0.1.1 The responsibility for collecting, processing, and disseminating the statistics is clearly specified.

The National Statistics Office of Georgia (GEOSTAT) was established as an independent legal entity under the Law on Statistics of December 11, 2009, N 2291–rs to be responsible for compiling and disseminating official statistics. Article 9 of the Charter of GEOSTAT (approved by the Presidential Decree No. 72 on February 1, 2010) mandated GEOSTAT to be in charge of all collection and dissemination of official statistics as well as the improvement in the coverage and quality of official data responsible by GEOSTAT as well as by other government agencies. Article 7 of the Law authorizes the GEOSTAT to work out a statistical activities program; and carry out statistical activities, which sets the central position of the GEOSTAT in the Georgian statistical system.

Accordingly, maintaining the national accounts system and compiling the satellite accounts is defined as one of the main functions of the Macroeconomic Statistics Division (as of now, National Accounts Division (NAD)). No other institution compiles alternative estimates of national accounts.

Article 25 of the Law on Statistics authorizes GEOSTAT to request from the administrative bodies and other physical and legal entities and receive all the statistical and other information (including confidential information) from them necessary for carrying out its functions.

Arrangements to promote consistency of methods and results are set up by the Board of the GEOSTAT, which has representatives from other data producing agencies, namely the National Bank of Georgia (NBG), the Ministry of Economy and Sustainable Development of Georgia (MOE), and Ministry of Finance of Georgia (MOF).

In addition to that, the President of Georgia approves annual State Program for Development of Statistics. The compilation and dissemination of national accounts statistics are stated in the State Program. (e.g., for current year there is an updates in survey of domestic investments).

0.1.2 Data sharing and coordination among data-producing agencies are adequate.

Article 5 of the Law on Statistics requires that GEOSTAT cooperate and coordinate with the local organizations producing the statistics in order to achieve efficiency. The GEOSTAT compiles many source statistics for the national accounts itself, and also use data from other data producing agencies, such as the NBG, which compiles balance of payments and monetary and financial statistics, some other related data from other financial corporations; MOF, which is responsible for compiling government finance statistics; and Revenue Service (under MOF) for value-added tax data and as an input for updating survey frames, as well as the Revenue Service. Article 16 of the Law on Statistics stipulates that GEOSTAT coordinates exchange of information among the administrative bodies in order to produce the statistics and facilitates effective implementation of the statistical standards and methodology approved. In addition, there are memorandums of understanding between the GEOSTAT and the MOF, GEOSTAT and Education Quality Development Center, and GEOSTAT and the NBG covering the sharing of macroeconomic data.

Within the GEOSTAT, the internal procedures are in place to ensure coordination between various divisions, namely Business Statistics Division, Agriculture and Environmental Statistics Division, Social Statistics Division, Population Census and Demographic Statistics D Division), Price Statistics Division. All proposed changes in questionnaire should be adopted by GEOSTAT Board. According to working procedures all divisions consult with NAD on methodology issues.

The central role of GEOSTAT in the field of statistics is further reiterated in Article 2 of the Charter of GEOSTAT, which states that the GEOSTAT should work out a unified policy for the field of statistics, prepare and introduce statistical standards and methodology, create and realize statistical classification system, create and improve statistical databases, information banks and networks; and create and approve statistical observance forms for producing official statistics. Such centralized statistical system in principle guards against duplication of efforts and unnecessary burden on respondents. However, there is no arrangement for regular meetings of all technical staff responsible for macroeconomic statistics. Such meetings provide a comprehensive arena for exchanging information on current and forthcoming projects for statistical development, promoting cross-sectoral data consistency crucial for macro-economic policy making, and coordinating work programs to avoid duplication of effort, ensure coherent application of methodology at all stages of data collection, and enhance effectiveness. Nevertheless, these agencies have several bi-lateral meetings and arrangements for collaboration on data issues, e.g., GEOSTAT with MOF and NBG on GDP estimates, GEOSTAT and NBG on data sources for BOP.

There are regular informal contacts with the staff of other data-producing agencies. Changes in the production of statistics are preceded by consultations and should be approved by the Board of the GEOSTAT.

Recommendation:

Conduct pre-established, regular meetings, such as one per year, to improve communication among data compilers at NBG, GEOSTAT, and MOF, by discussing issues of common interest, avoid duplication of efforts, and ensure the consistency of macroeconomic statistics (national accounts, monetary, fiscal, and external sector.

0.1.3 Individual reporters’ data are to be kept confidential and used for statistical purposes only.

GEOSTAT has sound legal and institutional provisions to ensure confidentiality of individual data. Article 26 of the Law on Statistics states that statistical data shall be public except for the data which allows for identification of an observation unit. Article 28 states that the confidential statistical data shall not be issued or disseminated or used for a nonstatistical purpose with exceptions envisaged by the Georgian legislation. When producing the official statistics it is obligatory to destroy or store separately the identity data including the questionnaires containing such data. According to Article 29 of the Law, the employees of the GEOSTAT should not use or disseminate confidential statistical data either for the personal, academic, research or any other activities. Violation of these provisions will lead to imposing a disciplinary responsibility against employee, notably in view of the guilt or/and the damage inflicted the Executive Director shall impose the following disciplinary penalties: warning, withholding a salary, and/or dismissal.

GEOSTAT staffs are required to keep individual data confidential by Law and the staff is well informed by the requirement. Access to individual data both to the actual forms and to the computer records is restricted to the appropriate staff. The procedures are adopted that prevent residual disclosure. There are special aggregation rules that ensure that unintended disclosure does not occur. Respondents to surveys are informed about the confidentiality of their responses (relevant statement is included in each survey form). Archive procedures ensure appropriate storage of information with clearly articulated rules.

0.1.4 Statistical reporting is ensured through legal mandate and/or measures to encourage response.

Article 25 of the Law on Statistics sets the obligation to provide statistical and other information to GEOSTAT, notably upon the request and according to the legislation of Georgia the administrative bodies shall be obliged to provide the GEOSTAT with the information on physical and private entities (including confidential information) available to them. However, no sanctions for nonreporting or misreporting are stipulated by the Law and, due to lack of legal and administrative support, very senior staff is required to intervene in order to get the respondents to collaborate.

Despite GEOSTAT’s increased efforts during last years to raise awareness and improve direct contacts with respondents, there has been the tendency of increasing of nonresponse rate for business survey (around 7 percent in 2011).

Recommendation:

Enact appropriate amendments to the Law of Georgia on Official Statistics to reinforce mandatory reporting of statistical data and ensure application of sanctions for nonreporting.

0.2.1 Staff, facilities, computing resources, and financing are commensurate with statistical programs.

Staff resources are not adequate for performing the current and upcoming tasks. The NAD includes six employees (head, one senior specialist, and four chief specialists), responsible for compiling annual and quarterly gross domestic product (GDP) in current and constant prices, supply and use tables (SUT), sequence of accounts up to capital account, annual and quarterly regional accounts, compilation of industrial production index (IPI), publication of other relevant statistics (Government Finance Statistics (GFS), Monetary statistics) in annual publications, national account (NA) section for quarterly bulletin of GEOSTAT, and prepare various reports for international organizations (Eurostat, United Nations Economic Commission for Europe (UNECE), etc.). The projects are under way on development of regional accounts and public-private partnerships GDP data. There is no spare capacity to develop sectoral accounts.

The salaries of the staff are lower compared to similar job positions in other data producing agencies in Georgia, which triggers staff turnover. Out of six staffs in NAD, two have more than five years of experience in national accounts.

The qualifications of the staff are generally adequate. The GEOSTAT takes every opportunity to send staff on international training courses, seminars, and workshops. Over past years, GEOSTAT staff attended various training activities in real sectors statistics including NA training courses at the IMF Institute (2006 and 2009), quarterly NA course at the Joint Vienna Institute (JVI) (two staff, in 2008), and price statistics course at the JVI in 2006. The GEOSTAT encourages staff to attend and present papers at domestic and international conferences (e.g., in 2009, UNECE, workshop on System of National Accounts 2008 (2008 SNA) challenges and exchange experiences with other countries). GEOSTAT staff participated in selected Organization for Economic Co-operation and Development (OECD) meetings. There is also informal on-the-job training in national accounts for new staff.

The IT resources in NAD are considered to be broadly commensurate with the needs of the current program of NAD, but not adequate for further development of national accounts statistics. The NAD is equipped with six personal computers, one laptop, two printers, and one all-in-one printer. The computers are connected by a network within the division. However, inter-divisional exchange of information is undertaken via e-mails that affect efficiency of the process. Hardware and software facilities are not quite up to date. IT resources are not adequate for the development of business statistics, which are based on the quarterly census of big companies and a sample of small and medium enterprises. Thus, there is no room for additional commitments.

After moving GEOSTAT to two separate buildings, communication problem arises and hampers the efficiency of the processes.

Article 9 of the Law on Statistics authorize the Executive Director to develop the list of staff and the salary funds of GEOSTAT and submit them for approval to the Board of the GEOSTAT, as well as to work out the draft budget of the GEOSTAT according to the statistical activity program. Budget limitations create some problems, for instance in the number of publications that can be produced.

Recommendation:

Augment staff and IT resources in the GEOSTAT. Ensure proper training for the staff and implement measures to retain experienced staff.

0.2.2 Measures to ensure efficient use of resources are implemented.

The GEOSTAT Board provides overall supervision of the organization of statistical work and oversees strategic plans for statistical development. In order to ensure the efficient use of resources the following measures are undertaken: (i) the thorough planning of statistical works (on multi-annual, annual and quarterly basis); (ii) the permanent monitoring of the appropriate use of resources according their destination. Special attention is granted to the improvement of the staff performances, especially its qualification and abilities. Time to time, staff receive differentiated bonuses based on the assessment results. The outside consultants are widely used to evaluate statistical methodologies and compilation systems.

0.3.1 The relevance and practical utility of existing statistics in meeting users’ needs are monitored.

The relevance of statistical program is ensured by the Board of the GEOSTAT, which consists of seven members and a Chairman, with the following composition: one representative of NBG, one representative of the Ministry of Economy and Sustainable Development of Georgia, one representative of MOF, and other five members, which represent private sector. The Parliament of Georgia should give consent to appoint the members of the Board (Law on Statistics, Article 11). The Board also serves as an advisory group to inform statistical processes. In addition, Article 5 of the Law on Statistics encourage cooperation with the international organizations in order to introduce the international practice and methodology and share relevant experience based on the agreements and treaties concluded with the international organizations engaged in this field.

Article 7 of the Law on Statistics stipulates that GEOSTAT should produce the statistics that are approved and/or recognized by the Board of the GEOSTAT, and also should need arises, the GEOSTAT is authorized to produce the statistics which is not envisaged by the statistical activity program. Executive Director submits the statistical activity program for approval to the President of Georgia (Article 9 of the Law on Statistics).

In addition, Eurostat (as one of users) performs regular quality checks of reported data. Their requirements are monitored and addressed in consistent manner. The broader group of users are approached directly on an ad hoc basis (e.g., during celebration of International Statistics Day). There is a GEOSTAT website on the social networks (e.g., Face book). Users are also encouraged to provide feedback via GEOSTAT official website. The feedback for commentary on national accounts releases are provided in timely manner. The GEOSTAT has an intensive reaching out activity, with meetings and seminars held with major groups of users including private sector. The users’ feedback is encouraged via GEOSTAT website.

0.4.1 Processes are in place to focus on quality.

The GEOSTAT commitment to quality is stipulated by law and well publicized. Article 1 of the Law on Statistics states that its goal is to ensure producing independent, objective and reliable statistics in the country based on the internationally recognized basic principles of statistics. Reflecting the spirit of this law, the GEOSTAT’s mission statement emphasizes the improvement and harmonization of statistical activities and the maintenance of independence, accuracy, relevance, integrity, timeliness, and professional standard of statistical information produced in Georgia. GEOSTAT is finalizing the National Strategy of Development of Statistics (NSDS) that includes special chapter on quality.

Quality policy is based on the provisions of national and EU legislation, Strategy of GEOSTAT, European Statistics Code of Practice, user needs and expectations. It defines overall intentions and directions of institution related to quality. The new management of the institution is giving priority to building trust and increasing the credibility of the statistics produced by GEOSTAT.

Conscious of value of independent quality assessment, GEOSTAT regularly participates in international evaluations, such as the IMF Report on the Observance of Standards and Codes (ROSC) Data module and the World Bank’s statistical capacity indicators. It also conducts regular communications with Eurostat on data quality issues. A global assessment mission from Eurostat is expected in 2012.

0.4.2 Processes are in place to monitor the quality of the statistical program.

The GEOSTAT regularly reviews and plans improvements to their internal processes. More formal annual Statistical Program is produced annual and approved by the President of Georgia. The newly created Monitoring Department is responsible for operating the monitoring, control and internal audit. To obtain a prompt feedback from users, a hot line phone number has been introduced on the website.

The expert guidance on the quality of their statistics is also ensured vie peer reviews within the framework of cooperation with other statistics agencies. GEOSTAT has established long-term cooperation with Statistics Sweden. Strategy of cooperation in national accounts is based on three year plan of Developing Georgian National Accounts. There is also established Cooperation with the Central Statistical Office of Poland. Main task of the project is to improve methodology of Regional Accounts compilation.

0.4.3 Processes are in place to deal with quality considerations in planning the statistical program.

The Board of GEOSTAT coordinates the economic statistics work program, including explicit decisions about quality and trade-offs among the dimensions of quality (e.g., resource availability, timeliness, and accuracy/reliability). The quality dimensions are also recognized explicitly in the NSDS.

1.1.1 Statistics are produced on an impartial basis.

Article 6 of the Law on Statistics stipulates that GEOSTAT independently carries out its activities based on the Georgian legislation. Article 1 of the Charter of GEOSTAT, 2010 further elaborate that the GEOSTAT carries out its activities based on the Georgian legislation, internationally accepted statistical principles, Law on Statistics, Law of Georgia on Legal Entity of Public Law, this Charter, GEOSTAT Board’s regulations and other normative acts. The GEOSTAT acquires rights and obligations to implement the goals established and functions assigned to it. There is no external pressure on the GEOSTAT with respect to the content or release of the statistics.

On the above premise, all official statistics including national accounts (and price) statistics are compiled on an impartial basis. The basic principles governing the collection, processing, and dissemination of statistics in Georgia includes professional independence, objectivity, reliability, confidentiality of statistical data, and efficiency (Law on Statistics, Article 4).

