A. National Accounts

4. The recommendations of IMF staff propose improving the household budget statistical survey and utilizing the results to derive estimates of household final consumption. The derivation of estimates of household final consumption is based on application of the results of the budgetary research on households. Data on volumes of turnover in retail trade and public catering and on volumes of commercial services provided to the public are used by Goskomstat as a primary source for adjusting the indicator. A mechanism for revising indicators for concealed and informal activities is applied to achieve balance in resources and use of goods and services designated for household final consumption.

5. Another recommendation of Fund staff is to derive the output of owner-occupied dwellings using market rental values. Calculation of the output of owner-occupied dwellings using methodology of Goskomstat relies on actual data of expenses on maintenance of the housing and is, effectively, not associated with the market rental value. First and foremost, this is because the housing and communal services sector in Russia is a subsidized economic sector (by almost 40 percent) and an assessment of housing services value on the basis of the market price incorporating subsidies will lead to a substantial change in the volumes and structure of household income and expenditure that will be difficult for users to interpret.

B. Consumer Price Index (CPI)

6. The Report proposes considering the inclusion in the CPI of services from owneroccupied dwellings. The recommendation cannot be implemented because the calculation of the CPI includes only those goods and services whose prices may be measured directly. In addition, there is no need for the proposed adjustment because the CPI includes the heading “Rental of housing in the state and municipal stocks,” which characterizes movements in housing cost rates in privatized apartments. The ratio of expenditures for other types of owner-occupied housing within the structure of consumer expenditures of the public is insignificant, and therefore their inclusion in the calculation of the CPI is inadvisable. In this manner, the indicator is fully incorporated in formation of the CPI.

7. The Report recommends reflecting purchases less sales in the weight for used vehicles when calculating CPI. Currently the survey program for household budgets does not reflect income from the sale of vehicles, and therefore the recommended weight is not calculated. For full coordination of CPI concepts and definitions with international standards, the relevant changes will be made to the budget survey program.

C. Producer Price Index (PPI)

8. The Report proposes extending the coverage of the PPI to include exported goods. The principle currently applied by Goskomstat for calculating the producer price index for products sold on the domestic market and separately for exports corresponds to the statistical practices of Canada, Finland, and the U.S. Development of an International Guideline for PPI Calculations is currently being completed. Following its publication, Goskomstat will carry out the necessary procedures to bring Russian methodology for PPI calculation into correspondence with the International Guideline for PPI Calculations.

9. The Report recommends accelerating the adoption of an international standard commodity classification for formulating the PPI. Experimental PPI calculations have been made since January 2003 using the All-Russian Classification of Types of Economic Activity (the OKVED). The OKVED is formulated on the basis of harmonization with the Statistical Classification of Economic Activities in the European Community (NACE Rev. 1). Prior to adoption of the new classification, the “Nomenclature for small commodity groups and representative commodities for calculation of average prices and producer price indices using the OKVED” will be utilized.

D. Government Finance Statistics

10. The IMF Report recommends introducing a new chart of accounts and budget classification aligned with the guidelines of the Government Finance Statistics Manual 2001 (GFSM 2001).

11. Recently the government of the Russian Federation approved a Conceptual Framework for Budget Process Reform, which stipulates the application in 2005 of an economic classification for operations of the general government sector corresponding to the provisions of the GFSM 2001.

12. In addition, work is currently underway to develop a Budgetary Chart of Accounts using the accrual basis and integrated with the budget classification, and also incorporating the provisions of the GFSM 2001. That document will enter into force as of January 1, 2005.

13. The Ministry of Finance posts on its website all materials associated with the development of the aforementioned Chart of Accounts and instructions for its application.

14. The IMF’s recommendations propose carrying out publication of a detailed technical description of concepts, sources, and methods used in the compilation of budget execution data.

15. Currently the Ministry of Finance of the Russian Federation is working on formalizing a methodology for compiling government finance statistics data in accordance with the IMF’s recommendations.

16. In the very near future the Ministry of Finance will implement the recommendation contained in the IMF’s Report concerning the dissemination on the Ministry of Finance’s website of a quarterly economic classification of federal government expenditures. In addition, the Ministry of Finance of the Russian Federation plans to publish government finance statistics data as well as basic approaches to their compilation.

