Institutional Units and Sectors 25
2.88 While the central government may also control
nonfi nancial or fi nancial corporations, these corpora-
tions are classifi ed outside of the central (and general)
government sector(s), but are part of the public sector.
However, if institutional units controlled by central
government are legally constituted as corporations but
are not market producers, they should be classifi ed as
part of the central government sector, not the public
corporations sector. Similarly, unincorporated enter-
prises controlled by central government units that do
not satisfy the criteria to be quasi-corporations (see
paragraph 2.34) should remain integral parts of those
units and, therefore, would be included in the central
government subsector.
2.89 In some countries, central government may
include units that engage in fi nancial transactions
that in other countries would be performed by central
banks. In particular, units of central government may
be responsible for the issue of currency, the mainte-
nance of international reserves, the operation of ex-
change stabilization funds, and transactions with the
International Monetary Fund. When the units in ques-
tion remain fi nancially integrated with central gov-
ernment and under the direct control and supervision
of central government, they cannot be treated as sepa-
rate institutional units. Accordingly, these monetary
authority functions carried out by central government
are recorded in the general government sector and not
the fi nancial corporations sector. However, because of
the analytic importance of obtaining accounts cover-
ing the monetary authorities as a whole, and in order
to provide links with other macroeconomic statistics
such as the 2008 SNA, the BPM6, and the MFSM, it is
recommended that the transactions of central govern-
ment agencies carrying out monetary authority and
deposit-taking functions be separately identifi ed, so
that they can be combined with those of the central
bank and other deposit-taking corporations in special
tabulations if desired.
State governments
2.90 State governments consist of institutional
units exercising some of the functions of government
at a level below that of central government and above
that of the government institutional units existing at
a local level. State governments are distinguished by
the fact that their fi scal authority extends over the
largest geographical areas into which the country as
a whole may be divided for political or administra-
tive purposes. Th ey are institutional units whose fi s-
cal, legislative, and executive authority extends only to
individual “states” into which the country as a whole
may be divided. Th ese states may be described by dif-
ferent names in diff erent countries and the subsector
may consist of state, provincial, or regional govern-
ments. For ease of expression, this level of government
will be referred to hereaft er as state governments. In
many countries, especially smaller countries, state
governments may not exist. However, in geographi-
cally large countries, especially those that have federal
constitutions, considerable powers and responsibili-
ties may be assigned to state governments.2.91 A state government may consist of many in-
stitutional units and usually has the fi scal authority to
levy taxes on institutional units that are resident in, or
engage in economic activities or transactions within,
its area of jurisdiction (but not other areas). It must
also be entitled to spend or allocate some, or possibly
all, of the taxes or other revenue that it receives ac-
cording to its own policies, within the general rules
of law of the country, although some of the transfers
it receives from central government may be tied to
certain specifi ed purposes. It should also be able to
appoint its own offi cers, independently of external ad-
ministrative control. On the other hand, if a regional
unit is entirely dependent on funds from central gov-
ernment, and if the central government also deter-
mines the ways in which these funds are to be spent
at the regional level, it should be treated as an agency
of central government for statistical purposes, rather
than as a separate level of government.2.92 In a few countries, more than one level of
government exists between the central government
and the smallest governmental institutional units at a
local level; in such cases, for purposes of sector clas-
sifi cation, these intermediate levels of government are
grouped with the level of government—either state or
local—with which they are most closely associated.2.93 If a state government exists, then its principal
departments and ministries will generally constitute
a single institutional unit in a manner similar to the
budgetary unit of the central government. In addi-
tion, there may be extrabudgetary agencies operat-
ing under the authority of a state government with a
separate legal identity and enough autonomy to form