## 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/group-1/discussion-note-26-further-defining-and-subclassifying-extrabudgetary-units-consultation-march2026.pdf) ## Other formats - [Markdown version](/-/media/files/data/statistics/gfsm/global-consultations/group-1/discussion-note-26-further-defining-and-subclassifying-extrabudgetary-units-consultation-march2026.pdf.md) - [Structured JSON version](/-/media/files/data/statistics/gfsm/global-consultations/group-1/discussion-note-26-further-defining-and-subclassifying-extrabudgetary-units-consultation-march2026.pdf.json) --- ### Summary Details - Task Team Responsible: GFS Compilation Task Team 1 (TT1) - Authors of Discussion Note: Galina Braverman and Lukas Reiss - Main points: - The definition of extrabudgetary units in GFSM 2014 is not precise; the change in the wording of the 2025 SNA definition of central government implies a need to review GFSM language, specifically replacing “nonmarket NPIs” with “nonmarket institutional units”. - There is a lack of guidance and examples distinguishing budgetary and extrabudgetary units (particularly funds). - Different types of extrabudgetary units vary substantially; subsectorization of extrabudgetary funds may be analytically useful because some have production functions while others mainly have financing functions. - The Discussion Note proposes clarifying the definition using SNA language, providing examples, and examining options for splitting extrabudgetary units into subsectors. ### Introduction and context - GFSM 2014 (paragraph 2.80) distinguishes at each subsector level of general government whether units are financed by the budget approved by the legislative bodies of that level or by extrabudgetary sources; GFSM 2014 (paragraph 2.82) states that “general government entities with individual budgets not fully covered by the main (or general) budget are considered as extrabudgetary units”. - Examples and current guidance are narrow; clearer definition and broader examples are crucial to understand differences between administrative accounts and GFS data. - If a fund does not satisfy criteria to be an autonomous institutional unit, it is classified as part of the budgetary government or public sector unit that controls it; where extrabudgetary funds are autonomous institutional units, they are presented together with other extrabudgetary units of the controlling subsector. - Separate data on extrabudgetary units help analysts understand links between administrative data and GFS data, particularly at the central government level where typically only one core institutional unit exists. - Rationale for subsectorization: more disaggregated data could show which activities are conducted outside core units but still considered general government, revealing the extent to which financing functions or production of government services are performed outside core government units. ### Issue A: Reviewing the definition of EBUs in light of changes in the 2025 SNA - Background and problem statement: - 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”). - Most GFSM 2014 paragraphs do not need amendment (paragraphs 2.1, 2.31-2.32, 2.64-2.66, 2.98, 2.124 cited as adequate). - Recommendation to replace “nonmarket NPIs” with “nonmarket institutional units” to include entities legally entitled to record and distribute profits yet functioning as nonmarket producers (example: public transport providers organized as enterprises but receiving high government grants). - Suggested rewording 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” to clarify statistical versus legal terminology. - Options presented: - Option A1: Maintain the Current GFSM 2014 Guidance. - Option A2: Align the language with the language in the 2025 SNA. - Option A3: Align with the 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 to align GFSM 2014 with the 2025 SNA and add clarifications to confirm scope and nature of extrabudgetary government units. ### Issue B: Clarifying guidance on identifying and differentiating EBUs - Background and problem statement: - GFSM 2014 (paragraph 2.82) defines extrabudgetary entities and sectorizes them by control criteria; if entities are separate institutional units they form a subsector extrabudgetary central government; entities that do not qualify as units are part of the controlling unit. - Need to incorporate footnote 28 language into the paragraph itself to clarify “off budget” funds that are special deposit accounts (usually not institutional units) versus true extrabudgetary institutional units. - GFSM 2014 (paragraph 2.83) lists NPIs controlled by government but omits examples of units primarily involved in financing activities; paragraph 2.82/2.83 should note that trusts and other funds where government carries all risk and rewards are extrabudgetary units. - Possible examples of funds considered extrabudgetary: COVID funds, R&D funds, emergency funds, compensation funds, funds providing social benefits financed by taxes. - Examples of non-market “special purpose units” with narrow tasks and low staffing should be mentioned. - Suggested broader examples for paragraphs 2.82 and 2.83: government-controlled non-market units substantially but not fully funded from the budget (public transport companies, universities, public hospitals), and government-controlled self-financed entities through compulsory fees, taxes, or natural resource revenues outside budgetary accounts (price/trade regulators, compensation funds, wealth funds, guarantee funds, petroleum/oil funds, environmental fund, pension funds). - Acknowledge the line between budgetary government and extrabudgetary units can be blurry concerning institutional unit status. - Options presented: - Option B1: Maintain the 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 budgetary central government and actual extrabudgetary units (add principle-based guidance). - Draft recommendation: - The research team and wider Task Team recommend Option B3 to expand descriptions and add principles-based guidance distinguishing “off budget” funds from autonomous extrabudgetary institutional units, aiding compilers and users. ### Issue C: Subsectorization of EBUs - Background and problem statement: - COFOG is often used to illustrate government expenditure functions (notably divisions 04 economic affairs, 07 health, 09 education), but allocating an entity wholly to one COFOG division is problematic (e.g., universities split between 09 education and research-related classifications). - ISIC-style classifications could add value but would impose high burdens on compilers and are not used for total government expenditure. - Alternative approach: split extrabudgetary sector into producing entities (extrabudgetary nonfinancial producers and extrabudgetary financial producers) and extrabudgetary funds (entities paying out transfers). Benefits: clarifies borderline cases between institutional unit status and being part of core unit, and between extrabudgetary producers of financial services and public financial corporations outside government. Drawback: additional burden for compilers and risk of inconsistent application across countries. - IMF GFS database indicates extrabudgetary central government is typically substantially smaller than budgetary central government; breaking down the smaller component may seem odd. - Options presented: - Option C1: Keep the status quo by not suggesting any split to the extrabudgetary sector. - Option C2: Split the extrabudgetary sector into 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. The Task Team concluded the cost to compilers of breaking down extrabudgetary units outweighs benefits for users. - Aggregate data for extrabudgetary units remains useful and exists in the EU member states and many countries reporting to the IMF GFS Database. - Countries should be encouraged to provide at least aggregate data on extrabudgetary units to enable comparison between core budgetary central government and extrabudgetary entities. ### Proposed text for GFSM Update and GFSAC views - Proposed action: - Add clarifications to the GFSM Update as described in recommendations A3 and B3. - Preliminary GFSAC views: - An earlier version of the discussion note was discussed at the GFSAC meeting of January 2026; the current version addressed suggestions from that meeting and Task Team recommendations are consistent with preliminary views of most GFSAC members. ### Questions for global consultation - Issue A (Definition of EBUs): - Indicate preferred choice: Option A1, Option A2 or Option A3; explain reasons and provide additional comments or alternatives. - Issue B (Identifying and Differentiating EBUs): - Indicate preferred choice: Option B1, Option B2 or Option B3; explain reasons and 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; explain reasons and provide additional comments or alternatives. - If not agreeing with the recommendation, specify what type of breakdown (subsectorization) would be most useful and how you would use this information. ### Annex: Data reporting of extrabudgetary units - Observation: - Extrabudgetary units are defined in GFSM 2014 but receive only passing reference in the 2025 SNA and ESA 2010; outside the IMF’s GFS framework, statistical reporting on extrabudgetary units is very limited. ### Current reporting practices in EU countries - EU countries generally do not separately report the net lending of extrabudgetary government units; instead they include them at the subsector level (i.e., central government, state governments, local governments, social security funds). - Table 2 of the Excessive Deficit Procedure reporting has 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. ### Availability in the IMF GFS database and implications - 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. - The discussion note interprets this limited availability as an indication that requiring additional breakdowns might be fruitless. ### Trade-offs in possible data requirement extensions - If data requirements on extrabudgetary units were extended, decisions would have to be made with respect to which data points should be required for each subgroup of extrabudgetary units. - Currently some countries show the full accounts of extrabudgetary units. - Requiring only the net lending (“budget balance”) has the following characteristics: - Might provide valuable information for advanced users because there tends to be more information (both on plans and on intra-year