Institutional Units and Sectors 39
control is established by the enabling instruments
and nonmarket nature of these entities.- Th ose agencies that satisfy the criteria to be an
institutional unit and that are mainly a market
producer should be classifi ed in the nonfi nancial
corporations subsector. Th ese market regulatory
agencies’ sole or principal activity is to buy, hold,
and sell the goods or services at economically
signifi cant prices.
2.159 Where market regulatory agencies are in-
volved in a mixture of activities, such as distributing
subsidies and buying, holding, and selling goods and
services, the sector classifi cation may require careful
consideration. If it is possible to separately identify a
quasi-corporation that is undertaking market activi-
ties, it should be classifi ed in the nonfi nancial corpo-
rations subsector. Th e nonmarket activities should be
classifi ed in the general government sector. If it is not
possible to distinguish two institutional units, the ma-
jority of the activities of the entity should determine
the sector classifi cation.
Development Funds and/or Infrastructure Companies or Entities
2.160 Some governments create special entities/funds
to fi nance and develop the economy in general, develop
specifi c sectors of the economy, or upgrade specifi c fa-
cilities, such as infrastructure. Th ese types of agencies/
funds may be involved in various aspects of develop-
ment, ranging from only providing the fi nances for de-
velopment activities to being involved in all aspects of the
actual development and construction of the infrastruc-
ture or facilities. Various terms, such as “development
banks,” “investment funds,” “fi scal stabilization funds,”
or “infrastructure companies,” are used to describe these
agencies. Whatever they are called, the sector classifi ca-
tion should be based not on their description but rather
on the economic nature of the entities.
2.161 Using the usual criteria (see paragraph
2.22), compilers should determine whether the en-
tity is a separate institutional unit in the public sec-
tor, or whether it is not an institutional unit and
should be classifi ed as an integral part of the unit
that controls it.
2.162 Th ese entities may be established in the legal
form of a corporation, but it is necessary to decide
whether to classify them as institutional units. Th e fi -
nancing arrangements of these entities usually involve
the issuance of debt instruments, but could also in-
clude some other sources of fi nancing. Th e customers
that they serve, the fi nancing arrangements, and the
economic ownership of the assets created by these en-
tities could oft en be indicative of the risks assumed by
these entities, and could help to determine their status
as an institutional unit. Th e following guidance applies:- If the entity cannot act independently from its
parent and is a passive holder of assets and liabili-
ties, it is an artifi cial subsidiary. If it is a resident
unit, it is classifi ed as a component of the level
of government that controls it (i.e., as part of the
parent unit). Th ese entities are not treated as sep-
arate institutional units, unless they are resident
in an economy diff erent from that of their parent
unit (see paragraphs 2.6–2.15).
- If the entity borrows on the market and then
lends only to general government units, it is not
involved in fi nancial intermediation and should
be regarded as a resident artifi cial subsidiary (see
paragraphs 2.42–2.44). - If government assumes economic ownership of
the nonfi nancial assets created, it is an indication
that the development fund is just a device to bor-
row and acquire the assets, and the entity should
be treated as a resident artifi cial subsidiary. - If these entities meet the defi nition of an insti-
tutional unit (see paragraph 2.22) and are gov-
ernment-controlled market producers of goods
or services, they should be classifi ed as a cor-
poration. More specifi cally, they will be a public
fi nancial corporation only if they are involved
in providing fi nancial services (see paragraph
2.53).^44 Th ey will be public nonfi nancial corpora-
tions only if they produce and sell the infrastruc-
ture assets at economically signifi cant prices in
market transactions.
(^44) Providing concessionary loans does not necessarily mean that
an institutional unit is not a market producer (e.g., some develop-
ment banks are providing concessionary loans but are still consid-
ered fi nancial intermediaries).