4.3.1  Over-reporting government debt and deficit

In particular, the use of data derived from the accounting treatment of PPPs based on a control criterion would generate substantial over-reporting for Eurostat (and thus debt and deficit) purposes. Indeed, the switch to a "control" criterion could be expected to bring on government balance sheet almost all PPP assets. Unless this issue is addressed, a significant reduction in PPP activity could take place as governments would discontinue (for reasons debt and deficit reporting impact) PPP programmes which could otherwise have passed the tests of economic value, affordability and value for money. The issues are summarised in the graphic below.

Impact of changes in government financial reporting
on practical application of ESA