Tribunal de Contas Quality and comparability of Public Debt data: the role of the Portuguese Court of Auditors Annual Meeting of the INTOSAI Working Group on Public Debt Hyderabad, Telangana, India 11-13 July 2018
Quality and comparability of the PD data: the role of the Portuguese Court of Auditors INSTITUTIONAL ARRANGEMENTS AT EUROPEAN LEVEL FOR THE PUBLIC DEBT SURVEILLANCE LEGAL FRAMEWORK PUBLIC DEBT IN THE EU FISCAL SURVEILLANCE (EDP PROCESS) INSTITUTIONAL ARRANGEMENTS AT NATIONAL LEVEL COMPILATION AND VALIDATION OF PUBLIC ACCOUNTS THE ROLE OF THE PORTUGUESE COURT OF AUDITORS • OPINION ON THE GENERAL STATE ACCOUNT • INSTITUTIONAL COOPERATION AGREEMENT IN THE FIELD OF GENERAL GOVERNMENT STATISTICS • FUTURE WORK ACCOUNTABILITY ARRANGEMENTS 2
Quality and comparability of the PD data: the role of the Portuguese Court of Auditors INSTITUTIONAL ARRANGEMENTS AT EUROPEAN LEVEL FOR THE PD SURVEILLANCE • LEGAL FRAMEWORK Maastricht Treaty (1992) creation of the Euro Since the introduction of euro notes and coins in 2002, 19 EU countries have joined the euro area 3
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Quality and comparability of the PD data: the role of the Portuguese Court of Auditors INSTITUTIONAL ARRANGEMENTS AT EUROPEAN LEVEL FOR THE PD SURVEILLANCE • LEGAL FRAMEWORK Budgeta Treaty on Protocol on the ry Stability, Stability and excessive deficit discipl Coordination Growth Pact procedure (EDP) ine EU and Governance Member States • Management of EMU • Coordination of economic and fiscal policies in EU countries • Government deficit must not exceed 3% of GDP • Government debt must not exceed 60% of GDP 5
Quality and comparability of the PD data: the role of the Portuguese Court of Auditors INSTITUTIONAL ARRANGEMENTS AT EUROPEAN LEVEL FOR THE PD SURVEILLANCE • PUBLIC DEBT IN THE EU FISCAL SURVEILLANCE (EDP PROCESS) Government debt: Relevant sustainability indicator to assess whether Member States' comply with the EU budgetary legislation Maastricht debt and all fiscal data reported by MS based on international statistical standards Government debt, – European System of Accounts (ESA 2010) also referred to as – Manual on Government Deficit and Debt (EU) EDP debt or as – System of National Accounts (2008 SNA), UN Maastricht debt – IMF GFS Manuals and Guides 6
Quality and comparability of the PD data: the role of the Portuguese Court of Auditors INSTITUTIONAL ARRANGEMENTS AT EUROPEAN LEVEL FOR THE PD SURVEILLANCE • PUBLIC DEBT IN THE EU FISCAL SURVEILLANCE (EDP PROCESS) Maastricht debt (definition) Comprised all units classified within the general government sector (central government, regional and local government, social security funds) Categories: a) Currency and deposits b) Debt securities c) Loans Valuation end-of-period position at face value Measured on gross basis Consolidated 7
Quality and comparability of the PD data: the role of the Portuguese Court of Auditors INSTITUTIONAL ARRANGEMENTS AT NATIONAL LEVEL • COMPILATION AND VALIDATION OF PUBLIC ACCOUNTS Compilation of Government Finance Statistics (GFS) in Portugal • Statistics Portugal compiles non-financial accounts • Central Bank (Banco de Portugal) compiles financial accounts and Maastricht debt Internal information compiled by Central Bank is complemented with information from external entities, namely, the Management Debt Office (IGCP), regarding the Sovereign debt 8
Quality and comparability of the PD data: the role of the Portuguese Court of Auditors INSTITUTIONAL ARRANGEMENTS AT NATIONAL LEVEL • COMPILATION AND VALIDATION OF PUBLIC ACCOUNTS Management of Sovereign debt Public Debt Law State financing has to be authorized by Parliament Annual Budget Law Establishes limits for the amounts Government is authorized to borrow during the year Minister of Finance Guidelines to be followed by the MDO in the execution of the financing policy approved by Government 9
Quality and comparability of the PD data: the role of the Portuguese Court of Auditors INSTITUTIONAL ARRANGEMENTS AT NATIONAL LEVEL • COMPILATION AND VALIDATION OF PUBLIC ACCOUNTS Management of Sovereign debt MDO (IGCP) • Public entity; • Depending from Ministry of Finance; • Responsible for integrated management of cash, funding and the direct debt management (issuance of debt instruments, repurchase of debt, repos and derivatives) 10
Quality and comparability of the PD data: the role of the Portuguese Court of Auditors INSTITUTIONAL ARRANGEMENTS AT NATIONAL LEVEL • THE ROLE OF THE PORTUGUESE COURT OF AUDITORS Court of Auditors • Sovereign body; • Examines the legality of public expenditure and rules on the accounts which the law has ordered to be submitted to the Court; • Specialized financial court (more than just jurisdictional functions), namely issuing an opinion on the General State Account (art. 214 of the Constitution of the Portuguese Republic) 11