The Executive Director of GEOSTAT is appointed by Board of the GEOSTAT for the term of 4 years and may be dismissed by the President of Georgia under special conditions (Article 8 of the Law on Statistics). The Executive Director is authorized to invite foreign or local experts on the contractual basis in accordance with the recommendations of the members of Board of the GEOSTAT in order to ensure effective operation of the GEOSTAT (Article 9.2).

Professional competency plays a key role in the promotion practices in the GEOSTAT and professional enhancement is encouraged. The general performance assessment of GEOSTAT staff is planned (including regional offices).

1.1.2 Choices of sources and statistical techniques, as well as decisions about dissemination, are informed solely by statistical considerations.

The choices of sources, statistical techniques, and dissemination of national accounts are made solely by the GOSTAT based entirely on statistical considerations. There has been no instance of ministerial interference in the choice of the statistical sources and methods.

1.1.3 The appropriate statistical entity is entitled to comment on erroneous interpretation and misuse of statistics.

The GEOSTAT provides explanatory materials when releasing the national accounts statistics. The GEOSTAT monitors media coverage of its statistical products and has the authority to comment on erroneous interpretation and misuse of the statistics that it produces.

1.2.1 The terms and conditions under which statistics are collected, processed, and disseminated are available to the public.

The terms and conditions governing the collection of statistics are published in the Law on Statistics and in Charter of GEOSTAT, which are widely available to the public, including from the GEOSTAT website: http://www.geostat.ge/index.php?action=page&p_id=29&lang=eng. In addition to legal provisions, the GEOSTAT website contains other relevant documents, such as the National Strategy of Development of Statistics, annual report of the GEOSTAT, information about the special data dissemination standard (SDDS), and information about individual statistical products.

1.2.2 Internal governmental access to statistics prior to their release is publicly identified.

The GEOSTAT disseminates the national accounts statistics to all users simultaneously. There is no governmental access to statistics prior to release. This practice is clearly made known to the public.

1.2.3 Products of statistical agencies/units are clearly identified as such.

Products of the GEOSTAT are clearly identified as such by its name and logo. The national accounts tables disseminated in the NBG’s publications identify the GEOSTAT as the source. However, in the GEOSTAT publications, there are cases, in which that attribution is not made to the source, when statistics from other data-producing agencies is reproduced.

1.2.4 Advance notice is given of major changes in methodology, source data, and statistical techniques.

It is the GEOSTAT policy to provide advance notice to users about major changes in methodology, source data, and statistical techniques. This usually is done in the Statistics Program, Strategy for the Development of National Accounts, and via regular publications for periods before the changes take effect. Examples where advance notice was provided in advance of such changes include the introduction of seasonally adjusted estimates; changes in business survey questionnaire, etc. Advanced notice is given for major changes in methodology (e.g., users are notified that 2012 data will accommodated new 2008 SNA classification of GFCF as a result of 2011 investment survey).

1.3.1 Guidelines for staff behavior are in place and are well known to the staff.

On its website, the GEOSTAT states that the Fundamental Principles of Official Statistics developed by United Nations Statistical Commission were at core in drafting the Law on Statistics and consequently establishing the GEOSTAT (http://www.geostat.ge/index.php?action=page&p_id=32&lang=eng). The Fundamental Principles stipulate that for retaining trust in official statistics, the statistical agencies need to act according to strictly professional considerations, including professional ethics. New staffs are made aware of the ethical standards when they join the GEOSTAT.

2.1.1 The overall structure in terms of concepts and definitions follows internationally accepted standards, guidelines, or good practices.

Quarterly and annual GDP estimates are produced based on the concepts and definitions recommended by the System of National Accounts 1993 (1993 SNA) under both the production and expenditure approaches.

2.2.1 The scope is broadly consistent with internationally accepted standards, guidelines, or good practices.

GEOSTAT has recently made improvements and implemented some recommended requirements, but more is to be done to meet the minimum scope requirements established by Inter-Secretariat Working Group on National Accounts (ISWGNA). The GEOSTAT compiles and disseminates the following core national accounts and aggregates: (i) annual and quarterly value added (VA) and GDP at current and constant (previous year) prices by activity; (ii) annual GDP by expenditure at current prices; (iii) annual rest-of-the-world accounts (up to net lending); (iv) annual sequence of accounts, except for the financial account, for the total economy. However, there is no GDP by expenditure approach at constant prices due to the absence of the export/import price indexes and problems in deflation of consumption.

Consumption of fixed capital has now been estimated with the historical time series back to 1996. A set of SUTs has now been prepared in more detail than the one compiled annually for the years since 1998. The latest SUT is available for 2009 with a breakdown of 67 products and 45 activities. In addition, the GEOSTAT compiles and disseminates quarterly and annual regional estimates of GDP. Regional estimates of Quarterly GDP are currently compiled using regionalization based on employment data from Household Budget Survey (HBS). HBS covers the whole territory and all types of households. Starting from 2006, annual regional accounts are complied following, in principle, ESA 95 methodology (combined methods). From 2007, the seasonally adjusted time-series were introduced. Work has started on compiling tourism satellite accounts. There are plans to establish sectoral accounts, starting from financial corporations and government sector in 2012 and households sector in 2013, subject to resource availability.

The definition of the economy and concept of residence are consistent with the 1993 SNA and the Balance of Payments Manual, fifth edition (BPM5). The whole territory of the country under control of the government is covered, including free zones (e.g., Poti). Part-time workers abroad (less than one year) are considered residents.

The definition of institutional unit is in accordance with the 1993 SNA, although data are collected at the enterprise level. The production boundary is in accordance with the 1993 SNA and includes in principle all of the following activities:

• Own-account production of goods for own-final consumption.

• Output of goods for own-account fixed-capital formation (separate data are available from business survey but not from other economic surveys).

• Research and development on own account is, in principle, is included but quality is hampered by the quality of source data that are (i) not of sufficient detail, (ii) are not compiled at the level of establishment. Data on the research activity of Academy of Science and other research institutions financed by the government are received from MOF with limited distinction between capital and current expenditures and limited detail.

• Mineral exploration.

• Production of computer software, entertainment, literary and artistic originals. Although, the split between software and databases is difficult to make. The data collection is not done in sufficient level of detail to record separately entertainment, literary, and artistic originals.

Illegal output sold to willing buyers is not in the scope of output measurement.

The assets boundary is generally in accordance with the 1993 SNA. Among tangible assets, agricultural work-in-progress is included in the scope of the assets boundary, including agriculture (breeding and for perennial crops). Land improvement in agriculture is included. The defense related assets that could be used for civilian purposes are included in the scope but not presented separately in the accounts. Historical monuments are not at present in the scope of capital formation. However, newly built churches are correctly included at cost of production. No estimates are made for valuables.

The following intangible assets are included based on information from annual business survey questionnaire (quarterly data are extrapolated using previous year structure): (i) mineral exploration, whether successful or not; (ii) systems and standard applications computer software and databases used for more than one year; (iii) entertainment, literary, or artistic originals; (iv) patented entities; and (v) leases and other transferable contracts.

Recommendation:

Set up the compilation system for GDP by expenditure approach in real terms.

2.3.1 Classification/sectorization systems used are broadly consistent with internationally accepted standards, guidelines, or good practices.

The classification and sectorization used in the compilation of the national accounts are in conformity with internationally recommended standards. The national classification of economic activities (GNC 001-2004) is based on Standard Classification of Economic Activities within the European Communities (NACE Rev. 1.1) at five-digit level for declared output an intermediate consumption. For nonobserved economy (NOE) output – 45 activities bridged to 5-digit level NACE. The national classification of products (CPA 002-99) based on Classification of Products by Activities (CPA) is used for classifying products (in some cases at section level and up to three-digit level). Government expenditures are classified according to the Classification of the Functions of Government (COFOG) at three-digit level. Household consumption, which was published earlier as a total figure, is now broken down according to the Classification of Individual Consumption according to Purpose (COICOP). Foreign trade is classified according to the International Harmonized Commodity Description and Coding System (HS) at six-digit level. The bridge table between product and activity classifications is obtained from the UNSD website and customised. No sectoral data are compiled.

NBG output is treated as nonmarket services that are consumed by government. The ancillary units are not treated as separate establishments. There are a large number of entities set up by central and local governments as legal entity of public law (LEPL) whose institutional sector status and coverage in GFS is uncertain. Some 3,000 of 5,000 plus LEPLs are schools. A detailed sectorization of LEPLs has not been done by MOF, so it is not known to which sector these units belong. Many LEPLs report to a line ministry, or to a local government. Many receive funding from the central budget, some have own-source revenue, and others are completely self financing. Some LEPLs also have the power to borrow. In the majority of cases the only data captured in the budget reporting system on LEPLs are the transfers to them from the State Budget or local government budgets. A minority of LEPLs are accounted for inside the State Budget, like a budgetary organization. Vouchers to students for education are treated as subsidies on product and not as social transfers in kind.

Recommendations:

Make efforts to compile data at establishments’ level.

Resolve classification issues for transactions of LEPLs.

Reclassify vouchers to students for education from subsidies on product to social transfers in kind.

2.4.1 Market prices are used to value flows and stocks.

The valuation rules used for recording flows and stocks are in accordance with the 1993 SNA. Market output is valued at basic prices. For households, output for own use is valued at equivalent market prices using average prices for analogous goods or services of the closest region. Nonmarket output is valued at cost.

Expenditure aggregates are valued at purchasers’ prices, that is, including levied taxes on products and value added taxes (VAT) with the deductible (refunded) part excluded, as well as trade and transportation margins. Total exports and imports are recorded on a free on board basis. Imports and exports of goods in US dollars are converted into Georgian Lari using arithmetic quarterly average, rather than using the rate prevailing in the market at the time of transaction. General government consumption expenditure is recorded at cost including an estimate of the consumption of fixed assets (based on accumulated fixed assets of the government during 10 years period). Nonprofit institutions consumption expenditure is recorded at factor cost, but consumption of fixed capital is not included. Gross fixed capital formation (GFCF) is recorded at purchaser’s prices, when the capital goods are purchased and estimated by cost for own-produced GFCF. The investment survey that is currently in progress will provide data on the stocks of fixed assets for all institutional sectors and by type of assets.

The imputations are made when market prices are not observable. Imputed rent on owner-occupied dwellings is calculated using data from HBS together with data on the comparable rental values for similar dwellings from consumer price index collection. Starting form the first quarter of 2012, it is planned to implement the cost approach using the methodology recommended by the OECD. The transfer prices have been detected in the country mainly for Foreign Direct Investment enterprises (e.g., transportation of oil) and adjustments to market prices is done by external sector statistics.

2.4.2 Recording is done on an accrual basis.

In principle, enterprises are asked to provide data on an accrual basis in accordance with the recommendations of the 1993 SNA. Work-in-progress, including output in agriculture is recorded in the period that it is produced, based on business survey data. General government data on taxes and subsidies on products, and expenditure and revenue data, which are recorded on a cash basis, are not currently adjusted to an accrual basis. However, the plans are to adjust government data to accrual based on monthly data from Revenue Services on taxable turnover. Rest of the world data are recorded on an accrual basis.

Recommendation:

Implement adjustments procedure for accrual recording of general government data on taxes and subsidies on products, and expenditure and revenue data.

2.4.3 Grossing/netting procedures are broadly consistent with internationally accepted standards, guidelines, or good practices.

Since the compilation system is set up at the enterprise level, transactions between establishments within the same enterprise (which may be materially significant in Georgia for communication and trade enterprises) are not recorded on a gross basis. However, business survey data contains separate data on output for each kind of economic activity undertaken by an enterprise. Moreover, for the compilation of regional GDP estimates, when establishments of the same enterprise are located in different regions, the transactions between them are estimated on a gross basis using annual information on turnover and using wages as an indicator.

Recommendation:

Make adjustments to business survey questionnaire to be able to make adjustments for gross recording of transactions between establishments, starting from communication and trade activities.

3.1.1 Source data are obtained from comprehensive data collection programs that take into account country-specific conditions.

The design of data collection program employed for national accounts compilation is adequate for annual and quarterly compilation of GDP by production and expenditure approaches. The following table presents the composition of data sources with the discrete data for both, annual and quarterly GDP compilation.

Table 1.

Composition of Data Sources

Table 1.

Composition of Data Sources

NACE	Main Sources
Production approach
Agriculture, forestry, hunting and fishing	Annual and quarterly agricultural survey (production quantities, no prices). Annual value of sales by product. Data from business survey on farms (for verification only). Data on fishing are based on quarterly HBS).
Mining and quarrying	Business survey – quarterly and annual output, and annual intermediate consumption. Number of employed people from HBS (source for calculation of nonobserved economy (NOE)).
Manufacturing	Business survey – quarterly and annual output, and annual intermediate consumption. Number of employed people from HBS (source of calculation of NOE).
Electricity, gas, and water supply	Business survey – quarterly and annual output, and annual intermediate consumption.
Construction	Business survey – quarterly and annual output, and annual intermediate consumption. For construction activity outside the coverage of business survey, the labor input method is not considered effective. Therefore, the specialized survey on construction was conducted in 2007 based on business survey frame (for individual entrepreneurs) augmented by data from HBS. Administrative data for public infrastructure (from GFS).
Trade, repair of motor vehicles, and personal and household goods	Business survey – quarterly and annual output, and annual intermediate consumption. HBS data for informal trade (bazaars). Trade margins from SUT. The Retail Trade Survey conducted in 2007. Financial Statement Analysis. External trade for NOE.
Restaurants and hotels accommodation, and food Services	Business survey – quarterly and annual output, and annual intermediate consumption. No labor input method is used. 2007 specialized survey of restaurants for 2006 data. There are plans to use data from tourism survey.
Transport, storage, postal, and warehousing	Business survey – quarterly and annual output, and annual intermediate consumption. HBS data for NOE component of transport.
Communication	Business survey – quarterly and annual output, and annual intermediate consumption. Social statistics, survey on employment.
Financial intermediation	Monthly NBG data on depository corporations, suitable also for estimating FISIM. Quarterly NBG data on premiums and claims of insurance companies.
Real estate, renting and business services	Business survey – quarterly and annual output, annual intermediate consumption. HBS for rent for owner occupied dwelling, different weights are used for sampling separately for Tbilisi, other urban areas, and other rural areas.
Public administration	Consolidated Budget of Georgia from MOF based on COFOG.
Education	Business survey – quarterly and annual output, and annual intermediate consumption.
	Subsidies and vouchers for education from the government are used for validation of output data.
Health and social work	Business survey – quarterly and annual output, and annual intermediate consumption. Health subsidies from the government are used for validation of output data.
Other community, social and personal services	Business survey – quarterly and annual output, and annual intermediate consumption. Annual survey of nonprofit institutions serving households (NPISH) (starting from 2007). This section accounts for around 4 percent of GDP, with several activities blended together.
Expenditure approach	Main Sources
Household final consumption expenditure	Quarterly HBS following COICOP classification. Own account nonmarket production is covered. The data are compared with SUT (the latest is of 2009). Housing rents (HBS, questionnaire 01). Health expenditure from HBS. NBG data on financial services (including FISIM). Education, entertainment and miscellaneous services – data from HBS are verified via various source data. BOP Data on tourism, health, and education. Household Expenditure Survey – (questionnaires 03 -04).
Government final consumption expenditure	Monthly government data on government expenditures by COFOG, with the split into individual and collective consumption expenditure (education, health care and cultural).
Gross Fixed Capital Formation	Business survey for corporations (including own-produced capitalized goods) General Government - data from GFS.
Changes in inventories	Business survey questionnaire request information on four types of inventories. SUT goods are balanced by changes in inventories.
Exports of goods and services	BOP data form NBG.
Imports of goods and services	BOP data from NBG.

