National Accounts Guidelines for ICP 2011

1. National Accounts Guidelines for ICP 2011 3rd ICP 2011 Technical Advisory Group Meeting at the OECD, Paris  10, 11 June 2010

2. Some Background • Emphasis was on price collection • Belated attention to National Accounts • Different estimates for GDP and population Situation in 2005 Lessons learnt • Need to establish process to determine GDP and population for the ICP • Improved editing procedures required • Ensure consistency between expenditures and survey prices

3. Some Background (cont’d) Proposed Procedures for 2011 • A step by step approach • Tables/questionnaires were developed to guide the countries • Testing in Oman, Lebanon, Kenya, Ethiopia, Hong Kong

4. Questionnaire on Estimation of BHs for the 2005 ICP Objectives • Set 2005 as starting point for the 2011 estimation • Ensure consistency between 2005 and 2011 • Establish how expenditures on basic headings were estimated for ICP 2005 • Document the 2005 compilation • Describe the sources for each • Show how data from original sources were adjusted for time; coverage; or definitions Recommended tasks

5. Questionnaire on Estimation of BHs for the 2005 ICP (cont’d) • Values obtained from the national accounts • Original data source used to estimate expenditure • Estimated expenditure in year of data source • Adjustments made to data from original data source • Brief explanation of adjustments • Expenditure reported for ICP 2005 Details required Mission Outcomes • Details available in 4 of the 5 countries • Time consuming

6. Commodity Flow Matrix Description • It shows how the supply of a product is distributed among intermediate and final uses • Valuation at purchasers’ prices • To be completed for products identified as important in relevant BH in any individual country • GDP could be derived: • either as total supply less intermediate consumption • or as total final expenditures plus net exports If all products were included

7. Commodity Flow Matrix (cont’d) • Total supply at purchasers' prices = • domestic production at basic prices • + imports at c.i.f. values • + trade and transport margins • + taxes on products • = Total use at purchasers’ prices Basic Equalities • Total use at purchasers' prices = Intermediate consumption + household final consumption expenditure + government final consumption expenditure + gross fixed capital formation + change in inventories and net acquisitions of valuables + exports (f.o.b.) Mission Outcomes • Full support from all 5 countries • Support for further development of SUTs but as long-term goal

8. Important Products Objectives • Improve and streamline GDP breakdown • Propose items to the regional list of specifications • Consistency between expenditures and prices • Better compile commodity flows • Describe the sources • Estimate quantities, prices and total expenditures for each of these products – even roughly Recommended Tasks

9. Important Products (cont’d) • Data sources used for average prices; quantities; values • Indicators to extrapolate forward from latest benchmark Details required Mission Outcomes • All countries could identify important products • Values could be identified in most cases • Quantities and hence average prices not available

10. Price Formation Objectives • Provide more details on important products • Consistency between expenditures and prices • Better compile commodity flows • Important products (domestically-produced and imported) • Household final cons exp and GFCF • Designed to systematically adjust values recorded at basic prices to the ICP-required basis of purchasers' prices • All individual steps required are shown Description

11. Price Formation (cont’d) Basic price (ex-factory price) + taxes on products excluding invoiced VAT less subsidies on products equalsProducers’ price + VAT not deductible by the purchaser + separately invoiced transport charges + wholesalers’ and retailers’ margins + installation costs (capital formation only) equalsPurchasers’ price Basic Equalities Domestic Basic price (c.i.f. unit value) + customs duties + taxes on products excluding invoiced VAT less subsidies on products equalsProducers’ price + VAT not deductible by the purchaser + separately invoiced transport + wholesalers’ and retailers’ margins + installation costs (capital formation only) equalsPurchasers’ price Imported

12. Price Formation (cont’d) Mission Outcomes • None of the 5 countries has data on margins, transport costs or installation costs for individual products • Suggest using this form only in countries that currently have commodity-flow approach or SUTs

13. Check on real expenditure evolution • Aim is to provide some basic edits by comparing the per capita notional real expenditures in 2011 with those in 2005 Objective Description • To be completed by the Regional Offices Data • Expenditure in national currency • Average “price” • Notional real expenditure • Population • Notional real expenditure per capita

14. Check on real expenditure evolution (cont’d) Notional real expenditures for 2011 • Calculate a “price” for a BH as geometric average of the prices provided by a country for products listed under that BH • These BH “prices” are divided into reported expenditures in national currency to obtain the BH notional real expenditures for 2011 • Finally, calculate per capita notional real expenditures for both years and change [in%] from 2005 year to 2011

15. Check on real expenditure evolution (cont’d) Mission Outcomes • Change can be two-fold: • prices [difference in products or price escalation] • actual change in per capita real expenditures • Suggest splitting the table into 2 parts Prices: to assist in editing the prices collected N.A.: Focus on BHs that behave significantly differently from related BHs

16. SNA93 Compliance Check Elements affecting the level of GDP • Is government defence expenditure on fixed assets that can be used for civilian purposes included in GCF? • Is CoFC included on all government fixed assets (roads, dams etc)? • Is all mineral exploration (successful and unsuccessful) capitalized? • Is expenditure on computer software purchases included in GCF and on software development included in output? 16

17. SNA93 Compliance Check Elements affecting the level of GDP • Is expenditure on entertainment, literary or artistic originals included in GCF and on their development included in output? • Is expenditure on valuables included in GCF? Mission Outcomes • This form will show whether a country uses an early or recent version of SNA • It was tested only in Hong Kong and it showed that Hong Kong is using SNA93 • To be sent to all countries where there is a need to confirm their SNA version 17

18. Data Validation • Compare GDP and major aggregates with data in the annual national accounts questionnaire • Sum of components equals corresponding aggregates • Signs of potentially negative expenditures • Completeness checks • [Non] Allocation of FISIM • Are net expenditures abroad allocated across products within HFCE • Verify price dynamics from production and imports to final uses for important products

19. Data Validation (cont’d) • Compare average price changes from 2005 to 2011 for each basic heading with overall price changes in the country over this period • Compute per capita expenditures for each BH • Compare shares of GDP contributed by each BH • Compare per capita real expenditures for each BH • Variations in per capita real expenditures for each BH between countries in each cluster • Consistency of PLIs across BHs within a country • Variation of PLIs within BHs between the countries in each cluster

20. Timetable 2011 2012 2013 2010 Major aggregates for latest year possible J N J N BH details for final cons. aggregates for latest year possible J Values for all BHs N J Preliminary data for 2010 J Major aggregates for 2011 J O M BH values for 2011 J O M M= May; J= July; O= October; N=November

21. THANK YOU