Agenda item 6e
Units and Sectors in SNA 2008
Kurt Wass
EFTA Statistical Office
Workshop on the Implementation of the 2008 SNA,
Kiev, 29 November – 2 December 2011
Units and Sectors in SNA 2008
• Units and their sectors are fundamental brick stones in SNA,
and there are fundamentally two types of units in the system:
– Producer Units
• Concerned with the production activities. A production unit can be an
institutional unit or a part of an institutional unit
– Institutional Units
• Concerned with the economic agents. Important to bear in mind that
institutional units are those units that can exercise economic
decision making and effective ownership rights, which can be
different from a legal and administrative arrangements.
– The fundamental philosophy in SNA 2008 is unchanged from SNA
1993, but provides some specifications and revisions concerning
units and sectors (SNA 2008, Annex 3-B)
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Units and Sectors in SNA 2008
• Producer Units - Changes:
– Ancillary Activities
• SNA 1993, ancillary activities part of the establishment being
served
• SNA 2008, producer unit undertaking ancillary activities to be
recognized as a separate establishment in certain cases:
– if statistically observable, i.e. separate accounts for the
production it undertakes are available, or
– if it is located in a geographically different location from the
establishments it serves;
– then, to be classified according to its own principal activity
– valuation on a cost basis, included capital costs
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Units and Sectors in SNA 2008
• Institutional Units:
―Legal status is not a sufficient criterion to define institutional
units. The decision should be based on actual economic
behaviour and characteristics.
―Legal entities that fail the criteria for institutional unit should
be combined with the units that control them (artificial
subsidiaries)
―Parts of legal entities that are sufficiently independent and
meet the criteria for institutional unit should be presented as
separate units (quasi corporations)
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No
Resident?
Illustrative allocations of
units to institutional sectors
ROW
Yes
Household?
Yes
Household
No
No
Non-market producer?
No
Yes
Government controlled?
No
NPISH
Producer of financial services?
Non-financial
corporations
Yes
Financial
corporations
Yes
Government
Government controlled?
Yes
Public Nonfinancial
corporations
No
National/
Foreign Nonfinancial
corporations
Government controlled?
Yes
Public
financial
corporations
No
National/
foreign
financial
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corporations
Institutional Units / Institutional Sectors - Changes:
SNA 2008
SNA 1993
Institutional unit / institutional sector
Artificial Subsidiaries
Artificial Corporations
No, unless resident in another economy than its parent
Branch owned by a non-resident
institutional unit
Notional resident unit
Yes, and in the country of residence
Multi-territory enterprises residency
No explicit guidance
Yes, as for branches. If lack of info, prorate the total
operations of the enterprise by economic territories
Special Purpose Entities
No explicit guidance
Yes, and sector according to main activity. Some
exceptions, e.g. resident SPEs set up by government
not recognised inst.units.
Holding company
Assigned to inst. sect main
activity of subsidiaries
Yes, and always allocated to financial corp. sector
despite the activities of the subsidiaries
Head office
No explicit guidance
Yes, inst. sector depends (non-financial/financial) on the
type of activities if its subsidiaries
Subsector non-profit institutions
No explicit guidance
In addition to assigning NPIs to inst. sect., subsectors
for NPIs allowing summarizing all NPIs
Nine subsectors financial
corporations
Five subsectors of
financial corporations
New subsectors reflecting new developments in fin.
services, markets and instruments
Definition financial services
Less explicit
Enlarged definition, more weight to financial services6
other than financial intermediation
Institutional Units in SNA 2008
The 2008 SNA provides additional guidance for the recording of special units
related to complex corporate structures:
Special purpose entities and artificial subsidiaries:
- no employees and no non-financial assets,
- little physical presence and always related to another corporation,
- treated in the same way as any other institutional unit, unless belonging to one
of the following categories:
- captive financial institutions,
- artificial subsidiaries of corporations,
- SPEs of general government
These 3 types of units are not treated as separate institutional units and are
consolidated with the parent unless they are a resident of a different economy.
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Institutional Units in SNA 2008
Head offices:
- exercise managerial control over its subsidiaries: overseeing and
managing other units of the enterprise, undertaking strategic or
organizational planning and decision making, operational and day-to-day
control (ISIC rev.4, 7010),
- allocated to non-financial corporations sector, unless all or most of its
subsidiaries are financial corporations (in this case – financial auxiliary).
Holding companies:
-hold assets of subsidiary corporation but do not have managerial
activities (ISIC rev.4, Section K, 5420),
-always treated as financial corporations in the 2008 SNA (captive
financial institutions).
