John Verrinder Eurostat The European System of Accounts ESA 2010 The methodological basis for government finance statistics Based on SNA 2008 as is the IMF GFS Manual 2014 Chapter 20 government ID: 1027770
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1. General Government – methodological treatment of selected cases from the EUJohn VerrinderEurostat
2. The European System of Accounts (ESA 2010)The methodological basis for government finance statisticsBased on SNA 2008 (as is the IMF GFS Manual 2014)Chapter 20 - government2
3. What happens if ESA not specific?Discussion amongst Member State experts Eurostat decisionManual on Government Deficit and Debt(=interpretation…)3
4. ESA 2010 defines general government"…the general government sector (S.13) consists of institutional units which are non-market producers whose output is intended for individual and collective consumption, and are financed by compulsory payments made by units belonging to other sectors, and institutional units principally engaged in the redistribution of national income and wealth." [Para 2.111]4
5. Public control"General government secures control over a corporation as a result of special legislation, decree or regulation which empowers the government to determine corporate policy. The following indicators are the main factors to consider in deciding whether a corporation is controlled by government.." [Para 2.38]>> voting interest, Board/key committees, key personnel, golden share, special regulations, dominant customer, borrowing.5
6. Non-market producersQualitative criteriaA public unit sells more than 50% of its output to government (no open/fair tendering); other detailsQuantitative criteria The "50% test" Market sales > 50% of production costs Over several years…6
7. Special cases for unitsEducational unitsPublic hospitalsFinancial activitiesSpecial purpose entitiesDebt management officesHead offices and holding companiesPrivatisation agencies7
8. Educational unitsNecessary to determine the extent of government controlFunding is not the issue in itself, but rather influence over what the funds are used for… Just standards imposed on all schools = no control Direct involvement of government in significant decisions = control (e.g. appointments, investment)8
9. Public hospitalsControl established through usual indicatorsEstablish if public hospitals really compete in practice with private hospitals in different fields Common price system with private hospitals Prices set in a way to allow de facto market competition Public hospitals not forced to continue with unprofitable activities9
10. Financial activitiesFinancial supervisory authoritiesClassified outside government if able to take independent decisions (incl. autonomous budget)Protection fundsClassified outside government if able to take independent decisionsFinancial intermediariesClassified outside government if placing itself at risk10
11. Special purpose entitiesMay be created by government for single or very narrow purpose (usually legal contract/contracts) Treated as an integral part of government when resident (re-routed through government if not)May be specific cases of independent entities (strong evidence) but likely to be rare11
12. Debt management officesUsually part of a government ministry.When they are separate institutional units, to be classified in general government. They act fully on behalf of government (auxiliary function)12
13. Head offices and holding companiesHead Offices: Control and direct subsidiaries, providing services (unrestricted)>>> Corporations sectorsHolding Companies: Do not perform management and effective direction, and are used for typical government activities (e.g. subsidies)>>> General Government13
14. Privatisation agenciesAlso includes "restructuring agencies".Classified in the general government sector as acting on behalf of government.Re-routing possible when a non-government unit undertakes this activity under government instruction.14
15. Government production – impact of classificationClassification into or outside general government has an impact on measured level of government output (and GDP).General Government units: Output as sum of costs.Corporate units: Output as market sales.15