From 1993 SNA to 1993 SNA Rev.1 A progress report on the update of the 1993 SNA

1
From 1993 SNA to 1993 SNA Rev.1 A progress
report on the update of the 1993 SNA

• UN Statistics Division
• Economic Statistics

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Important dates - 1993

• In 1993 the Statistical Commission during its
  27th session unanimously endorsed the System of
  National Accounts 1993 (1993 SNA). In the same
  year the United Nations Economic and Social
  Council in its resolution 1993/5 recommended that
  member States consider using the 1993 SNA as the
  international standard for compilation of their
  national accounts statistics and in the
  international reporting of comparable national
  accounting data.

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Important dates 1999

• In 1999 the Statistical Commission during its
  30th session endorsed the proposal of an
  mechanism for continuous updating of the 1993 SNA
  in order to maintain the systems relevance in an
  fast evolving world economy and to resolve
  ambiguities that may appear during its
  implementation.
• The updating mechanism includes four types
  editorial amendment, clarification beyond
  dispute, interpretation and change. For a
  detailed explanation and the procedure of their
  implementation refer to the following website
  http//unstats.un.org/unsd/sna1993/updatepage.asp?
  id1

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Important dates - 2002

• In 2002 the Statistical Commission during its
  33th session endorsed the proposal of ISWGNA to
  create an advisory expert group (AEG). It
  recommended that the groups primary task should
  be to advise ISWGNA on methodological issues and
  to assist ISWGNA in achieving resolutions on
  outstanding issues as well as issues arising in
  the future.

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10 year milestone

• After 10 years of its adoption the 1993 SNA is
  still
• Robust framework
• Broadly appreciated
• Resilient in the changing environment
• Not fully implemented in all countries

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but

• Changes in the economic environment require
  constant updates to the 1993 SNA in order to
  maintain relevance
• Existing incremental updating process has several
  shortcomings
• To slow
• To partial
• Does not ensure consistency and integrity of the
  system as a whole

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Important dates - 2003

• Therefore in 2003 the Statistical Commission
  during its 34th session endorsed a consolidated
  review of the 1993 SNA emphasizing that
• No fundamental or comprehensive changes to the
  system take place as they would impede the
  process of its implementation
• Internal consistency and consistency with related
  handbooks, such as Balance of Payments Manual,
  Government Finance Statistics and Monetary and
  Financial Statistics Manual is ensured
• Update should focus on a number of specific
  issues, but list of issues should be open-ended
  to include additional items, if needed

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Important dates - 2003 (contd)

• Managing and coordinating role of ISWGNA should
  continue with assistance from the AEG
• Transparency of the review process must be
  assured to achieve broad support in the
  international statistical community
• Global participation of national statistical
  offices and central banks is achieved
• Targeted publication date for the 1993 SNA, Rev.1
  is 2008

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Work programme for the updating of the 1993 SNA

• Prepared by ISWGNA in November 2003 in response
  to the request of the Statistical Commission
  during its 34th session
• Approved in 2004 by the Statistical Commission
  during its 35th session
• Includes the list of issues under review,
  governance structure, timetable, resource
  implications, decision-making process, and the
  delineation of the role of the AEG
• Announcement of Carol Carson as Project Manager
  and Anne Harrison as Editor in 2005 during the
  35th session of the Statistical Commission
• The complete document is available on the
  following website http//unstats.un.org/unsd/nati
  onalaccount/Workprogram1993SNAupdate2021Nov2003fi
  nal.pdf

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Governance structure (1)

• Statistical Commission
• Endorses the consolidated set of recommendations
  in 2007
• Approves the final output 1993 SNA, Rev.1 in
  2008

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Governance structure (2)

• Intersecretariat Working Group on National
  Accounts (ISWGNA)
• Composed of five member organizations Eurostat,
  IMF, OECD, UNSD, World Bank
• Chairmanship rotates among the five organizations
  and UNSD functions as Secretariat
• Functions at two levels ISWGNA Management Group
  (ISWGNAMA) and ISWGNA National Accountants
  (ISWGNANA)

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Governance structure (3)

