132 Government Finance Statistics Manual 2014
Subsidies to other sectors (253) include subsidies pay-
able to other general government units, to nonprofi t
institutions serving households, and to households, in
their capacity as producers. To allow for consolidation
of the general government and public sectors, identi-
fying the subsectors of the counterparties is needed.
6.88 Although not specifi cally used in the GFS
classifi cation structure, the 2008 SNA further identi-
fi es subsidies according to whether they are payable
on specifi c products or on production in general, de-
pending on how the value of the subsidy is calculated.
Further breakdown of GFS codes could allow for this
distinction.
6.89 A subsidy on products is a subsidy payable
per unit of a good or service. Th e subsidy may be a
specifi c amount of money per unit of quantity of a
good or service, or it may be calculated ad valorem
as a specifi ed percentage of the price per unit. A sub-
sidy may also be calculated as the diff erence between
a specifi ed target price and the market price actually
paid by a buyer. A subsidy on a product usually be-
comes payable when the good or service is produced,
sold, exported, or imported, but it may also be pay-
able in other circumstances, such as when a good is
transferred, leased, delivered, or used for own con-
sumption or own-account capital formation. Th ese
subsidies include:- Direct foreign trade subsidies, such as subsidies
on imported or exported goods and services that
become payable when the goods cross the fron-
tier of the economic territory or when the ser-
vices are delivered to resident institutional units
(e.g., import subsidies) or to nonresident units
(e.g., export subsidies)^31 - Implicit subsidies resulting from the operation
of an offi cial system of multiple exchange rates
(see paragraph 5.89), or resulting from payable
tax credits (see paragraph 5.31) - Losses of government trading organizations
whose function is to buy products and then sell
them at lower prices to residents or nonresidents,
(^31) Export subsidies do not include the repayment at the customs
frontier of taxes previously paid on goods or services while they
were inside the economic territory. Th ey also exclude the waiving
of the taxes that would be due if the goods were to be sold or used
inside the economic territory instead of being exported. Th ese
tax expenditures/credits are not recorded separately in GFS (see
paragraph 5.86).
when they are incurred as a matter of deliberate
government economic or social policy^32
- Subsidies payable to resident producers in re-
spect of their production that is used or con-
sumed within the economic territory - Regular transfers payable to corporations and
quasi-corporations that are intended to compen-
sate for recurrent losses (i.e., negative operating
surpluses) incurred on their productive activities
as a result of charging prices that are lower than
their average costs of production as a matter of de-
liberate government economic and social policy^33 - Subsidies resulting from the central bank accept-
ing interest rates lower than the prevailing mar-
ket rates (see Box 6.2).
6.90 Other subsidies on production are subsidies
that enterprises receive as a consequence of engaging
in production but that are not related to specifi c prod-
ucts. Included are: - Subsidies on payroll or workforce, which are pay-
able on the total wage or salary bill, the size of the
total workforce, or the employment of particular
types of persons such as physically handicapped
persons or persons who have been unemployed
for long periods; the subsidies may also be in-
tended to cover some or all of the costs of training
schemes organized or fi nanced by enterprises. - Subsidies to reduce pollution, which are trans-
fers intended to cover some or all of the costs
of additional processing undertaken to reduce
or eliminate the discharge of pollutants into the
environment.
6.91 Subsidies do not include: - Payment of interest or other debt service cost on
behalf of other producer units without acquiring
an eff ective claim on the original debtor—these
payments are recorded as capital transfers, and ac-
cording to the nature of the recipient, are recorded
either as capital grants (26) or capital transfers not
elsewhere classifi ed (2822). - Transfers made by governments to other resident
or nonresident units to fi nance all or part of the
(^32) In these cases, the subsidy is calculated as the diff erence be-
tween the purchase and the selling price.
(^33) Transfers to corporations and quasi-corporations to cover
large operating defi cits accumulated over two or more years are
recorded as capital transfers not elsewhere classifi ed (2822).