Some Recent
Analyses of the Public Sector
Investment Programme
FUNCTIONAL BREAKDOWN OF
CAPITAL EXPENDITURE
A functional
classification of capital outlays by Government permits us to examine the investment
trends in particular areas over time and gives us a hint/clue as to what should happen in
the future. Since we are interested in the functions of Government over time, the
conventional breakdown into ministries is of little value given that portfolios are moved
across ministries from time-to-time for various reasons. For example, the Government might
wish to do some expansion and consolidation bringing together programmes previously
administered by a ministry or another department.
The functional
classifications are very useful for making inter-country comparisons of expenditure on
certain socio-economic functions such as education, health, police, agriculture etc. In
this connection we have prepared a functional breakdown of
capital expenditure for the past ten (10) years. Just as functional comparisons help
to neutralize organizational changes in government within a country, they also neutralize
organizational differences between countries. As an example all functions connected to
housing may be located in the Ministry of Housing, while in another country those services
may be distributed in the ministries of Land, Finance, Social Welfare and Public Works. If
there was a functional classification, all the costs associated with housing in the
various units can be brought together under a "housing" function.
To classify capital
expenditure we have used the Classification of the Functions of Government (COFOG)
manual prepared by the International Monetary Fund. Although some functions of
smaller units of Government may fit into several COFOG categories, the classifications of
especially loans and subsidies can be somewhat difficult at times. COFOG is generally
related to the International Standard Industrial Classification of All Economic
Activities (ISIC) and the International Standard Classification of All Goods and
Services (IGS).
The functions of
Government are generally divided into four broad areas: Central governmental services;
Community and social services, Economic services and Other functions. However, some
countries add more details and some refining to the COFOG codes published in the present
GFS manual.
ECONOMIC CLASSIFICATION OF CAPITAL
EXPENDITURE
We look at the
economic classification of capital expenditure to establish the economic characteristics
of the transactions by which government performs its investment functions and how these
functions impact on the market for goods and services, in the financial markets and in the
distribution of income. The economic classification allows us to examine capital outlays
for consistency with and their impact on macroeconomic strategy. In this connection we
have included an Economic Classification of Capital Expenditure for the last decade
to permit comparison with our economic policy analysis provided on this site.
The economic
classification of capital expenditure here follows the convention as spelled out in the
Classification
of the Functions of Government (COFOG) manual published by the International
Monetary Fund. The breakdown is as follows: acquisition of fixed assets, purchase of
stocks, purchase of land an intangible assets and capital transfers. The classification
differs from the Standard National Accounts published by the United Nations
in that it focuses on the immediate character of the transaction.
ECONOMIC IMPACT OF RECENT
PUBLIC SECTOR INVESTMENT
(in preparation)
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