On strategy of implementation of the updated System of National Accounts in the Russian Federation Irina Masakova Rosstat Agenda item 3 Invited paper 16

Current situation System of National Accounts in Russia is based on concepts of SNA-93. Deviation from SNA recommendations was caused by :  Current national classifications that differ from their international analogues  Features of functioning of certain economy sectors and Russian legislation

Until OKONKh, from RCKEA. Production and generation of income accounts SNA calculations – at the level of 140 groupings of RCKEA Publication - at the level of RCKEA sections Until 2007 OKP was used, starting from January 1, 2008 – introduction of OKPD, harmonized with ISIC In near future coherent system of value, volume and price indicators will be created. This will help to broaden the the range of published indicators by types of activities In 2005 a classification of institutional units by sectors of economy was developed Accounting is performed by sectors: corporations, general government, non-commercial organizations, serving households, households, rest of the world In 2-3 years “corporations” sector will be divided into financial and non- financial corporations

Is changing because of: intention to harmonize national statistical classification with the international standards on state finance statistics; needs of public authorities conversion keys from the budget classification of expenditure by functions of the general government (COFOG) to categories of the classification by kind of economic activities the general government sector accounts for have been compiled indicators of production and generation of income accounts have been compiled according to categories of RCKEA while indicators of expenditure have been compiled for the first time according to COFOG Classification of revenue and expenditure of the state budget of the Russian Federation

 introduction of RCKEA was not accompanied by simultaneous introduction of the product classification harmonized with it  current statistical observations did not make it possible to obtain data needed to establish the structure of intermediate consumption  In order to ensure compliance of production and use accounts input- output tables for 2005 an 2006 were compiled (15 industries and 15 product groupings were distinguished )  Preparation work on development of basic IOT for 2012 is started Difficulties with Input-Output Tables

Problems of following SNA-93 recommendations  evaluation of housing rentals  calculation of Financial Intermediation Services Indirectly Measured (FISIM).

Valuation of housing rentals Housing environment: former system of financing expenditure on maintenance of dwellings is used market of dwellings develops and new methods of their maintenance and its financing are used  Expenditure on maintenance of dwellings is partly covered from the state budget. Some categories of households receive subsidies to finance payments of rentals  At present time market rentals can be established only with respect to dwellings rented out by households to other households, but it is not possible to use these market prices for remaining dwellings since the lack of the information on structure of dwelling fund and its qualitative characteristics.

Calculation of housing services:  rented dwellings - actual payments of rentals  own private dwellings - maintenance cost  blocks of flats – rentals paid to the companies providing public utilities and subsidies received. As the market of dwellings develops and reforms in this area are carried out methodological principles of valuation of rentals of dwellings will be revised. Mixed method for computation of rentals for dwellings.

Calculation of FISIM Usage of Financial Intermediation Services Indirectly Measured (FISIM) is considered as intermediate consumption of a conditional sector output of which is equal to zero

Current situation Entirely new information a technological basis for statistics was created Main classifications are harmonized with their international analogues Calculation of all the accounts provided by SNA-93 except for financial account, other changes in volume of assets and liabilities accounts, revaluation accounts, assets and liabilities balance SNA indicators are widely used in macroeconomic analysis and forecasting. The range of SNA users is considerably increased.

SNA updating process is a natural response to changes that take place in economic and social spheres in many countries of the world. In Russia there is an intensive transformation process that take place in various areas (i.e. privatization of state property, changes in institutional structure of the economy). Russia is rapidly integrating in global economy. But there are some features of transition economy which are still remain in social security, pension system, insurance and finance. In these areas transformation processes and establishment of market economy institutions go very slow and with a sense of fear.

Strategy of introduction of the updated SNA-93 in Russia Implementation of the updated SNA will be carried out on a parallel course with introduction in practice of those sections of the SNA 1993 which have not been implemented yet by ROSSTAT. Flexible approach for decision-making:  Methodological and organizational efforts in improving of source data system  new-level of interagency cooperation

Analysis of provisions of the updated SNA  demand on specific types of information from major users of data of the SNA and, above all, from the bodies of the general government;  relevance of specific provisions of the System to peculiarities in organization of the economy and the social sphere;  relative importance of individual provisions for raising reliability and analytical usefulness of indicators;  the need to improve informational base;  availability of resources;  level of interaction with other economic agencies

Priorities Evaluation of non-observed economy and in particular informal economy which plays an important role in Russia Considering expenses on purchasing of durable goods for military purposes as accumulation Treatment of of originals and copies of piece of work as economic assets Introduction of FISIM by users calculations Development of accounts by institutional and state sectors

Long-run prospects measuring traditional types of illegal activities studying of capital services concept (participation in international seminars, discussion on issues of its implementation). studying of macroeconomic productivity is very important for Russia. Preparation to it will be started in near future but its implementation will require a lot of time. modification of the formula of computation of output of non- market services produced by the government by introduction of imputed operating surplus on capital (difficult to achieve due to the lack of adequate data on capital of the government bodies ).

the new formula of output of central banks as the sum of outputs of non-market and market establishments (departments) (difficult to implement because of the lack of data on bank departments costs) updated concept of output of insurance companies, based on summing up costs and “normal profit”, calculated on the basis of prognostic calculations

Practicalities Refining of theoretical concepts and definitions makes it possible to improve economic content of the major aggregates, but their implementation is not always easy to achieve due to problems with obtaining necessary information The following could help to implement the updated SNA :  materials containing practical recommendations on how to solve a certain problem  exchange of experience

Implementation of new recommendation will cause a lot of changes in national accounts data (GDP, GNP, Savings and so on) There will be changes in dynamics of indicators The updated SNA should be introduced not as soon on of the SNA section is applied but by a large blocks, steps in order to decrease the number of time-series reviews The starting point for Russia is the development of basic input-output tables for the year When developing these table we should consider all the changes that can take place by that time. After the development of IOT it is necessary to revise series of GDP and its main components.