1. Introduction

This report is written in response to the findings of the Report on Observance of Standards and Code (ROSC) mission that visited Malawi between September 1-16, 2003. The ROSC data module provides a review of Malawi’s data dissemination practices against the General Data Dissemination System (GDDS) of the International Monetary Fund. It provides an in-depth assessment of the five macroeconomic accounts: monetary, government finance, national accounts, consumer price index, and balance of payments data sets.

2. Reactions by the Authorities

The Ministry of Finance (MOF), National Statistical Office (NSO) and the Reserve Bank of Malawi (RBM) welcome the findings of the Report on Observance of Standards and Codes (ROSC) Mission on all macroeconomic accounts and agree to publishing of the final report.

The findings of the Mission that prepared the data module of the ROSC are a true reflection of the current compilation and dissemination practices of these accounts. Although the Mission identified a number of problems regarding the compilation and dissemination of monetary and financial statistics, it was gratifying to note the Mission’s appreciation of the great efforts that were being made by the Malawian authorities to strengthen the statistical system despite tight resource constraints. To this effect, Malawi has been participating in the GDDS since 2002, reflecting the authorities’ strong commitment to adhere to internationally accepted good practices.

Consequently, the Government intends to undertake the following tasks consistent with the GDDS framework:

3. Monetary Statistics

RBM intends to improve, in due course, the quality and coverage of its monetary and financial statistics in accordance with the Monetary and Financial Statistics Manual (MFSM, 2001). The RBM intends to undertake the following tasks consistent with the GDDS framework:

• (i) Review the standard core report forms to adequately identify resident sectoral distribution of deposits and credit. This will also help in the separation of local governments, shares and other equity in the banks’ reports;

• (ii) Fully utilise the accrual accounting method of valuation and recording;

• (iii) Carry out workshops and seminars to educate commercial banks, other financial institutions and other stakeholders on the importance of monetary and financial statistics and the scope for improvements;

• (iv) Expand the monetary survey to a depository corporations survey and fully adopt the concepts and definitions as recommended in the MFSM (2001);

• (v) Expand the institutional coverage of the depository corporations survey and accordingly revise the series of the expanded survey;

• (vi) Publish a statement of methodology on the compilation practices of the monetary and financial statistics in the various Bank publications

• (vii) Provide a link of the Malawi Metadata page available on the IMF’s website on the RBM’s website;

• (viii) Closely work with other institutions responsible for data compilation and dissemination to ensure data consistency across sectors;

• (ix) Institute regular consultations with users of monetary and financial statistics in the form of surveys or regular meetings to ensure feedback and identify any emerging data requirements;

• (x) With respect to Balance of payments, the RBM intends to work closely with the NSO to ensure accuracy and consistency in BOP data estimates and

• (xi) At a later date, with technical assistance, the Bank intends to compile stock data on three separate flow components–transactions, revaluation, and other changes in volume of assets- as required in the MFSM (2001).

4. Government Finance Statistics

The MOF intends to improve the reporting of fiscal data in accordance with the Government Statistics Manual (GFSM 2001) consistent with the GDDS framework. However, MOF proposes to continue data reporting in accordance with GFSM 1986 before migrating to GFSM 2001. Nevertheless, most of the problems encountered will be solved after training more staff in the compilation of GFS and after instituting a proper migration path for the new GFSM 2001. With respect to coverage, data quality, integrity, methodological soundness, accuracy and reliability, serviceability and accessibility, Government intends to carry out the following:

• (i) The MOF will improve coverage of central and general government because fiscal data only covers central government operations;

• (ii) In terms of data quality, the Public Finance Management Act will be implemented as stipulated in terms of all financial reports, financial statements, and associated information and accounting procedures in accordance with generally accepted accounting practices;

• (iii) The government will ensure that the code of conduct for civil servants and Treasury code of conduct for accounting officers is followed and make an effort to provide timely sufficient government finance statistics;

• (iv) The Government is requesting for more technical assistance in order to facilitate the migration from GFSM 1986 to the GFSM 2001.

• (v) In terms of accuracy and reliability, sound statistical techniques used for compiling government finance statistics will be implemented and data on functional operations of statutory agencies and local governments has to be made available;

• (vi) The MOF need to promote consultations with users outside government and that monthly and quarterly government finance statistics have to be made consistent both in the short and long term;

• (vii) In terms of accessibility, Government will make an effort to publish monthly and quarterly data so that data is made accessible to different users in the economy

5. National Accounts

Some of the issues which Government intends to carry are as follows:

• (i) The NSO is currently working towards switching to 2000 base year when relevant data (AES) are available and is reviewing concepts, definitions and methodology by moving towards the 1993 SNA.

• (ii) NSO is working hand in hand with the Ministry of Agriculture in crop estimates to come up with more reliable information.

• (iii) Both financial and technical assistance are required for the NSO to carry out this survey. Technical assistance would be required to assist NSO with the methodology for survey design, analysis and for introducing the data into the national accounts.

• (iv) Technical assistance would also be required to assist in the move towards SNA 93.

6. Price Statistics

As already observed, most of the issues on price statistics are being followed. However, plans are underway to start compiling Producer Price Index that would be used in deflating National Accounts Current Price Series.

In this case, financial and technical assistance would be required to assist in improving methodology and compilation.

Metadata on the consumer price index were posted on the IMF’s Data Dissemination Standards Bulletin Board in February 2004.

7. Balance of Payments

Several issues have been observed under Balance of Payment but the Government intends to carry out some of the following measures:

• (i) The Government is adopting the BPM5 presentation of data which will be incorporated in the 2003 Balance of Payments Statistical Yearbook, and this presentation of data has already been published in an analytical format in the NSO’s Quarterly Statistical Bulletin of July-September 2003. All reviews on BOP data will fall under a different framework in the same context of BPM5.

• (ii) To improve coverage and quality of data, the Government will be working in collaboration with donor in the collection and compilation of grants/donor aid data. The bottom line is to examine, alongside the data suppliers, grants in cash and kind received by the government of Malawi, and possibly split between current and capital transfers. This will improve coverage and quality of data.

• (iii) A statement regarding the compilation and methodological practices followed in preparing Malawi’s balance of payments data will be prepared and availed to the public, alongside the published data, when the first set of major improvements are implemented.

• (iv) Malawi has also benefited from the Development Finance International (DFI) in terms of the first and second phases of the survey on foreign private investment both financially and technically. The capacity transfer will continue possibly for the next two years to ensure full capacity transfer, with financing of the surveys internalized within our work programmes.

• (v) Technical assistance will be required in drafting the survey form for insurance companies, Embassies and IO’s. Embassies and IO’s, being extraterritorial enclaves, would require special treatment in terms of approach since experience from other countries reveals a lot of reservations by these institutions towards government surveys. Technical assistance will also be required in implementing the methodology set out in the BPM5, compiling quarterly balance of payments data, the compilation and further analysis of IIP.