Institutional Units and Sectors 23
institutional units. For each of these subsectors, it
is oft en analytically useful to group its entities ac-
cording to administrative, legislative, or funding ar-
rangements. For example, governments may create
specialized boards, commissions, or agencies either as
part of their budgetary accounts or as separate units.
It may be possible to create subsectors at each level of
government based on whether the units in the subsec-
tor are fi nanced by the legislative budgets of that level
of government or by extrabudgetary sources—that is,
distinguishing between budgetary and extrabudgetary
units (irrespective of the treatment of social security
funds—see paragraph 2.78). Th e budgetary compo-
nent may comprise only the main (or general) bud-
get, and the extrabudgetary component the remaining
entities that constitute that level of government, ex-
cluding social security funds. Such a grouping of the
subsectors allows for a more direct comparison be-
tween budget data and GFS. Whether units are clas-
sifi ed as budgetary or extrabudgetary depends on
country circumstances. What is important, though, is
full coverage of the general government sector—that
is, the statistics compiled for each level of government
should cover all units that constitute that subsector of
government (central, state, or local).
2.81 In all countries, there is an institutional unit of
the general government sector particularly important
in terms of size and power, in particular the power to
exercise control over many other units and entities.
Th e budgetary central government is oft en a single
unit of the central government that encompasses
the fundamental activities of the national executive,
legislative, and judiciary powers. Th is component of
general government is usually covered by the main
(or general) budget. Th e budgetary central govern-
ment’s revenue and expense are normally regulated
and controlled by a ministry of fi nance, or its func-
tional equivalent, by means of a budget approved byControl of an NPI is defi ned as the ability to determine the general policy or program of the NPI. To determine if an NPI
is controlled by the government, the following fi ve indicators of control would be the most important and likely factors
to consider:- The appointment of offi cers—The government may have the right to appoint the offi cers managing the NPI
under the NPI’s constitution, its articles of association, or other enabling instrument. - Other provisions of the enabling instrument—The enabling instrument may contain provisions other than the
appointment of offi cers that effectively allow the government to determine signifi cant aspects of the general
policy or program of the NPI. For example, the enabling instrument may specify or limit the functions, objec-
tives, and other operating aspects of the NPI, thus making the issue of managerial appointments less critical or
even irrelevant. The enabling instrument may also give the government the right to remove key personnel or
veto proposed appointments, require prior approval of budgets or fi nancial arrangements by the government,
or prevent the NPI from changing its constitution, dissolving itself, or terminating its relationship with govern-
ment without government approval. - Contractual agreements—The existence of a contractual agreement between a government and an NPI may
allow the government to determine key aspects of the NPI’s general policy or program. As long as the NPI is ul-
timately able to determine its policy or program to a signifi cant extent, such as by being able to fail to comply
with the contractual agreement and accept the consequences, to change its constitution, or to dissolve itself
without requiring government approval other than that required under the general regulations, then it would
not be considered controlled by government. - Degree of fi nancing by government— An NPI that is mainly fi nanced by government may be controlled
by that government. Generally, if the NPI remains able to determine its policy or program to a signifi cant
extent along the lines mentioned in the previous indicator, then it would not be considered controlled by
government. - Risk exposure—If a government openly allows itself to be exposed to all, or a large proportion of, the fi nancial
risks associated with an NPI’s activities, then the arrangement constitutes control.
A single indicator could be suffi cient to establish control in some cases, but in other cases, a number of separate indi-
cators may collectively indicate control. A decision based on the totality of all indicators will necessarily be judgmental
in nature but clearly similar judgments must be made in similar cases.
Box 2.1 Government Control of Nonprofi t Institutions