## Proposed Recommendations: 2.6 Further defining and subclassifying extrabudgetary units ## Source details **Canonical URL:** [Proposed Recommendations: 2.6 Further defining and subclassifying extrabudgetary units](https://www.imf.org/-/media/files/data/statistics/gfsm/global-consultations/proposed-recommendations-gfsm-2014-update-26-further-defining-and-subclassifying-extrabudge.pdf) ## Other formats - [Markdown version](/-/media/files/data/statistics/gfsm/global-consultations/proposed-recommendations-gfsm-2014-update-26-further-defining-and-subclassifying-extrabudge.pdf.md) - [Structured JSON version](/-/media/files/data/statistics/gfsm/global-consultations/proposed-recommendations-gfsm-2014-update-26-further-defining-and-subclassifying-extrabudge.pdf.json) --- ### Summary - Global Consultation(s): GFSM: March 2026 - Discussions at GFSAC Meeting(s): January 2026 - Objective: Improve the definition and expand the description of extrabudgetary units (EBUs) in the government finance statistics manual (GFSM). - Key recommendations: - Clarify the definition of EBUs to align with the revised 2025 SNA by replacing “nonmarket NPIs” with the broader terms “nonmarket producers” or “nonmarket institutional units”. - Provide practical examples for distinguishing EBUs from administrative accounts and “off-budget” funds. - Do not further subdivide EBUs because limited data availability and additional compiler burden would reduce practical value. ### Background and core issues - GFSM 2014 distinguishes budgetary and extrabudgetary units and defines EBUs as government entities with their own budgets that are not fully covered by the main government budget. Governments may establish such entities for a wide range of purposes, including funds financed by earmarked transfers and entities delivering nonmarket services such as health and education. If these entities meet the criteria to be an institutional unit, they are classified as extrabudgetary units; there may also be situations where a public corporation is reclassified as an extrabudgetary unit. - Identified issues: - Issue A — Reviewing the definition of EBUs in light of changes in the 2025 SNA: - 2025 SNA glossary defines central government as including “those nonmarket producers controlled by the central government” (paragraph cited). Paragraph 5.195 defines the central government subsector as “consists of the institutional unit or units making up the central government plus those non-market producers that are controlled by central government”, replacing GFSM 2014 paragraph 2.85 language referring to “nonmarket NPIs”. - GFSM 2014’s term “nonmarket NPIs” is too narrow and excludes other nonmarket producers; it should be replaced by “nonmarket producers” or “nonmarket institutional units”. GFSM 2014 paragraph 2.59 beginning should be rewritten as: “the general government sector does not include entities classified as public corporations”. - Issue B — Clarifying guidance on identifying and differentiating EBUs: - Confusion arises between EBUs and “off‑budget” funds that are merely special deposit accounts within budgetary government and not separate institutional units. - Guidance lacks examples of units mainly engaged in financing activities (e.g., trusts and funds where government bears all risks and rewards), and many narrow, nonmarket special‑purpose units. - Decision on GFSM Update research project 1.26 “Treatment of trusts and other types of funds as separate institutional units” provides additional clarity on when to treat such entities as institutional units (and thus EBUs) rather than part of budgetary government. - GFSM 2014 paragraphs 2.82 and 2.83 could be expanded to include a broader range of common EBUs (e.g., public transport companies, universities, public hospitals, price/trade regulators, compensation funds, wealth funds, guarantee funds, petroleum/oil funds, environmental fund). - The distinction between budgetary and extrabudgetary is not always clear cut; borderline cases require compilers to carefully apply the institutional unit definition (GFSM 2014 paragraph 2.22). - Issue C — Subsectorization of EBUs: - Considered options: functional classifications (COFOG, ISIC) or splitting EBUs into producing entities (extrabudgetary nonfinancial producers and extrabudgetary financial producers) and extrabudgetary funds (entities paying out transfers). - Downsides: additional compilation burden, limited data availability, and potential inconsistent application. ### Proposed recommendations (explicit) - To address Issue A: - Revise the definition of general government and its subsectors to replace “nonmarket NPIs” with “nonmarket producers” or “nonmarket institutional units” (in line with the 2025 SNA). - Rewrite the beginning of GFSM 2014 paragraph 2.59 as: “the general government sector does not include entities classified as public corporations”. - Revise GFSM 2014 paragraphs 2.76, 2.85 and 2.95 to align with the definition of central, state and local