View Table

Table 1.

Composition of Data Sources

NACE	Main Sources
Production approach
Agriculture, forestry, hunting and fishing	Annual and quarterly agricultural survey (production quantities, no prices). Annual value of sales by product. Data from business survey on farms (for verification only). Data on fishing are based on quarterly HBS).
Mining and quarrying	Business survey – quarterly and annual output, and annual intermediate consumption. Number of employed people from HBS (source for calculation of nonobserved economy (NOE)).
Manufacturing	Business survey – quarterly and annual output, and annual intermediate consumption. Number of employed people from HBS (source of calculation of NOE).
Electricity, gas, and water supply	Business survey – quarterly and annual output, and annual intermediate consumption.
Construction	Business survey – quarterly and annual output, and annual intermediate consumption. For construction activity outside the coverage of business survey, the labor input method is not considered effective. Therefore, the specialized survey on construction was conducted in 2007 based on business survey frame (for individual entrepreneurs) augmented by data from HBS. Administrative data for public infrastructure (from GFS).
Trade, repair of motor vehicles, and personal and household goods	Business survey – quarterly and annual output, and annual intermediate consumption. HBS data for informal trade (bazaars). Trade margins from SUT. The Retail Trade Survey conducted in 2007. Financial Statement Analysis. External trade for NOE.
Restaurants and hotels accommodation, and food Services	Business survey – quarterly and annual output, and annual intermediate consumption. No labor input method is used. 2007 specialized survey of restaurants for 2006 data. There are plans to use data from tourism survey.
Transport, storage, postal, and warehousing	Business survey – quarterly and annual output, and annual intermediate consumption. HBS data for NOE component of transport.
Communication	Business survey – quarterly and annual output, and annual intermediate consumption. Social statistics, survey on employment.
Financial intermediation	Monthly NBG data on depository corporations, suitable also for estimating FISIM. Quarterly NBG data on premiums and claims of insurance companies.
Real estate, renting and business services	Business survey – quarterly and annual output, annual intermediate consumption. HBS for rent for owner occupied dwelling, different weights are used for sampling separately for Tbilisi, other urban areas, and other rural areas.
Public administration	Consolidated Budget of Georgia from MOF based on COFOG.
Education	Business survey – quarterly and annual output, and annual intermediate consumption.
	Subsidies and vouchers for education from the government are used for validation of output data.
Health and social work	Business survey – quarterly and annual output, and annual intermediate consumption. Health subsidies from the government are used for validation of output data.
Other community, social and personal services	Business survey – quarterly and annual output, and annual intermediate consumption. Annual survey of nonprofit institutions serving households (NPISH) (starting from 2007). This section accounts for around 4 percent of GDP, with several activities blended together.
Expenditure approach	Main Sources
Household final consumption expenditure	Quarterly HBS following COICOP classification. Own account nonmarket production is covered. The data are compared with SUT (the latest is of 2009). Housing rents (HBS, questionnaire 01). Health expenditure from HBS. NBG data on financial services (including FISIM). Education, entertainment and miscellaneous services – data from HBS are verified via various source data. BOP Data on tourism, health, and education. Household Expenditure Survey – (questionnaires 03 -04).
Government final consumption expenditure	Monthly government data on government expenditures by COFOG, with the split into individual and collective consumption expenditure (education, health care and cultural).
Gross Fixed Capital Formation	Business survey for corporations (including own-produced capitalized goods) General Government - data from GFS.
Changes in inventories	Business survey questionnaire request information on four types of inventories. SUT goods are balanced by changes in inventories.
Exports of goods and services	BOP data form NBG.
Imports of goods and services	BOP data from NBG.

3.1.2 Source data reasonably approximate the definitions, scope, classifications, valuation, and time of recording required.

GEOSTAT relies on various source data and makes adjustments to improve accuracy of source data to produce GDP estimate, but some gaps remain. GEOSTAT business surveys (including agriculture survey), monetary, government finance, and balance of payments statistics are designed to collect data consistent with the SNA definitions. The NAD staff cooperates with other GEOSTAT divisions in designing the surveys that would meet SNA requirements. Despite these procedures, some coverage and valuation issues remain. Quarterly IC data from business survey seem to be prone to under coverage; therefore, the growth rate is used to extrapolate data from previous year.

In 2010, NOE for all activities combined comprised around 20 percent and varied up to more than 50 percent for selected activities (trade, and other community, social, and personal services). The labor input data from business survey are compared with labor data from HBS to determine part that is not covered by business survey. For education, following the results from specialized household survey on education, it is believed that up to 20 percent of total education output is produced by private tutors. The relevant coverage adjustments are made in national accounts data. The GEOSTAT plans to conduct specialized survey on education in 2012.

Administrative data from other government agencies, which use different definitions, level of detail, or time of recording, are also adjusted to meet to national accounts requirements. Only around 60 percent of value-added tax data from Revenue service include clear activity attribution.

3.1.3 Source data are timely.

All source data are available on a timely basis. Balance of payments statistics is available with 85 days timeliness, monetary statistics–30 days after the reference month, monthly state budget data are available with 30 days timelines and monthly consolidated budget - 70 days after the reference quarter. There may be some delays with quarterly data on premiums and claims for insurance companies, related to accounting procedures. Data from other GEOSTAT divisions are provided on timely basis following timeliness established in the GEOSTAT Program.

3.2.1 Source data—including censuses, sample surveys, and administrative records—are routinely assessed, e.g., for coverage, sample error, response error, and nonsampling error; the results of the assessments are monitored and made available to guide statistical processes.

For business survey, data entry is done by the GEOSTAT central office. The reported data go through initial plausibility and consistency checks. High-value transactions are confirmed with respondents. Survey errors are routinely assessed. If sample error is high, the stratum is collapsed to an upper digit level. Confidence intervals are calculated for all variables to assess the accuracy. Nonresponses are sorted by seven reasons and analyzed (88 percent of nonresponse rate pertain to small enterprises), but results of this analysis is yet to be used to improve the data collection process. No consistency checks are performed with other data sources (e.g., administrative) and no adjustments are made to the survey results. The nonresponse rate has noticeably increased over last year.

The HBS has recently introduced additional validation. This has reportedly improved the data accuracy but uncertainty about under and misreporting remains. Sampling errors are available and adjusted for nonresponse but they are not used to improve the data collection process. In addition to several plausibility and consistency checks, data are subject to checks for data entry errors with double entry bookkeeping. Data of all 200 interviewers are verified and randomly checked by field supervisors, who in turn are monitored and randomly checked by central office expert. Logical controls within each questionnaire are computerized and erroneous or misreported data are removed from the database. No consistency checks are performed with other data sources (e.g., administrative) and no adjustments are made to the survey results. There’s roughly a 15 percent quarterly nonresponse. GEOSTAT is considering cooperation with Statistics Netherlands on improving the quality of HBS.

The accuracy of source data, such as government finance statistics, balance of payments data, and the price data is routinely assessed.

3.3.1 Data compilation employs sound statistical techniques to deal with data sources.

Surveys conducted by GEOSTAT employ sound statistical techniques, based on experts’ advice relating to the survey design and compilation. The computer software (based on SQL and Access) used to process survey results helps to minimize processing errors through the embedded checking procedures. Adjustments for outliers and nonresponse are made using sound statistical techniques. The special procedures are applied to improve consistency between the sum of the sample weights and the targeted population. Small-scale special collections are used to validate major source data.

3.3.2 Other statistical procedures (e.g., data adjustments and transformations, and statistical analysis) employ sound statistical techniques.

The GEOSTAT makes significant efforts to ensure the exhaustiveness of the GDP estimates. Activities of NOE are separately identified in the accounts. In addition to specialized surveys, the SUT data, data from the HBS, and administrative data are scrutinized to ensure coverage of all NOE components. Estimates for the NOE are made for both the production and the expenditure approach for compiling GDP. For agriculture, the output and intermediate consumption is estimated on the basis of the commodity flows for agricultural goods as well as data on area planted, livestock numbers, and productivity. Adjustments to the foreign trade data for nonrecorded exports and imports are made by the balance of payments compilers.

3.4.1 Intermediate results are validated against other information, where applicable.

Intermediate data are validated using time-series analysis combined with the cross checking with independent data sources such as employment statistics and tax data from Revenue Service.

3.4.2 Statistical discrepancies in intermediate data are assessed and investigated.

Assessments of potential discrepancies of major intermediate data are undertaken, and adjustments are made to remove the discrepancies. In particular, the following ratios are checked thoroughly: intermediate consumption/gross output, gross value added/gross output, consumption of fixed capital/gross output. In addition, the value added structure by industries is also checked for temporal consistency. Proper adjustments are made to remove the discrepancies.

3.4.3 Statistical discrepancies and other potential indicators of problems in statistical outputs are investigated.

The statistical discrepancy for 2010 annual GDP by production and expenditure approach is about 1 percent, but volatile and reach up to 3 percent in size for quarterly data. Discrepancies are shown explicitly in publication. Recently improved SUT are used to make the estimates more consistent. No studies about the bias in the GDP estimates are performed.

3.5.1 Studies and analyses of revisions are carried out routinely and used internally to inform statistical processes (see also 4.3.3).

The GEOSTAT does not conduct systematic revision studies. The NAD analyses direction and magnitude of revisions between preliminary and final data, but there is no documentation of the sources of errors, omissions, and fluctuations in the data. The results of investigations and adjustments made in the statistical processes are taken into account in compiling the data for the subsequent periods.

Recommendation:

Repeat from time to time comprehensive analyses of revisions to the data to inform statistical processes.

4.1.1 Periodicity follows dissemination standards.

Georgia meets the SDDS with respect to the periodicity of the GDP estimates. Quarterly GDP estimates are compiled and disseminated.

4.1.2 Timeliness follows dissemination standards.

The timeliness of quarterly GDP estimates exceeds SDDS requirements. It has been recently improved to 80 days after the reference period.

Monthly flash estimate of GDP in growth rates are available approximately 30 days after the end of the reference month.

4.2.1 Statistics are consistent within the dataset.

The official estimates of GDP for Georgia are derived using the production approach. The estimates for GDP by production and expenditure approaches in current prices have an explicit statistical discrepancy, which is around one percent of GDP but volatile over time. Also, an explicit statistical discrepancy shown in the accounts pertains to a discrepancy between the sum of saving and capital transfers and the sum of gross capital formation and net lending/net borrowing.

The GDP by production at constant prices are consistent with those in current prices, and the implicit deflators are consistent within the “value = volume x price” framework. Users are notified about nonadditivity of the chain-linked volume measures.

In the supply and use tables, supply of goods and services adjusted by NOE is balanced with the use through the changes in inventories (for goods) and through final consumption expenditures of the households (for services). Aggregates published in the input-output tables are consistent with the annual accounts estimates for the relevant year.

The quarterly and the annual GDP estimates are consistent. The conceptual framework and, in most cases, sources and methods (including index formula and base year) used for the quarterly and annual GDP compilation are the same. Quarterly accounts are benchmarked to annual accounts by prorating the difference over the quarters, but not making an appropriate use of Denton technique.

4.2.2 Statistics are consistent or reconcilable over a reasonable period of time.

Consistent annual and quarterly time series are published from 2003 (reference year). The quarterly estimates are consistent over time. Consistent historical time-series were reconstructed for 1996 – 2003 and offered to users upon special request. In explanatory notes within the national accounts publications, the GEOSTAT informs users about unusual changes in the economic trends. For instance, users were notified about the impact on the result of 2006 business survey on the estimates of output and the trends in NOE estimates with this regard. Chain-linked quarterly time series are published from 2003.

Advanced notice is given for major changes in methodology (e.g., users are notified that 2012 data will accommodate new 2008 SNA classification of GFCF as a result of 2011 investment survey).

4.2.3 Statistics are consistent or reconcilable with those obtained through other data sources and/or statistical frameworks.

National accounts data for the rest of world are consistent with BOP data. The BOP data are used directly in the national accounts after being converted to the national currency using average exchange rate for the respective quarter. Net lending/net borrowing is not entirely consistent with the BOP financial account. Data on capital transfers receivable and payable are consistent with the relevant BOP capital account data. Data on current transfers in secondary distribution of income account are consistent with the relevant BOP component. Data on import and export of goods and services for the GDP by the expenditure approach are consistent with the BOP current account data. Government finance statistics are used directly in the national accounts after making appropriate adjustments for consumption of fixed capital.

NBG provide monthly monetary and financial statistics data on depository corporations and quarterly data on insurance companies, which are used for compilation of the production accounts for financial corporations’ sector including for calculation of FISIM.

Implicit price deflators are comparable with published producer price indices.

4.3.1 Revisions follow a regular and transparent schedule.

The revision cycle of the national accounts follows a regular schedule, determined on the basis of the availability of source data and the timing of revisions to related datasets. Revisions to quarterly data can be made with each quarterly release, although most revisions are made following annual estimates. Upon completion of annual estimates, the quarterly data for four quarters of reference period and two available quarters of the current period are revised. At the end of March (80 days timeliness) each year preliminary annual production estimates are released for the reference period, followed by final estimates in 11 months after the reference period (November) after completion of the SUT tables (published at the end of December). In most cases revisions do not affect the trends in the time series in real terms. Special revisions, due to the introduction of new data sources (e.g., results of 2007 survey of NOE survey) are not explained to public.

