National Accounts Section United Nations Statistics Division The 2008 SNA research and implementation programme 14 December 2011 Herman Smith National Accounts Section United Nations Statistics Division

Outline of presentation Changes from the 1993 SNA 2008 SNA research issues 2008 SNA implementation 2

Changes from 1993 SNA Annex 3 of 2008 SNA (pages 581-602) grouped changes as: Further specifications of statistical units and revisions in institutional sectoring Further specifications of scope of transactions including the production boundary Extension and further specification of concept of assets, capital formation and consumption of fixed capital (CFC) Further refinement of treatment and definition of financial instruments and assets Further specifications of the scope of transactions concerning government and public sector Harmonization between concepts and classifications of SNA and BPM6 3

2008 SNA Changes affecting GDP 4

Capitalization of R&D Impacts Capitalization of R&D The activity of R&D is no longer treated as ancillary Expenditure on R&D is treated as capital formation (except those made available free) Impacts Move R&D from intermediate consumption to gross capital formation. This changes GDP by the same amount. Require adding consumption of R&D fixed capital stock to non- market output: increase GDP 5 5

Output for own final use by households and corporations is valued with a return to capital Impacts Output valued by cost increases by an imputed value of return to capital (Need total stock of assets for the calculation of return to capital) GDP increases by the same amount of imputed value Valuation of market producers only Not applicable to non-market producers like government and NPISH 6 6

Capitalization of weapon systems Military Expenditure Fixed assets (Transports and weapons delivery systems, inter- continental missiles, etc.) Change in inventories (bullets, bombs, etc.) Impacts Move expenditure on military equipments from final consumption to gross capital formation: This does not change GDP Require adding consumption of military fixed capital stock to government output: increase GDP 7 7

New way of measurement of FISIM Measurement relies only on interest receivable on loans and interest payable on deposits, ignoring all other investment incomes Loans made from own funds are also treated as generating output FISIM to be allocated between users Impacts Depending on the structure of financial instruments, output of FISIM could increase For example, loans made from own funds will increase FISIM Money lenders output recognized FISIM allocated to final demand and exports will increase GDP 8 8

Unfunded pension funds Impacts Change household consumption Change GDP Imputation There is a cost to administering pension schemes, including non-autonomous and unfunded ones Output to be determined using sum of costs, consumed by employees holding the pension entitlements 9 9

Treatment of ESOs Impacts Treatment of employee stock options as compensation of employees (in kind) It is equal to the difference between the market price and strike price at the vesting date (only when positive) It should be spread between the grant date and the vesting date Treatment has been approved by International Accounting Standards (IAS) and the US Financial Accounting Standards Board (FASB) Impacts Increase compensation of employees of corporations Reduce operating surplus of corporations Do not change GDP but change household income 10 10

2008 SNA Research agenda 11

2008 SNA Research Agenda Annex 4 of 2008 SNA Basic accounting rules: Financial instruments and non-financial assets: The concept of income ISWGNA website (http://unstats.un.org/unsd/nationalaccount/research.asp) Reflects current issues under discussion and new items and recommendations

Approach to SNA Research Agenda How to prioritise research topic? Urgency and importance in ensuring relevance of SNA to users? Consequences of change and difficulty of implementation? Completely new? Preparation already done? Selection of topic Widespread consultation Inclusion of compilers and users

Approach to SNA Research Agenda Coordination Auspices of ISWGNA In consultation with the AEG Task forces/expert groups Worldwide representation in deliberations Update procedure

Current issues under discussion Emission Permits under Cap and Trade Schemes Difference in the time when the permit is issued and when it is surrendered Difference in the initial value and market value The treatment of FISIM Risk management Liquidity transformation Consistency of FISIM in international trade Implications for price and volume measures Globalisation issues Goods for processing and merchanting Global production

implementation programme 2008 SNA implementation programme 16

Implementation programme UNSC in Feb 2010 supported the implementation programme and encouraged countries to develop their own programmes of implementation The Implementation Programme for the 2008 SNA and supporting statistics represents a global statistical initiative

Objective of the Global Statistical Initiative To assist countries in developing the statistical and institutional capacity to: (a) Make the conceptual change over from the 1993 SNA to the 2008 SNA (b) Improve the scope, detail and quality of the national accounts and supporting economic statistics.

Principles of the global initiative The efficiency and sustainability of the initiative rest on the agreed principles of the implementation strategy: (a) strategic planning (b) coordination, monitoring and reporting (c) improving statistical systems

Elements to operationalise the initiative (a) Use National Strategies for the Development of Statistics (NSDS) as the strategic planning framework (b) The programme information structure taking account of the statistical production process, and the scope and compliance for the national accounts and supporting economic statistics (c) The modalities of statistical capacity building include training and technical cooperation, publication of manuals and handbooks, research and advocacy (d) The stages of implementation leading to the change over to the 2008 SNA.

Why a strategic approach? To align the 2008 SNA country programme with national policy priorities and regional requirements Consultative process is system wide Resources are limited Piece meal approach is not cost effective Donor coordination is critical

The programme information structure To facilitate the coordination, monitoring and reporting on the SNA implementation in the multi- stakeholder environment. Frameworks Minimum Required Data Set (MRDS) based on UN-NAQ IMF GDDS and SDDS Report on the statistical process data quality

Statistical capacity building UNSD and other members of the ISWGNA initiated dialogue with the regional commissions and other development partners to consider programmes for four modalities (a) training and technical cooperation, (b) manuals and handbooks, (c) applied research and d) advocacy. The initial focus on these four modalities will be applied flexibly

Implementation stages Three stages Review of strategic framework and detailing of national and regional implementation programmes Adaptation of classification frameworks, business registers and frames, surveys, administrative data sources and information technology infrastructure Application of adapted frameworks and source data, backcasting and changeover to 2008 SNA Each country will determine the duration of the various stages. However, it is expected that from 2014 onwards, many Member States will change over to the 2008 SNA

Regional and national implementation programmes UNSD conduct series of seminars jointly with RC and countries in the respective regions To align regional and global implementation programmes To provide countries with tools to develop national implementation programmes for the 2008 SNA and supporting statistics

Thank You