Since the introduction of the Stability and Growth Pact and the enactment of the Protocol on the Excessive Deficit Procedure under the Maastricht Treaty, EU governments have had to take into consideration the impact of PPPs on government debt and deficit.
This paper is designed to clarify the process for determining the impact of PPPs on government debt and deficit. We refer to this throughout as the statistical treatment of PPPs.
The Eurostat treatment of PPPs is closely related to the accounting treatment of PPPs at national level. This is why recent trends aimed at changing government accounting standards may ultimately impact on government debt and deficit. This interaction is explained below.
The purpose of this paper is therefore:
• To clarify the meaning and purposes of accounting and statistical treatment of PPPs (Section1);
• To explain the Eurostat rules dealing with the impact of PPPs on government debt and deficit (Section 2);
• To analyse Eurostat's treatment of government support measures on PPPs within the framework of the financial crisis (Section 3);
• To examine recent trends in the accounting treatment of PPPs and describe how these changes may affect in practice the process for determining the Eurostat treatment of PPPs (Section 4).
The statistical aspects of this paper were developed in dialogue with Eurostat, whose co-operation is gratefully acknowledged. The paper reflects the new "Manual on Government Deficit and Debt - Implementation of ESA 95 - 2010 edition" published on 29 October 20101.
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1 See the "Manuals" section of the Eurostat website: http://epp.eurostat.ec.europa.eu/portal/page/portal/government_finance_statistics/introduction