Valentina Gydylika

Head of National Accounts and Macroeconomic Synthesis Division

Istanbul, May 6-8, 2015

National Accounts of Republic of MoldovaAchieved Results and Development

Prospects

National Accounts of Republic of Moldova

I. Current status of national accounts development

II. Improvement of quality of national accounts development

III. Achieved results in national accounts development

IV. Implementation of the 2008 SNA

V. Prospects for national accounts development

2

I. Current Status of National Accounts Development

1. In the Republic of Moldova, the national accounts had been implemented since 1995, with calculations in retrospective since 1993.

2. The current accounts are being drawn up: production, generation of income, primary and secondary distribution of incomes, redistribution of income in kind, use of disposable income. A capital transactions account is drawn up based on accumulation accounts.

3. For residents of the country, the accounts are drawn up and published by five institutional sectors of economy: non-financial corporations, financial corporations, public administration, non-profit institutions serving households

and households.

4. Production and generation of income accounts are developed also by types of economic activity

5. Transactions between residents and non-residents are reflected in the rest of the world sector which consists of accounts of: goods and services, primary incomes and текуcurrent transfers, capital transactions.

6. Accounts are developed in current and comparable prices.

7. Supply and disposition tables are developed by 55 types of economic activity in current and comparable prices.

8. Table of integrated economic accounts are developed in current prices, by domestic and foreign economy sectors.

3

I. Current Status of National Accounts Development

Quarterly, gross domestic product is developed by production methods: in whole by economy and types of economic activity and the use by seven aggregates: households, public administration, non-profit institutions serving households, gross fixed capital formation, stock changes, export and import of goods and services.

Both annual and quarterly data are adjusted for volumes of elements of non-observed economy. The non-observed economy elements are assessed in accordance with the international standards (SNA 93) and with Recommendations for Measuring the Non-Observed Economy issued under auspices of OECD in 2002.

Calculations are performed by types of economic activity and by sectors: formal sector (evasion of taxes, illegal business, hidden salary), informal sector (self-employed, unpaid worker of family business, employers which have from 1 to 5 and from 6 to 10 full-time salaried workers, household products for sale) and household products for own final consumption.

4

Classifications Used in Calculations

Moldova Classification of Economic Activities (MCOEA, rev. 1);

Classification of Individual Consumption according to Purpose (COICOP);

Classification of Functions of Public Administration Bodies (COFPAB).

5

II. Improvement of Quality of National Accounts Development

1. Improvement (enhancement) of information base.a. revision and implementation of indicators (sections) necessary for development of

the national accounts into the statistical forms;b. implementation of statistical reporting on quarter discrete basis;c. analysis of information database at a level of economic agent;d. assessment of statistical methods to check initial data and their updating;e. improvement of methods and techniques for collection of business survey

information;f. improvement of quality of sampling and methods for data dissemination for all set.2. Cooperation with other departments with regard to information exchange.

The Ministry of Finance submits to the National Bureau of Statistics a detailed data breakdown of Public National Budget; quarterly data are submitted at discrete basis.The Ministry of Information Technologies submits data for coverage of calculations of final consumption of households and gross fixed capital formation.National Agency for Energy Regulation submits data on issue of natural gas, electricity and heat to the consumers (households, state-financed organizations and economic agents) in kind and in value terms, annually and quarterly.Customs Service submits information on import of goods (in value terms) with indication of payments on VAT, excise taxes, customs duties by each type of goods.

6

II. Improvement of Quality of National Accounts Development – continuation

Information on economic agents is submitted at level of 9 characters (Product Range), on individuals – at level of 6 characters. Information is used for transition from basis prices to buying prices, to calculate annual average price indices on goods import/export, and for cross-check of tax amounts obtained from two departments: Ministry of Finance and Customs Service. Additionally, the Customs Service provides database with specification of import and export of goods for which an owner remains unchanged.

National Bank – balance of payment data at detailed level.