• ISWGNA Management Group (ISWGNAMA)
• Composed of high-level statistical executives of
  the five international organizations
• Agrees on the projects governance arrangements
• Ensures appropriate input and outputs, in
  agreement with Project Manager
• Assesses the overall work plan, time table, and
  budget of the project and raises funds
• Liaises with stakeholders, manages their
  expectations, views and concerns and gains their
  support
• Reports to the Statistical Commission

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Governance structure (4)

• Project Manager (Carol Carson)
• Agrees on desired outputs and outcomes with
  ISWGNAMG
• Reports regularly on progress and timeliness of
  update process and budgetary matters
• Develops an overall work plan in reference to
  organizational matters
• Liaises with stakeholders, manages their
  expectations, views and concerns and gains their
  support
• Provides oversight to the ISWGNANA and guidance
  to the support units
• With the Editor, ensures overall consistency of
  the SNA, Rev.1 and harmony with other
  macroeconomic statistical standards
• Reports to ISWGNA Management Group

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Governance structure (5)

• Editor (Anne Harrison)
• Progressively drafts recommendations for change
  and clarification and prepares drafts of text of
  the 1993 SNA, Rev.1
• Participates in technical discussion with
  ISWGNA NA, AEG and other expert groups
• With the Project Manager, ensures overall
  consistency of the SNA, Rev.1 and harmony with
  other macroeconomic statistical standards
• Catalogs changes that may be needed to the
  various existing handbooks, compilation guides,
  and satellite accounts manuals that arise from
  the update
• Reports to the Project Manager

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Governance structure (6)

• ISWGNA National Accountants (ISWGNANA)
• Composed of senior national accountants from the
  five international organisations
• Sponsors, facilitates and participates in the
  technical consultations
• In consultation with the AEG, considers the
  proposals for change and decides on the scope of
  the updating
• Circulates AEG recommendations to countries
  and/or regional and other expert meetings for
  comments
• Consolidates obtained country comments with AEG
  recommendations to formulate final
  recommendations
• In liaison with Editor, AEG and the existing
  expert groups assesses and evaluates the internal
  consistency of the 1993 SNA, Rev.1 and the
  harmony with other macroeconomic statistical
  standards

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Governance structure (7)

• Advisory Expert Group (AEG)
• Composed of 20 experts representing all regions
  of the world, bringing in expertise from various
  areas in national accounting
• Approves the list of issues for update together
  with ISWGNANA
• Discusses all issues considered for update
  through consultations, electronic discussion or
  in meetings in consultation with ISWGNANA
• Decides proposed changes or clarifications
  jointly with ISWGNANA, striving to reach
  consensus to the highest extend possible
• Presents a single solution to an issue to
  facilitate the approval and rewriting process
• Assesses and evaluates the internal consistency
  of the 1993 SNA, Rev.1 and the harmony with other
  macroeconomic statistical standards in liaison
  with Editor, ISWGNANA and the existing expert
  groups

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Governance structure (8)

• Various expert groups
• Include such groups as Canberra II, EDGs,
  regional expert groups, BOP Statistics Committee,
  Task Force on the Harmonization of the Public
  Sector Accounting
• Conduct first deliberations on the issues and
  submit the groups proposals for treatment of
  issues to the AEG for discussion and decision

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Governance structure Diagram
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Decision-making process

• Various expert groups like Canberra II, BOPCOM,
  TFHPSA, EDGs, regional meetings conduct first
  deliberations on issues and prepare proposal for
  treatment of issue to AEG
• AEG, jointly with ISWGNANA discusses proposal
  and takes decision by striving for consensus to
  the highest extend possible
• If AEG disagrees with proposal it is referred
  back to the responsible expert group for new or
  revised proposal based on discussion of the AEG
• If AEG agrees with proposal a recommendation for
  treatment of issue is formulated

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Decision-making process (contd)

• ISWGNANA circulates recommendation to all
  countries (NSO and CB) and regional commissions
  for discussion and comments with a 60-day
  response period
• Formulates final recommendation incorporating
  results of country comments and refers it to the
  editor
• Editor consolidates all final recommendations,
  ensuring conceptual consistency and produces
  final text of SNA 1993, Rev.1 for submission to
  the Statistical Commission in 2008

