1. GENERAL GOVERNMENT
Marga Hüttner

2. Outline Introduction Different concepts of general government
Delimitation of the sector general government
Sources general government statistics
Tools compiling general government statistics
Transactions of general government
General government in the National Accounts

3. Different concepts of general government
Administrative government (legal approach)
Industry general government (supply and use –tables)
Public sector (range of control)
Sector general government (sector accounts)

4. Administrative government (legal approach State)

5. Administrative government (legal approach municipalities)

6. Industry general government (supply and use –Tables)
The industry general government includes the branches
public administration and defence services;
compulsory social security services
public education services
Sector general government includes
the industry general government
and other branches such as
health and social work services
cultural services

7. Public sector
The public sector consists of all market and non-market producers controlled by government.
The public sector equals
the sector general government
corporations which are part of the sector non-financial corporations and of the sector financial corporations and are controlled by government.
Examples are:
Central bank, banks, airports, electricity companies owned by government

8. Public sector

9. Sector general government (sector accounts)
Definition
The sector general government consists of
all institutional units which are
controlled by government (qualitative criterion)
and are
non-market producers (qualitative criterion)

10. Delimitation of the sector general government
Institutional unit
An economic entity that has decision making autonomy in respect of its principal function. This unit is capable of:
owning goods and assets of its own right
incurring liabilities on its own behalf
engaging in economic activities / transactions
Sectors
Institutional units are grouped into sectors, based on principal function, behaviour and objectives

11. Government control
Government control is defined as the ability to determine the general policy of the unit.
Indicators of control e.g:
rights to appoint, veto or remove a majority of officers, board of directors, key personnel
rights to control via contractual agreements
rights to control from agreements /permission to borrow
the degree of financing
the degree of risk exposure

12. Market – non-market producers
Criteria
economically significant prices
50 % rule
If more than 50 % of the production costs are covered by sales then the producer is a market producer.
If less than 50 % of the production costs are covered by sales then the producer is a non -market producer.
Substance over form.

13. Non-market producers by sector
Sector general government (S.13)
Units mainly financed by compulsory payments (taxes, actual social contributions)
Non-profit institutions mainly financed and controlled by government
Sector non-profit institutions serving households (NPISH, S.15)
Non-profit institutions mainly financed but not controlled by government

14. Sector general government includes
Ministries
Provinces, Municipalities
Embassies and military bases abroad
Polder Boards and Inter Communal Arrangements
Regional Police Organizations
Universities and subsidized Private Schools
Social Security Funds and Organizations

15. Sector general government also includes
NPI’s mainly controlled and financed by government (museums, organizations for social work and employment service offices)
Units/schemes/funds of government that do not qualify as institutional units,
(e.g. earmarked funds for civil servants’ pensions, infrastructure or old age pensions)
Corporations which are controlled by government and are non-market producers. Substance over form.

16. Sector general government excludes
Corporations owned by government
Quasi-corporations of government
Financial institutions, e.g. the pension fund for civil servants or private social insurance schemes
NPI’s mainly financed but not controlled by government
International organizations and foreign embassies on domestic territory

17. Decision tree Institutional unit ? no part of the controlling unit
Institutional unit ? no
part of the controlling unit
- annual report of unit
- Own balance-sheet
- entitled to own goods and services
- able to incur liabilities
- able to make economic decisions
yes
Controlled by government ?
unit is classified to the
- legal government
private sector
- entitled to levy taxes
- owned by government
- Influence on general policy and decisions
Non-market producer ?
unit is classified as a
- sales against economic significant prices
public corporation
- less than 50% of production costs are covered
by sales
Unit is part of the sector general government

18. Sources general government statistics
Annual reports
Electronic data from administrations
Accounting reports
Questionnaires
Surveys of budget executions

19. Tools compiling general government statistics
Classifications for
Institutional sectors (ESA 1995/ESA 2010)
Transactions and other flows (ESA 1995/ ESA2010)
Industries (NACE)
Functions of government (COFOG)

20. Transactions of general government
Revenue less Expenditure
Taxes Intermediate consumption
Social contributions Compensation of employees
Sales of goods and services Interest
Other current revenue Subsidies
Capital transfer revenue Social benefits
Other current expenditure
Capital transfer expenditure
Investment expenditure
equals net lending/net borrowing
equals net financial transactions

21. Excessive Deficit Procedure (EDP)
EDP net lending/net borrowing
= Government finance statistics
net lending/net borrowing
+ the interest advantage less the interest
disadvantage from government interest
swaps

22. General government in the national accounts
Time of recording (accrual principle)
Measuring government output
Final consumption expenditure

23. Time of recording (accrual principle)
Taxes
Cash registration at source, time adjusted cash
Interest
Recording as accruing continuously, independent of cash payments
Payments in advance
Payments in arrear

24. Measuring government output
Output of non-market producers
equals
the sum of production costs
Production costs are
Intermediate consumption
Other taxes on production payable
Other subsidies on production receivable
Capital consumption
Compensation of employees

25. Output of non-market producers
Output consists of
Sales of goods and services
Own-account capital formation
Other non-market output

26. Final consumption expenditure government
Final consumption expenditure of government
equals
Output by government
minus market output by government
minus own-account capital formation
plus social benefits in kind via market producers (purchases by government that are supplied without transformation to households)

27. General government