B. Price Statistics (Consumer Price Index)

Clarifications on the staff’s assessment in the second paragraph of sub-section 3.2.1, Page 32

“The revised CPI is expected to be launched in January 2004. It may provide less regional detail as the new continuous HICES is based on a smaller sample of households. However, with regard to statistical needs for the overall territory, the regional detail provided may be redundant, as both the regional and city indices show rather small differences in their current levels, reflecting increased integration of regional markets. The SIS plans to ask users if a reduced geographical breakdown of the CPI will satisfy their needs.”

Studies on the new CPI with 2004 reference period have already been initiated since the composition of goods and services and the weights of CPI, based on 1994, have become old. The continuous base (HICES) survey, in contrast to previous one, is based on a small sample size of 9,800 households. Although this sample size is sufficient to give estimation for whole Turkey, urban and rural area, data of three years (2002, 2003 and 2004) are needed to give estimation for representative cities and geographical regions.

In the new system, HICES data for 2002, 2003 and 2004 will be used to construct the chained Laspeyres Price Index based on 2004. Since the survey data for 2004 will be ready approximately in June 2005, the index results will be made public in January 2006 together with CPI numbers for 2002, 2003, 2004 and 2005. In order to reflect current weighting structure, weights will be examined every year and, if needed, will be updated.

C. Government Finance Statistics

Turkish authorities also share the view of the IMF staff that the current system is weak in producing reliable data on the fiscal statistics for the entire public sector. However, Turkish authorities intend to eliminate this deficiency during the ongoing process of transition to the new GFS system. In this framework a working group on fiscal statistics could be formed by the participation of technical staff from the related agencies, namely MOF, Treasury, and the SPO. This working group could be coordinated by one of these institutions and work on consolidating the fiscal accounts of budgetary and extra-budgetary institutions. Also these accounts could be published in the websites of all these institutions.

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We are aware that good financial statistics should be based on good and developed accrual based accounting system. In this concept, a government accounting reform was begun by the MOF to move accrual based accounting system. It is expected that by the end of 2003 would complete the accounting reform program.

After completing public financial management and government accounting reforms, it is expected that all questions in the report would be answered.

D. Monetary Statistics

a. Adopt the guidelines of the MFSM on (i) sectorization of the economy; (ii) classification and valuation of financial assets and liabilities; (iii) treatment of financial derivatives; and (iv) accrual accounting.

As it was mentioned in the ROSC Data Module, current sector classifications are generally in line with the guidelines of the MFSM. However, there are some differences in terms of sector and sub-sector classifications (for example, the breakdown of household and non-profit institutions serving households are not available for non-financial corporations sector). In this regard, Statistics Department of the CBRT is reviewing sector classifications for harmonization with MFSM. Rearrangement of bank reporting forms in line with the guidelines of the MFSM will be the first step in this process and new structure of reporting forms is planned to be completed in the year 2002. Compilation and dissemination of data in this new format is expected to be completed in the year 2003 since it is a time consuming process for the banks and requires restructuring of banking data collection system.

The CBRT has started to implement market valuation for all securities in the CBRT accounting for the balance sheet of December 2002, as mentioned in part 2.4.1 of the DQAF.

As of February 2002, the Banking Regulation and Supervision Agency has issued a regulation requiring repurchase agreements to be treated as on-balance-sheet item as collateralized finance transactions, as mentioned in part 3.1.1. of the DQAF.

The BRSA changed the accounting legislation and banks’ chart of accounts by issuing the “Regulation of the Accounting Practices.”. The regulation is being applied by the banks since February 1, 2002 for trial purposes and will be fully in effect as of July 1, 2002.

b. Improve the timeliness of reporting of the analytical accounts of the banking sector to the level specified in the SDDS.

The BRSA requires the banks (i) to prepare their accounting records in compliance with the regulations put into effect by the BRSA, as per Article 13 of the Banks Act; and (ii) to deliver their interim financial statements to be issued, as of the end of each month, within thirty days following the reference period to the BRSA and the Banks Association of Turkey, and as well as to publish the Official Gazette, within forty-five days following the reference period, those issued as of the end of months of March, June, and September.

However, it is not expected to fulfill the timeliness requirement of the SDDS for the analytical accounts of the banking sector in the short-term due to delays in year-end balance sheets of banks and on-going effects of restructuring in the banking system.

c. Implement steps for the calculation of flows (transactions, revaluations arising from price and exchange rate changes, and other changes in the volume of assets.

Compilation of flow data (on the basis of transactions, revaluations arising from price and exchange rate changes, and other changes in the volume of assets) will be implemented for the banking sector. A draft will be prepared for the coverage and methods of calculation of flow data, and pilot implementations will be tested with several banks until early 2003. A calendar for implementation will be prepared according to results of pilot tests.

d. Keep under review future developments of investment and development banks and mutual funds (especially Liquid Funds) in the financial system.

Reviewing the developments in other financial institutions such as investment and development banks, insurance companies, leasing companies, and mutual funds will be considered in the framework of a future possible compilation of Other Financial Corporations’ Survey (OFCS), after the necessary rearrangements are finalized for the banking sector which were mentioned in the above paragraphs.

E. Balance of Payments Statistics

a. Compile and disseminate the monthly balance of payments and annual international investment position according to the classification recommended by BPM5.

January 2002 BOP report will be disseminated in conformity with the BPM5 standard components together with the historical data prepared in the same format. International Investment Position as of 2001, which will be disseminated in 2002, will conform with the classification recommended in BPM5.

b. Provide advance notice of major changes in methodology, source data, and statistical techniques.

In the past, major changes were announced at the time the data subject to change is disseminated. Henceforth, great importance will be given to provide advance notice of major changes in methodology, source data, and statistical techniques.

c. Disseminate the data template on international reserves and foreign currency liquidity (reserve template) including (a) deposits held with the CBRT by Turkish citizens residing abroad (Dresdner deposits) with an original and remaining maturity of one year or less under “short-term predetermined drains;” and (b) Dresdner deposits with a remaining maturity of more than one year under “contingent liabilities.” In addition, record commercial banks’ deposits at the CBRT from reserve requirements denominated in foreign currency as “contingent liabilities.”

The inclusions regarding the above data will be made by mid-2002.

d. Request additional information through domestic commercial banks from their customers, and conduct enterprise surveys to supplement available data based on banks’ foreign exchange records.

e. Define goods according to the breakdown recommended by BPM5.

f. Evaluate appropriate source data and estimation techniques to estimate transactions of free trade zones, goods procured at ports, financial derivatives and income transactions based on accrual basis and the c.i.f./f.o.b. factor for valuing imports.

The studies already started to improve the compilation and recording of the above mentioned subjects. On these issues; cooperation with the related establishments will also be provided.