Quality and comparability of the PD data: the role of the Portuguese Court of Auditors INSTITUTIONAL ARRANGEMENTS AT NATIONAL LEVEL • THE ROLE OF THE PORTUGUESE COURT OF AUDITORS Opinion on the General State Account (annual basis) • Assessment of the level and composition of public debt Direct financial debt (including contingent liabilities) Method: Audit of the data provided on the General State Account (Sovereign debt); Questionnaire to other entities (autonomous funds/public enterprises) Non financial debt Method: questionnaire sent to a sample of entities • Compliance with the guidelines and limits established by the Parliament and the Government 12
Quality and comparability of the PD data: the role of the Portuguese Court of Auditors INSTITUTIONAL ARRANGEMENTS AT NATIONAL LEVEL • THE ROLE OF THE PORTUGUESE COURT OF AUDITORS Institutional Cooperation Agreement in the field of GFS for general government accounts compilation Specific institutional framework signed in 2006 between Central Bank, Statistics Portugal, Budget Directorate Now extended to other entities: Public Finance Council, Court of Auditors , General Directorate of Treasury, Debt Management Office • Contribute to the high quality of GFS • Monitorisation of EDP notifications • Methodological analyses 13
Quality and comparability of the PD data: the role of the Portuguese Court of Auditors INSTITUTIONAL ARRANGEMENTS AT NATIONAL LEVEL • THE ROLE OF THE PORTUGUESE COURT OF AUDITORS Court of Auditors In the field of GFS (a) Releases to the national statistical authorities information which has given rise to observations expressed in decisions, reports or opinions approved by the Court, where deemed relevant by the latter to the compilation of statistics; (b) Clarifies issues arising from the information released 14
Quality and comparability of the PD data: the role of the Portuguese Court of Auditors INSTITUTIONAL ARRANGEMENTS AT NATIONAL LEVEL WHO DOES WHAT ? Parliament Authorizes State financing Public Debt Law Government Establishes limits and debt instruments to be used during the year Annual Budget Law Ministry of Finance Specific guidelines Financial transactions related to Decree-Law that Management Debt the issuing of Sovereign debt regulates the activity of Office MDO (IGCP) Checks the activity of MDO (Assessment of the level and composition of Specific audits; public debt; compliance with the guidelines Court of Auditors Opinion on the General and limits) State Account Institutional Cooperation Agreement (Relevant information for GFS) Central Bank Compilation of Maastricht debt EDP notification Statistics Portugal 15
General Government Central government Budgetary Other Regional and Social Public non- Public central budgetary local Security financial financial government units/entities governments Funds corporations corporations (+) Liabilities Sovereign debt Currency and Gross debt deposits Instruments Debt securities Net debt Loans Government debt Maastricht debt Trade credits Other liabilities Non-financial public sector debt (-) Financial Assets Valuation Nominal Face value Market value value 16
Quality and comparability of the PD data: the role of the Portuguese Court of Auditors Ministry of Finance / European Statistics Portugal Entity Management Debt Court of Auditors Commission and Central Bank Ofice (Eurostat) Type of debt Sovereign debt Government debt Maastricht debt Management Debt Opinion on the General EDP notification Publication Ofice / State Account General State Account Budgetary central Central government Institutional units Budgetary central government and other Regional and local governments included government budgetary units Social Security Funds Consolidation Not consolidated Consolidated Consolidated 240 883,0 M€ 236 282,8 M€ 234 573,2 M€ Value (2016) (129,9 % GDP) (127,6 % GDP) (126,7% GDP) 17
Quality and comparability of the PD data: the role of the Portuguese Court of Auditors FUTURE WORK • ACCOUNTABILITY ARRANGEMENTS The global financial crisis in 2008, imposed a better assess risks to public debt sustainability Looking at transparency and comparability of public sector reporting • To achieve better accountability and transparency fundamental to have an appropriate set of accounting standards • European government accounting arrangements very heterogeneous • Governments pressed to be more transparent and produce comparable information 18
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