State Taxation Service submits declaration on income tax and value-added tax with identification codes; summarized information on entrepreneurial patents (for coverage of delivery of services for population); information on tax inspections (to improve calculations of non-observed economy).

National Pay Office of Social Insurance – list of economic agents which pay to the National Pay Office of Social Insurance with identification codes.

Thereafter, for coverage of register, data from all sources of information (administrative sources, financial results, business statistics) are harmonized.

7

Improvement of Measuring the Indicators of Volume of Gross Domestic Product (GDP).

Before 2012, quarterly GDP was calculated in prices of the relevant period of a previous year. This method did not allow to obtain annual preliminary data of GDP in comparable prices as a sum of 4 quarters. It was decided to calculate in annual average prices of the previous year. In this regard, it was necessary to revise all deflators and price indices applied for quarterly GDP calculations.

As it is difficult for some industry offices to provide necessary time indices, some calculations are performed directly by the National Accounts and Macroeconomic Synthesis Division.

Quarterly producer price index (PPI), consumer price index (CPI), index of goods import/export prices in annual average prices of the previous year are calculated on the basis of monthly indices provided by the departments of industry, price statistics and foreign trade statistics.

For gross fixed capital formation, PPIs of the European Union countries are used which are adjusted by exchange rate.

Regular implementation of annual average prices of the previous year has been performed by the National Bureau of Statistics starting with the calculations for the first quarter of 2013. For development of time series, quarterly data for a year of 2011 and 2012 were also recalculated into annual average prices of the previous year.

8

III. Achieved Results in National Accounts Development of the Republic of Moldova

Results achieved by means of:

1. Improvement of information base

а. improvements of statistical sources of information, implementation of necessary indicators for making calculations;

b. coverage and consistency of data (cooperation with other ministries, departments with regard to information exchange);

c. integration of all sources of data (business surveys and administrative sources) to improve quality of business register.

2. Implementation of commodity flow method annually and quarterly for:

а. calculation of final consumption of households at a level of 4 characters of COICOP;

b. calculation of gross fixed capital formation (GFCF) – investments (GFCF elements) are disaggregated for construction and machinery and equipment.

3. Experimental calculations on imputed rent as per OECD recommendations (user expenditure method).

4. Improvement of GDP volume indicators.

а. implementation of calculations of GDP quarterly data in annual average prices of the previous year.

b. application of benchmarking to adjust quarterly data to annual results.

c. recalculation of GDP changes from years between 1995 and 2014 into prices of a year of 2010 and use of seasonal adjustments.

9

3. Improvement of GDP Volume Indicators.

d. Improvement of recalculation of taxes on products into comparable prices: Excise taxes – deflation through nominal growth of rates of excise taxes. To

determine average weighted volume index, 4 groups of excise taxes (the most weighted – cigarettes, alcoholic beverages except for wine) have been adopted, cars and energy resources;

VAT – extrapolation through volume index of a part of final consumption of households;

Customs duties – through volume index of goods imported from abroad (except for the CIS countries).

e. Recalculation of machinery and equipment – deflation through PPIs of the EU countries.

f. Recalculation of import and export of services into comparable prices using average weighted index of tourism, transport and communications, as very these services have the highest specific weight in services.

Implementation of GDP quarterly calculations into official practice on a discrete basis and recalculation into annual average prices of the previous year allowed to obtain preliminary annual GDP estimate as a sum of four quarters.

5. Implementation of the Moldova Classification of Economic Activities of Moldova, Rev.2, (MCOEA, rev.2).

а. branch statistics officially implemented COEA, rev.2 since January 2014.

b. National Accounts Office recalculated GDP time series (annual, quarterly) for years between 1995 and 2014, in current and comparable prices in accordance with COEA, rev.2 .

10

Implementation of the 2008 SNA

Before a year of 2014, the activities on transition to the 2008 SNA were reflected in Plan for Statistics Development for 2012-2014. Currently, the Strategy for Development of National Statistical System for 2015-2020 is under elaboration which will reflect the further steps on implementation of the 2008 SNA. First of all, it specifies a development of those indicators which have an impact on GDP amount and structure.

