Abstract
Albania was among the first countries to participate in the General Data Dissemination System (GDDS), posting its metadata on the Dissemination Standards Bulletin Board. Its metadata have been used as a model by other countries participating in the GDDS. Recommendations to increase further Albania’s adherence to internationally accepted statistical practices, and enhance the analytical usefulness of its statistics include additional staff resources, expanding and improving surveys, implementing measures to minimize errors in commercial banks’ reporting, and to speed up processes in addressing these errors.
I. GENERAL REMARKS
Bank of Albania (Bank of Albania), Ministry of Finance (MoF) and Institute of Statistics (INSTAT) found that ROSC mission assessment of the Albanian’s macroeconomic statistical data confirm our intention to harmonize the standards and methodologies towards achieving good quality of the statistical data.
Appreciating the experience of using the DQAF for assessing quality of the statistical data, we share the view that achieving the good statistical practices are the most important for transition economies. Albanian’s main goal is to become a member country of EU and in this context we are working to improve our statistics as a part of reform in our policies to meet many requirements for EU accession.
As participant in GDDS, Albanian authorities pay much attention to produce higher quality of the macroeconomic data as well as to improve the transparency in dissemination of statistics to meet user’s needs.
Reacting to the summary and detailed assessment of macroeconomic data as result of the ROSC mission, Albanian authorities share their general agreement with the Fund’s findings.
A description of the mission’s main recommendations and the authorities’ implementation plans are detailed below.
II. RESPONSE TO CROSS-CUTTING RECOMMENDATIONS
11. Allocate additional staff resources for the current and planned macroeconomic statistics compilation and dissemination programs, including for information technology support
The structure of the, Department of Statistics, Bank of Albania will be reviewed until the first quarter of 2007, and will be expanded to include among other things, the compilation of flows data, IIP and External Debt statistics.
12. Maintain a stable complement of trained professional staff through, among others, the upgrading of status of INSTAT staff in the hierarchy of the government civil service and the upgrading of office facilities in all the data producing agencies. Continue the emphasis on staff training and development.
The development of human resources in INSTAT has recently benefited from a raise in salaries of its staff. In the view of the Bank of Albania’s commitment to launch Inflation targeting and a greater involvement of real and fiscal sector indicators in the formulation of monetary policy, the staff working in the Statistics Department, Bank of Albania, has been recently trained to comprehend the statistical information produced by the other institutions.
13. Increase financial resources for improving source data. Attach priority to improving source data to adequately capture the non observed economy and remittances, which are particularly important in the Albanian economy.
INSTAT and Bank of Albania will work on exploring the structure and quantitative estimates of the informal economy in Albania. A better understanding of the structure and type of the transactions will develop the estimation methods of remittances.
14. Sign and implement the Memorandums of Understanding between data producing agencies on the modalities of data sharing (e.g., identification of data to be shared, timetable, responsible unit within the agency, etc.).
Both institutions (INSTAT and Bank of Albania) are in the process of drafting the Memorandums of Understanding on the modalities of data sharing. Other data producing agencies are as well interested on a better collaboration in the future.
15. Implement an electronic (online) reporting system for banks and other financial institutions to enhance the efficiency of monetary and balance of payments statistics compilation processes. Introduce a database driven compilation system for monetary and balance of payments statistics.
The BoA has included this recommendation in its strategy plan as a medium -term plan. It is already defined that the duty to be fulfilled on 2007.
III. RESPONSE TO SECTORAL RECOMMENDATIONS
A. National Accounts
16. Expand and improve surveys e.g., labour force survey and country-wide HBS.
It is important to stress once more that INSTAT must expand source data and improve survey coverage to provide adequate basis for compilation of more reliable national accounts estimates. More specifically, INSTAT will conduct a labour force survey (beginning in 2007) as well as a country-wide household budget survey (already started on October 1st, 2007). Improving labour data should be a matter of priority in the context of using a labour input based methodology so as to ensure the reliability of the national accounts estimates; We fully agree that to improve the Albanian national accounts it is necessary to increase the human, technical and financial resources.
17. Expand the scope of annual national accounts to include the income account, the capital account, and the rest of the world accounts as intended in INSTAT Strategic Plan.
In the framework of the EU funded Twinning project is created a strategic plan to define the possibilities to include the respective accounts recommended here. Sequence of development of national accounts depends on many different factors, where the predominant are data sources, etc.