E. Monetary Statistics

17. One of the mission’s comments is that timeliness of the data on analytical accounts of the monetary authorities does not meet SDDS requirements. Before November 2003 the Bank of Russia compiled the preliminary data using the balance sheet data. It provided more accuracy and allowed to minimize discrepancies between the preliminary data and the final publication of the analytical accounts of monetary authorities but it took one or two days more than SDDS required. Taking into account mission’s recommendations the Bank of Russia has changed the source of information for these data and beginning in November 2003 preliminary data on monetary authorities based on the operational data is disseminated within two weeks in line with SDDS requirements.

18. With respect to the mission’s comment that the data of nonoperating depository corporations should be included in the institutional coverage of monetary statistics, the Bank of Russia has analysed the data on such types of depository corporations thoroughly and since November 2003 the Bank of Russia has expanded the institutional coverage of monetary statistics by including the data of nonoperating credit institutions with simultaneous revision of data from 1997 after announcing on official CBR’s website.

19. Regarding the recommendation that accrued interest should be incorporated into underlying sectors and financial instruments, from the beginning of 2004 the Bank of Russia has begun to include the accrued interest on deposits in money aggregates.

20. Another mission’s comment is that the valuation of gold is not in line with the MFSM. In fact, the CBR monetary gold is valued at 300 US dollars per troy ounce. This approach is based on one of the IFRS’s¹ principles—prudence, extremely important for central banks—the large holders of gold. Nevertheless, taking into account the statements of MFSM to value the gold on the basis of a market price, this issue will be given further consideration in the adaptation period of implementing the concepts and principles outlined in the MFSM.

21. In regard to the comment that data on financial derivatives are not currently available to compilers of monetary data. According to the Provision of the Central Bank of the Russian Federation No. 1363-U of December 25, 2003 «About compiling and providing the financial accounting of credit institutions» beginning with the reference period ended by September 30, 2004 credit institutions will start to compile financial accounting in accordance with the IFRS. This reporting information will include data on financial derivatives and it will be also available for the purpose of compiling monetary statistics that will provide the treatment of financial derivatives to put in line with the MFSM conception.

22. As regards the other IMF recommendations concerning the conformity to the main principles of the MFSM the Bank of Russia will consider them in further development of monetary statistics.

F. Balance of Payments

23. All the key recommendations were taken into account while preparing the next publication of the BOP after the visit of the mission:

Disseminate advance notices of changes in methodology and source data

24. A notice of major changes in methodology and source data for balance of payments for Q3, 2003 had been placed on the website of Bank of Russia in advance, before the official publication of the BOP. In future the CBR is going to keep to the same practice. Besides, the CBR tried to pay more attention to other items concerning cooperation and interaction with the users, namely:

• Efficient reaction on misinterpretation of BOP data in mass media (a press-release on unusual trends in direct investment was published before the official release of the analytical comment).

• Enhancing of direct contacts with users (it was made clear that all the interested users should not hesitate to contact BOP compilers and to ask any questions or make comments).

• A note that all the BOP data are subject to revisions during the year have been added to all our presentations including those on the website.

• As it has been mentioned by the mission that the foreign trade statistics was in area where further improvement is required, the CBR has published the time series on volumes and prices of exports of energy goods.

• In order to assess the users needs better the CBR started to conduct user surveys. For example, the dissemination of a new edition on foreign trade in services was supplemented by a questionnaire. Along with the annual publication of BOP the CBR is planning to carry out questioning of BOP data users.

Provide a further institutional breakdown of the banking sector to distinguish monetary authorities’ portfolio and other investment transactions

25. The sector of monetary authorities has been shown separately with a recommended detailed breakdown starting with the publication for Q3, 2003, and the BOP time series have been revised back. This breakdown has also been introduced in the IIP and external debt tables.

26. As for the recommendation of the mission concerning the necessity of a unified presentation of external debt statistics, the table “External Debt of the Russian Federation by Maturity” with all required breakdowns (by sector, instrument, maturity), which is brought to maximum conformity with Table 4.1 of External Debt Statistics Guide, is published on the CBR’s website on a regular basis.

Reclassify freight insurance under insurance services

27. Freight insurance calculated on the basis of international transactions reporting system has been excluded from transportation and included in insurance services. The reclassified services have been published since December 2003 with simultaneous revision of time series. When the survey of customs declarations financed by the World Bank and aimed at determination of a CIF/FOB adjustment is done to the end, these figures could be improved further.