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Decision-making process - Diagram
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Criteria for identifying issues for updating

• Issues emerging in the new economic environment
• Old issues, previously discussed and rejected, if
  they fulfill one of the following criteria
• Warrant the need to a further look in the new
  economic environment due to their economic
  significance
• Advancement in methodological research justifying
  different treatment
• Recognition of user needs
• Feasibility of planned changes

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List of issues

• For the complete list of issues, including
  descriptions, available recommendations, comments
  refer to the following website
  http//unstats.un.org/unsd/sna1993/issues.asp
• Issues
• 1. Repurchase agreements
• 2. Employer retirement pension schemes
• 3. Employee stock options
• 4.a Non-performing loans
• 4.b Valuation of loans and deposits Write-off
  and interest accrual on impaired loans
• 5. Non-life insurance services
• 6. Financial services
• 6.a Financial services
• 6.b Allocation of the output of central banks
• 7. Taxes on holding gains
• 8. Interest under high inflation
• 9. Research and development
• 10. Patented entities

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List of issues (contd)

• 11. Originals and copies
• 12. Databases
• 13. Other intangible fixed assets
• 14. Cost of ownership transfers
• 15. Cost of capital services production account
• 16. Government owned assets
• 17. Mineral exploration
• 18. Right to use/exploit non-produced resources
  between residents and non-residents
• 19. Military expenditures
• 20. Land
• 21. Contracts and leases of assets
• 22. Goodwill and other non-produced assets
• 23. Obsolescence and depreciation
• 24. Build-Own-Operate-Transfer (BOOT) schemes
• 25.a Ancillary units
• 25.b Institutional units
• 25.b.i Holding companies, special purpose
  entities, trusts
• 25.b.ii Treatment of multi-territory enterprises
• 25.b.iii Recognition of unincorporated branches

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List of issues (contd)

• 26. Cultivated assets
• 27. Classification and terminology on assets
• 28. Amortization of tangible and intangible
  non-produced assets
• 29. Assets boundary for non-produced intangible
  assets
• 30. Definition of economic assets
• 31. Valuation of water
• 32. Informal sector
• 33. Illegal and underground activities
• 34. Super dividend, capital injections and
  reinvested earnings (government transactions with
  public corporations (earnings and funding))
• 35. Tax revenue, uncollectible taxes, and tax
  credits (recording of taxes)
• 36. Private/public/government sectors delineation
  (sectorization boundaries)
• 37. Activation of guarantees (contingent assets)
  and constructive obligations
• 38. Transaction concept
• 38.a Change of economic ownership (as term)
• 38.b Assets, liabilities and personal effects of
  individuals changing residence ("migrant
  transfers")
• 38.c Application of accrual principles to the
  debt in arrears

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List of issues (contd)

• 39. Residence
• 39.a Meaning of national economy
• 39.b Predominant center of economic interest (as
  term)
• 39.c Clarification of non-permanent workers and
  entities with little or no physical presence
• 40. Goods sent abroad for processing
• 41. Merchanting
• 42. Retained earnings of mutual funds, insurance
  companies, and pension funds
• 43. Interest and related issues
• 43.a Treatment of index linked debt instruments
• 43.b Interest at concessional rates
• 43.c Fees payable on securities lending and gold
  loans
• 44. Financial assets classification

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List of clarifications

• For the complete list of clarifications,
  including descriptions and available
  recommendations refer to the following website
  http//unstats.un.org/unsd/sna1993/issues.aspclar
  
• Clarifications
• C1. Other subsidies on production to non-market
  producers
• C2. The treatment of seignorage profits from the
  issue of coins in the 1993 SNA and in the Manual
  of Government Finance Statistics (GFS) 1986
• C3. Review of SNA terminology for
  user-friendliness
• C4. Volumes and prices in relation to taxes on
  products
• C5. Clarification of components of compensation
  of employees
• C6. Review of SNA codes
• C7. Should the first appearance of value of
  financial derivatives be entered as other changes
  in volume (OCVA)?
• C8. Classification of financial assets F5 Shares
  and other equity/F52 Mutual Funds
• C9. Valuation of equity
• C10. Measurement of non market output

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List of clarifications (contd)

