General Government –
methodological treatment of
selected cases from the EU
John Verrinder
Eurostat
The European System of Accounts
(ESA 2010)
The methodological basis for
government finance statistics
Based on SNA 2008 (as is the
IMF GFS Manual 2014)
Chapter 20 - government
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What happens if ESA not specific?
Discussion amongst Member
State experts
Eurostat decision
Manual on Government Deficit
and Debt
(=interpretation…)
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ESA 2010 defines general
government
"…the general government sector (S.13) consists of
institutional units which are non-market producers
whose output is intended for individual and
collective consumption, and are financed by
compulsory payments made by units belonging to
other sectors, and institutional units principally
engaged in the redistribution of national income
and wealth." [Para 2.111]
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Public control
• "General government secures control over a corporation as
a result of special legislation, decree or regulation which
empowers the government to determine corporate policy.
The following indicators are the main factors to consider in
deciding whether a corporation is controlled by
government.." [Para 2.38]
• >> voting interest, Board/key committees, key
personnel, golden share, special regulations,
dominant customer, borrowing.
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Non-market producers
Qualitative criteria
A public unit sells more than 50% of its output to
government (no open/fair tendering); other details
Quantitative criteria
The "50% test"
Market sales > 50% of production costs
Over several years…
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Special cases for units
Educational units
Public hospitals
Financial activities
Special purpose entities
Debt management offices
Head offices and holding companies
Privatisation agencies
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Educational units
Necessary to determine the extent of government
control
Funding is not the issue in itself, but rather
influence over what the funds are used for…
Just standards imposed on all schools = no control
Direct involvement of government in significant
decisions = control (e.g. appointments, investment)
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Public hospitals
Control established through usual indicators
Establish if public hospitals really compete in
practice with private hospitals in different fields
Common price system with private hospitals
Prices set in a way to allow de facto market
competition
Public hospitals not forced to continue with unprofitable
activities
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Financial activities
Financial supervisory authorities
Classified outside government if able to take independent
decisions (incl. autonomous budget)
Protection funds
Classified outside government if able to take independent
decisions
Financial intermediaries
Classified outside government if placing itself at risk
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Special purpose entities
May be created by government for single or very
narrow purpose (usually legal contract/contracts)
Treated as an integral part of government when
resident (re-routed through government if not)
May be specific cases of independent entities
(strong evidence) but likely to be rare
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Debt management offices
Usually part of a government ministry.
When they are separate institutional units, to be
classified in general government.
They act fully on behalf of government
function)
(auxiliary
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Head offices and holding
companies
• Head Offices: Control and direct subsidiaries,
providing services (unrestricted)
• >>> Corporations sectors
• Holding Companies: Do not perform management
and effective direction, and are used for typical
government activities (e.g. subsidies)
• >>> General Government
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Privatisation agencies
• Also includes "restructuring agencies".
• Classified in the general government sector as
acting on behalf of government.
• Re-routing possible when a non-government unit
undertakes this activity under government
instruction.
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Government production – impact of
classification
Classification into or outside general government
has an impact on measured level of government
output (and GDP).
General Government units: Output as sum of costs.
Corporate units: Output as market sales.
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