Public Domestic Finance
Public domestic finance
Government revenues/spending are recognised to be significant, but the choice of data source can give very different figures. In the tables, the sum of tax revenue and public or publicly guaranteed external debt is taken as a proxy for finance used by governments. It would be more precise to look at the government spending/budget data, but this data is less readily available.
Data sources
The calculation is a sum of:
- the ratio of WDI tax revenues to GDP is multiplied by the WDI GDP in US$ at 2005 prices,
- the Net flows on external debt, public and publicly guaranteed (PPG) from non-official creditors (official creditors are covered under "Public international Finance") from WB International Debt Statistics without shorterm debt.
The data on total reserves is also from the WB International Debt Statistics, but it is included as a memo item (as is stock, not a flow category).
Main issues
The key element to note here is that the WDI shows systemically and significantly lower government revenues than those calculated by the IMF on the basis of country-by-country analysis (ex: WDI shows tax revenues at 14% of GDP for MICs, while IMF estimated their share at 22% in a recent study; WDI shows sub-20% values for several developed and developing countries). The detailed and more accurate country data of the IMF is not publicly available, but this indicates that Public domestic finance for developing countries in the attached table would in aggregate be underestimated by about 20%.
Question
Are there better data sources or ways for calculating Public Domestic Finance?