• C11. Concept of jobs and concept of persons
• C12. Top level industry classifications
• C13. Clarification of Chapter XXI on satellite
  accounts
• C14. The definition of interest
• C15. The Public Sector
• C16. Measurement of labor inputs
• C17. Measurement of output produced for own final
  use
• C18. Inventory withdraws defined including or
  excluding normal losses
• C19. Government final consumption expenditure
• C20. Legal versus economic terminology
• C21. Definition of an establishment
• C22. Valuation of work-in-progress
• C23. Capital assets not yet ready for use
• C24. Changes in inventories
• C25. Links between business accounting and
  national accounting
• C26. Currency unions
• C27. SDRs
• C28. Direct investment

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AEG meetings

• Four meetings between 2004 2006 to deliberate
  on the proposals of the various expert groups
• Some issues will be discussed through
  e-discussions or e-consultations and if consensus
  is reached recommendations will be adopted in
  meetings without further discussion
• Meeting in early 2006 is last chance to
  deliberate on issues all issues need to have
  AEG recommendation at that time
• Early 2007 meeting to review mutual consistency
  of all final recommendations on updated issues
  and overall integrity of the system
• 2007 final meeting to adopt all proposed changes
• For detailed information on AEG meetings refer to
  the following website http//unstats.un.org/unsd/
  nationalaccount/aeg.htm

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AEG meeting in February 2004

• Agreement on the list of 44 issues considered for
  update, classified into the following categories
• Issues identified by ISWGNANA which are part of
  deliberations of existing expert groups like
  Canberra II, EDGs, regional expert groups
• Issues identified by the Balance of Payments
  Committee (BOPCOM)
• Issues identified by the Task Force on
  Harmonization of Public Sector Accounts (TFHPSA)
• Identification of responsible agency or expert
  group for each issue
• Agreement on recommendations for the following
  issues
• 3. Employer stock options
• 5. Non-life insurance services
• 6.a Financial services
• 6.b Output of central banks
• 7. Taxes on holding gains
• 14. Cost of ownership transfers
• 19. Military expenditures
• 26. Cultivated assets

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AEG meeting in Feb. 2004 Overview of country
comments

• 42 countries responded to AEG recommendations,
  equally from National Statistical Offices and
  Central Banks
• Majority of countries supports AEG
  recommendations
• Results of the country comments were summarized
  as follows

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AEG meeting in December 2004

• Agreement on recommendations for the following
  issues
• 4.a Non-performing loans
• 11. Originals and copies
• 12. Databases
• 14. Cost of ownership transfers
  Part II
• 16. Government owned assets cost of
  capital services
• 17. Mineral exploration
• 20. Treatment of land improvements
• 25.b.i Holding companies, special purpose
  entities (SPEs), and trusts
• 25.b.ii Treatment of multi-territory
  enterprises
• 25.b.iii Recognition of branches
• 38.a Change of economic ownership
• 38.c Application of accrual principles
  to debt in arrears
• 39.b Residence of households

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AEG meeting in Dec. 2004 Overview of country
comments

• 56 countries responded to AEG recommendations,
  equally from National Statistical Offices and
  Central Banks
• Majority of countries supports AEG
  recommendations,
• Only for issue 16 - Government owned assets a
  large number of reservations or disagreements
  were reported
• AEG recommendation to include a return to
  capital, viewed as opportunity cost in the
  measurement of non-market output was opposed
  either in principle or on the basis of
  feasibility
• AEG requested a questionnaire for global
  consultation on this issue to be sent to national
  accounts departments of all countries

34
AEG meeting in Dec. 2004 Overview of country
comments (contd)

• Results of the country comments were summarized
  as follows

35
AEG meeting in July 2005

• Agreement on recommendations for the following
  issues
• 1. Reverse transactions
• 4.a Non-performing loans
• 9. Research and development
• 11. Originals and copies
• 12. Databases
• 15. Cost of capital services
• 16. Government owned assets cost of
  capital services
• 20. Treatment of land improvements
• 22. Purchased goodwill and marketing
  assets
• 23. Obsolescence and depreciation
• 25.b.ii Treatment of multi-territory
  enterprises
• 31. Water as an asset
• 35. Tax revenues, uncollectible taxes
  and tax credits