Public is not well informed about the revision policy.

Recommendation:

Enhance communication with users about revision policy.

4.3.2 Preliminary and/or revised data are clearly identified.

Users are made aware that data are subject to revision. The preliminary estimates are clearly identified in the databases that are available to users, with expected date of revision. The revised data are disseminated with the same level of detail as those previously published. The hard copy publications with final data have no indication whether the data have been revised.

4.3.3 Studies and analyses of revisions are made public (see also 3.5.1).

Differences between the preliminary and final data are not explained to users.

Recommendation:

Enhance communication with users regarding revision studies and analysis of revisions.

5.1.1 Statistics are presented in a way that facilitates proper interpretation and meaningful comparisons (layout and clarity of text, tables, and charts).

In recent years there have been a lot of improvements in data dissemination practice. The level of detail is sufficient for analysis. The GEOSTAT website was developed with elaborated annual and quarterly national account time series. In 2004, the new annual publication on national accounts was issued with more detail. The following national accounts estimates are disseminated: (i) gross output by type of economic activities one digit level of NACE, at current prices; (ii) intermediate consumption by types of economic activities, at current prices; (iii) GDP by types of economic activities, at current prices;(iv) GDP at constant (2003) prices; (v) GDP growth indices (real growth, chain-linked, cumulative), to the same period of the previous year; (vi) GDP by categories of use, at current prices; (vii) generation of income account; (viii) gross national income and other aggregates of national accounts up to financial account; (ix) gross value added by regions, at current prices; (x) supply and use tables (by type of economic activities and products 15/15, 19/27 and 45/67); (xi) share of NOE output to total output by type of economic activities; (xii) labor productivity at current and constant (2003) prices; (xiii) production indices; and (xiv) seasonal adjustments. The deflators of GDP are published, including the chain-linked time series. A limited number of charts are included and accompanied by brief analysis of recent trends.

5.1.2 Dissemination media and format are adequate.

The dissemination format is adequate. The annual and quarterly preliminary estimates are disseminated first by a press release. Selected time series can be downloaded from the GEOSTAT website in Excel format. Following Article 27 of the Law on Statistics, the GEOSTAT disseminates statistical data in electronic form free of charge; and charges all the users except the administrative bodies for the printed statistical publications.

5.1.3 Statistics are released on a preannounced schedule.

Schedule of statistical release is backed by legislation. Article 7 of the Law on Statistics obliges GEOSTAT to produce the schedule for promulgation of the statistical data and ensure its publicity; as well as disseminate the statistical data in observance of this schedule. The GEOSTAT disseminates an advance release calendar, which includes the national accounts statistics, for the forthcoming year on a month by month basis.

5.1.4 Statistics are made available to all users at the same time.

Article 7 of the Law on Statistics explicitly stipulates that GEOSTAT secures the equal access to the statistical data for all the users. This principle is strictly followed.

5.1.5 Statistics not routinely disseminated are made available upon request.

Unpublished but nonconfidential customized data are made available to users upon request, which is publicized on the GEOSTAT website. The users’ survey indicates that GEOSTAT is responsive to their requests.

5.2.1 Documentation on concepts, scope, classifications, basis of recording, data sources, and statistical techniques is available, and differences from internationally accepted standards, guidelines, or good practices are annotated.

There is no detailed information on data sources and methods for compilation of national accounts in Georgia. The short summary of general methodology is available in the annual publication of national accounts and on the website. Also, the list of data sources is available on the web under the GDP General Methodology heading. The National Summary Data Pages with the SDDS data categories is disseminated in accordance with the electronic procedures established by the IMF to facilitate quarterly certification of the national metadata for national accounts and IPI. The GEOSTAT website contains references to the elaborated list of documents related to internationally accepted standards.

Recommendation:

Develop and disseminate detailed documentation on data sources and methods for compilation of national accounts in Georgia.

5.2.2 Levels of detail are adapted to the needs of the intended audience.

Metadata are not made available at different levels of detail.

5.3.1 Contact points for each subject field are publicized.

The GEOSTAT website and all statistical publications contain the mailing address, telephone and fax numbers, and e-mail address of the GEOSTAT. The proper procedures are in place to redirect queries to the specific division. National accounts staff promptly and knowledgeably handle all inquiries. Recently, a lot of work has been done by GEOSTAT management to raise awareness of the use of statistics (e.g., for other government agencies, businesses, etc.).

5.3.2 Catalogs of publications, documents, and other services, including information on any charges, are widely available.

A catalog of publications is provided on the GEOSTAT website. Users can download annual, quarterly, and monthly publications, as well as archived publications and specialized releases from the GEOSTAT website free of charge.

Table 2.

Data Quality Assessment Framework (July 2003): Summary of Results for National Accounts

(Compiling Agency: National Statistics Office)

Table 2.

Data Quality Assessment Framework (July 2003): Summary of Results for National Accounts

(Compiling Agency: National Statistics Office)

Key to symbols: NA = Not Applicable; O = Practice Observed; LO = Practice Largely Observed; LNO = Practice Largely Not Observed; NO = Practice Not Observed; SDDS = Complies with SDDS Criteria
Element	NA	Assessment				Comments
		O	LO	LNO	NO
0. Prerequisites of quality
0.1 Legal and institutional environment			X			No sanctions (penalties) for nonreporting or misreporting are stipulated by the Law. No sufficient contacts with other statistics producing agencies to take into account the respondent burden and to avoid duplication of efforts. Lack of venue for multilateral collaboration for technical staff to address cross-sectoral consistency.
0.2 Resources				X		Inadequate staff and financial resources, unattractive salaries. Need to upgrade IT resources in line with the medium-term program.
0.3 Relevance		X
0.4 Other quality management		X
1. Assurances of integrity
1.1 Professionalism		X
1.2 Transparency		X
1.3 Ethical standards		X
2. Methodological soundness
2.1 Concepts and definitions		X
2.2 Scope			X			Volume measures of expenditure GDP are not compiled. Data are collected at the enterprise level. No sufficient level of detail to record separately entertainment, literary, and artistic originals.
2.3 Classification/sectorization			X			Vouchers to students for education are treated as subsidies on product and not as transfers. Deficiencies in classification of LPELs.
2.4 Basis for recording			X			General government data on a cash basis are not adjusted to an accrual basis. Transactions between establishments within the same enterprise (which may be materially significant in Georgia for communication and trade enterprises) are not recorded on a gross basis.
3. Accuracy and reliability
3.1 Source data				X		No economic census / surveys have been conducted in observable past; business survey and HBS are affected by underreporting, maintenance of business register needs improvement; coverage of the some activities is considered incomplete (trade, other community, social and personal activities). No exports and imports price indices are compiled.
3.2 Assessment of source data		X
3.3 Statistical techniques			X			Deficiencies in volume measures of trade and taxes. Outdated coefficients for measuring work in progress in agriculture. Denton technique is not applied for benchmarking quarterly accounts to annual estimates.
3.4 Assessment and validation of intermediate data and statistical outputs		X
3.5 Revision studies			X			No revisions studies. Revisions to the data are explained in the text that accompanies the publication.
4. Serviceability
4.1 Periodicity and timeliness		X
4.2 Consistency		X
4.3 Revision policy and practice			X			Revision policy is not publicized.
5. Accessibility
5.1 Data accessibility		X
5.2 Metadata accessibility			X			Limited documentation on sources and methods.
5.3 Assistance to users		X

View Table

Table 2.

Data Quality Assessment Framework (July 2003): Summary of Results for National Accounts

(Compiling Agency: National Statistics Office)

Key to symbols: NA = Not Applicable; O = Practice Observed; LO = Practice Largely Observed; LNO = Practice Largely Not Observed; NO = Practice Not Observed; SDDS = Complies with SDDS Criteria
Element	NA	Assessment				Comments
		O	LO	LNO	NO
0. Prerequisites of quality
0.1 Legal and institutional environment			X			No sanctions (penalties) for nonreporting or misreporting are stipulated by the Law. No sufficient contacts with other statistics producing agencies to take into account the respondent burden and to avoid duplication of efforts. Lack of venue for multilateral collaboration for technical staff to address cross-sectoral consistency.
0.2 Resources				X		Inadequate staff and financial resources, unattractive salaries. Need to upgrade IT resources in line with the medium-term program.
0.3 Relevance		X
0.4 Other quality management		X
1. Assurances of integrity
1.1 Professionalism		X
1.2 Transparency		X
1.3 Ethical standards		X
2. Methodological soundness
2.1 Concepts and definitions		X
2.2 Scope			X			Volume measures of expenditure GDP are not compiled. Data are collected at the enterprise level. No sufficient level of detail to record separately entertainment, literary, and artistic originals.
2.3 Classification/sectorization			X			Vouchers to students for education are treated as subsidies on product and not as transfers. Deficiencies in classification of LPELs.
2.4 Basis for recording			X			General government data on a cash basis are not adjusted to an accrual basis. Transactions between establishments within the same enterprise (which may be materially significant in Georgia for communication and trade enterprises) are not recorded on a gross basis.
3. Accuracy and reliability
3.1 Source data				X		No economic census / surveys have been conducted in observable past; business survey and HBS are affected by underreporting, maintenance of business register needs improvement; coverage of the some activities is considered incomplete (trade, other community, social and personal activities). No exports and imports price indices are compiled.
3.2 Assessment of source data		X
3.3 Statistical techniques			X			Deficiencies in volume measures of trade and taxes. Outdated coefficients for measuring work in progress in agriculture. Denton technique is not applied for benchmarking quarterly accounts to annual estimates.
3.4 Assessment and validation of intermediate data and statistical outputs		X
3.5 Revision studies			X			No revisions studies. Revisions to the data are explained in the text that accompanies the publication.
4. Serviceability
4.1 Periodicity and timeliness		X
4.2 Consistency		X
4.3 Revision policy and practice			X			Revision policy is not publicized.
5. Accessibility
5.1 Data accessibility		X
5.2 Metadata accessibility			X			Limited documentation on sources and methods.
5.3 Assistance to users		X

0.1.1 The responsibility for collecting, processing, and disseminating the statistics is clearly specified.

The GEOSTAT was established as an independent legal entity under the Law on Statistics of December 11, 2009, N 2291–rs to be responsible for compiling and disseminating official statistics. Article 9 of the Charter of GEOSTAT (approved by the Presidential Decree no.72 on February 1, 2010) mandated GEOSTAT to be in charge of all collection and dissemination of official statistics as well as the improvement in the coverage and quality of official data responsible by GEOSTAT as well as by other government agencies. Article 7 of the Law authorizes the GEOSTAT to work out a statistical activities program; and carry out statistical activities, which sets the central position of the GEOSTAT in the Georgian statistical system.

Accordingly, collecting, compiling and disseminating CPI and PPI and analyzing the inflation dynamics are defined as the main functions of the Price Statistics Division of GEOSTAT. No other institution compiles alternative inflation estimates.

Article 25 of the Law on Statistics authorizes GEOSTAT to request from the administrative bodies and other physical and legal entities and receive all the statistical and other information (including confidential information) from them necessary for carrying out its functions.

Arrangements to promote consistency of methods and results are set up by the Board of the GEOSTAT, which has representatives from other data producing agencies, namely the NBG, the MOE, and the MOF.

In addition to that, the President of Georgia approves annual State Program for Development of Statistics. The compilation and dissemination of price statistics are stated in the State Program (e.g., for current year there is an updates on CPI weights).

0.1.2 Data sharing and coordination among data-producing agencies are adequate.

Article 5 of the Law on Statistics requires that GEOSTAT cooperate and coordinate with the local organizations producing the statistics in order to achieve efficiency. Article 16 of the Law on Statistics stipulates that GEOSTAT coordinates exchange of information among the administrative bodies in order to produce the statistics and facilitates effective implementation of the statistical standards and methodology approved. In addition, there are memorandums of understanding between the GEOSTAT and the MOF, GEOSTAT and Education Quality Development Center, and GEOSTAT and the NBG covering the sharing of macroeconomic data. GEOSTAT is the sole compiler of price statistics.

Within the GEOSTAT, the internal procedures are in place to ensure coordination between various divisions, namely Business Statistics Division, Agriculture and Environmental Statistics Division, Social Statistics Division, Population Census and Demographic Statistics Division, Price Statistics Division. All proposed changes in questionnaires as well as other changes in the production of statistics is preceded by consultations and need to be approved by the Board of the GEOSTAT.

The central role of GEOSTAT in the field of statistics is further reiterated in Article 2 of the Charter of GEOSTAT, which states that the GEOSTAT should work out a unified policy for the field of statistics, prepare and introduce statistical standards and methodology, create and realize statistical classification system, create and improve statistical databases, information banks and networks; and create and approve statistical observance forms for producing official statistics. Such centralized statistical system in principle guards against duplication of efforts and unnecessary burden on respondents. There is no arrangement for regular meetings of all technical staff responsible for macroeconomic statistics. Such meetings provide a comprehensive arena for exchanging information on current and forthcoming projects for statistical development, promoting cross-sectoral data consistency crucial for macroeconomic policy making, and coordinating work programs to avoid duplication of effort, ensure coherent application of methodology at all stages of data collection, and enhance effectiveness. Nevertheless, these agencies have several bi-lateral meetings and arrangements for collaboration on data issues e.g., the GEOSTAT has a memorandum of cooperation with the NBG as well as a working group with NBG dealing with CPI. In addition, Vice-President of NBG is GEOSTAT board member, ensuring cooperation at the higher level and there are regular informal contacts with the staff of other data-producing agencies.

Recommendation:

Conduct pre-established, regular meetings, such as one per year, to improve communication among data compilers at NBG, GEOSTAT, and MOF, by discussing issues of common interest, avoid duplication of efforts, and ensure the consistency of macroeconomic statistics (national accounts, monetary, fiscal, and external sector.)

0.1.3 Individual reporters’ data are to be kept confidential and used for statistical purposes only.

GEOSTAT has adequate legal and procedural provisions to ensure confidentiality of individual reporters, and in satisfactorily follow these in practice. Article 26 of the Law on Statistics states that statistical data shall be public except for the data which allows for identification of observation unit. Article 28 states that the confidential statistical data shall not be issued or disseminated or used for a nonstatistical purpose with exceptions envisaged by the Georgian legislation. When producing the official statistics it is obligatory to destroy or store separately the identity data including the questionnaires containing such data. According to Article 29 of the Law, the employees of the GEOSTAT should not use or disseminate confidential statistical data either for the personal, academic, research or any other activities. Violation of these provisions will lead to imposing a disciplinary responsibility against employee, notably in view of the guilt or/and the damage inflicted the Executive Director shall impose the following disciplinary penalties: warning, withholding a salary, and/or dismissal.

