## Discussion Note: 2.6 Further defining and subclassifying extrabudgetary units ## Source details **Canonical URL:** [Discussion Note: 2.6 Further defining and subclassifying extrabudgetary units](https://www.imf.org/-/media/files/data/statistics/gfsm/global-consultations/discussion-note-26-further-defining-and-subclassifying-extrabudgetary-units-consultation-mar.pdf) ## Other formats - [Markdown version](/-/media/files/data/statistics/gfsm/global-consultations/discussion-note-26-further-defining-and-subclassifying-extrabudgetary-units-consultation-mar.pdf.md) - [Structured JSON version](/-/media/files/data/statistics/gfsm/global-consultations/discussion-note-26-further-defining-and-subclassifying-extrabudgetary-units-consultation-mar.pdf.json) --- ### High-level issues and draft recommendations - Key problems identified: - The definition of extrabudgetary units in GFSM 2014 is not precise; a wording change in the 2025 SNA central government definition implies a need to review GFSM language. - The term “nonmarket NPIs” should be replaced by “nonmarket institutional units”. - Lack of guidance and examples to distinguish between budgetary and extrabudgetary units, particularly funds. - Heterogeneity of extrabudgetary units suggests potential analytical value in subsectorization (some units perform production functions, others primarily financing functions). - Draft overarching recommendation: - Clarify the definition of extrabudgetary units using 2025 SNA language, provide broader examples, and examine options for splitting them into subsectors. ### Introduction and background - GFSM 2014 treatment: - GFSM 2014 (paragraph 2.80) distinguishes, at each subsector level of general government, units financed by the legislative-approved budget from extrabudgetary sources. - GFSM 2014 (paragraph 2.82) states “general government entities with individual budgets not fully covered by the main (or general) budget are considered as extrabudgetary units”. - GFSM 2014 (paragraph 2.83) treats nonmarket nonprofit institutions controlled by government as typically classified as extrabudgetary units if they satisfy institutional unit criteria. - Practical considerations: - Governments may establish extrabudgetary funds fully financed by dedicated transfers from the budget for specific purposes (e.g., welfare, compensation for damages). - Some extrabudgetary units carry out production (e.g., road construction, nonmarket production of health or education) and may rely variably on main budget financing. - Where a fund does not satisfy criteria to be an autonomous institutional unit, it is classified as part of the budgetary government unit that controls it. - New SNA guidance on when to treat trust funds and other funds as separate institutional units should be taken into account for the GFSM update. - Analytical value: - Separate data on extrabudgetary units improves understanding of links between administrative accounts and GFS, especially at central government level. - More disaggregated data could show activities conducted outside core units that are still considered general government. ### Issue A — Reviewing the definition of EBUs in light of changes in the 2025 SNA - Background facts: - 2025 SNA defines central government as “Part of general government that includes all administrative departments of the national executive, legislative, and judicial functions, other central agencies and those nonmarket producers controlled by the central government, whose competence extends normally over the whole economic territory” (replacing GFSM 2014 wording referencing “nonmarket NPIs”). - GFSM 2014 paragraphs noted as appropriate and not requiring amendment: 2.1; 2.31-2.32; 2.64-2.66; 2.98; 2.124. - Specific recommended wording changes: - Replace “nonmarket NPIs” with “nonmarket institutional units” in GFSM paragraphs 2.58 and 2.83. - Replace “NPIs” with “nonmarket institutional units” in paragraph 2.1 (Government Control of Nonprofit Institutions). - Consider rewriting beginning of GFSM 2014 paragraph 2.59 from “The general government sector does not include public corporations” to “The general government sector does not include entities classified as public corporations”. - Options identified: - Option A1: Maintain current GFSM 2014 guidance. - Option A2: Align language with 2025 SNA. - Option A3: Align language with 2025 SNA and expand on what is covered within nonmarket producers, central agencies, administrative “departments”. - Draft recommendation: - The research team and wider Task Team recommend Option A3. Alignment with the 2025 SNA and added clarifications are recommended to confirm the scope and nature of extrabudgetary government units. ### Issue B — Clarifying guidance on identifying and differentiating EBUs - Background facts: - GFSM 2014 (paragraph 2.82) currently defines extrabudgetary entities and sectorizes them according to control criteria; if not separate institutional units they are part of the controlling unit. - Footnote 28 language should be incorporated into paragraph 2.82 to clarify “off budget” funds that are special deposit accounts and not institutional units. - GFSM 2014 (paragraph 2.83) mentions NPIs controlled by government but omits units primarily involved in financing activities. - Examples recommended to be explicitly mentioned: trusts and other funds where government carries all risk and rewards (e.g., COVID funds, R&D funds, emergency funds, compensation funds, funds providing social benefits financed by taxes). - Suggested broader examples of EBUs: public transport companies, universities, public hospitals, price/trade regulators, compensation funds, wealth funds, guarantee funds, petroleum/oil funds, environmental fund, pension funds. - Note: some EBUs are non-market “special purpose units” with narrow tasks