Government Finance Statistics Manual 2014

16 Government Finance Statistics Manual 2014

or secondary activities can be carried out.^15 Th e type

of services referred to include keeping records, man-

aging and paying employees, cleaning, maintenance,

transportation, and security. An entity undertaking

only ancillary activities will, in general, not satisfy the

criteria to be an institutional unit.^16

2.46 Many governments allocate substantial re-

sources to social protection through the provision of

social benefi ts (see paragraphs 6.96–6.105 and Ap-

pendix 2), to protect the entire population or specifi c

segments of it against certain social risks. Social risks

are events or circumstances that may adversely aff ect

the welfare of the households concerned either by im-

posing additional demands on their resources or by

reducing their income. Examples of social benefi ts

are the provision of medical services, unemployment

compensation, and social security pensions. Because

of the large scale of social protection programs in

many countries and the various organizational struc-

tures of such programs, Appendix 2 describes the in-

stitutional units involved in these programs and their

eff ects on statistics of the general government sector.

2.47 Government usually comprises two or more

institutional units, and there normally is one unit

that controls the other units. Th e controlling unit

most likely includes the legislature, head of state,

and judiciary. In contrast to corporations (see para-

graph 2.107), one government unit controls another

government unit by appointing its managers and/or

determining the laws and regulations that provide its

fi nance rather than through equity ownership. Gen-

erally, government units do not issue shares. SPEs,

wealth funds, or other entities of government that are

legally constituted as corporations but do not satisfy

the statistical defi nition of a corporation should be

classifi ed as government units in one of the subsectors

of the general government. As a result, a liability for

equity and investment fund shares could appear in the

consolidated general government’s balance sheet (see

paragraphs 2.137 and 2.152–2.155).^17

(^15) Ancillary activities produce mainly services, but, as exceptions,
goods that do not become a physical part of the marketable prod-
ucts produced by an enterprise.
(^16) See the 2008 SNA, paragraphs 5.35–5.45, for more details.
(^17) Because of consolidation, GFS are not highly sensitive to the
institutional unit borderline among the subsectors of the general
government sector, as long as all general government units are
fully covered.
2.48 Public corporations, in contrast to general
government units, are institutional units that are
potential sources of fi nancial gains or losses to the
government units that own or control them. In some
cases, the corporation issues shares, and thus the fi -
nancial gain or loss is clearly allocated to the share-
holders. In other cases, no shares are issued, but it
is clear that a specifi c government unit controls the
corporation’s activities and is fi nancially responsible
for it. In those cases, the responsible government unit
also owns equity and investment fund shares (see
paragraphs 7.164–7.177).

Institutional Sectors^18

2.49 An economy can be divided into institutional

sectors.^19 It is therefore necessary to defi ne institu-

tional sectors and identify the type of sectors that exist.

Defi ning Institutional Sectors

2.50 An institutional sector groups together simi-

lar kinds of institutional units according to their eco-

nomic objectives, functions, and behavior. Each sector

consists of a number of institutional units that are

resident in the economy and is intrinsically diff erent

from the other sectors. An economy is divided into

fi ve mutually exclusive institutional sectors. All resi-

dent institutional units are allocated to one of these

institutional sectors. Th e fi ve institutional sectors are:

• Nonfi nancial corporations sector


• Financial corporations sector


• General government sector


• Households sector


• Nonprofi t institutions serving households sector.
  2.51 Th e relationship between these sectors of the
  economy and the types of institutional units (discussed
  in paragraphs 2.26–2.48) is depicted in Figure 2.1.

Nonfi nancial corporations sector

2.52 Th e nonfi nancial corporations sector con-

sists of resident institutional units that are princi-

pally engaged in the production of market goods or

(^18) Th e defi nitions and descriptions of institutional sectors are fully
consistent with the corresponding defi nitions and descriptions in
the 2008 SNA, Chapter 4.
(^19) Hereaft er, “sector” will oft en be used as a short form for “insti-
tutional sector.”