GEOSTAT staffs are required to keep individual data confidential by Law and the staff is well informed by the requirement. Access to individual data both to the actual forms and to the computer records is restricted to the appropriate staff. The procedures are adopted that prevent residual disclosure. There are special aggregation rules that ensure that unintended disclosure does not occur. Respondents to surveys are informed about the confidentiality of their responses (relevant statement is included in each survey form). Archive procedures ensure appropriate storage of information with clearly articulated rules.

0.1.4 Statistical reporting is ensured through legal mandate and/or measures to encourage response.

Article 25 of the Law on Statistics sets the obligation to provide statistical and other information to GEOSTAT, notably upon the request and according to the legislation of Georgia the administrative bodies shall be obliged to provide the GEOSTAT with the information on physical and private entities (including confidential information) available to them. However, no sanctions for nonreporting or misreporting are stipulated by the Law and, due to lack of legal and administrative support, very senior staff at times is required to intervene in order to get the respondents to collaborate.

With its price statistics surveys, nonreporting has not been an issue and no deterioration in response rates has been observed in practice.

Recommendations:

Enact appropriate amendments to the Law of Georgia on Official Statistics to reinforce mandatory reporting of statistical data and ensure application of sanctions for nonreporting. If reporting is mandatory, penalties for noncompliance (including misreporting) act as effective deterrent, even if such provision rarely needs to be employed.

Establish mechanisms in place to promote the voluntary reporting of data.

0.2.1 Staff, facilities, computing resources, and financing are commensurate with statistical programs.

Staff resources at the Price Statistics Division (PSD) are barely sufficient for carrying out the day-to-day compilation work for both CPI and PPI, but not further improvement to better adhere to international standards. To further improve the quality of its statistics and undertake tasks, like establishing central price collection for complex products for CPI and PPI, and participating in the International Comparison Program (ICP), additional staff resources are needed. The current staff level is fully occupied with the routine monthly cycle and tasks related to issues like identifying alternative data sources, evaluating and adjusting the weight data against additional information, improving the quality adjustment methodology. The Price division employs 7 central staff, all with university education with economics as the main subject. All staff members divide their time between the CPI and the PPI, roughly in a 70 to 30 proportion, respectively. In addition, there are 20 field collectors in the regions who work with the data collection and receive direct guidance and training from the PSD staff. This is, by international comparison, a small organisation for compiling price statistics. Staff turnover has been very slow in recent years regardless of the significantly below-average remuneration within the public sector.

All employees have their personal computers, and the network services within GEOSTAT and between the regional offices seem sufficient. While new statistical software licences have been acquired with donor assistance, there are issues with maintaining other IT infrastructure up-to-date. The data processing resources have recently improved significantly with the implementation of hand held computers (USAID funded) and accompanied software for CPI data collection and transfer, as well as a Delphi based index compilation system. However, the PPI compilation process still relies on out-dated technology that ties the scarce staff resources at the central office. Current 3-year bilateral cooperation with Statistics Sweden is expected to address these issues shortly.

The GEOSTAT makes good use of its existing resources but, overall, GEOSTAT suffers from inadequate resources, as acknowledged by the data users. There is a great disparity in average salaries between other government agencies; NDSD indicates GEOSTAT staff receiving around 60% for similar government positions. To supplement its limited resources, GEOSTAT participates in various statistical programmes with the financial supports from donors. While these partnerships provide significant benefits to the GEOSTAT, the financial dependency on donors increases the risk on sustainability of these data programs. The new GEOSTAT central office facilities are appropriate but the long distance from other government offices and the GEOSTAT Tbilisi office may, to a degree, hamper day-to-day communication within the organization and with its key users.

Recommendation:

Increase the overall staff, IT, and financial resources for the GEOSTAT.

0.2.2 Measures to ensure efficient use of resources are implemented.

The GEOSTAT Board provides overall supervision of the organization of statistical work and oversees strategic plans for statistical development. In order to ensure the efficient use of resources the following measures are undertaken: (i) the thorough planning of statistical works (on multi-annual, annual and quarterly basis); (ii) the permanent monitoring of the appropriate use of resources according their destination. The Internal Audit Division carries out inspections of the staff of regional staff and monitors the resource use within the budgeting and execution of the Annual and Mid Term Actions Plans.

Special attention is granted to the improvement of the staff performance, especially its qualifications and abilities. Time to time, staff receive differentiated bonuses based on the assessment of the heads of divisions.

Outside consultants are widely used to evaluate statistical methodologies and compilation systems.

0.3.1 The relevance and practical utility of existing statistics in meeting users’ needs are monitored.

The relevance of statistical program is ensured by the Board of the GEOSTAT, which consists of seven members and a Chairman, with the following composition: one representative of the NBG, one representative of the Ministry of Economy and Sustainable Development, one representative of the MOF, and other five members, which represent private sector. The Parliament of Georgia should give consent to appoint the members of the Board (Law on Statistics, Article 11). The Board also serves as an advisory group to inform statistical processes. In addition, Article 5 of the Law on Statistics encourage cooperation with the international organizations in order to introduce the international practice and methodology and share relevant experience based on the agreements and treaties concluded with the international organizations engaged in this field.

Article 7 of the Law on Statistics stipulates that GEOSTAT should produce the statistics that are approved/recognized by the Board of the GEOSTAT, and also should need arises; the GEOSTAT is authorized to produce the statistics which is not envisaged by the statistical activity program. Executive Director submits the statistical activity program for approval to the President of Georgia (Article 9 of the Law on Statistics).

There is no user’s advisory group that would meet on a regular basis to provide feedback on the relevance of the current price statistics and new data requirements. Nevertheless, GEOSTAT consults various broader user groups on an ad hoc basis (e.g., during celebration of International Statistics Day). Users are also encouraged to provide feedback via GEOSTAT official website and its social networks (e.g., Facebook.) In addition, Eurostat (as one of users) performs regular quality checks of reported data. Their requirements are monitored and addressed in consistent manner.

Recommendation:

Establish a users’ advisory group for price statistics that meets on a regular basis (e.g., annually) and include all types of users to discuss existing data programs, plans for improvement, and to obtain user feedback on current and planned data programs.

0.4.1 Processes are in place to focus on quality.

The GEOSTAT commitment to quality is stipulated by law and well publicized. Article 1 of the Law on Statistics states that its goal is to ensure producing independent, objective and reliable statistics in the country based on the internationally recognized basic principles of statistics. Reflecting the spirit of this law, the GEOSTAT’s mission statement emphasizes the improvement and harmonization of statistical activities and the maintenance of independence, accuracy, relevance, integrity, timeliness, and professional standard of statistical information produced in Georgia. GEOSTAT is finalizing the NSDS that includes special chapter on quality.

Quality policy is based on the provisions of national and EU legislation, Strategy of GEOSTAT, European Statistics Code of Practice, user needs and expectations. It defines overall intentions and directions of institution related to quality. The management of the institution is giving priority to building trust and increasing the credibility of the statistics produced by GEOSTAT. From the ROSC Users’ survey, users indicated that in the last few years GEOSTAT disseminates more statistics, survey results, and information on methodology as well as becomes more responsive to their queries.

Conscious of value of independent quality assessment, GEOSTAT regularly participates in international evaluations, such as the IMF ROSC Data module and the World Bank’s statistical capacity indicators. It also conducts regular communications with Eurostat on data quality issues.

0.4.2 Processes are in place to monitor the quality of the statistical program.

The GEOSTAT regularly reviews and plans improvements to their internal processes. More formal annual Statistical Program is produced annual and approved by the President of Georgia. The newly created Monitoring Department is responsible for operating the monitoring, control and internal audit. The Internal Audit Division is established in GEOSTAT for systematic internal reviews of GEOSTAT processing including data collection and processing.

The expert guidance on the quality of their statistics is also ensured vie peer reviews within the framework of cooperation with other statistics agencies. GEOSTAT has established long-term cooperation with Statistics Sweden. Strategy of cooperation in price statistics is based on three-year plan of Developing Georgian CPI and PPI. There is also established Cooperation with the Central Statistical Office of Latvia.

0.4.3 Processes are in place to deal with quality considerations in planning the statistical program.

The Board of GEOSTAT coordinates the economic statistics work program, including explicit decisions about quality and trade-offs among the dimensions of quality (e.g., resource availability, timeliness, and accuracy/reliability.) The quality dimensions are also recognized explicitly in the NSDS.

1.1.1 Statistics are produced on an impartial basis.

Article 6 of the Law on Statistics stipulates that GEOSTAT independently carries out its activities based on the Georgian legislation. Article 1 of the Charter of GEOSTAT, 2010 further elaborate that the GEOSTAT carries out its activities based on the Georgian legislation, internationally accepted statistical principles, Law on Statistics, Law of Georgia on Legal Entity of Public Law, this Charter, GEOSTAT Board’s regulations and other normative acts. The GEOSTAT acquires rights and obligations to implement the goals established and functions assigned to it. There is no external pressure on the GEOSTAT with respect to the content or release of the statistics.

On the above premise, all official statistics including price statistics are compiled on an impartial basis. The basic principles governing the collection, processing, and dissemination of statistics in Georgia includes professional independence, objectivity, reliability, confidentiality of statistical data, and efficiency (Law on Statistics, Article 4).

The Executive Director of GEOSTAT is appointed by Board of the GEOSTAT for the term of 4 years and may be dismissed by the President of Georgia only under special circumstances (Article 8 of the Law on Statistics). The Executive Director is authorized to invite foreign or local experts on the contractual basis in accordance with the recommendations of the members of Board of the GEOSTAT in order to ensure effective operation of the GEOSTAT (Article 9.2).

Professional competency plays a key role in the promotion practices in the GEOSTAT and professional enhancement is encouraged.

1.1.2 Choices of sources and statistical techniques, as well as decisions about dissemination, are informed solely by statistical considerations.

The choices of sources, statistical techniques, and dissemination of price statistics are made solely by the GEOSTAT based entirely on statistical considerations. There has been no instance of ministerial interference in the choice of the statistical sources and methods.

1.1.3 The appropriate statistical entity is entitled to comment on erroneous interpretation and misuse of statistics.

The GEOSTAT provides explanatory materials in the price statistics press releases and on its website. The GEOSTAT monitors media coverage of its statistical products and has the authority to comment on erroneous interpretation and misuse of the statistics that it produces. At times, senior staff of GEOSTAT corrected the misinterpretation of statistics by media.

1.2.1 The terms and conditions under which statistics are collected, processed, and disseminated are available to the public.

The terms and conditions governing the collection of statistics are published in the Law on Official Statistics and in Charter of GEOSTAT, which are widely available to the public, including from the GEOSTAT website http://www.geostat.ge/index.php?action=page&p_id=29&lang=eng. In addition to legal provisions, the GEOSTAT website contains other relevant documents, such as the National Strategy of Development of Statistics, annual report of the GEOSTAT, information about the SDDS, and information about individual statistical products.

1.2.2 Internal governmental access to statistics prior to their release is publicly identified.

The GEOSTAT disseminates the price statistics to all users simultaneously. There is no governmental access to statistics prior to release.

1.2.3 Products of statistical agencies/units are clearly identified as such.

Products of the GEOSTAT are clearly identified as such by its name and logo. The price statistics in the NBG’s publications and website identify the GEOSTAT as the source. However, in the GEOSTAT publications, there are cases, in which that attribution is not made to the source, when statistics from other data-producing agencies is reproduced but does not concern the dissemination of price statistics.

1.2.4 Advance notice is given of major changes in methodology, source data, and statistical techniques.

The GEOSTAT provides advance notice about major methodology changes in price statistics in the Annual and Mid-Term Action Plans as well as in the National Strategy for the Development of Statistics in Georgia (2011-2014), available on the GEOSTAT website http://www.geostat.ge/index.php?action=page&p id=794&lang=eng.

Advance notice was provided for major changes such as the introduction of the three-year cycle in CPI weight revisions, seasonally adjusted estimates, changes in business survey questionnaire, etc. For the upcoming CPI revision a note will be added on the GEOSTAT website and CPI press release.

1.3.1 Guidelines for staff behavior are in place and are well known to the staff.

On its website, the GEOSTAT states that the Fundamental Principles of Official Statistics developed by United Nations Statistical Commission were at core in drafting the Law on Statistics and consequently establishing the GEOSTAT: http://www.geostat.ge/index.php?action=page&p id=32&lang=eng. The Fundamental Principles stipulate that for retaining trust in official statistics, the statistical agencies need to act according to strictly professional considerations, including professional ethics. New staffs are made aware of the ethical standards when they join the GEOSTAT.

Guidelines for Effective Communication, a code of conduct –document last updated in August 2011 and approved by the Executive Director, gives further guidance for the GEOSTAT staff on how to interact with other staff and external stakeholders.

2.1.1 The overall structure in terms of concepts and definitions follows internationally accepted standards, guidelines, or good practices.

The CPI concepts and definitions largely follow the Consumer Price Index Manual (CPI Manual) and the household monetary consumption expenditure of the 1993 SNA. The CPI estimates the price changes of goods and services urban households purchase for their own consumption. The expenditure estimates according to the COICOP are provided at high level of detail.

The concepts and definitions of the HBS, the basis for CPI weights and basket, broadly follow international recommendations.

During the next CPI revision in January 2012 GEOSTAT is planning to introduce expenditure weights based on the National Accounts monetary household consumption expenditure. This would bring the CPI conceptually closer to National Accounts and improve internal data coherence. It would also improve the accuracy of the consumer expenditure pattern. As a result, the change would also affect the way headline inflation is determined due to large changes in relative weights of key expenditure categories.

2.2.1 The scope is broadly consistent with internationally accepted standards, guidelines, or good practices.

The scope is largely consistent with internationally accepted standards, except the CPI weights currently cover the expenditure of only the households of the five largest cities (covering some 40% of the population), even though the HBS data for the urban and rural areas is available. In addition, treatment of owner-occupied housing is inconsistent. While the limited coverage is well known and clearly communicated with the users, the international standard recommends that population coverage includes all households and not be restricted to urban-only households. Otherwise the CPI population coverage relates to urban families of all sizes and income levels. The index covers marketed goods and services for final consumption purchase including purchases by unincorporated businesses.

