About
SNA News and Notes
SNA News and Notes
Issue 9, May 1999
Economic
Statistics at the 30th Session of the Statistical
Commission
By Károly Kovács,
UNSD (For Information)
The Statistical Commission
met from 1–5 March 1999 and discussed several issues on economic
statistics. Documents for the meeting are available in all the six official
languages of the United Nations at the following homepage:http://unstats.un.org/unsd/statcom/sc99.htm
The Commission approved
the ISWGNA proposal for an updating mechanism for the 1993 SNA, already
described in the newsletter (issue no. 7.). The only amendment to the
proposed mechanism refers to the period that the member states of the
Statistical Commission are given for final approval of an amendment -
this period was extended from 30 to 60 days. With regard to the specific
amendments, the Commission agreed in principle with the one referring
to the treatment proposed for financial derivatives, but asked the ISWGNA
to consider specific comments made on the text and recirculate the redrafted
text to all national statistical offices. The Commission also approved
the draft Classifications of Expenditure According to Purpose. With respect
to the milestone assessment it was recalled that its purpose had been
to create an instrument to assess progress and/or to identify difficulties
encountered by countries or groups of countries in their implementation
efforts so as to focus better on technical cooperation activities. In
this regard the secretariat was asked to strengthen the analytical portion
of the milestone assessment.
The Commission welcomed
the improved reporting format on the activities of city groups and reemphasized
the need for city groups to formulate a clear objective and agenda. The
evaluation report on the ICP was commended and it was noted that while
the ICP served several important needs, in its current form it suffered
from some serious drawbacks, which hampered its effectiveness. For more
information please refer to ICP News, April 1999 and to Commission documents.
It was acknowledged at the meeting that the IMF's Special Data Dissemination
Standard (SDDS) has had positive impacts on the statistical systems of
many countries, but concerns were expressed about the proposed extension
to the area of external debt statistics.
UNSD's
support to SNA implementation in developing countries
By Jan W. van Tongeren,
UNSD (For Information)
UNSD's programme on
SNA implementation is executed in close collaboration with other international
and bilateral programmes. In the regional context, pilot compilation in
one or more countries is established and the experiences are disseminated
through regional seminars, workshops and technical reports. UNSD's support
of SNA compilation is generally based on a computerised approach, which
aims at systematising the compilation and linking it electronically to
other statistical databases. It aims at extending the limited GDP compilation
in most countries to institutional sector accounts, and in particular
the household and non-financial corporate sector accounts, as a means
of improving the statistically weakest parts of the accounts. As such,
it further developed the analytical potential with regard to social issues
(household sector accounts broken down by subsections and extended to
social data) and the link between production and financial flows including
direct (foreign) investment flows. This is part of an effort to bring
national accounting as close as possible to the user's needs by appropriate
design of detail and scope of the national accounts, including satellite
accounts, and by linking accounts to indicator and other analyses.
In Africa, UNSD is
supporting two programmes. The first one focuses on Mozambique, but with
extensions to other Portuguese speaking countries in Africa. The second
programme is in Ghana and Cote d'Ivoire. Once these programmes are implemented,
similar efforts may be undertaken in other countries of the Economic Community
of West African States (ECOWAS).
In Central America,
a close cooperation has been established between UNSD and the Central
American Monetary Council (Consejo Monetario para America Central). Its
emphasis is on establishing links between national accounting and 'financial
programming' as supported by the IMF. GDP compilation is extended to institutional
sector accounts with particular emphasis on financial accounts and balance
sheets for most sectors. A computerised compilation approach with this
orientation is being implemented in Costa Rica and Guatemala.
Other efforts are
also underway in the Caribbean in close co-operation with CARICOM and
a subgroup of countries through the Organization of East Caribbean States
Secretariat and the East Caribbean Central Bank. In 1997 a workshop organized
in St. Vincent by CARICOM was used to develop a programme of inter-country
co-operation. The emphasis of the programme is on developing simple accounts
for small island economies, including limited institutional sector accounts,
and tourism accounts within the supply and use table of the SNA. Also,
links are being established between accounting and indicator analysis
and modelling.