realizations) for the core budgetary unit. - Would imply that countries would not need to show consolidating elements within subsectors (i.e., transfers and loans within the same level of government), which they might hesitate to publish. *Source: 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 ### Introduction and context - GFSM 2014 (paragraph 2.80) distinguishes at each subsector level of general government whether units are financed by the budget approved by the legislative bodies of that level or by extrabudgetary sources; GFSM 2014 (paragraph 2.82) states that “general government entities with individual budgets not fully covered by the main (or general) budget are considered as extrabudgetary units”. - Examples and current guidance are narrow; clearer definition and broader examples are crucial to understand differences between administrative accounts and GFS data. - If a fund does not satisfy criteria to be an autonomous institutional unit, it is classified as part of the budgetary government or public sector unit that controls it; where extrabudgetary funds are autonomous institutional units, they are presented together with other extrabudgetary units of the controlling subsector. - Separate data on extrabudgetary units help analysts understand links between administrative data and GFS data, particularly at the central government level where typically only one core institutional unit exists. - Rationale for subsectorization: more disaggregated data could show which activities are conducted outside core units but still considered general government, revealing the extent to which financing functions or production of government services are performed outside core government units. *GFSM 2014 Update Consultation: March 2026 — Discussion Note* ### Issue A: Reviewing the definition of EBUs in light of changes in the 2025 SNA - Background: - 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”). - Most GFSM 2014 paragraphs do not need amendment (paragraphs 2.1, 2.31-2.32, 2.64-2.66, 2.98, 2.124 cited as adequate). - Recommendation to replace “nonmarket NPIs” with “nonmarket institutional units” to include entities legally entitled to record and distribute profits yet functioning as nonmarket producers (example: public transport providers organized as enterprises but receiving high government grants). - Suggested rewording 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” to clarify statistical versus legal terminology. - Options: - Option A1: Maintain the Current GFSM 2014 Guidance. - Option A2: Align the language with the language in the 2025 SNA. - Option A3: Align with the 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 to align GFSM 2014 with the 2025 SNA and add clarifications to confirm scope and nature of extrabudgetary government units. *GFSM 2014 Update Consultation: March 2026 — Discussion Note* ### Issue B: Clarifying guidance on identifying and differentiating EBUs - Background: - GFSM 2014 (paragraph 2.82) defines extrabudgetary entities and sectorizes them by control criteria; if entities are separate institutional units they form a subsector extrabudgetary central government; entities that do not qualify as units are part of the controlling unit. - Need to incorporate footnote 28 language into the paragraph itself to clarify “off budget” funds that are special deposit accounts (usually not institutional units) versus true extrabudgetary institutional units. - GFSM 2014 (paragraph 2.83) lists NPIs controlled by government but omits examples of units primarily involved in financing activities; paragraph 2.82/2.83 should note that trusts and other funds where government carries all risk and rewards are extrabudgetary units (see Proposed Recommendations Document references). - Possible examples of funds considered extrabudgetary: COVID funds, R&D funds, emergency funds, compensation funds, funds providing social benefits financed by taxes. - Examples of non-market “special purpose units” with narrow tasks and low staffing should be mentioned (see Proposed Recommendations Document references). - Suggested broader examples for paragraphs 2.82 and 2.83: government-controlled non-market units substantially but not fully funded from the budget (public transport companies, universities, public hospitals), and government-controlled self-financed entities through compulsory fees, taxes, or natural resource revenues outside budgetary accounts (price/trade regulators, compensation funds, wealth funds, guarantee funds, petroleum/oil funds, environmental fund, pension funds). - Acknowledge the line between budgetary government and extrabudgetary units can be blurry concerning institutional unit status. - Options: - Option B1: Maintain the 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 budgetary central government and actual extrabudgetary units (add principle-based guidance). - Draft recommendation: - The research team and wider Task Team recommend Option B3 to expand descriptions and add principles-based guidance distinguishing “off budget” funds from autonomous extrabudgetary institutional units, aiding compilers and users. *GFSM 2014 Update Consultation: March 2026 — Discussion Note* ### Issue C: Subsectorization of EBUs - Background: - COFOG is often