The CPI relies exclusively on the HBS of 2008-09 for the CPI weight structure, which implicitly determines the difference in the scope of coverage between the CPI and the consumption expenditure of the household sector as defined in the 1993 SNA. No adjustments are made for the HBS weights. The treatment of services of owner-occupied housing in the CPI is unclear. On one hand the owner-occupied housing is excluded from the weight estimates, which rely on cash consumption expenditure. On the other hand, a small expenditure share from actual rental expenditure is diverted to ‘purchase of housing’. This is represented in the price survey with an item measuring ‘Apartment price’, measuring the actual or estimated acquisition prices of apartments. The resulting practice of excluding the owner-occupied housing in the weights but including it in the price survey is clearly not soundly based.

Other common and acceptable exclusions in the CPI scope with respect to consumption expenditure are own-account and illegal market goods and services. These exclusions are described in the metadata. In terms of geographical coverage, the CPI weights cover the expenditure of all urban households in the five main cities. Abkhazian Autonomous Republic and Tskhinvali Region (former South Ossetian Autonomous Region), a part of Georgian territory not controlled by the central authorities are excluded.

Recommendations:

Extend the coverage to include the expenditure pattern of the whole population in the CPI weights and evaluate the need for including additional outlets for price collection to cover the rural areas.

Clarify the treatment of owner-occupied housing in the weights. The common international approach is to include the weights based on imputed rents for similar housing units and covering the price survey with an appropriate rental survey also used for the actual rental expenditure.

2.3.1 Classification/sectorization systems used are broadly consistent with internationally accepted standards, guidelines, or good practices.

International classification standard COICOP is used throughout in both the HBS and CPI. In addition, for a few certain typical national and regional items, Georgia has adapted COICOP by expanding classification to the 8-digit level to account for country-specific needs and better facilitate the price collection.

2.4.1 Market prices are used to value flows and stocks.

Market prices, including trade and transportation margins, taxes less subsidies are used to value the consumption expenditure weights. Product specifications also largely include price-determining characteristics related to the terms of transactions. See also 3.1.1.

2.4.2 Recording is done on an accrual basis.

Prices for goods and services are recorded on an accrual basis. Most are collected each month over the period between the 10^th and the 20^th of the month. Infrequently changing prices such as public transport fees and nationally set prices are reviewed at the time of changes are applied.

2.4.3 Grossing/netting procedures are broadly consistent with internationally accepted standards, guidelines, or good practices.

The CPI compilation does not include any grossing/netting. The main area where netting could play a significant role is with treatment of personal vehicle markets. Used cars purchases are included in the CPI with gross weights, as available from the HBS. The weighting practice will be reviewed during the next CPI revision in 2012.

3.1.1 Source data are obtained from comprehensive data collection programs that take into account country-specific conditions.

The source data for the CPI are (i) the HBS which provides expenditure data by commodity for the whole country except the conflict territory for the CPI weighting pattern, and (ii) the monthly regional survey of retail prices. Broadly, they provide a sound but not sufficient basis for the CPI. However, relying solely on the HBS for the weights structure does not provide sufficiently accurate structure of true expenditures. Similarly, the monthly price survey carried out by the regional price collectors may not alone capture the relevant price changes for all items.

3.1.2 Source data reasonably approximate the definitions, scope, classifications, valuation, and time of recording required.

The CPI price survey provides a good approximation for the definitions, scope, classifications, valuation and time of recording required. However, for some goods the current price collection may not provide a complete picture, in a sense that alternative markets outside typical physical outlets currently excluded from the regional surveys may be or may soon become relevant. Travel ticket purchases though the Internet is an example.

Recommendation:

For some complex goods and service, such as cellular phone services, seek alternative data sources, virtual outlets, outside the normal regional price survey to reflect consumer behavior.

3.1.3 Source data are timely.

Both the HBS and CPI price survey have good periodicity and timeliness and enable GEOSTAT to disseminate the CPI estimates only 3 days after the end of the reference month. The quarterly HBS results are obtainable some 8 weeks after the survey and detailed annual estimates are available two months after the end of year. The price survey, conducted between the 10^th and 20^th of the month, is validated daily during the survey and transferred to the central office already on the 21^st of the month for further data validation and CPI compilation.

3.2.1 Source data—including censuses, sample surveys, and administrative records—are routinely assessed, e.g., for coverage, sample error, response error, and nonsampling error; the results of the assessments are monitored and made available to guide statistical processes.

Accuracy of the CPI source data is routinely assessed, both with respect to the HBS and the Price Survey.

3.3.1 Data compilation employs sound statistical techniques to deal with data sources.

The CPI compilation techniques have improved in 2010 by enhancing the previous imputation method for seasonal products. Previously the method relied on imputing only elementary or higher level aggregate indices instead of individual prices. However, few issues still remain in order to implement international best practices.

In the case of quality change, efforts are made to identify changes and some changes, like package size adjustments are carried out. However, the practice is to treat the changed product as a new item and splice out the associated price change, rather than directly estimate the value of the quality change. If there are overlapping prices available, this implicitly assumes that the whole price difference is due to quality change. With rapidly changing goods like mobile phones and computers some of the quality change is potentially missed with the current method.

Missing prices are also imputed based on a default group relative method. Although a good basic method, an additional imputation strategy would likely decrease sudden corrections at the time the item reappears in the basket. The imputation could be based on either the same items’ price movements in other regions, which provide sufficiently similar price movements given that Georgia is a relatively small country, or similar individual items’ price changes in the within the region. This can have significant impact when combined with the Dutot formula and relatively high price variation within some elementary aggregates.

However, the current practice in treating seasonal product may significantly miss the price changes at the beginning of each annual index. If a seasonal item is not available in December that is used as the base price period, the elementary index for this item is imputed in January based on the next higher level in the classification structure. Hence, base prices are in some cases not imputed. Within an annual index everything is fine but the problem appears with chaining these annual indices to form longer time-series. Historically, before the 2010 methodology improvement, this has led to situations where the long-term indices for some seasonal items have significantly deviated from the actual price levels. There is still a potential problem if the price change of a seasonal item (between first introductory price in the new index and the last observed price in the previous index) differs from the corresponding group relative used for the imputation.

Number of improvement in the statistical methods recommended in the assessment is already being planned for the next revision in January 2012.

Recommendations:

Consider estimating the December base prices for seasonal products based on an average over a longer time period that would include actual prices for each transaction. Make sure that the actual price levels from end of previous season to the beginning of the new season reflect similar changes in the chained sub-indices.

Introduce quality adjustment methods to implicitly or explicitly account for the quality changes.

3.3.2 Other statistical procedures (e.g., data adjustments and transformations, and statistical analysis) employ sound statistical techniques.

Generally, the household consumption expenditure is used to establish the CPI weights. However, the treatment of expenditure on OOH is unclear, as explained above. To calculate the elementary aggregate, the Dutot formula (relative of arithmetic average prices) is calculated for each item by region. The HBS expenditure weights are used to aggregate the elementary aggregates progressively first within each region. The modified Laspeyres formula is used, updating series of short-term price changes to compile the annual index series. Corresponding regional expenditure weights from the HBS finally aggregates regions for an all-Georgian CPI. However, the Dutot formula used at the elementary aggregate level can lead to significant index changes due to large price variance within some elementary aggregates.

The weight reference period is updated every three years, based on the availability of the most recent HBS. However, the weights are not adjusted to coincide the price and index reference period of month of December. Long consistent time series are compiled by chaining annual index series together.

Recommendations:

Change the Dutot formula to a Jevons index (geometric average) to partially account for substitution effect and to lessen the impact of large price variation within the elementary aggregates.

Price-update the expenditure weights to align the weight and index reference periods.

3.4.1 Intermediate results are validated against other information, where applicable.

The regional CPIs and sub-series are compared with each other to identify inconsistencies. Large differences are check with the field supervisors and, if needed, individual price data are confirmed.

3.4.2 Statistical discrepancies in intermediate data are assessed and investigated.

Unusual movements in the index arising from large movements in particular sectors are investigated and corresponding price date reviewed. The procedures concentrate on the monthly movement of the index series.

3.4.3 Statistical discrepancies and other potential indicators of problems in statistical outputs are investigated.

Reasons for short-term changes in both the price and index data are generally rigorously investigated and their impact to the overall index explained.

3.5.1 Studies and analyses of revisions are carried out routinely and used internally to inform statistical processes (see also 4.3.3).

The CPI estimates are released final as a policy. Some internal analysis on the impact of weight structure changes is carried out.

4.1.1 Periodicity follows dissemination standards.

The CPI is compiled and released monthly and therefore conforms to the SDDS standard.

4.1.2 Timeliness follows dissemination standards.

The timeliness of the price indices meets SDDS dissemination standards. The CPI is released only three days after the end of the reference month.

4.2.1 Statistics are consistent within the dataset.

The aggregation structure and practice ensures internal consistency of the regional and sub-group CPI estimates.

4.2.2 Statistics are consistent or reconcilable over a reasonable period of time.

Consistent long time-series is available from year 2000, even though they are not published together with the monthly index publication. They are however, available on the GEOSTAT website in other publications. There is a policy of not revising the historical series, which is in line with international best practice.

4.2.3 Statistics are consistent or reconcilable with those obtained through other data sources and/or statistical frameworks.

The CPI estimates are routinely compared with the corresponding PPI estimates and are largely consistent with them. Similarly, since detailed CPI series are used in the deflation of household goods consumption, consistency is largely ensured in that part. For a large part of consumer services expenditure CPI series are used in conjunction with direct volume measures that may deviate from each other.

4.3.1 Revisions follow a regular and transparent schedule.

As a policy and is a common practice, there are no revisions to the CPI series once disseminated. The weight revision schedule of every three years has been in use since 2000 and explained to the users. The revisions of weights use information from HBS, which is scheduled to take place every three years even though there have been deviations due to partial dependency on donors’ financial support.

4.3.2 Preliminary and/or revised data are clearly identified.

Following internationally accepted practice, the CPI data are final upon release.

4.3.3 Studies and analyses of revisions are made public (see also 3.5.1).

Not applicable since data are final.

5.1.1 Statistics are presented in a way that facilitates proper interpretation and meaningful comparisons (layout and clarity of text, tables, and charts).

The main CPI press release is disseminated in a format that helps interpreting the results: it explains the main sources of price change in writing and in charts. The data are provided in a set of Microsoft Excel-files at regional and COICOP division level from year 2000 onward. To analyze long-term trends users need to either construct the series themselves or search for the quarterly bulletin that includes longer consistent time-series.

Monthly short (month-on-month) and long-term (12-month change) inflation estimates are accompanied with period average and annual inflation estimates.

5.1.2 Dissemination media and format are adequate.

The CPI press release has been recently improved and currently provides a basis for good understanding of recent inflationary trends. More detailed CPI series are available on the GEOSTAT website.

5.1.3 Statistics are released on a preannounced schedule.

An annual Statistical Calendar for all GEOSTAT publications is published in advance in the Publication calendar on the GEOSTAT website.

5.1.4 Statistics are made available to all users at the same time.

The CPI press release is made available for all interested users receive simultaneously.

5.1.5 Statistics not routinely disseminated are made available upon request.

As a policy, all nonconfidential data are available from GEOSTAT upon request and special compilations can be provided to users. A list of available additional products and their fees is published on the GEOSTAT website.

5.2.1 Documentation on concepts, scope, classifications, basis of recording, data sources, and statistical techniques is available, and differences from internationally accepted standards, guidelines, or good practices are annotated.

GEOSTAT website provides a short description in English and Georgian of the CPI use, methodology, and the list of CPI basket items. It also provides a link for the SDDS metadata, which is the main detailed description of the CPI. However, it does not reflect the latest methodology changes and lacks of detail.¹ The website also has a placeholder for a whole section of metadata but still needs to be populated.

Recommendation:

Produce and disseminate detailed metadata describing the methodology practiced in compilation of Georgian CPI.

5.2.2 Levels of detail are adapted to the needs of the intended audience.

The current limited metadata is not adapted for different audiences. The short methodology description is intended for the general public and a planned CPI handbook and SDDS metadata for more advanced users.

Recommendation:

Develop further and disseminate the different metadata publications.

5.3.1 Contact points for each subject field are publicized.

A general email and telephone contacts are available on the GEOSTAT website and main publications. Main users are directly in contact with specific technical staff or the head of the Price Division. The CPI press release refers to the GEOSTAT website.

5.3.2 Catalogs of publications, documents, and other services, including information on any charges, are widely available.

The GEOSTAT website provides list of all available publications and calendar or publication dates. In addition, a document “Prices for dissemination of statistical data generated beyond the statistical activity program of National Statistics Office of Georgia’’ (Decree #14, 2011, of Board of GEOSTAT) which sets the fees for disseminating additional statistical data.

Table 3.

Data Quality Assessment Framework (July 2003): Summary of Results for Price Statistics (Consumer Price Index)

(Compiling Agency: National Statistics Office of Georgia)

Table 3.

Data Quality Assessment Framework (July 2003): Summary of Results for Price Statistics (Consumer Price Index)

(Compiling Agency: National Statistics Office of Georgia)

Key to symbols: NA = Not Applicable; O = Practice Observed; LO = Practice Largely Observed; LNO = Practice Largely Not Observed; NO = Practice Not Observed; SDDS = Complies with SDDS Criteria
Element	NA	Assessment				Comments
		O	LO	LNO	NO
0. Prerequisites of quality
0.1 Legal and institutional environment			X			No sanctions for nonreporting are stipulated by law.
0.2 Resources				X		The staff and financial resources are inadequate to seriously develop the quality of price statistics.
0.3 Relevance			X			No user group exists for price statistics.
0.4 Other quality management		X
1. Assurances of integrity
1.1 Professionalism		X
1.2 Transparency		X
1.3 Ethical standards		X
2. Methodological soundness
2.1 Concepts and definitions		X
2.2 Scope			X			Coverage restricted to urban-only households. Treatment of owner-occupied housing not clear.
2.3 Classification/sectorization		X
2.4 Basis for recording		X
3. Accuracy and reliability
3.1 Source data			X			Housing weights and price survey inadequate, transactions specifications lack detail.
3.2 Assessment of source data		X
3.3 Statistical techniques			X			Imputation methods and treatment of quality change do not
3.4 Assessment and validation of intermediate data and statistical outputs		X				Meet international standards.
3.5 Revision studies		X
4. Serviceability
4.1 Periodicity and timeliness		X
4.2 Consistency		X
4.3 Revision policy and practice		X
5. Accessibility
5.1 Data accessibility		X
5.2 Metadata accessibility			X			Develop and release detailed methodology for CPI.
5.3 Assistance to users		X

View Table

Table 3.