In Colombia support
has been given to the implementation of environmental accounting. A future
Human Resource Accounts (HRA) programme is also envisaged, based on recently
developed household sector accounts. A similar programme in Bolivia emphasizes
the integration of SNA and SAM approaches to household sector and socio-economic
accounts, and also includes the development of socio-economic indicators
for policy analysis.
In Asia an effort
has been started in the Philippines with particular emphasis on institutional
sector accounts, as an extension of the present supply and use compilation.
Two training seminars have been conducted for staff of the Philippines
National Statistical Co-ordination Board and staff of other government
agencies. It is expected that, through these efforts, Philippines staff
in the future will be able to assist in implementing the SNA in other
countries in the region. In Korea, a programme in the National Statistical
Office has been supported to develop household sector accounts and their
extension to social data, i.e. HRAs for integrated socio-economic analysis.
The present programme in Korea focuses on education, but can be potentially
extended to other areas of socio-economic analysis.
Purchasing
Power Parities (PPP)
By Paul McCarthy,
OECD (For Information)
Question: What
are PPPs?
Answer: In
their simplest form PPPs are price relatives which show the ratio of the
prices in national currencies of the same good or service in different
countries. A more technical definition of PPPs is that they are the rates
of currency conversion that equalize the purchasing power of different
currencies by eliminating the differences in price levels between countries.
The major use of PPPs is as a first step in making inter-country comparisons
in real terms of GDP and its component expenditures.
Question: How
are PPPs calculated?
Answer: The
easiest way to see how a PPP is calculated is to consider a good which
is identical in two countries. A simple example would be a litter of Coca
Cola. If it costs 15.00 francs in France and $2.00 in America then the
PPP for Coca Cola between France and the USA is 15.00/2.00, or 7.50. This
means that for every dollar spent on a bottle of Coca Cola in the USA,
7.50 francs would have to be spent in France to obtain the same quantity
and quality - or, in other words, the same volume - of Coca Cola. PPPs
are not only calculated for individual commodities; they are also calculated
for various groups of commodities (e.g., refreshments, vegetables).
Question: What
is the relationship between PPPs and the national accounts?
Answer: An
important use of national accounts is to make international comparisons
of the size of different economies. Calculating PPPs is the first step
in the process of converting the levels of GDP and its major aggregates,
expressed in national currencies, into a common currency to enable these
comparisons to be made. While there is some interest in PPPs as measures
of price levels, their most important use is as an intermediate step in
calculating levels of GDP (or of GDP per capita) and its major components
in a common currency.
Question: How
are PPPs calculated for GDP?
Answer: The
calculation is undertaken in three stages: first, at the commodity level,
where price relatives are calculated for individual goods and services;
then, at the commodity group level, where the price relatives calculated
for the commodities in the group are averaged to obtain unweighted PPPs
for the group; and finally, at the broader aggregation levels right up
to GDP, where the PPPs for the commodity groups covered by the aggregate
are weighted and averaged to obtain PPPs for the aggregate. The weights
used to aggregate the PPPs in this last stage are the expenditures on
the commodity groups.
Question: What
are the drawbacks to using exchange rates to convert GDP to a common currency
for international comparison purposes?
Answer: There
are two major disadvantages. First, exchange rates vary from day to day
and sometimes change abruptly - perhaps because of speculation against
a currency or because of changes in interest rates. If GDP is converted
into US dollars using exchange rates, the size of a country's economy
will also appear to vary from day to day and undergo abrupt shifts for
reasons that have nothing to do with the actual levels of economic activity
in that country. This volatility can be overcome to some extent by using
averaging devices, such as the Atlas method employed by the World Bank,
although the results can be distorted if exchange rates change rapidly.
A second disadvantage is that exchange rates do not simply reflect the
relative prices of goods and services produced in a country – they
are affected by the relative prices of tradable goods and by factors such
as interest rates, financial flows etc. So the use of exchange rates to
convert a service such as a haircut may give inappropriate answers and
the PPP approach is to be preferred conceptually. When the GDP of different
countries is converted to dollars using PPPs, they are all being valued
at a common set of prices. As with a time series of GDP at constant prices,
it then becomes possible to compare the underlying volumes.
