1. METAC Workshop March 14-17, 2016 Beirut, Lebanon National Accounts Compilation Issues Session 10: Households final consumption expenditures

2. Topics Definition Coverage National / Domestic concept Classification Time of recording, valuation Data sources and procedures

3. Definition … expenditure incurred by resident households for consumption of goods or services. It includes also: the estimated value of barter transactions, goods and services received in kind, and goods and services produced and consumed by the same household. It excludes expenditure on fixed assets or valuables, as well as expenditures incurred for business purposes – current and capital

4. Coverage HFCEs include: Purchase of goods and services; Own account production of goods; Services of owner-occupied dwellings; Gifts received in kind; Financial services directly charged; Insurance services; Pension funding services; Payments by households for licenses, permits, etc. which are regarded as purchases of services; The purchase of output at not economically significant prices, e.g. entrance fees for a museum.

5. Coverage HFCEs exclude: Social transfers in kind Items treated as intermediate consumption or gross capital formation: – Expenditures by households owning unincorporated enterprises – Expenditure that an owner-occupier incurs on the maintenance and repair of the dwelling – Purchase of dwellings (treated as gross fixed capital formation) – Expenditure on valuables (treated as gross capital formation) Purchase of land Payments of taxes, such as licenses to own vehicles, boats or aircraft and also licenses to hunt, shoot or fish Subscriptions, contributions and dues paid by households to NPISHs Voluntary transfers in cash or in kind by households to charities, relief and aid organizations

6. National vs Domestic concept of consumption Households final consumption expenditures consists of: Consumption expenditure of resident households in the economic territory – From domestic production – From imports of goods and services Consumption expenditure of resident households in other economic territory – Import of goods and services National concept: – … includes expenditures of residents abroad – … excludes expenditures of nonresidents in the country

7. National vs Domestic concept of consumption 2008 SNA: Household final consumption expenditure reefers to resident households, whether that expenditure is incurred within the economic territory or abroad. The calculation procedures based on national concept: Total expenditures of the households (resident and non- resident) in the economic territory (domestic concept) plus: residents‘ expenditures abroad (import) minus: expenditures of non-resident in the country (export) … depend on the used source data: – Household expenditure survey – Retail trade turnover

8. Classification Classification of individual consumption according to purpose (COICOP), … main headings: 01, Food and non alcoholic beverage; 02, Alcoholic beverage, tobacco and narcotics; 03, Clothing and footwear; 04, Housing, water, electricity, gas and other fuels; 05, Furnishing, household equipment and routine maintenance of house; 06, Health; 07, Transport; 08, Communication; 09, Recreation and culture; 10, Education; 11, Restaurant and hotels; 12, Miscellaneous goods and services.

9. Classification Central product classification, combined with COICOP

10. Time of recording and valuation Time of recording expenditure on a good is to be recorded at the time its ownership changes expenditure on a service is recorded when the delivery of the service is completed. Valuation At purchasers’ prices paid by households, including any taxes on products that may be payable at the time of purchase, including also any transport charges not included in the seller’s invoice price. Production for own final consumption - at basic prices, consistently with their valuation in production account Purchases on credit – without inclusion of any interest or service charges

11. Data sources and compilation procedures Source data Demographic sources: – Households‘ budget survey (HBS); – Living conditions monitoring survey; – Labor force survey: households production for own final consumption. – Constrains: when the surveys do not observe the households income and expenditures continuously over the whole year. Agriculture statistics: – Economic accounts for Agriculture (EAA) – Agricultural food balances – Crop forecast survey, initial measure of production for own final use – Post harvest survey, estimated production for own final use – Constrains: limited coverage of subsistence agriculture

12. Data sources and compilation procedures Business statistics: – Surveys on wholesale and retail sale activities; – Surveys on activities providing goods and services to households; – Employers expenditures in kind for remuneration of employees – Constrains: mostly covers formal businesses; different concepts, for example: retail turnover follows domestic concept. Balance of Payments: – Travel and tourism expenditures of residents abroad and non-residents in the country; – Personal services purchased by residents abroad and by non-residents in the country

13. Data sources and compilation procedures Foreign trade statistics – Groupings by broad economic categories (BEC), not entirely consistent with the national accounts concepts, for example imports of vehicles, spar parts and supplies; Administrative data – VAT files, but only for companies above the applied threshold; – Companies‘ information: electricity, gas, and water

14. Compilation procedures Direct approach, based on the available source data; Commodity flow approach, – but at more detailed commodity level: – … total resource of good/service – IC – GC –GCF - exports Recommendations: – consistent use of all available source data with possible checks for coverage and plausibility of the national accounts estimates, both on production and expenditure side ;

15. Compilation procedures Recommendations consistent allocation of the corresponding elements from the production accounts, and generation of income accounts, examples: – Agricultural production for own final consumption; – Non-agricultural production provided as wages and salaries in kind; food in manufacturing; trade with consumer goods; hotels and restaurants, including estimates for tips; passenger transport; – Imputed rent; – Life insurance and Pension fund services – Financial intermediation services

16. Compilation framework Example:

17. Compilation framework Verification in the frame of Goods and Services account

18. References 2008 SNA, Chapter ILO Informal activities World Drug Report

19. Thank you