Data Quality Assessment Framework (July 2003): Summary of Results for Price Statistics (Consumer Price Index)

(Compiling Agency: National Statistics Office of Georgia)

Key to symbols: NA = Not Applicable; O = Practice Observed; LO = Practice Largely Observed; LNO = Practice Largely Not Observed; NO = Practice Not Observed; SDDS = Complies with SDDS Criteria
Element	NA	Assessment				Comments
		O	LO	LNO	NO
0. Prerequisites of quality
0.1 Legal and institutional environment			X			No sanctions for nonreporting are stipulated by law.
0.2 Resources				X		The staff and financial resources are inadequate to seriously develop the quality of price statistics.
0.3 Relevance			X			No user group exists for price statistics.
0.4 Other quality management		X
1. Assurances of integrity
1.1 Professionalism		X
1.2 Transparency		X
1.3 Ethical standards		X
2. Methodological soundness
2.1 Concepts and definitions		X
2.2 Scope			X			Coverage restricted to urban-only households. Treatment of owner-occupied housing not clear.
2.3 Classification/sectorization		X
2.4 Basis for recording		X
3. Accuracy and reliability
3.1 Source data			X			Housing weights and price survey inadequate, transactions specifications lack detail.
3.2 Assessment of source data		X
3.3 Statistical techniques			X			Imputation methods and treatment of quality change do not
3.4 Assessment and validation of intermediate data and statistical outputs		X				Meet international standards.
3.5 Revision studies		X
4. Serviceability
4.1 Periodicity and timeliness		X
4.2 Consistency		X
4.3 Revision policy and practice		X
5. Accessibility
5.1 Data accessibility		X
5.2 Metadata accessibility			X			Develop and release detailed methodology for CPI.
5.3 Assistance to users		X

0.1.1 The responsibility for collecting, processing, and disseminating the statistics is clearly specified.

The GEOSTAT was established as an independent legal entity under the Law on Statistics of December 11, 2009, N 2291–rs to be responsible for compiling and disseminating official statistics. Article 9 of the Charter of GEOSTAT (approved by the Presidential Decree No. 72 on February 1, 2010) mandated GEOSTAT to be in charge of all collection and dissemination of official statistics as well as the improvement in the coverage and quality of official data responsible by GEOSTAT as well as by other government agencies. Article 7 of the Law authorizes the GEOSTAT to work out a statistical activities program; and carry out statistical activities, which sets the central position of the GEOSTAT in the Georgian statistical system.

Accordingly, collecting, compiling and disseminating CPI and PPI and analyzing the inflation dynamics are defined as the main functions of the Price Statistics Division of GEOSTAT. No other institution compiles alternative inflation estimates.

Article 25 of the Law on Statistics authorizes GEOSTAT to request from the administrative bodies and other physical and legal entities and receive all the statistical and other information (including confidential information) from them necessary for carrying out its functions.

Arrangements to promote consistency of methods and results are set up by the Board of the GEOSTAT, which has representatives from other data producing agencies, namely the NBG, the MOE, and the MOF.

In addition to that, the President of Georgia approves annual State Program for Development of Statistics. The compilation and dissemination of price statistics are stated in the State Program (e.g., for current year there is an updates on CPI weights).

0.1.2 Data sharing and coordination among data-producing agencies are adequate.

Article 5 of the Law on Statistics requires that GEOSTAT cooperate and coordinate with the local organizations producing the statistics in order to achieve efficiency. Article 16 of the Law on Statistics stipulates that GEOSTAT coordinates exchange of information among the administrative bodies in order to produce the statistics and facilitates effective implementation of the statistical standards and methodology approved. In addition, there are memorandums of understanding between the GEOSTAT and the MOF, GEOSTAT and Education Quality Development Center, and GEOSTAT and the NBG covering the sharing of macroeconomic data. GEOSTAT is the sole compiler of price statistics.

Within the GEOSTAT, the internal procedures are in place to ensure coordination between various divisions, namely Business Statistics Division, Agriculture and Environmental Statistics Division, Social Statistics Division, Population Census and Demographic Statistics Division, Price Statistics Division. All proposed changes in questionnaires as well as other changes in the production of statistics is preceded by consultations and need to be approved by the Board of the GEOSTAT.

The central role of GEOSTAT in the field of statistics is further reiterated in Article 2 of the Charter of GEOSTAT, which states that the GEOSTAT should work out a unified policy for the field of statistics, prepare and introduce statistical standards and methodology, create and realize statistical classification system, create and improve statistical databases, information banks and networks; and create and approve statistical observance forms for producing official statistics. Such centralized statistical system in principle guards against duplication of efforts and unnecessary burden on respondents. There is no arrangement for regular meetings of all technical staff responsible for macroeconomic statistics. Such meetings provide a comprehensive arena for exchanging information on current and forthcoming projects for statistical development, promoting cross-sectoral data consistency crucial for macro-economic policy making, and coordinating work programs to avoid duplication of effort, ensure coherent application of methodology at all stages of data collection, and enhance effectiveness. Nevertheless, these agencies have several bi-lateral meetings and arrangements for collaboration on data issues e.g., the GEOSTAT has a memorandum of cooperation with the NBG as well as a working group with NBG dealing with CPI. In addition, Vice-President of NBG is GEOSTAT board member, ensuring cooperation at the higher level and there are regular informal contacts with the staff of other data-producing agencies.

Recommendation:

Conduct pre-established, regular meetings, such as one per year, to improve communication among data compilers at NBG, GEOSTAT, and MOF, by discussing issues of common interest, avoid duplication of efforts, and ensure the consistency of macroeconomic statistics (national accounts, monetary, fiscal, and external sector.)

0.1.3 Individual reporters’ data are to be kept confidential and used for statistical purposes only.

GEOSTAT has adequate legal and procedural provisions to ensure confidentiality of individual reporters, and in satisfactorily follow these in practice. Article 26 of the Law on Statistics states that statistical data shall be public except for the data which allows for identification of observation unit. Article 28 states that the confidential statistical data shall not be issued or disseminated or used for a nonstatistical purpose with exceptions envisaged by the Georgian legislation. When producing the official statistics it is obligatory to destroy or store separately the identity data including the questionnaires containing such data. According to Article 29 of the Law, the employees of the GEOSTAT should not use or disseminate confidential statistical data either for the personal, academic, research or any other activities. Violation of these provisions will lead to imposing a disciplinary responsibility against employee, notably in view of the guilt or/and the damage inflicted the Executive Director shall impose the following disciplinary penalties: warning, withholding a salary, and/or dismissal.

GEOSTAT staff are required to keep individual data confidential by Law and the staff is well informed by the requirement. Access to individual data both to the actual forms and to the computer records is restricted to the appropriate staff. The procedures are adopted that prevent residual disclosure. There are special aggregation rules that ensure that unintended disclosure does not occur. Respondents to surveys are informed about the confidentiality of their responses (relevant statement is included in each survey form). Archive procedures ensure appropriate storage of information with clearly articulated rules.

0.1.4 Statistical reporting is ensured through legal mandate and/or measures to encourage response.

Article 25 of the Law on Statistics sets the obligation to provide statistical and other information to GEOSTAT, notably upon the request and according to the legislation of Georgia the administrative bodies shall be obliged to provide the GEOSTAT with the information on physical and private entities (including confidential information) available to them. However, no sanctions for nonreporting or misreporting are stipulated by the Law and, due to lack of legal and administrative support, very senior staff at times is required to intervene in order to get the respondents to collaborate.

With its price surveys nonreporting has not been an issue for GEOSTAT and no deterioration in response rates has been observed. However, the response rates have declined in the larger annual Business Surveys also used for deriving the PPI weights.

Recommendations:

Enact appropriate amendments to the Law of Georgia on Official Statistics to reinforce mandatory reporting of statistical data and ensure application of sanctions for nonreporting. If reporting is mandatory, penalties for noncompliance (including misreporting) act as effective deterrent, even if such provision rarely needs to be employed.

Establish mechanisms in place to promote the voluntary reporting of data.

0.2.1 Staff, facilities, computing resources, and financing are commensurate with statistical programs.

Staff resources at the Price Statistics Division (PSD) are barely sufficient for carrying out the day-to-day compilation work for both CPI and PPI. To further improve the quality of its statistics and undertake tasks, like establishing central price collection for complex products for CPI and PPI, and participating in the International Comparison Program (ICP), additional staff resources are needed. The current staff level is fully occupied with the routine monthly cycle and tasks related to issues like identifying alternative data sources, evaluating and adjusting the weight data against additional information, improving the quality adjustment methodology, etc. The Price division employs 7 central staff, all with university education with economics as the main subject. All staff members divide their time between the CPI and the PPI, roughly in a 70 to 30 proportion, respectively. In addition, there are 20 field collectors in the regions who work with the data collection and receive direct guidance and training from the PSD staff. This is, by international comparison, a small organisation for compiling price statistics. Staff turnover has been very slow in recent years regardless of the significantly below-average remuneration within the public sector.

All employees have their personal computers, and the network services within GEOSTAT and between the regional offices seem sufficient. While new statistical software licences have been acquired with donor assistance, there are issues with maintaining other IT infrastructure up-to-date. The data processing resources have recently improved significantly with the implementation of hand held computers (USAID funded) and accompanied software for CPI data collection and transfer, as well as a Delphi based index compilation system. However, the PPI compilation process still relies on out-dated technology that ties the scarce staff resources at the central office. Current 3-year bilateral cooperation with Statistics Sweden is expected to address these issues shortly.

The GEOSTAT makes good use of its existing resources but, overall, GEOSTAT suffers from inadequate resources, as acknowledged by the data users. The limited resources partially explain a great disparity in average salaries between staff of GEOSTAT and other government agencies. To supplement its limited resources, GEOSTAT participates in various statistical programmes with the financial supports from donors. While these partnerships provide significant benefits to the GEOSTAT, the financial dependency on donors increases the risk on sustainability of these data programs. The new GEOSTAT central office facilities are appropriate but the long distance from other government offices and the GEOSTAT Tbilisi office may, to a degree, hamper day-to-day communication within the organization and with its key users.

Recommendation:

Increase the overall staff, IT, and financial resources for the GEOSTAT.

0.2.2 Measures to ensure efficient use of resources are implemented.

The GEOSTAT Board provides overall supervision of the organization of statistical work and oversees strategic plans for statistical development. In order to ensure the efficient use of resources the following measures are undertaken: (i) the thorough planning of statistical works (on multi-annual, annual and quarterly basis); (ii) the permanent monitoring of the appropriate use of resources according their destination. The Internal Audit Division carries out inspections of the staff of regional staff and monitors the resource use within the budgeting and execution of the Annual and Mid Term Actions Plans.

Special attention is granted to the improvement of the staff performance, especially its qualifications and abilities. Time to time, staff receive differentiated bonuses based on the assessment of the heads of divisions.

Outside consultants are widely used to evaluate statistical methodologies and compilation systems.

0.3.1 The relevance and practical utility of existing statistics in meeting users’ needs are monitored.

The relevance of statistical program is ensured by the Board of the GEOSTAT, which consists of seven members and a Chairman, with the following composition: one representative of the NBG, one representative of the Ministry of Economy and Sustainable Development, one representative of the MOF, and other five members, which represent private sector. The Parliament of Georgia should give consent to appoint the members of the Board (Law on Statistics, Article 11). The Board also serves as an advisory group to inform statistical processes. In addition, Article 5 of the Law on Statistics encourage cooperation with the international organizations in order to introduce the international practice and methodology and share relevant experience based on the agreements and treaties concluded with the international organizations engaged in this field.

Article 7 of the Law on Statistics stipulates that GEOSTAT should produce the statistics that are approved and or recognized by the Board of the GEOSTAT, and also should need arise; the GEOSTAT is authorized to produce the statistics which is not envisaged by the statistical activity program. Executive Director submits the statistical activity program for approval to the President of Georgia (Article 9 of the Law on Statistics).

In addition, to enhance the relevance of its statistics, GEOSTAT consults various use groups both on a regular and ad hoc basis. Eurostat (as one of users) performs regular quality checks of reported data. Their requirements are monitored and addressed in consistent manner. The broader group of users is approached directly in some statistical events (e.g., during celebration of International Statistics Day). Users are also encouraged to provide feedback via GEOSTAT official website and its social networks (e.g., Facebook). However, there is no regular venue for the users to discuss the issues related to the price statistics and their development.

Recommendation:

Establish a users’ advisory group for price statistics that meets on a regular basis and includes all types of users.

0.4.1 Processes are in place to focus on quality.

The GEOSTAT commitment to quality is stipulated by law and well publicized. Article 1 of the Law on Statistics states that its goal is to ensure producing independent, objective and reliable statistics in the country based on the internationally recognized basic principles of statistics. Reflecting the spirit of this law, the GEOSTAT’s mission statement emphasizes the improvement and harmonization of statistical activities and the maintenance of independence, accuracy, relevance, integrity, timeliness, and professional standard of statistical information produced in Georgia. GEOSTAT is finalizing the NSDS that includes special chapter on quality.

Quality policy is based on the provisions of national and EU legislation, Strategy of GEOSTAT, European Statistics Code of Practice, user needs and expectations. It defines overall intentions and directions of institution related to quality. The management of the institution is giving priority to building trust and increasing the credibility of the statistics produced by GEOSTAT. From the ROSC Users’ survey, users indicated that in the last few years GEOSTAT disseminates more statistics, survey results, and information on methodology as well as becomes more responsive to their queries.

Conscious of value of independent quality assessment, GEOSTAT regularly participates in international evaluations, such as the IMF ROSC Data module and the World Bank’s statistical capacity indicators. It also conducts regular communications with Eurostat on data quality issues.

0.4.2 Processes are in place to monitor the quality of the statistical program.

The GEOSTAT regularly reviews and plans improvements to their internal processes. More formal annual Statistical Program is produced annual and approved by the President of Georgia. The newly created Monitoring Department is responsible for operating the monitoring, control and internal audit. The Internal Audit Division is established in GEOSTAT for systematic internal reviews of GEOSTAT processing including data collection and processing.

The expert guidance on the quality of their statistics is also ensured vie peer reviews within the framework of cooperation with other statistics agencies. GEOSTAT has established long-term cooperation with Statistics Sweden. Strategy of cooperation in price statistics is based on three-year plan of Developing Georgian CPI and PPI. There is also established Cooperation with the Central Statistical Office of Latvia.

