1. Policy Brief
To: Honourable Minister, Ministry Of Finance and Economic Management
From: MACROECONOMIC COMMITTEE (MEC) TECHINCAL TEAM
Date: Thursday, 20 October 2016

2. Outline
Purpose
Background
Findings
Policy Analysis
Recommendation

3. Purpose:
The purpose of this brief is to present to you how we can improve GDP estimates in Vanuatu. This is by way of resolving the challenges we currently faced with GDP forecasting and identify possible solutions that we can adopt to sustain and improve medium term forecasting.

4. BACKROUND
GDP compilation workshop enable MEC technical team to discuss challenges
And identify solutions
PFEM Act mandate MFEM to produce medium term GDP forecasting
MEC members from RBV, DoFT, VNSO & DCIR
MEC meets quarterly to review GDP based on recent policy developments
GDP forecasting important for Monetary Fiscal Policy decision
Therefore important to enhance GDP forecasting that is consistent and reliable
With current and medium term plans

5. FINDINGS & RESULTS
After the consultation session, the team have come up with the following findings:
The list herein is not in order of importance. This tasks are equally important and must be actioned in the immediate future:

6. DEPARTMENT OF FINANCE AND TREASURY
VNSO present to MEC GDP compilation methods
Identify major indicators and data sources
Improve questionnaire structure including legislation
More support from PFTAC & propose for exchange programs with Aussie & NZ Treasury

7. DEBT UNIT
Need to update debt data regularly
Quarterly debt report? Important for policy makers to aware of the debt level on a regular basis.
Timely dissemination of debt data with RBV and Treasury on time

8. Reserve Bank of Vanuatu – RBV.
Need to share monetary data with MFEM
Ensure the use of composite index in forecasting GDP.
Disseminate BOP data on time to treasury & other users
Timely release of QER and other bulletin

9. Vanuatu National Statistics office - VNSO
Timely release of NA for GDP forecasting discussion at MEC level
Need to increase statistics coverage area
Present compilation of GDP to MEC by Expenditure and Production approach
Collect other identified indicators e.g. building permit
Compile deflators to their corresponding deflators
Compile and complete outstanding surveys
Improve the department structure – high job turn over

10. INLAND REVENUE - DCIR
improve compliance coverage and enforcement
improve tax auditing coverage
recruit more compliance officers
recruit more tax audit officers
recruit a tax statistician/ data dissemination officer
Publish calendar of release
Need to improve tax infrastructure
Tax Unit should present the tax reform outcome to MEC.

11. RECOMENDATIONS :
Streamlining agencies calendar
A memorandum of Understanding for Data Sharing
Joint retreat/workshop for Annual Development Plans
Regular government Cash Flow Committee meetings
Accommodate MEC in the financial regulation and improve its structure
An approved GDP forecasting model to be used by both RBV and Treasury – Welcome comments from the region

12. Merci beaucoup