Politics and statistics: a happy marriage?

POLITICS AND STATISTICS: A HAPPY MARRIAGE?

Peter van de VenHead of National AccountsOECD

World Statistics Congress, STS 045Hong Kong, August 25-30, 2013

Overview

• Administrative use of national accounts data

• Pros and cons of administrative use

• The case of the Excessive Deficit Procedure

• Way forward

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Administrative use of NA-data

• GNI/GDP for the calculation of contributions to international organizations, ECB capital share, IMF-quotas, etc.

• Regional GDP per capita for the eligibility of a region to EU Structural Funds

• Government Deficit and Debt (Excessive Deficit Procedure)

• More recently: Excessive Imbalances Procedure

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Pros of administrative use

• Considerable improvement of quality and international comparability, e.g. exhaustiveness of GDP-estimates

• Improved transparency, e.g. availability of metadata

• Growing prominence of statistics in general, and national accounts in particular

• Focus on certain indicators provides single and clear message, e.g. government deficit and debt

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Cons of administrative use

• Increased allocation of resources to compilation of data for administrative use

• Less inclination to look at other demands related to general economic policy and economic research

• Discussion on recording of transactions and classification of units less balanced, decisions driven by impact on certain indicators

• More inclined to being “exactly wrong” instead of “approximately right” => bookkeepers vs. economists

• Political interference in defining and interpreting international standards

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The case of the Excessive Deficit Procedure: general

• Growth and Stability Pact:– Government Deficit < 3% of GDP

– Government Debt < 60% of GDP

• Definitions based on System of National Accounts

• Procedure in case of disputed recording/classifications:– Formal advice from the Committee on Monetary, Financial and

Balance of Payments statistics (CMFB), often based on previous work of a dedicated Task Force (http://www.cmfb.org/main-topics/excessive.htm)

– Decision by Eurostat => Manual on Government Deficit and Debt (http://epp.eurostat.ec.europa.eu/portal/page/portal/government_finance_statistics/methodology/ESA_95)

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The case of the Excessive Deficit Procedure: some more details

• Always room for interpretation of standards => accounting creativity or even gimmickries:– Sale and lease back of government owned property

– Assumption of pension liabilities of public corporations

– PPPs

– Securitisation

– Etc.

• Political pressure feeds into the process of defining and interpreting standards:– Recording of assumption of pension liabilities

– Recording of government interventions into banking system

– Recording of unfunded government sponsored pension entitlements

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The case of the Excessive Deficit Procedure: some more details

• Government policy determined by impact on indicators, not by what’s the sensible thing to do: – Pension reforms

– Selling government property at the wrong time

• Single indicators provide clear message, but they are also one-dimensional, and don’t tell the whole story

• Appropriateness of the relevant indicators?– Deficit => Saving

– Gross Debt => Net Financial Debt or Net Worth

– Contingent liabilities

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The case of the Excessive Deficit Procedure: way forward

• Stop focussing too much on single indicators

• Provide additional indicators (Saving, Net Financial Debt)

• Provide additional data:– Table on guarantees and contingent liabilities

– Table on implicit pension liabilities

• Provide more metadata, and especially more information on possible caveats

• Provide more story-telling, by putting data in a context

Developments initiated by Eurostat to be fully supported!

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Way Forward

• ???????

• Try to get more involved in the choice of indicators

• Provide additional data and story-telling

• Role and independence of statistics should always be laid down explicitly

• When interpreting standards: economic substance should always override legislative interpretation of standards => need to define certain general principles

• Secure additional funding of resources, instead of (implicitly) cutting back resources for other areas

• ….

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Thank you for your attention!

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