Workshop on the Implementation and Links between the System of National Accounts 2008 and the Government Finance Statistics Manual 20 – 22 November 2013, Istanbul, Turkey CHANGE OVER TO THE 2008 SNA METHODOLOGY IN THE UKRANIAN NATIONAL ACCOUNTS Irina NIKITINA Director of the Macroeconomic Statistics Department

 Strategy for the Development of Ukrainian Statistics for the period until 2017 (the Cabinet of Ministers of Ukraine from г. № 413)  Annual detailed plan of the State Statistical Surveys  The relationship between changes in SNA, GFS, PoB, MAFS 2 LEGAL BASIS OF UKRANIAN NATIONAL ACCOUNTS Implementation of the international standard 2008 SNA State Statistics Committee, Ministry of Finance, Ministry of Economic Development, Treasury, National Bank Improvement of government finance statistics The Ministry of Finance, Treasury, State Statistics Committee Improvement of the external sector statistics National Bank, the State Statistics Committee Improvement of monetary and financial statistics National Bank, the State Statistics Committee, The State Commission for Regulation of Financial Services Markets of Ukraine, National Securities and Stock Market Commission

THE BASIS OF NEW UKRANIAN NATIONAL ACCOUNTS METHODOLODY 1)The System of National Accounts, 2008 (2008 SNA); 2)The European System of National and Regional Accounts (ESA- 2010). 3

FIRST PRIORITY– CHANGES AFFECTING THE SCOPE AND STRUCTURE OF GDP Allocation of FISIM Reinsurance Research and Development Military expenditures Goods for processing abroad Illegal activities Imputed rent 4

CALCULATION OF FISIM Formula: FISIM = [(rL - rr) x yL] + [(rr - rD) x yD] The base reference rate: average on loans and deposits in the interbank market Data from the National Bank of Ukraine and The State Commission for Regulation of Financial Services Markets of Ukraine: monthly balances of loans and deposits interest income on loans/interest expenditures on deposits FISIM export and import will be included after the adjustment in the BoP § ЕSА-2010 FISIM for Central Banks is not calculated 5

ALLOCATION OF FISIM Intermediate consumption institutional sectors NFC, FC, GG, NPISH, HHs (in the part of employers and housing loans) Output non-market production GG, NPISH Final consumption (increases GDP) Institutional sectors GG, NPISH, HHs (in the part of consumer credit) 6

REINSURANCE The calculation scheme of reinsurance services premiums received from reinsurence minus incurred claims minus increase in premium supplements Effect of SNS: Increases output and IC, no impact on VA 7

RESEARCH AND DEVELOPMENT The following types are included in gross capital formation: basic research applied research experimental development The following types remain in intermediate consumption: support scientific and technical services (not used repeatedly in the production) undertaken without the intention of obtaining benefits acquired by market producers in activity M 72 “Research and Development” 8

MILITARY EQUIPMENT Expenditures on weapon systems, which can be used more than a year, are transferred from intermediate consumption to gross fixed capital formation (produced assets). Single-use items are considered as inventories 9

GOODS FOR PROCESSING ABROAD 2008 SNA and BPM6 recommend to rerecord export and import on economic ownership basis 1. Import minus the value of imported raw materials 2. Export minus the value of processed goods plus the processing fee 3. Intermediate consumption minus the cost of raw materials 4. Output minus the cost of raw materials 5. The value added remains the same 10

ILLEGAL ACTIVITIES Type N2. “Manufacturers, who are not registered deliberately – illegal activity". EU countries agreed on illegal activities included in the SNA: production and distribution of drugs (assessment based on World Drug Report UNDOC data) prostitution (assessment by CSW International Alliance HIV/AIDS) smuggling of alcohol and tobacco (balance method, customs data) 11

IMPUTED RENT User cost method (Derek Blades. Evaluation of services of owner-occupied households. Report from the 9 th UNECE/Eurostat/OECD meeting on National Accounts ) 12

IMPACT ON INDUSTRY 13

IMPACT ON FINAL CONSUMPTION 14

EFFECT ON GDP 15

FUTURE DIRECTIONS FOR THE DEVELOPMENT OF UKRANIAN NATIONAL ACCOUNTS  Changes in the institutional sectors classification  Changes in the classification of financial and non-financial assets Irina NIKITINA Director of the Macroeconomic Statistics Department 16

FUTURE DIRECTIONS FOR THE DEVELOPMENT OF PUBLIC FINANCE STATISTICS  Development and implementation of unified chart of accounts and accounting standards for the public sector with the use of accrual method, currently accounting, which provides the formation of fiscal data, is divided into two components: - accounting of budgets (cash accounting with accrual elements on individual transactions as debt, obligations of the budgetary funds); - accounting in the public organizations (modified accrual method).  Establishment of common rules for the formation of budget and financial statements in accordance with international standards, which are developed on the basis of International Financial Reporting Standards for the general government sector  Bringing classifications and budget indicators in accordance with the requirements of the Manual on Government Finance Statistics - provisions in the accounting standards to collect information on: consumption of fixed capital and imputed employer’s contribution to social insurance. 17

FUTURE DIRECTIONS FOR THE DEVELOPMENT OF PUBLIC FINANCE STATISTICS -Reflection in the classification of transactions in non-financial assets of the transactions related to loans “below the line” i.e. as financing transactions -Separation of subsidies and current transfers, and bringing them in the line with the requirements of the SNA Inclusion of debt arrears in a specific class -Accounting for Special Drawing Rights (SDRs) -Accounting for “shares and other equity” -Detailed breakdown of current expenditure of budget institutions -Detailing of expenditures on education and R&D -Reclassification of expenditures on R&D and weapon systems from current to capital expenditures -Development of new format for presentation of budget data for the needs of national accounts

THANK YOU FOR ATTENTION! Irina NIKITINA Director of the Macroeconomic Statistics Department