The General Government Sector in the National Accounts

The ESA 2010 defined the consolidation perimeter of the government, in other words, the entities (named institutional units) to be considered for the purpose of the calculation of the deficit and the public debt. Under the ESA 2010, a unit that is to be classified as an institutional unit requires two conditions: to have decision autonomy and complete accounting. Decision autonomy is understood to be (1) the right to be the owner of goods and assets and to be able to transact them, (2) to be able to make economic decisions, (3) to be able to contract liabilities, and (4) to be able to elaborate autonomous accounting records. The definition of the sector that belongs to an institutional unit depends, in the first place, on the control of that unit. Control is understood to be (1) able to determine a general policy and (2) able to choose the management board and (3) to hold more that 50% of the capital (which is considered to be sufficient but is not necessary a condition for control). Non-market institutional units are understood to be any institutional unit that does not fulfil the market revenue rule: whereby more than 50% of the total costs are covered by market revenue (revenue by sales at an economically significant price).