Question: Are
PPPs a substitute for exchange rates in making international comparisons?
Answer: It
would be a mistake to think of PPPs as a substitute for exchange rates
in making international comparisons. In fact, they are complementary because
PPP based comparisons are useful in specific situations, such as that
described above, while exchange rate based comparisons are more appropriate
in others. For example, if an analyst wanted to work out how much could
be imported with the proceeds from a particular level of exports then
it would be necessary to use exchange rates rather than PPPs.
Question: What
does it mean if a PPP differs from the corresponding exchange rate?
Answer: The
simple example above of the price of a litter of Coca Cola in France and
the USA can show the implication of any such divergence. For example,
if the PPP for GDP turned out to be 7.50 francs to the dollar and the
actual exchange rate was 6.00 francs to the dollar, an American changing
dollars for francs at this exchange rate would find the level of prices
in France higher than at home.
Can
reinvested earnings on direct foreign investment (D.43) be negative?
By Christian Ravets,
EUROSTAT (For Information)
The conclusion in
the EU Working Group was that the recording of negative reinvested earnings
does have a real economic meaning. Namely if resident enterprises
that are direct investment enterprises owned by non-residents make a loss,
a negative flow D.43 correctly reduces national income of the country
where the parent company is located and increases the national income
of the country of production. The latter corresponds to all primary incomes
received by resident institutional units. Analogously, losses made in
the rest of the world by non-resident enterprises owned by resident units
correspond to a reduction in their national income.
Another explanation
for the occurrence of negative reinvested earnings is that dividends are
to be recorded as of the moment they are declared payable (1993 SNA paragraph
3.99). A significant difference between a given year's profits and the
dividends paid during that year might be observed, since the latter are
linked to the enterprise's earlier results. When actual distribution,
in the form of dividends (or withdrawals of income from quasi-corporations),
is higher than the operating surplus of a direct foreign investment enterprise,
the flow D.43 becomes negative. Of course, if reinvested earnings are
persistently negative for entire industries, this could be a result of
errors in the way they are measured.
Mexico
publishes Institutional Sector Accounts
By Antonio Puig
Escudero, National Institute of Statistics, Geography and Informatics,
Mexico (For Information)
By the end of 1998,
the National Institute of Statistics, Geography and Informatics (INEGI)
concluded the preparation of Institutional Sector Accounts of Mexico for
the period 1993-1997, to be published annually. The recommendations of
the SNA 1993 were followed in compiling these accounts. The basic information
used for integrating the accounts came from various sources (inter alia,
tax and company registries, public finance and balance of payments statistics,
sector-based surveys and household surveys, economic and agricultural
censuses).
The following institutional
sectors are defined for the Mexican economy: non-financial corporations
within which private and public capital corporations are distinguished;
financial corporations, both private and public capital corporations
including banks, insurance companies, retirement funds, and other financial
intermediaries (securities firms, factoring companies, financial leasing
companies, etc.); general government comprised of central and local
government, and social security institutions; household which distinguishes
producing households; non-profit institutions serving households
and the rest of the world. Regarding the "size" of these
sectors it can be observed that non-financial corporations generate 52.4%
of the total Mexican GDP; financial corporations 4.7%; general government
9.3%; households 33.1%; and non-profit institutions serving households
0.5%.
The complete sequence
of accounts up to the financial account was compiled for each of the above-mentioned
institutional sectors. It is important to note that Institutional Sector
Accounts in Mexico incorporate matrices of flow of funds.
The entire System of Mexican National Accounts comprises annual
accounts, quarterly accounts, some monthly accounts, national and
state accounts, economic sector accounts and institutional sector accounts.
It also includes a set of satellite accounts, such as for example accounts
for the Maquilladora exporting industry, for the Tourism Sector and for
the environment. [For further information about the National Account System
of Mexico send your e-mail to apuig@cnes.inegi.gob.mx].
Implementation
of the SNA/ESA in Romania
By Clementina Ivan
Ungureanu and Adriana Ciuchea, National Commission for Statistics, Romania
(For Information)
Romanian stastisticians
began the implementation of the System of National Accounts (SNA) in 1989.