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Sub-sectoring the financial corporations sector
2008 SNA
1993 SNA
•
•
•
•
Central Bank
Other depository corporations
Other financial intermediaries
except insurance corporations
and pension funds
Financial auxiliaries
•
•
•
•
•
•
•
•
Insurance corporations and
pension funds
•
•
Central Bank
Deposit-taking corporations except
the Central Bank
Money market funds (MMF)
Non-MMF investment funds
Other financial intermediaries except
insurance corporations and pension
funds
Financial auxiliaries
Captive financial institutions and
money lenders (NEW)
Insurance corporations
Pension funds
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General Government and Public Sectors
•
Recognising the fact that the powers, motivation and functions of
government are different from those of other sectors of the economy and
that it organises its operations through different institutional units, the
2008 SNA gives extra guidance for the distinction and relations between
general government and public corporations in a new separate chapter.
•
The chapter on the General Government and Public Sectors, provides
another presentation the General Government more suitable for fiscal
analysts and policymakers, and in line with the analytical framework of
the GFSM2001 of the IMF.
•
The notion of government control of corporations and NPIs is changed,
and a list of indicators provides guidance.
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The Delineation of the Public Sector
To establish the borderlines of the Public Sector and the distinction
between Public Corporations and Units of the General
Government three tests should be performed:
1. Residency and Institutional Unit
2. Market or Non-Market Producer
3. Public Control
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The Delineation of the Public Sector - Market or non-market producer
Market
Producer?
No
NPISH
Yes
Providing
financial
services
General Government
No
Yes
Non-financial
corporations
Financial
corporations
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The Delineation of the Public Sector - Market or non-market producer
•
To be considered as a market producer, the unit must provide all or most of the
output to others at prices that are economically significant.
•
Economically significant prices are prices that have a significant effect on the amount
producers are willing to supply, and on the amounts purchasers wish to buy, i.e.
when:
1. Producers are seeking profits or at least covering costs;
2. Consumers has the freedom to purchase or not
•
This definition of economically significant prices is (on purpose) a bit vague. The ESA
1995 defines them as prices that at least cover 50% of the production costs.
(However, output sold by households is always considered to be at economically
significant prices. This avoids e.g. that subsidized farmers get classified as
government producers.) In SNA 2008 it is indicated that at one would expect that the
sales would cover at least half of the production costs over a sustained multiyear
period.
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The Delineation of the Public Sector - Market or non-market producer
• A producer that sells all or most of its output to government without competition
with private producers might not be considered a market producer, even if it
charges economically significant prices.
• Sales are to be measured before any taxes applicable to the products are added,
and exclusive government payments granted exclusively to the producer. Own
account production is not considered as part of sales in this context
•Production costs are the sum of intermediate consumption, compensation of
employees, consumption of fixed capital and other taxes on production. For
market producers a return to capital is included. Subsidies on production are not
deducted
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The Delineation of the Public Sector – Public Control
No
Non-financial
corporation
Financial
corporation
Controlled
by public
unit?
Controlled
by public
unit
Yes
Public non-financial
corporations
No
Yes
Public corporations
Public non-financial
corporations
+
General Government
=
PUBLIC SECTOR
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The Delineation of the Public Sector – Public Control
Indicators for Government control of corporations:
1. Ownership of the majority of the voting interest
2. Control of the board or other governing body
3. Control of the appointment and removal of key personnel
4. Control of key committees of the entity
5. Golden shares and options
6. Regulation and control
7. Control by a dominant customer
8. Control attached to borrowing from the government
Control remains essentially a judgmental decision. The decision could be based on
assessment either of single indicator or collective judgment of several indicators.
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The Public Sector and its Subsectors
Public Sector
General government
Central
government
State
government
Local
government
Public Corporations
Financial
Non-financial
Public monetary
Corporations *
Public non-monetary
corporations
* Including central bank 17
The Public Sector and its Subsectors
Reasons for compiling data for the public sector include the
following:
• Public corporations may carry out functions of government
(subsidized lending, provision at lower than market prices,
hiring staff for social reasons)
• Detailed data on public corporations is useful for
sustainability analysis
• Government often explicitly or implicitly guarantees the
liabilities of public corporations. Many fiscal risks originate in
public corporations.
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Some special entities
In SNA 2008, guidance are provided on when certain entities
created by government units are to be included in the Public
Sector or not.
1.
2.
3.
4.
5.
Quasi-corporations
Restructuring agencies
Special purpose entities
Joint Ventures
Supranational authorities
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Units and Sectors in SNA 2008
•The identification of institutional units is often based on legal
ownership rather than on economic ownership. How do you in practise
identify institutional units that are not legal entities?
•The delineation between government units and non-government units
are based on a consideration of the so-called market test. How do you
in practice distinguish market producers from non-market producers?
•SNA 2008 introduces several new entities like SPEs, Head Offices,
Joint Ventures etc. Would you in practice have access to the necessary
information and resources to apply the guidance on these new types of
entities in the SNA 2008?
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