOF and the ÁKK exhibit professionalism in the performance of their functions. The Act on Public Finance and the Act on Statistics support the compilation of budget execution data and GFS on an impartial basis and according to technical criteria. Recruitment is conducted through a competitive process, based on the qualifications for the position being filled. Descriptions of main developments are provided together with budget execution data, and the ministry holds meetings to brief the press and Parliament.

Transparency is evidenced by making available to the public the legislation containing the terms and conditions under which budget execution data are compiled and disseminated. Early access by senior government officials to budget execution data is not communicated to the public, but is known to be necessary during the preparation of the final accounts. There is no internal government access prior to the release of statistics reported to international organizations. Major methodological changes are described in legislation and in notes included in the corresponding reports when they are introduced. The ethical standards guiding the compilation and dissemination of budget execution data and GFS are enshrined in the Act on the Legal Status of Civil Servants and the “Code of Ethics for Civil Servants.”

2. Methodological soundness

The concepts and definitions used to compile budget execution data generally follow the guidelines of A Manual on Government Finance Statistics, 1986 (GFSM 1986), while the GFS reported for publication in the Government Finance Statistics Yearbook 2003 (GFSY 2003) follow the guidelines of the Government Finance Statistics Manual 2001 (GFSM 2001). A formal “migration path” from the GFSM 1986 framework to the GFSM 2001 framework has not yet been adopted. However, significant progress has been made to this effect in connection with the country’s accession to the European Union (EU): the coverage of legal government has been expanded to comply with the European System of Accounts 1995 definition of general government (and thereby with the GFSM 2001), accrual (cash adjusted) data is being compiled annually, a balance sheet of non-financial assets is being prepared, and balance sheets of financial assets and liabilities have been compiled (including other economic flows). The compilers of statistics expressed interest in moving to accrual accounting and adopting the GFSM 2001 framework.

The institutional scope of the monthly and annual budget execution data for central government and general government generally follows international guidelines, except for the exclusion of certain extrabudgetary institutions, which because of their characteristics are classified as institutional units of the general government for statistical purposes. The institutional scope of the statistics reported for publication in GFSY 2003 is in conformity with the guidelines of the GFSM 2001. The monthly budget execution data for central government provide limited detail in national format (there are no detailed tables for revenues, expenditures, and financing), whereas the annual budget execution data for general government and its subsectors provide substantially more detail, but do not fully follow internationally accepted standards. The GFS reported for publication in the IMF’s Government Finance Statistics Yearbook (GFSY) have in the past followed the GFSM 1986 guidelines and beginning in 2003 the GFSM 2001 guidelines, and have included the recommended level of detail.

In terms of classification/sectorization, institutional sectors are generally defined in accordance with the System of National Accounts 1993 (and thereby with the GFSM 2001). Annual budget execution data are provided separately for all subsectors and for consolidated general government. The monthly budget execution data for central government provide only summary data using a national classification, there are no tables with an economic classification of revenues and expenditures, or a functional classification of expenditures. The annual budget execution data for general government and its subsectors provide a summary table in national classification, as well as tables for the economic classification of revenues and expenditures, and for the functional classification of expenditures, following GFSM 1986 classification guidelines. Tables for financing are provided separately in the final accounts in national classification, but financing data are not directly linked to the above the line deficit. A debt table for central government following a national classification by instrument is also disseminated separately. The GFS reported for publication in the IMF’s GFSY have included the classifications recommended by GFSM 1986 and more recently GFSM 2001.

The basis for recording transactions is a cash flow basis. Transactions are recorded at the time money flows in or out of the Treasury single account, according to the corresponding bank statement. Amounts denominated in foreign currency are converted to national currency using the daily average exchange rate from the National Bank of Hungary. All transactions are generally shown on a gross basis, except for short term government securities.

3. Accuracy and reliability

Comprehensive and timely source data covering the full range of economic stocks and flows are provided from administrative systems for all levels of government. A comprehensive register of all legal government units is kept and regularly updated by the Treasury. Source data allows for basic consolidation, but not full consolidation. All central and local government units follow a unified accounting system, that includes a detailed chart of accounts. Information published under financial accountability arrangements (the final accounts) can be easily reconciled with GFS, though they have different scope.

Source data are assessed and validated with other accounting or administrative records that allow for verification of their accuracy; however, the resulting statistical outputs are not assessed and validated with similar data published by other institutions. Data are compiled following sound statistical techniques. Monthly and annual budget execution data and GFS are essentially final when first disseminated, as preliminary annual data is based on final reports from budget units (it becomes officially final when Parliament approves the final accounts). Revisions are few and usually associated with corrections. Thus, no revision studies are conducted.

4. Serviceability

The periodicity and timeliness of fiscal statistics meet or exceed the Special Data Dissemination Standard (SDDS) requirements. There is consistency in budget execution data and GFS within the dataset, except for a statistical discrepancy between the above the line and below the line data, that has become relatively small due to reconciliation efforts. The sum of monthly data does not equal the annual data, as there are small differences due to year-end adjustments. Budget execution data and GFS are largely consistent with national accounts statistics, balance of payments data, and financial and debt data, as common sources are generally used. Revision policy and practice are well known, as the dissemination of preliminary and final data follows a regular schedule.

5. Accessibility

Data accessibility is satisfactory. The presentation of annual budget execution data follows the guidelines established by the Act on Public Finance. Commentaries on current-period developments are included with both monthly and annual budget execution data. The GFS reported for publication in the GFSY have included all the standard components prescribed by the manuals. The budget execution data and SDDS related statistics are released simultaneously to the general public, according to the corresponding advance release schedule. The availability of statistics not routinely disseminated is not publicized.

Metadata1 accessibility needs to be improved. No comprehensive sources and methods document is published. Information is only available from published legislation, not methodological notes posted on the MOF’s Internet website. Differences from international standards are not annotated. The SDDS base page metadata and summary methodology statements are updated regularly. Limited general use information about public sector statistics, and no specialized use information is made available to the public. Assistance to users could also be improved. Users interested in obtaining information usually send letters or an e-mail to the MOF. Contact persons for the SDDS data categories are provided on the Dissemination Standards Bulletin Board. Finally, a catalogue of the statistical products and services by the MOF is not available.

II. Recommendations

  • Adopt the GFSM 2001 framework for compilation and dissemination of budget execution data (in addition to the administrative presentation) and GFS.

  • Compile and disseminate GFS for general government and its subsectors quarterly, using the GFSM 2001 framework.

  • Compile and disseminate GFS for central government monthly, using the GFSM 2001 framework. In the meantime, compile and disseminate GFS for budgetary central government using the GFSM 1986 framework (i.e., publish the full set of tables recommended for revenues, expenditures and financing).

  • Disseminate on the MOF’s Internet website the GFS reported to the IMF for publication in the International Financial Statistics and GFSY, as well as the information reported to the EU.

  • Seek feedback from users of budget execution data and GFS on a regular basis.

  • Disseminate a detailed technical description of concepts, sources and methods used in the compilation of budget execution data and GFS. Annotate differences from international standards.

  • Continue efforts to achieve full consolidation of budget execution data and GFS, and to reconcile the deficit with financing.

  • Increase the staff resources assigned to compilation and dissemination of budget execution data and GFS.

1

Metadata is a general term used to refer to information about the data compiled and disseminated (e.g., coverage, sources, concepts, classifications, etc.).