POLITICS AND STATISTICS: A HAPPY MARRIAGE? Peter van de Ven Head of National Accounts OECD World Statistics Congress, STS 045 Hong Kong, August 25-30, 2013

Overview Administrative use of national accounts data Pros and cons of administrative use The case of the Excessive Deficit Procedure Way forward 2

Administrative use of NA-data GNI/GDP for the calculation of contributions to international organizations, ECB capital share, IMF-quotas, etc. Regional GDP per capita for the eligibility of a region to EU Structural Funds Government Deficit and Debt (Excessive Deficit Procedure) More recently: Excessive Imbalances Procedure 3

Pros of administrative use Considerable improvement of quality and international comparability, e.g. exhaustiveness of GDP-estimates Improved transparency, e.g. availability of metadata Growing prominence of statistics in general, and national accounts in particular Focus on certain indicators provides single and clear message, e.g. government deficit and debt 4

Cons of administrative use Increased allocation of resources to compilation of data for administrative use Less inclination to look at other demands related to general economic policy and economic research Discussion on recording of transactions and classification of units less balanced, decisions driven by impact on certain indicators More inclined to being “exactly wrong” instead of “approximately right” => bookkeepers vs. economists Political interference in defining and interpreting international standards 5

The case of the Excessive Deficit Procedure: general Growth and Stability Pact: –Government Deficit < 3% of GDP –Government Debt < 60% of GDP Definitions based on System of National Accounts Procedure in case of disputed recording/classifications: –Formal advice from the Committee on Monetary, Financial and Balance of Payments statistics (CMFB), often based on previous work of a dedicated Task Force ( topics/excessive.htm) topics/excessive.htm –Decision by Eurostat => Manual on Government Deficit and Debt ( nance_statistics/methodology/ESA_95) nance_statistics/methodology/ESA_95 6

The case of the Excessive Deficit Procedure: some more details Always room for interpretation of standards => accounting creativity or even gimmickries: –Sale and lease back of government owned property –Assumption of pension liabilities of public corporations –PPPs –Securitisation –Etc. Political pressure feeds into the process of defining and interpreting standards: –Recording of assumption of pension liabilities –Recording of government interventions into banking system –Recording of unfunded government sponsored pension entitlements 7

The case of the Excessive Deficit Procedure: some more details Government policy determined by impact on indicators, not by what’s the sensible thing to do: –Pension reforms –Selling government property at the wrong time Single indicators provide clear message, but they are also one-dimensional, and don’t tell the whole story Appropriateness of the relevant indicators? –Deficit => Saving –Gross Debt => Net Financial Debt or Net Worth –Contingent liabilities 8

The case of the Excessive Deficit Procedure: way forward Stop focussing too much on single indicators Provide additional indicators (Saving, Net Financial Debt) Provide additional data: –Table on guarantees and contingent liabilities –Table on implicit pension liabilities Provide more metadata, and especially more information on possible caveats Provide more story-telling, by putting data in a context  Developments initiated by Eurostat to be fully supported! 9

Way Forward ??????? Try to get more involved in the choice of indicators Provide additional data and story-telling Role and independence of statistics should always be laid down explicitly When interpreting standards: economic substance should always override legislative interpretation of standards => need to define certain general principles Secure additional funding of resources, instead of (implicitly) cutting back resources for other areas …. 10

Thank you for your attention! 11