Before 1989, macro-economic aggregates were compiled according to the
Material Product System (MPS). First estimates according to the SNA were
obtained by converting the MPS estimates into ‘SNA-type estimates’
for the period 1989-1990. The starting point for the conversion was the
Net Material Product created in the material sphere and calculated according
to the MPS. Since 1991 the estimates have been compiled in accordance
with the ESA 1979. In 1991, macro-economic indicators were also converted
into SNA-type estimates backward to 1980. Three stages of implementation
of the SNA/ESA are identified in Romania. During the first stage, 1989-90,
sector accounts at current prices and input-output tables at current and
constant prices were compiled. The second stage, 1991-92, is characterised
by the start of the implementation of the SNA/ESA recommendations; improvements
to data collection (enterprise accounting reports and classifications)
were also introduced. The third stage began in 1993. The period was characterised
by very high rates of inflation, the start of privatisation, introduction
of value added tax and substantial changes in the business accounting
system; new statistical, financial, accounting and administrative sources
of information became available. All these changes had to be reflected
in the accounts.
The Romanian annual
national accounts cover input-output tables in current and constant prices
and sector accounts. Provisional annual GDP estimates are available 2
months after the year; and final estimates within 2 years after the end
of the reference year. Sector accounts and input-output tables at current
and constant prices (broken down by 105 industries) have been published
for 1989-95. Since 1993 financial accounts have been compiled and published
by the National Bank of Romania in co-operation with the NCS. Quarterly
national accounts have been compiled, on an experimental basis, since
1994. The publication of the quarterly estimates began in 1998. Regional
accounts for 1993 and 1994 are also compiled using a ‘top-down’
approach.
Future work comprises
improvement of the coverage and the quality of the estimates. A major
task is the implementation of the 1993 SNA/ESA 1995. The Romanian national
accounts already include some aspects of the new system, such as basic
price evaluation of output and value-added, the use of chain indices in
calculating the constant price estimates and certain elements of the gross
fixed capital formation according to the 1993 SNA. The full implementation
of the 1993 SNA/ESA 1995 is planned for the 1998 estimates. A revision
of the accounts back to 1990 is also planned.
AFRISTAT's
programme for the implementation of the 1993 SNA
By Hubert Gbossa,
Afristat, Mali (For Information)
AFRISTAT is an international
organization, which comprises 16 member states from sub-Saharan Africa
(including Comoros). The purpose of AFRISTAT is to further the statistical
development of its member states. In the area of national accounting the
objective is to develop and implement harmonized methods for the compilation
of the accounts within a common conceptual framework based on the 1993
SNA. Harmonized methods were defined by a group of experts from the 16
countries during a series of workshops, which were organized by AFRISTAT.
The common conceptual framework (scope of the accounts, economic classifications
etc.) was also discussed during these meetings. A handbook, which describes
all the methods which have been elaborated, is being prepared. Furthermore,
training workshops on the 1993 SNA and the harmonized methods are being
organized.
The ERETES software,
which is a tool to compile national accounts, will support the practical
implementation (see also newsletter No. 5). The accounts of Central African
Republic, Cameroon, Cote d'Ivoire, and Chad are already based on the 1993
SNA. In Mali the implementation efforts are well underway. For the members
of the West African Economic and Monetary Union, programmes will soon
be launched with financial support from the European Union. The implementation
programme for the remaining countries has been formulated and at present
efforts are being undertaken to secure the necessary funding. This approach
will take several years, but it is expected that the member countries
of AFRISTAT will all have reached levels 3 or 4 of the milestone definition
elaborated by the ISWGNA by the year 2005, whilst at the same time satisfying
the conditions laid out in the IMF General Data Dissemination System.
