International Workshop on Measuring GDP by Final Demand Approach Uttam Narayan Malla, Director General Suman Aryal, Director Central Bureau of Statistics Kathmandu Country Presentation: Nepal

Historical Perspective First attempt in 1961/62 by then Ministry of Economic Planning Gap of two years Responsibility shifted to CBS Continuation after 1964/65

NA compilation practices GDP predominantly based on Value added approach Separate estimates of expenditure components except change in stocks Change in stock: residually estimated No explicit statistical discrepancy Attempt to produce GDP by income approach

Rebasing and linking practices Analytical and Mechanical re-referencing Base year 1964/65 – Analytical and First NA series 1974/75 – Analytical 1984/85 – Analytical 1994/95 – Mechanical linking 2000/01 - Analytical

Demand Components Final Consumption Expenditure –Government –Households –Nonprofit institution serving households Capital Formation –Gross fixed capital formation –Change in stocks Net exports –Exports –Imports

Measuring Household Consumption HIES Resolution –Households Consumption Expenditure Value of consumer goods and services acquired, used or paid for by a household through direct monetary purchases, own account production, barter or as income in kind for the satisfaction of the needs and wants of its members –Actual final consumption of Households Sum of its household consumption expenditure and the value of consumer goods and services acquired or used by the household through transfers from government, non-profit institutions or other households

Household Consumption Major Data Source –Household Survey –Retail Survey –Balance of payments –Value added tax Income and consumption link –functional relationship between disposable income and consumption Commodity flow

Compilation practice in Nepal Independent estimates for –Households final consumption expenditure –Government final consumption expenditure –NPISH final consumption expenditure –Gross fixed capital formation –Exports –Imports Residual –Change in stocks Statistical Discrepancy –No explicit discrepancy –Change in stocks contains discrepancy also

Compilation practice in Nepal Household consumption largest single component –Accounting for around 80% of GDP Benchmark data –Nepal Living Standards Survey (NLSS) –Balance of Payment Extrapolation –Population growth rate –CPI for food, non food and service separately Price system applied –Acquisition price –Includes non-deductable VAT and other taxes on products –Includes all types of margins Income Consumption Link –Some exercise had also been carried out.

Coverage and sources Coverage Source 1 Goods and services bought for final consumption by householdsNLSS* 2 Goods produced for own final consumption by householdsNLSS 3 Services of owner-occupied dwellingsNLSS 4 Goods and services acquired by households in barter transactions for final consumptionNLSS 5 Goods and services received by households as payment in kind from producersNLSS 6 Expenditures incurred in do- it-yourself decoration, maintenance and routine repairs of own dwellings and personal goodsNLSS 7 Payment to government units to obtain various kinds of licenses, permits, certificates, passportsNLSS* 8 Explicit and imputed service charges on household uses of financial intermediation services provided by banks, insurance companies, pension fundsNLSS* 9 Purchases made outside the residence territoryBOP

Nepal Living Standards Survey Consumption related questions at a glance Consumption related questions at a glance

Classification adopted COIPCOP –Not adopted yet Disaggregation is based on –CPI components Correspondence –NLSS consumption headings and CPI components

Major CPI Components FOOD & BEVERAGES Grains and Cereal Products Pulses Vegetables and Fruits Spices Meat, Fish and Eggs Milk and Milk Products Oil and Ghee Sugar and Related Products Beverages Restaurant Meals NON-FOOD & SERVICES Cloth, Clothing & Sewing Services Footwear Housing Goods and Services Transport and Communication Medical and Personal Care Education, Reading and Recreation Tobacco and Related Products

Actual Final Consumption Sum of household consumption expenditure, individual consumption expenditure of Government and consumption expenditure of NPISH

Consumption in Figure in millions Rs.

Typical Issues Credit issues –may involve three distinct components price of the goods itself- It is Consumption expenses of the financial company making loan: It is Consumption interest payments: Not consumption No such distinctions are made Unincorporated Household Sector – Spending is intermediate consumption No such analysis has been done

General Issues/Limitations Systematic Errors –Sampling error of the survey itself Coverage Errors/Uncertinities –goods and services purchased infrequently Economy of Scale Supply and Use tables

What'snewinSupply and Use Table What's new in Supply and Use Table Independent estimates for change in stocks for 2004/05 New level for household consumption –Estimates for around 52 different good and services –Commodity flow approach –around 5% higher than published one. –Adjustment for FISIM allocation

Scheduled program Follow up consumption survey Exploring the VAT and government account detail Separate treatment for Infrequent Goods and services bought for final consumption by households Payment to government units to obtain various kinds of licenses, permits, certificates, passports Explicit and imputed service charges on household uses of financial intermediation services provided by banks, insurance companies, pension funds Change in Stocks

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