National Accounts

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• National Accounts
• ICP
• Regional Course on Price Statistics and ICP
• Male, Maldives
• 25-29 September 2005
• TIMOTHY LOStatistician, International Comparison
  ProgramAsian Development Bank

2
Role of national accounts experts

• ICP 2005 is a joint project involving both price
  statisticians national accountants.
• National accounts experts provide the expenditure
  weights while the price statisticians provide the
  prices.
• A main objective of ICP 2005 is to compare the
  real GDP of participating countries this
  requires good estimates of the level of GDP in
  national currencies.

3
Starting Point for the ICP

• GDP is the starting point for ICP
• Expenditure on GDP is classified into at least
  155 basic headings using four international
  classifications
• COICOP for household expenditure
• COPNI for NPISH
• COFOG for government
• CPA/CPC for gross fixed capital formation

4
SNA 1968 versus SNA 1993

• FISIM
• Allocation to consumers
• Military equipment
• Dual purpose equipment now GFCF
• Illegal production
• Explicitly included
• Valuables as part of capital accumulation
• Software and mineral exploration is GFCF

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1993 System of National Accounts

• ICP 2005 based on the 1993 SNA, but some
  approximations are inevitable. For example
• Non-profit institutions may not be distinguished
  in some countries
• Many countries will not be able to estimate
  transactions in valuables, patented entities
• Most countries do not yet allocate FISIM to
  users
• Few countries estimate value added in illegal
  activities

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Key requirements

• GDP must cover
• Crops and livestock for own consumption
• Goods services sold by informal or
  unregistered producers (ex. food and drinks
  sold by itinerant vendors plumbers, builders,
  electricians etc)
• Significant illegal activities - prostitution and
  drugs
• All government expenditures - for example,
  Military forces, state and local expenditures

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Key requirements

• Dwellings built for own occupancy can be
  constructed from traditional materials or modern
  housing
• Software mineral exploration (as capital
  formation)
• Significant NPISHs
• religious, international funded organisations

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Expenditure on GDP

• There are 7 main ICP expenditure aggregates
• Individual consumption expenditure by households
• Individual consumption expenditure by NPISHs
• Individual consumption expenditure by government
• Collective consumption expenditure by government
• Gross fixed capital formation
• Change in inventories acquisitions less
  disposals of valuables
• Balance of exports and imports

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Expenditure on GDP

• These are further divided into
• 61 Groups
• 126 Classes
• 155 Basic headings (ICP BHs)

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Main expenditure aggregates
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Main Aggregates to Basic Headings

• An example of breaking Main Aggregates into
  category, group, class and basic heading is shown
  in the following link.

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Importance of Basic Headings

• Most detailed level for which weights are
  available
• They are the starting point for participating
  countries to draw up regional lists of the
  specific goods and services for which they agree
  to collect prices.
• The basic headings are used as the framework for
  editing the reported prices
• The ICP organizers will calculate PPPs for the
  basic headings before aggregating them to higher
  levels for publication

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Examples of Basic Headings Food

• 110000 Individual consumption of households
  Main aggregate
• 110100.0 Food and non-alcoholic beverages
  Category
• 110110.0 Food
  Group
• 110111.0 Bread and cereals
  Class
• 110111.1 Rice BH
• 110111.2 Other cereals, flour etc.
  BH
• 110111.3 Bread BH
• 110111.4 Other bakery products
  BH

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Actual individual consumption

• ICP 2005 will compare actual individual
  consumption - not final consumption expenditure

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Who consumes? Who pays?
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Actual individual consumption

• Actual individual consumption of households
• Equals
• Plus
• Plus

• individual consumption expenditure by households
• individual consumption expenditure by NPISHs
• individual consumption expenditure by government

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Expenditure weights will refer to final
consumption expenditure

• Participating countries will need to supply
  weights for final consumption expenditure FCE
  this cover both splits for both household FCE and
  govt FCE.
• Conversion to actual final consumption will be
  done by the ICP organizers.
• Participating countries will need to distinguish
  between individual collective consumption
  expenditures of government.

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Individual consumption expenditure by households

• Actual expenditures
• food, clothing, transport, rent, services.
• Imputed expenditures
• rents of owner-occupiers
• food other goods for own consumption
• goods services provided as income in kind
• FISIM (if allocated to consumers)
• Barter transactions

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Individual consumption expenditure by NPISHs

• Non-Profit Institutions Serving Households
  (NPISHs) are mainly funded by households - either
  residents or foreign households.
• Examples
• religious organizations (mosques, temples,
  churches, schools, clinics, hospitals)
• trade unions
• political parties in multi-party states
• UNICEF, OXFAM, Red Crescent

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Individual consumption expenditure by government

• Most expenditures on housing, health, recreation
  culture, education social protection are
  individual.
• Two kinds
• production of services by government for the
  benefit of individual households
• purchase of goods services by government from
  other producers which are then passed on to HHs,
  either free or at low cost (health education
  only)

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Collective consumption expenditure by government

• Mainly falls under the COFOG headings of general
  public services, defence, public order and
  safety, economic affairs environment protection
• Only one kind - the production of services by
  government. Collective consumption does not
  involve the purchase of goods services for
  delivery to households.

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Gross fixed capital formation (GFCF)

• Goods that are expected to be used in production
  for several years
• GFCF is always measured net of sales
• sales for scrap, sales to abattoirs, exports of
  second-hand assets
• 1993 SNA includes expenditures on software
  mineral exploration in GFCF

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Change in inventories

• Work in progress - construction, ships
• Stocks of raw materials, finished goods, goods
  for resale, goods stored by government as
  strategic reserves, such as food and fuel.
• Estimates may not be comprehensive but should
  cover important items such as food and fuel
  stocks, stocks of mining companies, large
  retailers...

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• Thank You!