1. Development of FISIM а. Calculation in current prices. Calculations are performed on the basis of

information obtained from the National Bank of Moldova on balances of loans (L) and deposits (D) by institutional sectors and average rate of interest on issued loans (rL) and deposits (rD), by months in national and foreign currencies.

b. To determine reference rate (rr), the highest issued deposit interest is applied, by months in national and foreign currencies.

c. According to the 2008 SNA methodology, FISIM is calculated by formula: FISIM = [(rL – rr) x L] + [(rr – rD) x D]

FISIM in current prices, mln lei

1993 SNA 2008 SNA

2010 1499 1700

2011 1774 1548

2012 1743 1663

2013 1711 1706

2014 2251 2059

11

Calculation in comparable prices is performed by deflation of loan and deposit balances by quarters in national and foreign currencies, using common CPI (for current quarter) calculated in annual average prices of the previous year.

Using annual average interest rate on loans, deposits and basic interest rate from the previous year in national and foreign currencies, FISIM is determined according to known formula for loans and deposits in foreign and national currencies, for each quarter separately. Annual data are a sum of four quarters.

FISIM in comparable prices, mln lei

1993 SNA 2008 SNA

2011 1517 1814

2012 2032 1760

2013 1836 1909

2014 1896 1976

12

2. FISIM Distribution between Final and Intermediate Consumption by Sectors:

Intermediate consumption is distributed by types of economic activity, using a structure of received and paid interests based on the annexes on financial results of the economic agents, and by sectors according to source data obtained from the National Bank in terms of sectors.

Final consumption is distributed by sectors according to the same source data obtained from the National Bank in terms of sectors.

Sectors FC IP

Nonfinancial sector *

Financial sector *

Public administration *

Households

-Consumer loan *

-Real estate loan (К70 – real estate operations)

*

-Other loans *

Deposits *

Non-profit institutions serving households *

13

2. Issue of Central Bank, Reflections of Military Expenditures and Research and Development Expenditures.

As for issue of the Central Bank, the reflections of research and development expenditures, the experimental calculations were performed in accordance with the 2008 SNA for a year of 2013. The calculations were performed based on available sources of information: Public budget implementation, Costs, Business expenditures and investments, Structural questionnaire, Research and development activities, Resources-distribution table.

During developments, the missing indicators (missing information) were identified.

In this regard: jointly with the Ministry of Defence, a list of indicators was drawn up (types of

armament, cost, service life) which the Ministry of Defence (on certain conditions and approved documents) will regularly submit to the NBS;

with the National Bank, a procedure on singing the information exchange contract is under completion. It lists the indicators required for making calculations;

for development of research and development expenditures, the NBS will introduce the required amendments to the statistical reporting form “On Research and Development Activities”. In this regard, a cooperation has been established with the Academy of Sciences which (by agreement) will submit to the NBS available information on research and development expenditures.

14

PROSPECTS FOR NATIONAL ACCOUNTS DEVELOPMENT OF THE REPUBLIC OF MOLDOVA

1. Since quarter I of 2015, implementation of the classification of economic activities – MCOEA, rev. 2;

2. To perform experimental calculations of cost of services of owner-occupied housing as per the OECD recommendations, taking into account census returns for a year of 2014 (June 2016);

3. To perform experimental calculations of Gross Regional Product (2016);

4. Implementation of the 2008 SNAImprovement of FISIM calculations: - distribution by institutional sectors and by types of economic activity (as per

MCOEA, rev. 2); - joint work with the National Bank to determine FISIM import/export (balance of

payment-VI issue).

To perform experimental calculations on: - reflection of military expenditures (October 2015); - issue of the central bank (July 2015); - reflection of research and development expenditures (November 2015).

Implementation of the 2008 SNA (2017) and readjustment of time series (since 1995).

15

Thank you for your attention

16