Implementation of 2008 SNA in Jamaica. Outline Policy issues - relationship with national accounts framework The Jamaican System of National Accounts.

Implementation of 2008 SNAin Jamaica

Outline

Policy issues - relationship with national accounts framework

The Jamaican System of National Accounts Current compilation procedures New requirements for 2008 SNA Other improvements to the accounts Next Steps

Policy Issues

Vision 2030 National Development Plan for Jamaica Outlines national goals, strategies & outcomes National Outcome #7: A Stable Macro economy

Fiscal balance of 0% of GDP Debt to GDP ratio of 75% Real GDP annual growth rate of 5%

Policy Issues (cont’d)

As outlined in ‘Fiscal Policy Paper FY 2012/13’ dated May 24, 2012, GOJ committed to achieving the following fiscal targets/ceilings by FY 2015/2016 Fiscal balance of 0% of GDP Debt to GDP ratio of 100% or less Wages to GDP ratio of 9%

The Jamaican System of National Accounts

Consolidated Accounts of the nation GDP by expenditure at current and constant

prices GDP by income Generation and use of disposable income Capital account Rest of the world account

The Jamaican System of National Accounts

Value added by industry Supply and Use Table Input Output Table Tourism Satellite Account

The Jamaican System of National Accounts

Currently not included Institutional sector accounts Financial account Other changes in assets account Balance Sheet

Current compilation procedures

Jamaican System of National Accounts prepared on the 1993 United Nations System of

National accounts (1993 SNA) base year for the constant price estimates is 2007

Current compilation procedures

Annual national accounts estimates prepared using the production, income and expenditure approaches

Quarterly national accounts estimates prepared using the production approach

Current compilation proceduresAnnual GDP by product

Estimated at current and constant prices classification of industries used in the accounts is the

Jamaica Industrial Classification (JIC 2005) -a local adaptation of the United Nations International Standard Industrial Classification of all Economic Activities (ISIC Rev.3)

Current compilation proceduresAnnual GDP by product (cont’d)

a production account is compiled for each product group in an industry

production accounts by industry are calculated at the five digit level of the JIC

twelve industry categories - disaggregated into 248 product groups

Current compilation proceduresAnnual GDP by expenditure

Estimated at current and constant prices Expenditure approach – sum of household spending,

government spending on goods and services, investment in fixed capital (construction, machinery and equipment), change in inventory and exports less imports of goods and services

Current compilation proceduresAnnual GDP by expenditure (cont’d)

Household Final Consumption Expenditure is classified using Classification of Individual Consumption According to Purpose (COICOP)

Government Final Consumption Expenditure currently not classified using COFOG

Gross fixed capital formation is broken down by type of capital goods

Current compilation procedures Quarterly GDP by product

The preparation of quarterly value added estimates incorporates the use of quarterly indicators to extrapolate value added by economic activity

Quarterly estimates at constant prices are derived from quantity indicators or value indicators, which are deflated by appropriate price indices. Trend extrapolation is also utilized when there are no available indicators

Current compilation procedures Quarterly GDP by product (cont’d)

The estimates are benchmarked to the annual estimates using the ‘BENCH’ programme which is a generalization of the Denton Method. This programme was developed by Statistics Canada (STATSCAN)

The estimates are seasonally adjusted using the

X11ARIMA seasonal adjustment method

New Requirements for 2008 SNA Ancillary activities

A producer undertaking purely ancillary activities should be treated as a separate establishment and classified according to principal activity

This methodology is currently being used in the Jamaican system

New Requirements (cont’d)Financial Services

FISIM: Jamaican system Currently calculated as property income

receivable less interest payments Currently allocated between intermediate

consumption (not by industry but rather as a notional industry) and household consumption

New Requirements (cont’d)Financial Services

FISIM should be calculated with respect to a reference rate

Output of FISIM = (rL-rr)fL + (rr-rD)fD,rr=reference rate

rL=interest rate on loans

fL=stock of loans

rD=interest rate on deposits

fD=stock of deposits

New Requirements (cont’d)Financial Services

Actions to be taken Identify a reference rate that excludes service

charge and reflects the risk and maturity structure of deposits and loans

Allocate that part of FISM apportioned to intermediate consumption to user industries

New Requirements (cont’d)Financial Services

Output of Central Bank Currently being estimated as the sum of costs in

Jamaican system New recommendation is to separate the services

of the Central Bank into the 3 groups: financial intermediation monetary policy services supervisory services

New Requirements (cont’d)Research & Development

The output of research and development should be capitalized

Jamaican system Research and development activities were not

identified separately on Annual National Income questionnaire. As a result, these would have been included in ‘other expenditure’ and treated as intermediate consumption

New Requirements (cont’d)Goods for processing

In the case of goods sent abroad for processing, the export of the processing country is the processing fee, which is also the output of the processor as there is no change in ownership of goods

This methodology is currently being used in the Jamaican system Methodology needs to be harmonized with the

Balance of Payments

New Requirements (cont’d)

Treatment of employee stock options as compensation of employees

Valuation of output for own final use by households and corporations to include return to capital These areas require further research to inform

actions to be taken

Other Improvements

Identify methodology to estimate consumption of fixed capital of Central Government including public education and health

Collaborate with the Ministry of Finance to estimate imputed pension contribution by Government

Revision of Annual National Income questionnaires Review of administrative data sources

Next Steps

Classify Government Final Consumption Expenditure using COFOG

Publish GDP by expenditure at constant prices Revise JIC based on ISIC Rev 4 Ongoing revisions to the estimation of the non-

observed economy• Introduction of monthly production volume index

and expansion of producer price index• Household Expenditure Survey to be undertaken in

2015

Schedule for Implementation

The first phase will be completed in 2016 and should cover Milestone 2 of the 2008 implementation, quarterly GDP by expenditure and improvements to the national accounts that were not undertaken in the last major revision to the system. This should also lead to improvement in the coverage

Schedule for Implementation

Institutional sector accounts- gradual introduction final set of accounts by 2020, starting with the government sector

STATIN will not be able to implement the full scope of the SNA

No plans in the medium term to include the financial accounts and balance sheets

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