The third part of this chapter contains background information on the fiscal sector in Poland, including a brief description of the structure of the fiscal sector, coverage of recent fiscal developments, tax and expenditure policies, and the financing of the deficit. A more detailed analysis of the methods of assessing developments in government revenues and expenditures is provided also. The second part discusses the main analytical issues in fiscal analysis, including the notions of government saving and investment, alternative measures of fiscal imbalance, alternative methods of financing a fiscal deficit and their macroeconomic implications, and the sustainability of the fiscal policy. Main classifications of revenues and expenditures are also outlined, and the concept of the conventional overall deficit is discussed. Subsequent sections focus on the definition of the government sector, the measurement of government operations, and some basic concepts employed in the classification and accounting treatment of government operations.
This framework is designed to facilitate the analysis of government transactions with respect to income, outlays, capital accumulation, and financing. 1 The GFS provides an internationally accepted framework for presenting data on a government’s fiscal operations. The first part of this chapter opens with a discussion of key concepts set out in the IMF’s Manual on Government Finance Statistics (GFS). This chapter is devoted to an exposition of this basic framework of fiscal accounting and analysis.
In order to assess the overall fiscal performance of an economy in the context of stabilization and structural reform, it is essential to have a firm grasp of the basic principles of fiscal accounting and analysis. Frequently, large macroeconomic imbalances, both internal and external, can be traced to a fiscal imbalance that policy has failed to correct. Policies that deal with taxation, public spending, and borrowing affect the behavior of producers and consumers and influence the distribution of income and wealth in the economy. Together with monetary and exchange rate policies, it also influences the balance of payments, the debt levels, and the rates of inflation and economic growth. Fiscal policy directly affects an economy’s use of aggregate resources and level of aggregate demand. Fiscal developments and policies play a central role in determining overall economic developments and policies.
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