government sectors included in the glossary and text of the 2025 SNA. - To address Issue B: - Expand guidance in GFSM 2014 paragraphs 2.82 and 2.83 to include a broader range of common EBUs, including partially budget‑funded nonmarket units and self‑financed government‑controlled entities funded through compulsory fees, assigned taxes, or natural resource revenues. - Clarify that “off‑budget” funds that do not constitute institutional units should be recorded within budgetary central government and provide guidance to facilitate this distinction. - To address Issue C: - Do not include any further subdivision of extrabudgetary units in the updated GFSM. ### Rationale - Strengthen understanding and classification of extrabudgetary units while balancing analytical usefulness with compilation burden. - Further subdivision, while potentially analytically useful, would impose additional compiler burden and may yield limited practical value due to data limitations and inconsistent application. ### Proposed text excerpts for GFSM Update (selected, with paragraph numbers) - Proposed addition to paragraph 2.41: - Entities with separate legal identity and substantial autonomy, with direct revenue sources (including earmarked taxes or compulsory fees) that may not be channeled through the main budget, and that satisfy the criteria to be an institutional unit (see paragraphs 2.22 and 2.80), should be treated as separate government units (often referred to as extrabudgetary units). Conversely, “off-budget” arrangements that merely constitute special deposit or other accounts of a budgetary unit, and do not meet the criteria for an institutional unit, should be recorded within the relevant budgetary government unit. - Proposed paragraph 2.58 (general government sector composition): - The general government sector consists of resident institutional units that fulfill the functions of government as their primary activity. The general government sector comprises: - All government units of central, state, provincial, regional, and local government, and social security funds (see paragraphs 2.76–2.103) imposed and controlled by those units - All nonmarket producers, including NPIs, that are institutional units and are controlled by government units (see paragraph 2.83). - Proposed rewrite of paragraph 2.59: - “The general government sector does not include entities classified as public corporations, even when all the equity of such corporations is owned by government units, nor quasi-corporations that are owned and controlled by government units. However, unincorporated enterprises owned by government units that cannot be treated as are not quasi-corporations remain integral parts of those units and, therefore, must be included in the general government sector.” - Proposed paragraphs 2.76, 2.81, 2.82, 2.83, 2.85 and 2.95 (highlights): - 2.76: general government includes all government units and all nonmarket producers, including NPIs, that are institutional units and are controlled by government units; subsector disaggregation is often necessary. - 2.81: budgetary central government typically covered by the main budget; distinction between budgetary and extrabudgetary units is not always clear cut; compilers should carefully apply criteria for identifying an institutional unit. - 2.82: General government entities with individual budgets not fully covered by the main (or general) budget are considered extrabudgetary. These entities operate under authority or control of central, state, or local government and may have their own revenue sources (including earmarked taxes, compulsory fees, or other assigned revenues), which may be supplemented by grants. Entities may be established to carry out specific functions (road construction, nonmarket production of health or education services, financing activities such as special‑purpose trusts and funds where government bears the risks and rewards). Conversely, “off-budget” arrangements that merely constitute special deposit or other accounts of a budgetary unit, and do not meet the criteria for an institutional unit, should be recorded within the relevant controlling budgetary government unit. - 2.83: Nonmarket producers, including NPIs, that are institutional units and are controlled by government are typically classified as extrabudgetary units when they satisfy the criteria to be an institutional unit and are classified with the level of government that controls them. All NPIs allocated to the general government sector should retain their identity as NPIs in statistical records. - 2.85 and 2.95: central and local government subsector definitions to include institutional units plus those nonmarket producers, including NPIs, that are institutional units and are controlled by the respective level of government. --- _Source: https://www.imf.org/-/media/files/data/statistics/gfsm/global-consultations/proposed-recommendations-gfsm-2014-update-26-further-defining-and-subclassifying-extrabudge.pdf_