Formation
of an Intersecretariat Working Group on Price Statistics
By Kimberly Zieschang,
IMF (For Information)
A new Intersecretariat
Working Group on Price Statistics (IWGPS) was formed in late September
1998 by the Statistical Office of the European Communities (EUROSTAT),
the International Labor Office (ILO), the International Monetary Fund
(IMF), the Organization for Economic Cooperation and Development (OECD),
the UN Economic Commission for Europe (ECE), and the World Bank. The mission
of the IWGPS is to develop manuals on international best practice in compiling
statistics for major price indices. The first project that has been undertaken
is a new manual on the CPI, updating the ILO manual published in 1989
(Consumer Price Indices; An ILO Manual).
A technical expert
group on the CPI (TEG-CPI) was formed under the coordination of the ECE
in February 1999 and is in the process of finalizing the chapter outline
for the manual. The TEG-CPI will meet again on the occasion of the next
Ottawa Group meeting in Reykjavik, Iceland during 25-27 August 1999, and
papers on topics to be covered in the draft outline will be presented
at the ECE/ILO meetings on the Consumer Price Index in Geneva, Switzerland
during 3-5 November 1999. A technical expert group on the Producer Price
Index (TEG-PPI) will be formed under the coordination of the IMF and will
organize its work in step with that of the TEG-CPI to ensure that the
manuals have consistent organization and use consistent concepts and terminology.
The last international manual on producer prices was published by the
UN in 1979 (Manual on Producers' Price Indices for Industrial Goods, Statistical
Papers Series M, No. 66). An important objective in the design of the
manuals is to coordinate their recommended concepts and methodology with
international standards for compilation of economic statistics, including
the 1993 System of National Accounts.
Accrual
Accounting of Interest: three concepts
By Cor Gorter,
IMF (For information)
SNA News and Notes
Issue 5 reported that an Expert Group on Monetary and Financial Statistics
that convened at IMF headquarters in November 1996 suggested clarifying
the 1993 SNA treatment of interest accruals on tradable debt securities.
What is the issue? Many people read the 1993 SNA as saying that the overall
interest accrued on a tradable debt security is equal to the difference
between (i) the amount of money the creditor provides to the debtor at
inception, and (ii) all payments the debtor promises to make to the creditor.
In other words, the agreement between the original parties defines the
amount of interest payable. This implies that, during the full life of
a fixed-rate debt security, the accrual of interest reflects the market
conditions as of the time the security was created.
This concept of interest
causes measurement problems when a tradable security is sold, because
the new owner may not know what the originally agreed interest was. That
will occur especially when the SNA interest is not fully mirrored by coupon
payments (think, for instance, of bills or discounted bonds). However,
the new owner does know (i) the price at which the security is bought
and (ii) all remaining payments by the debtor and their spread in time.
From these data, the new owner can derive an interest, or discount, rate
which reflects market conditions at the moment of acquisition (rather
than of the security's inception). The fifth edition of the Balance of
Payments Manual recommends recording this 'acquisition' concept of interest
in specific cases. There is still a third school of thought. Supporters
of this school think that interest accrues according to current market
prices at any point in time. In every recording period, interest could
then be computed by comparing (i) the average market price of the security
during the recording period and (ii) the remaining payments by the debtor.
It is impossible to know in advance how much interest a fixed-rate security
will carry because, as Peter Hill eloquently put it in an unpublished
1996 note, "The total return on a security may be fixed at the time
it is issued, but not the split between holding gains and interest, (…).
Only if there are no price changes, is it all interest."
These three notions
of interest lead to important differences in the flow accounts. In choosing
the best one, both conceptual and measurement arguments may be important.
What is your opinion? Please contact accrual@imf.org to express your views
or to request background documents.
Electronic
discussion group: treatment of nominal holding gains and interest on financial
assets
By Robin Lynch,
World Bank (For Information)
The treatment of nominal
holding gains and interest on financial assets under conditions of high
inflation is under current debate. Major talking points are whether negative
real interest should be shown in the primary income account when adjusting
interest for inflation, and whether nominal holding gains on loans in
national currency can be anything but zero. The ISWGNA has been asked
to consider whether the SNA 93 should be revised, in the light of the
debate. In order to investigate the issues further, the ISWGNA has asked
the World Bank to set up an electronic discussion group. If you are interested
in finding out more, and participating in the discussion, please contact
Robin Lynch at RLynch@WorldBank.org for information
on how to join the group. You can also find out by accessing the World
Bank data web-site at http://www.worldbank.org/data/working/working-iswgna.html.
