Measuring Government's Contingent Positions in Japan's Flow of Funds Accounts: Implications for GFSM
Satoru Hagino, Chihiro Sakuraba
Research and Statistics Department, Bank of Japan, Nihonbashi, Tokyo, Japan

Japan's flow of funds accounts include government financial positions compiled in a consistent manner with the IMF's Government Finance Statistics Manual (GFSM). Measuring its contingent positions including financial derivatives, however, is a challenging task. As for the central government, the flow of funds accounts have recorded the market value of assets and liabilities under interest swap agreements since 2010. Recently, the local governments in Japan have involved widely in derivative trades, but their market values remain to be identified. In addition, governments have provided guarantee to the bonds issued by public corporations, but the entire outstanding has not been measured. The question would be whether such positions should be classified as standardized guarantees defined in the SNA 2008. We also argue practical methods of measuring such off-balance-sheet positions. Similar to other nations, pension liabilities involve some complicated issues on the degree of contingency in the Social Security Funds. In this context, careful treatments of pension liabilities should be incorporated in the GFSM at the opportunity of its revision in 2011. Various estimation results for Japan's public pension liabilities are shown for our arguments.

Keywords: Government finance statistics; Derivatives; Japanese statistics; Flow of funds

Biography: Mr. Hagino is the Director of Statistics Development and Coordination of the Bank of Japan and was seconded to the Statistics Department of the International Monetary Fund since 2000 to 2004. Mr. Sakuraba is the Chief Statistician of the Bank of Japan and the Vice-chair of the Irving Fisher Committee on Central Bank Statistics. Both have a wide and long career in statistics compilation and international collaboration.