and low staffing (see Proposed Recommendations Document references). - Options identified: - Option B1: Maintain current GFSM 2014 guidance. - Option B2: Expand examples of extrabudgetary units without further principle-based guidance. - Option B3: Expand examples and distinguish between “off-budget” funds within the budgetary central government and true extrabudgetary units (principle-based guidance). - Draft recommendation: - The research team and wider Task Team recommend Option B3. Expanded descriptions plus principles-based guidance to distinguish “off budget” funds from autonomous extrabudgetary units are recommended. ### Issue C — Subsectorization of EBUs - Background facts and trade-offs: - COFOG is often used to illustrate government expenditure functions, with divisions 04 economic affairs, 07 health and 09 education being particularly important for EBUs; however, COFOG requires detailed reporting and may cause confusion because expenditure by a single government entity can be allocated across COFOG divisions (example: university education vs R&D). - Classification systems like ISIC could add value but would impose high burden on compilers. - Alternative breakdown proposed: split extrabudgetary sector into producing entities and extrabudgetary funds (recognizing borderline cases between institutional unit status and being part of core unit). - Decision trees for classifying financial and nonfinancial enterprises differ; extrabudgetary producers of financial services often border public financial corporations classified outside government. - IMF GFS database indicates extrabudgetary central government is typically substantially smaller than budgetary central government; breaking down the smaller component may be odd and impose costs. - Options identified: - Option C1: Keep status quo (no split). - Option C2: Split extrabudgetary sector into three subsectors: - a) Extrabudgetary funds (entities paying out transfers) - b) Extrabudgetary non-financial producers - c) Extrabudgetary producers of financial services - Draft recommendation: - The research team and wider Task Team recommend Option C1. Rationale: cost to compilers of breaking down EBUs outweighs benefits for users. - Continued encouragement for countries to provide at least aggregate data on extrabudgetary units, since aggregate EBU data exists for EU member states and many countries reporting to the IMF GFS Database. ### Proposed text and institutional views - Proposed action for GFSM Update: - Add clarifications consistent with recommendations A3 and B3 to the GFSM Update. - Preliminary GFSAC views: - An earlier version discussed at the GFSAC meeting of January 2026 addressed GFSAC suggestions; Task Team recommendations in the note are consistent with preliminary views of most GFSAC members. ### Questions for global consultation - Issue A (Definition of EBUs): - Indicate preferred choice among Option A1, Option A2, Option A3 and explain reasons; provide additional comments or alternatives. - Issue B (Identifying and Differentiating EBUs): - Indicate preferred choice among Option B1, Option B2, Option B3 and explain reasons; provide additional comments or alternatives. - What different types of extrabudgetary units are prevalent in your country? - Issue C (Subsectorization of EBUs): - Indicate preferred choice: Option C1 or Option C2 and explain reasons; provide additional comments or alternatives. - If you do not agree with the recommendation, specify what type of breakdown would be most useful and how you would use this information. ### Annex — data reporting of extrabudgetary units - Fact: - Extrabudgetary units are defined in GFSM 2014, but merit only passing reference in the 2025 SNA and ESA 2010; outside the IMF’s GFS framework, there is very limited statistical reporting on extrabudgetary units. ### Reporting practices in EU countries and Eurostat coverage - EU countries generally do not separately report the net lending of extrabudgetary government units; instead they include them at the subsector level (central government, state governments, local governments, social security funds). - Table 2 of the Excessive Deficit Procedure reporting includes the concept of “working balance” with the net lending of entities outside the working balance shown separately in aggregated form. - The current European System of Accounts transmission program includes voluntary items concerning the public debt of budgetary central government and extrabudgetary central government. - As of August 2025, the Eurostat database shows this data for only 2 countries. ### IMF GFS database coverage and data availability - The IMF’s GFS database contains entries for the full accounts of extrabudgetary units at the central government level. - A large proportion of countries do not provide these data in the IMF’s GFS database, indicating limited availability. ### Considerations for extending data requirements on extrabudgetary units - Extending data requirements would require decisions about which data points should be required for each subgroup of extrabudgetary units. - Currently, some countries report the full accounts of extrabudgetary units; others do not. ### Policy option: requiring only net lending ("budget balance") - Requiring only the net lending (the “budget balance”) for extrabudgetary units could provide valuable information for advanced users. - Rationale: - There tends to be more information available on plans and on intra-year realizations for the core budgetary unit than for extrabudgetary units. - Requiring only net lending would mean countries would not need to publish consolidating elements within subsectors (for example, transfers and loans within the same level of government), which they might hesitate to publish. *IMF — GFSM 2014 Update Consultation: March 2026 — Discussion Note: 2.6 Further defining and subclassifying extrabudgetary units* ### Section 1 ### Discussion Note: 2.6 Further defining and subclassifying extrabudgetary units ### Summary details and authors - Task Team Responsible: GFS Compilation Task Team 1 (TT1) - Authors of Discussion Note: Galina Braverman and Lukas Reiss - Context: GFSM 2014 Update Consultation: March 2026 ### High-level issues and draft recommendations - Key problems identified: - The definition of extrabudgetary units in GFSM 2014 is not precise; wording change in the 2025 SNA central government definition implies a need to review GFSM language. - The term “nonmarket NPIs” should be replaced by “nonmarket institutional units”. - Lack of guidance and examples to distinguish between budgetary and extrabudgetary units, particularly funds. - Heterogeneity of extrabudgetary units suggests potential analytical value in subsectorization (some units perform production functions, others primarily financing functions). - Draft overarching recommendation: - Clarify the definition of extrabudgetary units using 2025 SNA language, provide broader examples, and examine options for splitting them into subsectors. ### Introduction and background - GFSM 2014 treatment: - GFSM 2014 (paragraph 2.80) distinguishes, at each subsector level of general government, units financed by the legislative-approved budget from extrabudgetary sources. - GFSM 2014 (paragraph 2.82) states “general government entities with individual budgets not fully covered by the main (or general) budget are considered as extrabudgetary units”. - GFSM 2014 (paragraph 2.83) treats nonmarket nonprofit institutions controlled by government as typically classified as extrabudgetary units if they satisfy institutional unit criteria. - Practical considerations: - Governments may establish extrabudgetary funds fully financed by dedicated transfers from the budget for specific purposes (e.g., welfare, compensation for damages). - Some extrabudgetary units carry out production (e.g., road construction, nonmarket production of health or education) and may rely variably on main budget financing. - Where a fund does not satisfy criteria to be an autonomous institutional unit, it is classified as part of the budgetary government unit that controls it. - New SNA guidance on when to treat trust funds and other funds as separate institutional units should be taken into account for the GFSM update. - Analytical value: - Separate data on extrabudgetary units improves understanding of links between administrative accounts and GFS, especially at central government level. - More disaggregated data could show activities conducted outside core units that are still considered general government. ### Issue A — Reviewing the definition of EBUs in light of changes in the 2025 SNA - Background facts: - 2025 SNA defines central government as “Part of general government that includes all administrative departments of the national executive, legislative, and judicial functions, other central agencies and those nonmarket producers controlled by the central government, whose competence extends normally over the whole economic territory” (replacing GFSM 2014 wording referencing “nonmarket NPIs”). - GFSM 2014 paragraphs noted as appropriate and not requiring amendment: 2.1; 2.31-2.32; 2.64-2.66; 2.98; 2.124. - Specific recommended wording changes: - Replace “nonmarket NPIs” with “nonmarket institutional units” in GFSM paragraphs 2.58 and 2.83. - Replace “NPIs” with “nonmarket institutional units” in paragraph 2.1 (Government Control of Nonprofit Institutions). - Consider rewriting beginning of GFSM 2014 paragraph 2.59 from “The general government sector does not include public corporations” to “The general government sector does not include entities classified as public corporations”. - Options identified: - Option A1: Maintain current GFSM 2014 guidance. - Option A2: Align language with 2025 SNA. - Option A3: Align language with 2025 SNA and expand on what is covered within nonmarket producers, central agencies, administrative “departments”. - Draft recommendation: - The research team and wider Task Team recommend Option A3. Alignment with the 2025 SNA and added clarifications are recommended to confirm the scope and nature of extrabudgetary government units. ### Issue B — Clarifying guidance on identifying and differentiating EBUs - Background facts: - GFSM 2014 (paragraph 2.82) currently defines extrabudgetary entities and sectorizes them according to control criteria; if not separate institutional units they are part of the controlling unit. - Footnote 28 language should be incorporated into paragraph 2.82 to clarify “off budget” funds that are special deposit accounts and not institutional units. - GFSM 2014 (paragraph 2.83) mentions NPIs controlled by government but omits units primarily involved in financing activities. - Examples recommended to be explicitly mentioned: trusts and other funds where government carries all risk and rewards (e.g., COVID funds, R&D funds, emergency funds, compensation funds, funds providing social benefits financed by taxes). - Suggested broader examples of EBUs: public transport companies, universities, public hospitals, price/trade regulators, compensation funds, wealth funds, guarantee funds, petroleum/oil funds, environmental fund, pension funds. - Note: some EBUs are non-market “special purpose units” with narrow tasks and low staffing (see Proposed Recommendations Document references). - Options identified: - Option B1: Maintain current GFSM 2014 guidance. - Option B2: Expand examples of extrabudgetary units without further principle-based guidance. - Option B3: Expand examples and distinguish between “off-budget” funds within the budgetary central government and true extrabudgetary units (principle-based guidance). - Draft recommendation: - The research team and wider Task Team recommend Option B3. Expanded descriptions plus principles-based guidance to distinguish “off budget” funds from autonomous extrabudgetary units are recommended. ### Issue C — Subsectorization of EBUs - Background facts and trade-offs: - COFOG is often used to illustrate government expenditure functions, with divisions 04 economic affairs, 07 health and 09 education being particularly important for EBUs; however, COFOG requires detailed reporting and may cause confusion because expenditure by a single government entity can be allocated across COFOG divisions (example: university education vs R&D). - Classification systems like ISIC could add value but would impose high burden on compilers. - Alternative breakdown proposed: split extrabudgetary sector into producing entities and extrabudgetary funds (recognizing borderline cases between institutional unit status and being part of core unit). - Decision trees for classifying financial and nonfinancial enterprises differ; extrabudgetary producers of financial services often border public financial corporations classified outside government. - IMF GFS database indicates extrabudgetary central government is typically substantially smaller than budgetary central government; breaking down the smaller component may be odd and impose costs. - Options identified: - Option C1: Keep status quo (no split). - Option C2: Split extrabudgetary sector into three subsectors: - a) Extrabudgetary funds (entities paying out transfers) - b) Extrabudgetary non-financial producers - c) Extrabudgetary producers of financial services - Draft recommendation: - The research team and wider Task Team recommend Option C1. Rationale: cost to compilers of breaking down EBUs outweighs benefits for users. - Continued encouragement for countries to provide at least aggregate data on extrabudgetary units, since aggregate EBU data exists for EU member states and many countries reporting to the IMF GFS Database. ### Proposed text and institutional views - Proposed action for GFSM Update: - Add clarifications consistent with recommendations A3 and B3 to the GFSM Update. - Preliminary GFSAC views: - An earlier version discussed at the GFSAC meeting of January 2026 addressed GFSAC suggestions; Task Team recommendations in the note are consistent with preliminary views of most GFSAC members. ### Questions for global consultation - Issue A (Definition of EBUs): Indicate preferred choice among Option A1, Option A2, Option A3 and explain reasons; provide additional comments or alternatives. - Issue B (Identifying and Differentiating EBUs): - Indicate preferred choice among Option B1, Option B2, Option B3 and explain reasons; provide additional comments or alternatives. - What different types of extrabudgetary units are prevalent in your country? - Issue C (Subsectorization of EBUs): - Indicate preferred choice: Option C1 or Option C2 and explain reasons; provide additional comments or alternatives. - If you do not agree with the recommendation, specify what type of breakdown would be most useful and how you would use this information. ### Annex — data reporting of extrabudgetary units - Fact: - Extrabudgetary units are defined in GFSM 2014, but merit only passing reference in the 2025 SNA and ESA 2010; outside the IMF’s GFS framework, there is very limited statistical reporting on extrabudgetary units. *GFSM 2014 Update Consultation: March 2026 — Discussion Note: 2.6 Further defining and subclassifying extrabudgetary units* ### Section 2 ### discussion-note-26-further-defining-and-subclassifying-extrabudgetary-units-consultation-mar - Section 2 ### Reporting practices in EU countries and Eurostat coverage - EU countries generally do not separately report the net lending of extrabudgetary government units; instead they include them at the subsector level (central government, state governments, local governments, social security funds). - Table 2 of the Excessive Deficit Procedure reporting includes the concept of “working balance” with the net lending of entities outside the working balance shown separately in aggregated form. - The current European System of Accounts transmission program includes voluntary items concerning the public debt of budgetary central government and extrabudgetary central government. - As of August 2025, the Eurostat database shows this data for only 2 countries. ### IMF GFS database coverage and data availability - The IMF’s GFS database contains entries for the full accounts of extrabudgetary units at the central government level. - A large proportion of countries do not provide these data in the IMF’s GFS database, indicating limited availability. ### Considerations for extending data requirements on extrabudgetary units - Extending data requirements would require decisions about which data points should be required for each subgroup of extrabudgetary units. - Currently, some countries report the full accounts of extrabudgetary units; others do not. ### Policy option: requiring only net lending ("budget balance") - Requiring only the net lending (the “budget balance”) for extrabudgetary units could provide valuable information for advanced users. - Rationale: - There tends to be more information available on plans and on intra-year realizations for the core budgetary unit than for extrabudgetary units. - Requiring only net lending would mean countries would not need to publish consolidating elements within subsectors (for example, transfers and loans within the same level of government), which they might hesitate to publish. --- _Source: https://www.imf.org/-/media/files/data/statistics/gfsm/global-consultations/discussion-note-26-further-defining-and-subclassifying-extrabudgetary-units-consultation-mar.pdf_