1. ICP Expenditure Classification
PROPOSED CHANGES
3nd Regional Coordinating Agencies meeting Oct 28-30, 2015 Washington DC

2. PROBLEM
Participating economies are required to provide a detailed breakdown of their final expenditure on GDP in line with the ICP expenditure classification: the 2005/2011 classification
Important to have reliable estimates of expenditure on GDP at the BH level: aggregation of PPPs; converted to real expenditures
Participating economies find it difficult to break down their expenditure on GDP into the 155 BHs of the 2005/2011 classification: too detailed; questionable reliability
Review the 2005/2011 classification: simplify (less detail); improve (fit for purpose); update (expenditure definitions)

3. OBJECTIVES
To reduce the number of BHs: combining BHs with comparable products
To improve the homogeneity of the BHs: splitting BHs found to be too heterogeneous
To improve/retain the transparency of the classification by making certain expenditures explicit: either by splitting BHs or by not combining BHs
To be coherent with the expenditure classifications of regions with their own comparison programmes (Eurostat-OECD, CIS)

4. POINTS OF REFERENCE
BH coefficients of variations by region: indicator of a BH’s homogeneity (33% critical value)
BH weights (share of expenditure on GDP) by region: large weight (possible split), small weight (possible merge)
Reference PPPs: could BHs with common reference PPP be combined
Required for verification purposes
The revised Eurostat expenditure classification (258 BHs)
Derek Blades proposals (120 BHs)

5. Proposed classification BHs
OVERVIEW
Main aggregate
Proposed classification BHs
2005/2009 classification BHs
Individual consumption expenditure by households 78
110
Individual consumption expenditure by NPISHs 3 1
Individual consumption expenditure by government 20 21
Collective consumption expenditure by government 5
Gross capital formation 8 16
Balance of exports and imports 2
GDP
115
155

6. SPLIT BHs Actual rentals for housing
Actual and Imputed rentals for housing
Imputed rentals for housing
Expenditure on health
Individual consumption expenditure by NPISHs
Expenditure on education
Expenditure on other services

7. MERGED AGGREGATES 150000 Gross fixed capital formation
Gross Capital formation
-.01 Gross fixed capital formation
-.02 Changes of inventories
-.03 Acquisitions less disposals of valuables
Changes in inventories and acquisitions less disposals of valuables

8. MERGED BHs: FOOD AND BEVERAGES
Bread
Other bakery products
Fresh or chilled vegetables other than potatoes
Fresh or chilled potatoes
Frozen vegetables. preserved vegetables. vegetable-based products
Pork
Lamb. mutton & goat
Fresh. chilled or frozen fish & seafood
Preserved or processed fish & seafood
Sugar
Jams. marmalades & honey
Confectionery. chocolate & ice cream
Fresh milk
Preserved milk & other milk products
Spirits
Wine
Beer
Butter & margarine
Other edible oils & fats
Fresh or chilled fruit
Frozen fruit. preserved fruit. fruit-based products

9. MERGED BHs: REPAIRS 1103121 Garments
Cleaning. repair & hire of clothing
Audio-visual. photographic & information processing equipment
Recording media
Repair of audio-visual. photographic & information processing equip.
Shoes & other footwear
Repair & hire of footwear
Major durables for outdoor & indoor recreation
Maintenance & repair of other major durables for recreation & culture
Furniture & furnishings
Carpets & other floor coverings
Repair of furniture. furnishings & floor coverings
Major household appliances whether electric or not
Small electric household appliances
Repair of household appliances
Maintenance & repair of the dwelling
Maintenance & repair of personal transport equipment

10. MERGED BHs: MISCELLANEOUS
Water supply
Miscellaneous services relating to the dwelling
Bicycles
Animal drawn vehicles
Passenger transport by sea & inland waterway
Combined passenger transport
Other purchased transport services
Gas
Other fuels
Major tools & equipment
Small tools & miscellaneous accessories
Telephone & telefax equipment
Telephone & telefax services
Domestic services
Household services
Garden & pets
Veterinary & other services for pets
Other medical products
Therapeutic appliances & equipment
Other medical products
Therapeutic appliances & equipment
Cultural services
Games of chance

11. MERGED BHs: GROSS CAPITAL FORMATION
Fabricated metal products
General purpose machinery
Special purpose machinery
Electrical & optical equipment
Other manufactured goods nec
Motor vehicles. trailers & semi-trailers
Other road transport
Other transport equipment

12. MERGED BHs: BALANCING ITEMS
Purchases of resident households in the rest of the world
Purchases of non-resident households in the economic territory
Opening value of inventories
Closing value of inventories
Acquisitions of valuables
Disposals of valuables
Exports of goods & services
Imports of goods & services

13. NEXT STEPS
Recalculate 2011 regional and global results using the proposed classification and compare them with the 2011 regional and global results obtained with the 2005/2011 classification
Establish whether the proposed classification makes it easier for participating economies to estimate reliable BH expenditures (Can you do this every year?)
Determine the impact that the proposed classification will have on product selection and price collection
Finalise the proposed classification
Adoption and implementation (codes, core lists, regional lists, SNA)

14. Thank you for listening Your comments please