used to illustrate government expenditure functions (notably divisions 04 economic affairs, 07 health, 09 education), but allocating an entity wholly to one COFOG division is problematic (e.g., universities split between 09 education and research-related classifications). - ISIC-style classifications could add value but would impose high burdens on compilers and are not used for total government expenditure. - Alternative approach: split extrabudgetary sector into producing entities (extrabudgetary nonfinancial producers and extrabudgetary financial producers) and extrabudgetary funds (entities paying out transfers). Benefits: clarifies borderline cases between institutional unit status and being part of core unit, and between extrabudgetary producers of financial services and public financial corporations outside government. Drawback: additional burden for compilers and risk of inconsistent application across countries. - IMF GFS database indicates extrabudgetary central government is typically substantially smaller than budgetary central government; breaking down the smaller component may seem odd. (Annex referenced for data availability details.) - Options: - Option C1: Keep the status quo by not suggesting any split to the extrabudgetary sector. - Option C2: Split the extrabudgetary sector into subsectors: - a) Extrabudgetary funds (entities paying out transfers) - b) Extrabudgetary non-financial producers - c) Extrabudgetary producers of financial services - Draft recommendations: - The research team and wider Task Team recommend Option C1. The Task Team concluded the cost to compilers of breaking down extrabudgetary units outweighs benefits for users. - Aggregate data for extrabudgetary units remains useful and exists in the EU member states and many countries reporting to the IMF GFS Database. - One key benefit of showing extrabudgetary units separately is enabling users to compare core budgetary central government with extrabudgetary entities to better understand links between administrative and GFS data; countries should be encouraged to provide at least aggregate data on extrabudgetary units. *GFSM 2014 Update Consultation: March 2026 — Discussion Note* ### Proposed text for GFSM Update and GFSAC views - Proposed action: - Add clarifications to the GFSM Update as described in recommendations A3 and B3. - Preliminary GFSAC views: - An earlier version of the discussion note was discussed at the GFSAC meeting of January 2026; the current version addressed suggestions from that meeting and Task Team recommendations are consistent with preliminary views of most GFSAC members. *GFSM 2014 Update Consultation: March 2026 — Discussion Note* ### Questions for global consultation - Issue A (Definition of EBUs): - Indicate preferred choice: Option A1, Option A2 or Option A3; explain reasons and provide additional comments or alternatives. - Issue B (Identifying and Differentiating EBUs): - Indicate preferred choice: Option B1, Option B2 or Option B3; explain reasons and 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; explain reasons and provide additional comments or alternatives. - If not agreeing with the recommendation, specify what type of breakdown (subsectorization) would be most useful and how you would use this information. *GFSM 2014 Update Consultation: March 2026 — Discussion Note* ### Annex: Data reporting of extrabudgetary units - Observation: - Extrabudgetary units are defined in GFSM 2014 but receive only passing reference in the 2025 SNA and ESA 2010; outside the IMF’s GFS framework, statistical reporting on extrabudgetary units is very limited. *GFSM 2014 Update Consultation: March 2026 — Discussion Note* *Source: 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-march2026 - Section 2 ### Current reporting practices in EU countries - EU countries generally do not separately report the net lending of extrabudgetary government units; instead they include them at the subsector level (i.e., central government, state governments, local governments, social security funds). - Table 2 of the Excessive Deficit Procedure reporting has 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. ### Availability in the IMF GFS database and implications - 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. - The discussion note interprets this limited availability as an indication that requiring additional breakdowns might be fruitless. ### Trade-offs in possible data requirement extensions - If data requirements on extrabudgetary units were extended, decisions would have to be made with respect to which data points should be required for each subgroup of extrabudgetary units. - Currently some countries show the full accounts of extrabudgetary units. - Requiring only the net lending (“budget balance”) has the following characteristics: - Might provide valuable information for advanced users because there tends to be more information (both on plans and on intra-year realizations) for the core budgetary unit. - Would imply that countries would not need to show consolidating elements within subsectors (i.e., 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/group-1/discussion-note-26-further-defining-and-subclassifying-extrabudgetary-units-consultation-march2026.pdf_