In this case is important to develop a methodology to estimate the generation of income account starting from the estimate of wages and salaries;
18. For the expenditure approach, rationalize statistical technique to maximize the use of existing source data. For years when household final consumption cannot be separately estimated, derive a single balancing item on the expenditure side combining household final consumption, changes in inventories, and the statistical discrepancies.
INSTAT is using the “Commodity Flow” method in order to improve the methodology of calculation of GDP from expenditures side.
19. Use more extensive data sources to cross-check validity of intermediate data. Estimates of construction activity (currently based on limited labour input data) should be assessed for consistency with other construction input and productivity estimates.
From a methodological point of view it is possible that the output due to ordinary maintenance has been included in investments rather than in the household consumption. For this reason, INSTAT will start very soon an investigation of LSMS data 2003-2004 in order to verify whether it is possible to define a new estimate.
In the same time NA sector, will start also the investigation of the SBS data of the construction sector in order to estimate separately secondary activities from main activity of the construction sector. This exercise will contribute to a better estimation of the GFCF (construction component).
20. Include non-deductible VAT in the valuation of intermediate consumption to conform to the 1993 SNA’s concept of purchasers’ price.
We have started to make the preliminary estimation of non-deductible VAT based on the limited data in disposition for this purposes. In the future it is necessity to make a proposal for a new special survey, addressed to all units of Public Administration, etc, to know all other variables (depreciation, etc) in collaboration with the Ministry of Finance.
21. Apply the revision policy consistently. Identify status of disseminated GDP (e.g., preliminary, revised, and final) in all releases.
National Account sector has recently adopted the revision policy and it has already disseminated the information on the timeliness of national accounts data to the public and also the status of data is indicated on the last publications of INSTAT
22. Update the advance release calendar to reflect the recently adopted revision policy.
INSTAT already updated the released calendar.
23. Identify clearly where users can obtain the official national accounts data (e.g., name of publication or a dedicated page on the INSTAT website).
The recommendation is implemented already.
24. Improve the timeliness of the data through greater use of the INSTAT website for the first dissemination of the data.
The recommendation is implemented already.
B. Consumer and Producer Price Indices
25. Update the weights as soon as possible.
Update of weights for the CPI will be after we will have the result of the Household Budget survey (HBS) 2006.
The current version of PPI, called a fix–base–year, imposes many practical problems. INSTAT intend to replace this approach with the chain index one.
When using a “chain-index”, new weights could be assigned each year if felt necessary. In this chain-index, each transaction will be compared with its previous year December price. These price relatives (ex. 1) will be weighted together to give index number for each product group, and so on to give index numbers for the total PPI.
Renovation of product list, establishment was done using the results of Business Structural Survey of 2004. New questionnaire, to compile the data of new PPI, is prepared. Creation of authentic data entry, in collaboration with IT staff, is in process.
26. Publish the PPI every month.
The publishing of PPI every month requests the collection of the data on monthly basis. So far, because of usage of enumerators, INSTAT visit the enterprises quarterly and collect their data on monthly basis. The recommendation will take place on medium term.
27. Introduce checks on the prices reported by enumerators
With the renovation of CPI and PPI the new data entry will have an automatic check of price reported.
28. Replace non-respondents to the HBS with similar households (CPI); replace enterprises that go out of business (PPI).
In the methodology of the HBS it is not foreseen the replacement of the non-respondents with the similar household.
In the new PPI indices the replacement of enterprises will be once a year, in December.
29. Include new items into the CPI as they become significant.
INSTAT already analyze the new items when they are significant for the CPI, calculated their weights when possible.
30. When an enterprise stops producing an item in the PPI, replace it with another product.
In the new PPI it is foreseen the substitution of the item during the year. The item substitutions imply that the base price (previous December price) must be adjusted.
31. Deduct sales from purchases of second hand goods when deriving the CPI weights.
In the HBS we will deduct sales from purchases of second hand goods, so we will take in consideration when driving the CPI weights.
32. Impute missing prices using the change in the average price for related products (PPI).
The recommendation is already applied.
33. Validate the PPI results against all other available price data.
INSTAT will work on validating the PPI results, in line with other sources, such as export—import data, short-term statistics CPI etc.
34. Update the methodological guides and publish them in Albanian and English
The update of methodological guide is in process.
C. Government Finance Statistics
35. Accelerate work aimed at formally adopting the GFSM 2001 -based reporting format, including for high-frequency data (monthly cash flow and quarterly government operations data) as well as quarterly non financial public sector debt.
