railway company) from financial to real transactions. Two months later, in May 2005, the
2001 deficit was estimated to be 3.2 percent of GDP mainly because of the upward
revision of transfers to firms. Finally, in March 2006, due to a GDP upward revision, the
2001 deficit was indicated to be 3.1 percent of GDP.
The overall revision can be interpreted in terms of the deficit-specific SFA component (x)
considered in the previous section: x was initially overestimated. More specifically, the
deficit revision reflects a reduction of the cash-accrual adjustment by 0.6 percentage
points of GDP, an increase in the sale of assets by 0.6 points (the reclassification of
securitization), and a reduction in acquisitions of financial assets by 0.5 points (mainly,
the reclassification of capital injections in the railway company).
The decline initially reported for the deficit between 2000 and 2001 (from 1.7 percent to
1.4 percent of GDP) was in sharp contrast with the dynamics of the change in debt.
According to the data available in March 2002, the latter rose from 1.6 percent of GDP in
2000 to 3.5 percent in 2001. This indicator turned out to be more stable than ESA95 net
borrowing: overall, it was revised upwards by 0.7 percentage points of GDP; moreover,
revisions took place only up to March 2003.
Figure 6.1 Italy: Net Borrowing and Change in Debt (millions of euro)
A - The picture taken in March 2002 B - The picture taken in March 2006
-------Net borrowing----Change in debt
-------Net borrowing----Change in debt
Figure 6.1 shows the divergence between the ESA95 deficit and the change in debt as it
first appeared in March 2002 (Panel A) and as it appears now (Panel B). After the
revisions, the dynamics of the ESA95 deficit is clearly closer to that of the change in
debt. The joint examination of the indicators could have provided an early warning of the
likely forthcoming revisions. Banca d’Italia in its Annual Report released in May 2002 in
fact carried out this comparative exercise.116
Portugal: the 2001 Deficit Outturn
In March 2002 - in its first notification about the 2001 fiscal outcomes - Portugal
estimated the general government deficit to be 2.2 percent of GDP as against 1.5 percent
in 2000. At that time, the most up-to-date deficit forecasts by international institution
were somewhat more favourable.
Eurostat stated that it was not in a position to certify the Portuguese figures due to, among
other reasons, the lack of information on capital injections to public corporations - which
The Report also included an analysis of the composition of total SFA.
169