It’s all about stock-flow adjustments, or SFAs — the curious cases when a government’s stock of debt increases without a corresponding change in its deficit to explain it.

Attached to its most recent release on EU debt and deficit numbers, Eurostat has penned quite an interesting note on how these SFAs work (while pointing out that SFAs “have legitimate accounting explanations”). Hat-tip the WSJ’s Charles Forelle.

Though as far as we can see, one possible cause often seems to be a government’s desire to make transactions without any immediate effect on worsening its deficit.

In any case, some of the largest post-crisis SFA adjustments:

In 2011, Portugal reported the biggest positive SFA among all the Member States due to a transfer of pension funds from some of the country’s largest banks to the state and due to disbursements of loans granted by the EU (under the EFSM), the euro-area Member States (under the EFSF) and the IMF.

Hungary has the second largest SFA in 2011 due to a transfer of the assets of 2nd pillar pension funds to the Pension Reform and Debt Reduction Fund (part of government), and due to the purchase of equity in the oil and gas corporation MOL. In addition, there were positive debt adjustment effects following a significant depreciation of the Hungarian national currency.

The large SFA for Cyprus reflects a loan received from Russia, with the funds being retained as deposits. Financial support provided to financial institutions by the government in 2011 further increased the SFA.

Greece recorded a SFA of 3% in 2011 explained by an accumulation of loan assets and shares and other equity, as well as a positive debt adjustment, reflecting a decrease in payables of public hospitals and ministries.

The high positive SFA for Ireland in 2011 mainly reflects capital injections into Allied Irish Banks and Irish Life & Permanent.

Still not clear what Portugal did to get its deficit down, but its debt stock up, by acquiring Portuguese banks’ pensions.

Under Maastricht rules, future pension payments don’t count as government liabilities in the present. The immediate upfront payment that banks would’ve transferred to the government can be classified as revenue for the purposes of recording the deficit, though.

A potted explanation of that, and the origin of the “hidden borrowing” term, is in this IMF paper on accounting devices and fiscal illusions, which we’ve written about.

A fuller explanation — based on the French government’s acquisition of pension obligations of France Telecom in 1997 as it tried to squeeze itself to fit inside the eurozone — can be found here. Start at page 237 and read onwards.

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