Albanian Ministry of Finance Treasury System (AMoFTS) (oracle financials application parameterized and customized on the Albanian public financial system) is on phase of testing, training and getting used of the system (November-December 2006). MoF plan to go-live with the system on the beginning of January 2007.
By using the Albanian integrated centralized computerized treasury system we are going to implement accrual accounting as it is required and provide reports in cash and modified accrual basis in the same time.
36. Improve source data coverage for external donor financed projects
In this context MoF has undertaken some steps for stregthening the public investment management, in the programming process as well as in the implementation platform (reports, entered in the AmoFTS etc..)
Responsibility transfer from the METE to the MoF, where is established the new Public Investment Management Directory under General Budget Department is a step ahead for improving the process of programming the Domestic and Foreign investments.
Recently MoF has passed the State Debt Law in Parliament and expected in the future to cover all of the main issues specific to public debt issuance and managment.
37. In the context of the development and implementation of the new Oracle-based IT infrastructure, construct and document as soon as feasible, a national chart of accounts for all general government sub sectors aligned with GFSM 2001 classifications.
On 2007 we will implement the detailed (7 digits) chart of accounts for the general government (central, local, extra budgetary funds -SSI, HII) approximately with GFSM 2001 classifications.
38. Publicize revisions (within or outside any revision cycle) through, for instance, in the publication Fiscal Statistics of Government or in the freely accessible database maintained on the MoF website.
Ministry of Finance supports this recommendation of the mission to publish the revised data in the publication Fiscal Statistics of Government and in the freely accessible database maintained on the MoF website. (for the reason of the reconciliations with the banking system and budgetary units after the deadline of the fiscal indicators reporting)
D. Monetary Statistics
39. Strengthen the BoA law to provide full legal assurances that individual reporters’ data may be used only for statistical purposes.
The BoA’s Legal Department is drafting a new law on the Bank of Albania, expected to pass by end 2009, which will also strengthen the legal support for the dissemination of monetary and financial statistics by including an explicit role for the Bank of Albania to compile and disseminate these statistics. It will also ensure confidentiality of individual data and use of these for statistical purposes only.
40. Implement an electronic (online) reporting system for commercial banks and other financial institutions to enhance efficiency of monetary compilation.
The BoA has included this recommendation in its strategy plan as a medium -term plan. It is already defined that the duty to be fulfilled on 2007.
41. Although current staff resources suffice for monetary statistics compilation, additional resources are needed in the Information Technology Department to (1) design the S ARS database for a better performance including the generation of monetary data and (2) implement an electronic (online) reporting system for commercial banks and other financial institutions. More resources are needed in the SD to expand monetary statistics to cover also other financial corporations and to compile and present flow data for the financial sector, as recommended by the Monetary and Financial Statistics Manual (MFSM).
The structure of the Department of Statistics will be reviewed until the first quarter of 2007, and will be expanded to include among other things, the compilation of flows data. The Sector of Monetary and Financial Statistics is currently working on a draft structure.
42. It would be desirable that further work in the area of monetary statistics include compilation of flow data.
The compilation of flows data in monetary statistics would require additional information from bank’s reporting as regards securities holdings, in order to separately identify changes in values and transactions. The BoA plans to draft this requirement by the end of 2006. On the other hand data on changes in value due to changes in the exchange rate for main categories could be identified from the existing reports.
43. Revalue long-term securities for investment and available for trading held by the banking sector using estimated fair value.
The BoA will consider obtaining estimates of long term securities issued by nonresidents in special tables of the regular reporting system by commercial banks. The necessary data for a revision of the series for the Central Bank’s accounts are currently available.
44. Adopt accrual accounting for SLAs so as to apply fully the MFSM guidelines on accrual accounting.
For the moment the BoA considers that the SLA’s accrual assets and liabilities are not enough materially significant such as to justify an increase in the reporting burden. The total assets of such institutions represent only 0.4 percent of the total assets of Other Depository Corporations.
45. Implement measures to minimize errors in commercial banks’ reporting and to speed up processes in addressing these errors.
The BoA has shortened the time lag for reporting by banks from 20 days to 15 days. It will be further shortened to 10 days starting from March 2007. This currently allows more time for the reports to be checked for errors.
46. When delayed reporting by commercial banks occurs, carry forward the balance sheet for the previous month of the late reporting bank and make users aware of this technique. The data should be denoted as provisional.
The BoA has already adopted such practice.
