1 Selected Issues with Implementation of 2008 SNA (continued) Training Workshop on System of National Accounts for ECO Member Countries October 2012, Tehran, Islamic Republic of Iran United Nations Statistics Division

2  Mineral exploration and evaluation  Measurement of FISIM  Exhaustiveness of national accounts (non-observed economy and informal sector) Outline of Presentation

3 Mineral exploration and evaluation  Value of expenditures on exploration for petroleum and natural gas and for non-petroleum deposits and subsequent evaluation of the discoveries made  Includes Prelicence costs Licence and acquisition costs Appraisal costs Costs of actual test drilling and boring Costs of aerial and other surveys, transportation costs, etc to carry out such tests Re-evaluation costs  Gross fixed capital formation whether successful or not

4 Mineral exploration and evaluation Valuation  Own account Sum of costs including return to fixed capital (for market producers)  Contracted out Explicit fee Data sources  Survey of mining enterprises Census is preferable due to volatility

5 FISIM - Concept  Indirect measure of the value of financial intermediation services provided but for which financial institutions do not charge explicitly  Needs to be imputed because no explicit fees are charged  Split actual interest transactions into SNA interest FISIM  Applies to loans and deposits Financial institutions

6 FISIM - Concept  FISIM L = FISIM on loans  FISIM D = FISIM on deposits  r L = lending rate  r D = deposit rate  rr = reference rate  Y L = stock of loans  Y D = stock of deposits  r L Y L = actual bank interest receivable on loans  r D Y D = actual bank interest payable on deposits  rrY L (rrY D ) = SNA interest on loans (deposits) Record in allocation of primary income account

7 FISIM - Concept Reference rate  Between interest rates on loans and deposits  No service element  Reflects risk and maturity structure of deposits and loans  One reference rate per currency  One method Simple or weighted average of the ratio of interest payable on deposits to the stock of deposits and ratio of interest receivable on loans to the stock of loans

8 FISIM – Estimation and Allocation Bottom-up method  If complete data on average stocks of loans and deposits and interest by sector from monetary authorities are available  Calculate FISIM on loans to each sector  Calculate FISIM on deposits to each sector  Sum up to get total FISIM

9 FISIM – Estimation and Allocation Top-down method  If complete data on average stocks of loans and deposits and interest by sector from monetary authorities are not available  Calculate total FISIM on loans  Calculate total FISIM on deposits  Distribute total FISIM on loans (deposits) to each sector in proportion to average stocks of loans and deposits (from other sources)

10 FISIM – Estimation and Allocation Households  FISIM on loans to households sector Owners of dwellings (dwelling loans) Owners of unincorporated enterprises Other loans (final consumption expenditure)  FISIM on deposits to households sector Owners of unincorporated enterprises (intermediate consumption) Deposits as final consumers (final consumption expenditure) Intermediate consumption

11 FISIM – Estimation and Allocation Households  Complete breakdown of data not always available  Allocate FISIM on loans to Owners of dwellings (dwelling loans) Owners of unincorporated enterprises Other loans (final consumption expenditure) Using indicators such as breakdown of data on loans from other sources

12 FISIM - Estimation Households  Allocate FISIM on deposits to Owners of unincorporated enterprises (intermediate consumption) Households as final consumers (final consumption expenditure)  Using indicators from other sources such as Ratio of stocks of deposits to VA for smallest size corporations Ratio of stocks of deposits to turnover for smallest size corporations  Other solutions? Equal split? Professional judgement

13  Need to ensure whole of economic activity within the SNA production boundary is measured comprehensively  Exhaustiveness of coverage of national accounts  Ensures availability of good quality national accounts for economic policy making and research Exhaustiveness of National Accounts

14 Non-observed economy (NOE)  Extent of economic activity missing from statistical data collections and from administrative sources  5 problem areas that are most likely to be non- observed are: Underground Illegal Informal sector Household production for own final use Deficiencies of basic data collection programme (statistical underground) Exhaustiveness of National Accounts

15 Methods to measure NOE  Direct surveys Expenditure and income surveys  Indirect statistical methods Supply based approaches, including labour input method Demand based approaches Income based approaches Commodity flow approach Exhaustiveness of National Accounts

16 Informal sector (ILO concept)  Consists of units engaged in production with the purpose of generating income and employment for the person concerned  Characterised by a low level of organisation, informal employment relations (e.g. oral agreements), with little or no division between labour and capital as factors of production, on a small scale  Production units have features of household enterprises  At least some of production should be sold or bartered  Coverage restricted to employment size below certain level or units which are not registered  Confined to non-agricultural activities Exhaustiveness of National Accounts

17 Informal sector (2008 SNA operational guidelines)  ILO concept always regards informal sector as a subset of household unincorporated enterprises operating within the production boundary of the SNA  Excludes the following from SNA households sector Institutional households such as prisons, and retirement homes Households with no production activity Produce exclusively for own final use Households whose only activity is the production of services from owner-occupied dwellings or the production of services by employing domestic staff or both Agricultural production  Consider national practices in establishing the households sector to see if any adjustment to the first step is necessary Exclude NPISHs if included in households sector  Provides breakdown by type of activity so that common exclusions according to type of activity can be made Exhaustiveness of National Accounts

18 Approaches to measuring activities of informal sector  Household surveys  Establishment surveys  Mixed household-enterprise surveys Exhaustiveness of National Accounts

19 Questions?

20 Thank You