36
AEG meeting in July 2005 (contd)

• Agreement on recommendations for the following
  issues (contd)
• 36. Public/private/government sector
  delineation
• 37. Granting of guarantees
• 38.b Migrants transfers
• 39.c Residence of households
  Non-permanent workers
• 39.c Residence of households Ships crew
  and patients
• 40. Goods sent abroad for processing
• 42. Retained earnings on mutual funds
  and other collective investment schemes
• 43.a Interest on index-linked debt
  instruments
• 43.a Debt instruments linked to foreign
  currency
• 43.c Fees on security lending and
  reversible gold transactions
• 44. Distinction between loans and
  deposits
• 44. Traded loans (Borderline between
  Securities and Other Financial Instruments)

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AEG meeting in July 2005 Overview of country
comments

• Country comments are currently still obtained
  (deadline 30 November 2005)
• Comments are posted against corresponding issues
  as soon as they are received, for reference check
  the following website
• http//unstats.un.org/unsd/sna1993/issues.asp

38
AEG meeting in January/February 2006

• Last meeting to discuss conceptual issues and
  clarifications and agree on recommendations
• AEG recommendations for each of the 44 issues
  must be formulated
• For provisional list of issues to be discussed
  refer to the following website
  http//unstats.un.org/unsd/nationalaccount/aeg.htm

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Basic structure of SNA 1993, Rev.1

• No change in basic structure
• Major new issues will go into new, separate
  chapters or annex
• New or revised text will be incorporated into
  existing chapters for completion
• Opportunities to shorten existing text will be
  exploited
• Record of changes of text will be created

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Role of editor

• New text
• Drafts most of new text
• Adjusts text contributed by others to achieve
  harmonization in substance and style with rest of
  draft and provides authors of text with record of
  changes made
• Existing text of the SNA
• Makes editorial touch-ups without creating
  changes to the SNA and flags them for easy
  identification

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Role of reviewers

• ISWGNANA
• Provides eagle eye review of first draft
• Carries out substantive review of all chapters
• AEG
• Reviews chapters or parts of the revised SNA,
  probably organized in groups
• Mandate of review is limited to seek out
  inconsistencies based on agreed recommendations
  and clarifications

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Organization of draft review

• Chapters will go through the following stages
• Exiting text or contribution
• Draft from editor for eagle eye review by
  ISWGNANA
• Draft for review by AEG, publication on the
  website and distribution to NSO and CB for
  comments
• Redraft from editor for eagle eye and
  substantive review by ISWGNANA
• Final draft ready for submission to Statistical
  Commission

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Organization of draft review (contd)

• Chapters divided into two tranches and proceeded
  through consecutively
• First tranche Chapters that are the heart of
  the SNA
• Second tranche Remaining chapters, tables,
  glossary
• Approach allows more review time for tranche 1
  (heart)
• Editor will work on blocks of related chapters
  within tranche and upon completion of blocks
  releases them for review

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Output dates

• Initial set of consolidated recommendations
  Early 2006
• Views on consistency April-Sept. 2006
• Revised set of consolidated recommendations for
  Statistical Commission Late 2006
• Draft of tranche 1 for AEG meeting Early 2007
• Draft of tranche 2 for AEG and outlook towards
  implementation of revised SNA Late 2007
• Draft of 1993 SNA, Rev.1 for Statistical
  Commission Late 2007

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Monitoring progress

• UNSD will maintain progress database on the
  internet to assure transparency of process
• Database input provided by editor
• Database will exist in three levels
• Summary chapter x issue matrix with color coding
  indicating progress publicly available
• More detailed matrix for ISWGNANA restricted
  access
• Project management to track tasks and assignments
  during review restricted access

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Useful references

• Projects main website containing links to all
  available information http//unstats.un.org/unsd/
  nationalaccount/snarev1.asp
• List of all issues/clarifications, including
  descriptions, papers, recommendations, country
  and expert comments http//unstats.un.org/unsd/sn
  a1993/issues.asp
• List of all AEG meetings, including agenda,
  papers, presentations, minutes
  http//unstats.un.org/unsd/nationalaccount/aeg.htm