PUBLIC/PRIVATE SECTOR
DELINEATION and
GOVERNMENT TRANSACTIONS WITH
PUBLIC CORPORATIONS
UN STATISTICS DIVISION
Economic Statistics Branch
National Accounts Section
UNSD/NA/MR
1
Principles
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No fundamental change is proposed in the
delineation between government and private
controlled units.
Guidelines are developed to help clarify the
meaning of “control” and “economically
significant prices”.
The recommendation:
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To use a decision tree
Additional guidance on the criterion of control
Additional guidance on economically significant
prices
Decision tree
Answer 3 questions:
1.
Is the entity an institutional unit?
2.
Is the institutional unit part of the
public sector?
3.
Is the public institutional unit market
or non-market?
Control
Government control on corporations
Definition: control is the ability to determine the general
corporate policy of an entity;
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8 major indicators:
1.
2.
3.
4.
5.
6.
7.
8.
Ownership of the majority of the voting interest
Control of the board or other governiong body
Control of the appointment and removal of key personnel
Control of key committes of the entity
Golden shares and options
Regulation and control
Control by a dominant customer
Control attached to borrowing from the government
Control
Government control on non-market
NPIs
5 major indicators:
1.
2.
3.
4.
5.
Appointment of officers
Other provisions of enabling instrument
Existence of contractual agreements
Degree of financing by government
Level of risk exposure
Economically significant prices
(ESP)
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ESP is the criterion that is used to classify output and producers as
market (a public corporation) or non-market (a government unit)
For a public unit whose production is sold primarily to corporations
and households:
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To qualify as market producer, the general rule is that the majority of
the production costs are expected to be covered by the value of the
sales (over a sustained multi-year period).
However, no numerical rule is agreed on at international level.
In principle, this assessment is to be made for each institutional unit
individually.
For public units whose production is sold only to government, 2
cases may be considered:
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-
-
The public entity provides ancillary services: the accounts will be
consolidated
The public entity is an institutional unit that can be:
the only supplier: it is always treated as a non-market unit (unless it
competes in tendering for contract on commercial terms)
One of several producers: it is treated as a market producer if prices
are ESP and if it competes with other producers.
Definition of sales (ESP)
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Based on the business notion of sales
Excludes taxes on products and subsidies on
products (except subsidies granted to all
producers including private ones for this type
of activity)
Excludes own-account production
Definition of production costs
Production costs are the sum of:
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Intermediate consumption
Compensation of employees
Costs of capital services (or CFC)
Other taxes on production (other subsidies on
production are not deducted)
Government transactions with public
corporations: earnings from equity
investment and capital injections
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Background:
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The government tends to manipulate transactions
with public corporations in order to show
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Either higher revenues (lower budget deficit) or
Reduce losses to public corporations.
The 1993 SNA specifies that regular payments
from public corporations to government are
recorded as dividends and payments from public
quasi-corporations as withdrawals from
entrepreneurial income.
Exceptional large payments are treated the same
way as regular payments.
Government transactions with public
corporations: earnings from equity
investment and capital injections
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The AEG recommends that:
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Exceptional payments from government to public corporations
(capital injections) should be recorded as capital transfers when
they are used to cover accumulated losses.
Exceptional payments from government to public corporations
should be recorded as additions to equity when the intention is to
increase its investment with a valid expectation of a return in the
form of property income.
Exceptional payments from public corporations (earnings from
equity investment) to the government should be recorded as
withdrawals from equity, which is not income, and cannot be used
to reduce budget deficits.
Regular payments
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From public corporations to the government should continue to be
treated as dividends
From public-quasi corporations to the government should continue to
be treated as withdrawals of from entrepreneurial income.
Thank You