Relevant reading material is Annex B to Chapter XIX of the 1993 SNA, and
the OECD Manual on Inflation Accounting. Further existing relevant material
will be made available through the discussion group and web-site.
Electronic
discussion group: cost of transferring ownership of assets
By Paul McCarthy,
OECD (For Information)
A note was included
in the last issue of SNA News and Notes briefly describing a Singapore
Department of Statistics paper recommending a change in the treatment
of the costs of transferring ownership of assets. The ISWGNA has now set
up an internet page to obtain feedback on this issue. The page is on the
OECD national accounts web site. It can be accessed at www.oecd.org/std/nahome.htm
by clicking on the button "Papers under discussion". You can
have your comments on this issue put on to the internet discussion page
by e-mailing them to the contact address shown on that page.
SNA
News and Notes on the world wide web
By Károly Kovács,
UNSD (For Information)
The quickest way to
publish information today is via the internet. Since its inception the
SNA News and Notes has been made available both in print and via the internet.
Please find here listed the web addresses where you can find access to
the various language editions.
All the issues of
the newsletter published so far can be found on the United Nations Statistics
Division homepage in four languages: www.un.org/Depts/unsd/sna/sna.htm.
The Spanish version is originally placed on the Economic Commission
for Latin America and the Caribbean homepage: www.eclac.cl/espanol/estadisticas/scn93_nn.htm
and the Russian version placed on the homepage of the International
Monetary Fund: www.imf.org/external/pubs/ft/sna/default.htm
Links have been established between these websites. Try to reach one of
the above listed homepages and be encouraged to use the search feature
that makes the electronic format even more convenient and efficient to
use.
Acknowledgement
of Mr. Pierre Muller (INSEE) (For Information)
The following text
acknowledging the contribution of Mr. Pierre Muller is included in the
French language edition of the 1993 SNA, but was unfortunately omitted
in other language editions:
"Throughout the
period 1991 to 1993, the various authors benefited from the thorough and
extensive written comments on all the draft chapters made by Messrs. Andre
Vanoli and Pierre Muller (INSEE France) working in close collaboration
with each other."
Meetings,
seminars (For Information)
7 June - 16 July 1999
Training course in the 1993 SNA organized by IMF, Washington
July - August 1999
World Bank seminar on PPPs
20 September 1999
A workshop on accounting for depletion in the national accounts, organized
by OECD, Paris
21 - 24 September
1999 Annual Meeting of OECD national accountants, Paris
27 September - 1 October
1999 A UNSD and UNESCAP Workshop on International Economic and Social
Classifications in collaboration with the Australian Bureau of Statistics
is to be held in Canberra, Australia. The workshop is to focus on the
implementation and use of activity and product classifications (with special
attention to ISIC and CPC in the Asia and Pacific region).
11-15 October 1999
UNECA workshop on the corporate sector for African French speaking countries,
Addis Ababa, Ethiopia.
8-12 November 1999
Workshop on the Implementation of the 1993 SNA with emphasis on Regional
Accounts for Latin America, organized by UNSD, UNECLAC, INEGI, Aguascalientes,
Mexico
8-10 November, 1999
Meeting of the Camberra Group on Capital Stock Estimates, organized by
BEA/BLS in Washington D.C.
31 January-11 February 2000, Training course in the 1993 SNA organized
by IMF in Abidjany, Cote d'Ivoire.
Editorial
Note
SNA News and Notes
is a bi-annual information service of the ISWGNA prepared by United Nations
Statistics Division (UNSD). It does not necessarily express the official
position of any of the members of the ISWGNA (European Union, IMF, OECD,
United Nations and World Bank)
SNA News and Notes
is published in four languages (English, French, Russian and Spanish)
and can be accessed on the internet: http://www.un.org/Depts/unsd
Correspondence including
requests for free subscriptions should be addressed to:
UNSD, Room DC2-1720,
New York, NY 10017;
tel.:+1-212-963-4854,
fax:+1-212-963-1374,
e-mail: sna@un.org
| 