E. Balance of Payments Statistics
47. Conduct more frequent (e.g., quarterly) surveys on remittances; survey freight charges; and survey tourist expenditures biannually.
Particularly because remittances are a predominant item in the Albanian balance of payments, several surveys will be conducted to the households who receipt money from their family abroad in quarterly basis. This recommendation will be applied on year 2007.
It will be analyzed whether new coefficients need to be applied on freight and smuggled goods and new survey will be conducted on the big importing companies.
The new system ASYCUDA which is still implemented will facilitate the estimation of freight. Its implementation in all the system offices may take time. Bank of Albania is still applying the coefficients recommended by the last IMF technical assistance mission, 2006).
Bank of Albania is conducting the travel survey on quarterly basis because of the seasonality of the expenditures during the summer and the winter vacations. This practice will be continued in order to maintain the time series on the coefficients of travel for further estimations. Bank of Albania will start carrying out the travel surveys at minor borders to improve the benchmark data (IMF technical assistance mission, 2006)
48. Re-estimate the split of total “remittances” between compensation of employees and workers’ remittances and explore the use of other data sources (e.g., Living Standard Measurement Survey) to check the plausibility of the estimates.
Recently INSTAT is conducting a Household Budget Survey. The results of this survey will be used by Bank of Albania in order to check the plausibility of the estimates done by Bank of Albania on remittances.
49. Tighten procedures on data quality control and cross-checks, particularly in the estimation of remittances.
The Bank of Albania is working on revising the estimation of remittances checking the quality of the data provided by the sources and cross-checking the calculation of the estimation of remittances.
50. Because “remittances” are an important item in the Albanian balance of payments, a new survey should be conducted to re-estimate the division of unidentified inflows of foreign exchange between compensation of employees and workers’ remittances. This survey could be either among banks and foreign exchange bureaus or among households, whichever the BoP division considers to be more feasible and cost-effective.
The recommendation will take place on year 2007.
51. Strengthen the Bank of Albania law to provide for the sanctions including fines needed to mandate survey responses from non-bank reporters, to inspect the financial accounts of firms, and to prohibit the provision of individual reporters’ data to tax authorities.
Bank of Albania will revise the legal status regarding to the statistics in order to establish its right to data needed for fulfilling its mandate (including BoP statistics compilation), providing the tool for enforcing this right including new legal provisions. This issue is part of the Bank of Albania medium term strategy.
52. Implement the revised reporting form for insurance services.
Bank of Albania has already implemented the new reporting form for insurance companies (last recommendation of IMF technical assistance mission, 2006).
53. Obtain the public debt service schedule from the MoF and record interest on an accrual basis.
The DMFAS actually used by MoF for monitoring of external debt in the form of loans does not calculate the accrued interest. With the implementation of the new version DMFAS 5.3 the calculation of accrual interest is previewed. Consequently in the balance of payments the interest will be recorded on accrual basis.
54. Require quarterly reporting by significant firms of transactions in direct investment equity, debt, and reinvested earnings; in portfolio equity and debt; and in trade credit.
The annual survey of Bank of Albania in cooperation with INSTAT is actually taking place as the Bank of Albania law doesn’t force the firms to have a direct reporting. The recommendation will be applied in line with the improvement of the Bank of Albania legal framework.
55. Estimate purchases of land and construction financed by unidentified foreign exchange inflows.
Bank of Albania is actually conducting a survey on construction companies and real estate agencies to find what portion of the current housing boom is being financed by unreported transactions between residents and nonresidents. This is the very first survey of this kind. The results will be analyzed in order understand the structure and the type of transactions necessary to develop estimation methods of the BoP statistics.
56. BoP division should strive to improve further coordination with INSTAT with respect to survey design, execution, and follow-up to non-response.
Bank of Albania’s Statistics department has a productive relationship with INSTAT. The both institutions are making efforts on further improvement on the quality of the surveys starting with the designation of the questionnaire and the improvement of the response rate.
57. IT support should be provided to the BoP division to set up an automated database system that will preclude the need for manual data entry and could accommodate fully electronic reporting by banks, including an ITRS if this option is selected.
This is a medium -term plan in the Bank of Albania strategy plan.
58. During the interim before a database-driven compilation system can be introduced, the spreadsheets currently in use for intermediate compilation of different portions of the balance of payments should be linked by introduction of relevant formulas.
BoP division has already reorganized the excel files linked by relevant formulas to one BoP spreadsheet.