0.4.3 Processes are in place to deal with quality considerations in planning the statistical program.

The Board of GEOSTAT coordinates the economic statistics work program, including explicit decisions about quality and trade-offs among the dimensions of quality (e.g., resource availability, timeliness, and accuracy/reliability.) The quality dimensions are also recognized explicitly in the NSDS.

1.1.1 Statistics are produced on an impartial basis.

Article 6 of the Law on Statistics stipulates that GEOSTAT independently carries out its activities based on the Georgian legislation. Article 1 of the Charter of GEOSTAT, 2010 further elaborate that the GEOSTAT carries out its activities based on the Georgian legislation, internationally accepted statistical principles, Law on Statistics, Law of Georgia on Legal Entity of Public Law, this Charter, GEOSTAT Board’s regulations and other normative acts. The GEOSTAT acquires rights and obligations to implement the goals established and functions assigned to it. There is no external pressure on the GEOSTAT with respect to the content or release of the statistics.

On the above premise, all official statistics including price statistics are compiled on an impartial basis. The basic principles governing the collection, processing, and dissemination of statistics in Georgia includes professional independence, objectivity, reliability, confidentiality of statistical data, and efficiency (Law on Statistics, Article 4).

The Executive Director of GEOSTAT is appointed by Board of the GEOSTAT for the term of 4 years and may be dismissed by the President of Georgia only under special circumstances (Article 8 of the Law on Statistics). The Executive Director is authorized to invite foreign or local experts on the contractual basis in accordance with the recommendations of the members of Board of the GEOSTAT in order to ensure effective operation of the GEOSTAT (Article 9.2).

Professional competency plays a key role in the promotion practices in the GEOSTAT and professional enhancement is encouraged.

1.1.2 Choices of sources and statistical techniques, as well as decisions about dissemination, are informed solely by statistical considerations.

The choices of sources, statistical techniques, and dissemination of price indices are made solely by the GEOSTAT based entirely on statistical considerations. There has been no instance of ministerial interference in the choice of the statistical sources and methods.

1.1.3 The appropriate statistical entity is entitled to comment on erroneous interpretation and misuse of statistics.

The GEOSTAT provides explanatory materials in the price statistics press releases and on its website. The GEOSTAT monitors media coverage of its statistical products and has the authority to comment on erroneous interpretation and misuse of the statistics that it produces. At times, senior staff of GEOSTAT corrected the misinterpretation of statistics by media.

1.2.1 The terms and conditions under which statistics are collected, processed, and disseminated are available to the public.

The terms and conditions governing the collection of statistics are published in the Law on Official Statistics and in Charter of GEOSTAT, which are widely available to the public, including from the GEOSTAT website http://www.geostat.ge/index.php?action=page&p id=29&lang=eng. In addition to legal provisions, the GEOSTAT website contains other relevant documents, such as the National Strategy of Development of Statistics, annual report of the GEOSTAT, information about the SDDS, and information about individual statistical products.

1.2.2 Internal governmental access to statistics prior to their release is publicly identified.

The GEOSTAT disseminates the price statistics to all users simultaneously. There is no governmental access to statistics prior to release.

1.2.3 Products of statistical agencies/units are clearly identified as such.

Products of the GEOSTAT are clearly identified as such by its name and logo. The price statistics in the NBG’s publications and website identify the GEOSTAT as the source. However, in the GEOSTAT publications, there are cases, in which that attribution is not made to the source, when statistics from other data-producing agencies is reproduced but does not concern the dissemination of price statistics.

1.2.4 Advance notice is given of major changes in methodology, source data, and statistical techniques.

The GEOSTAT provides advance notice about major methodology changes in price statistics in the Annual and Mid-Term Action Plans as well as in the National Strategy for the Development of Statistics in Georgia (2011-2014), available on the GEOSTAT website (http://www.geostat.ge/index.php?action=page&p_id=794&lang=eng). Advance notice was provided for major changes such as the PPI weight revisions, seasonally adjusted estimates, changes in business survey questionnaire, etc. For the upcoming PPI revision a note will be added on the GEOSTAT website and PPI press release.

1.3.1 Guidelines for staff behavior are in place and are well known to the staff.

On its website, the GEOSTAT states that the Fundamental Principles of Official Statistics developed by United Nations Statistical Commission were at core in drafting the Law on Statistics and consequently establishing the GEOSTAT (http://www.geostat.ge/index.php?action=page&p_id=32&lang=eng). The Fundamental Principles stipulate that for retaining trust in official statistics, the statistical agencies need to act according to strictly professional considerations, including professional ethics. New staffs are made aware of the ethical standards when they join the GEOSTAT.

Guidelines for Effective Communication, a code of conduct–document last updated in August 2011 and approved by the Executive Director, gives further guidance for the GEOSTAT staff on how to interact with other staff and external stakeholders.

2.1.1 The overall structure in terms of concepts and definitions follows internationally accepted standards, guidelines, or good practices.

With some deficiencies, the concepts and definitions used to compile the PPI follow broadly the guidelines in the 1993 SNA and the PPI Manual. Instead of output, turnover is used at all aggregation levels, and the PPI is not compiled by product detail. Furthermore, only products under the primary activity of the enterprise are included for pricing and assigned weights. Otherwise the industrial and commodity detail for pricing purposes are sufficient and provide reasonable breakdown of the industrial sector, even though the PPI is not compiled and disseminated based on product classification. The separate Construction sector PPI is in effect an input (material only) PPI instead of an output PPI.

Recommendation:

Apply the output concept for the PPI weights at higher aggregation levels instead of turnover. Include also the products from significant secondary activities into the PPI sample.

2.2.1 The scope is broadly consistent with internationally accepted standards, guidelines, or good practices.

The scope of main PPI includes industrial production activities (mining, manufacturing and electricity, gas and water supply) and is broadly in accordance with international guidelines. However, product based PPIs, useful for internal validation and imputation purposes and for National Account deflation purposes, are not compiled. All resident market enterprises are in scope but only products under their primary activity are included into the PPI within an industry. At higher aggregate level, combining industries together, total turnover is utilized. The international recommendation is to include maximum feasible production, including primary and secondary production. At the headline PPI level this is achieved but within an industry the relevant importance of different products may not be fully representative.

The industrial output is some 20 percent of the total output and significant additional development work has been put to extend the coverage to the agricultural sector, construction and select service industries. The construction and freight transport PPIs are currently produced in addition to the industrial core as separate indicators.

Recommendation:

Consider compiling the PPIs also by product classification. This will also serve in improving imputation method within the PPI and make it more valuable for some key users.

2.3.1 Classification/sectorization systems used are broadly consistent with internationally accepted standards, guidelines, or good practices.

The PPI utilizes standard European industrial classifications (NACE) for classifying the market enterprises in the Business Survey and corresponding CPA for their products. The product classification is only used to derive estimates within the most detailed industrial activities in the PPI.

2.4.1 Market prices are used to value flows and stocks.

Internationally acceptably, market turnover at basic prices is used for the weight structure, excluding invoiced VAT, excise taxes, supply-and-sales trade margins, and transportation costs.

2.4.2 Recording is done on an accrual basis.

Actual prices from existing invoices are collected and they reflect prices received by the producer ‘at the factory gate’, excluding sales taxes and separately billed transport costs. More complex products where product sale and delivery may significantly differ in time and by customer type are specified in product descriptions.

2.4.3 Grossing/netting procedures are broadly consistent with internationally accepted standards, guidelines, or good practices.

There is no netting procedure in the PPI since it is a gross-weighted index. No stage of processing indices, for which net product weights would need to be determined, is currently produced either.

3.1.1 Source data are obtained from comprehensive data collection programs that take into account country-specific conditions.

The PPI is based on (i) industrial turnover weights from the Business Survey and product weights from turnover breakdown within sampled enterprises’ main products, and (ii) the price survey of sampled enterprises’ main product transactions. Generally they provide adequate basis for the compilation of the PPI, but the completeness of the Business Register behind the sample, especially for some industries, may not provide an up-to-date source. The reliance of a standard paper questionnaire for all industries makes it possibly difficult to capture different and changing pricing policies across industries. The PPI weighting structure is based solely on the turnover by industry, not the market output. In addition, within the most detailed industry level the total enterprise turnover is distributed to a sample of products under the main activity only, excluding secondary products.

3.1.2 Source data reasonably approximate the definitions, scope, classifications, valuation, and time of recording required.

The source data are reasonably consistent with the definitions, scope, and classifications of PPI statistics. The PPI weight data are currently derived from the business register which is updated continuously but more frequently for the larger enterprise than the small. The prices are actual invoiced prices but transaction specifications for some industrial products may leave it unclear when the production, delivery or sales actually take place.

3.1.3 Source data are timely.

Price collection finishes on the 8^th of the following month corresponding typically 80–90 percent response rate for the price survey. The annual turnover estimates are available and incorporated to the business register within 4-6 months after the survey period.

3.2.1 Source data—including censuses, sample surveys, and administrative records—are routinely assessed, e.g., for coverage, sample error, response error, and nonsampling error; the results of the assessments are monitored and made available to guide statistical processes.

The source data validation is generally adequate although there are no adjustments for the PPI weight data that would improve their accuracy relative to the actual turnover and production. Using output estimates is planned for the PPI revision in 2012.

For business survey, data entry is done by the GEOSTAT central office. The reported data go through initial plausibility and consistency checks. High-value transactions are confirmed with respondents. Survey errors are routinely assessed. If sample error is high, the stratum is collapsed to an upper digit level. Confidence intervals are calculated for all variables to assess the accuracy. Nonresponses are sorted by 7 reasons and analyzed (88 percent of nonresponse rate pertain to small enterprises).

For the price survey, the data collectors check and confirm the paper forms for large changes from the previous month’s prices before sending to central office supervisors who go through all forms again. At the time of entering the data into the PPI database large changes are evaluated and confirmed directly with the enterprises if necessary.

3.3.1 Data compilation employs sound statistical techniques to deal with data sources.

Statistical techniques are mostly adequate but certain practices fall behind the international standards. The accuracy of data collection method relies solely on the respondents’ correct understanding of the questionnaire and methods to treat quality changes and missing prices do not reflect international recommendations and best practices.

Missing prices are carried forward until the index revision every other year, even in case the products become permanently unavailable. This is not a recommended practice, as missing prices should be imputed and products permanently missing should be replaced. Quality changes are generally not assessed for the degree they represent pure price change. Even though changes happen infrequently, no record of the replacements or specifications changes is kept when changes take place. The current PPI software does not allow for better handling of these changes but GEOSTAT is currently developing a new system for the PPI, expected to be operational already from January 2012 when the next index revision takes place.

For seasonal products the respondent enterprises need to fill in the questionnaire the December base prices even for unavailable products in January when the survey begins. They are instructed to use the last available price from previous year but it leaves a possible issue with year-to-year consistency in the long-term index series. There are a limited number of seasonal products in the PPI but their off-season missing prices, as with other temporary and permanently missing prices, are currently carried forward until they appear the following season.

Recommendations:

Update the related methods of imputing missing prices, treating of quality changes, and introduction of new products into the PPI. All missing prices should be imputed; quality changes should be accounted for using either implicit or explicit quality methods; or permanently unavailable items should be replaced. Implement appropriate imputation methods into the new PPI software being developed.

Consider estimating the December base price for seasonal products based on an average over a longer time period that would include actual prices for each transaction.

3.3.2 Other statistical procedures (e.g., data adjustments and transformations, and statistical analysis) employ sound statistical techniques.

The PPI weights are based on gross sales, as is acceptable by international standards. The weights reference period refer to a year while the index and price reference periods to the month of December. The detailed product weights within each industry are derived from the turnover share of sampled enterprises main products, excluding secondary products.

The PPI is compiled using an internationally accepted formula, the weight updates are sufficiently frequent and longer time series are compiled linking annual indices together. Each product specification within an industry gets a weight based on the company weight and the product weight within the company. A standard Laspeyres formula based on long-term price changes is then applied.

Recommendation:

In order to implement sample changes consider changing the long-term elementary aggregate formula with either a weighted geometric average or the modified Laspeyres formula based on short-term price changes. Price-update the weights to align with the index reference period.

3.4.1 Intermediate results are validated against other information, where applicable.

Difference between corresponding CPI and PPI products are compared and differences explained.

3.4.2 Statistical discrepancies in intermediate data are assessed and investigated.

Difference between corresponding CPI and PPI products are compared and differences explained.

3.4.3 Statistical discrepancies and other potential indicators of problems in statistical outputs are investigated.

Discrepancies with PPI series and global commodity prices and local CPI series are kept under review and reasons for discrepancies sought for.

3.5.1 Studies and analyses of revisions are carried out routinely and used internally to inform statistical processes (see also 4.3.3).

The PPI estimates are released final as a policy. Some internal analysis on the impact of weight structure changes is carried out.

4.1.1 Periodicity follows dissemination standards.

The PPI is compiled and released monthly, as required in the SDDS.

4.1.2 Timeliness follows dissemination standards.

The PPI is released just 15 days after the end of the reference month, meeting the SDDS requirements.

4.2.1 Statistics are consistent within the dataset.

The aggregation structure follows industrial activity only and hence has no internal consistency issues with respect to aggregation.

4.2.2 Statistics are consistent or reconcilable over a reasonable period of time.

Monthly long time-series are available from year 2000 onwards. The data are published on series of quarterly and annual publications, available on the GEOSTAT website. At the time of methodological changes, the series are linked together to form long time-series. There is a policy of not revising the historical series, which is in line with international practice.

4.2.3 Statistics are consistent or reconcilable with those obtained through other data sources and/or statistical frameworks.

The PPI estimates are routinely compared with the corresponding sub-group CPI estimates and are largely consistent with them. The PPIs are also increasingly being used in the deflation within the national accounts.

4.3.1 Revisions follow a regular and transparent schedule.

There are no revisions to the PPI series once disseminated. The PPI weight revision schedule of every two years has been in use since year 2000 and is explained to the users.

4.3.2 Preliminary and/or revised data are clearly identified.

Following internationally accepted practice, the PPI data are final upon release.

4.3.3 Studies and analyses of revisions are made public (see also 3.5.1).

Not applicable since data are final.

5.1.1 Statistics are presented in a way that facilitates proper interpretation and meaningful comparisons (layout and clarity of text, tables, and charts).

The PPI data are released on the GEOSTAT website without analysis or commentary. The data are published as a set of Microsoft Excel-files that include total and sub-industry level short-term (month-on-month) and long-term (12-month change and period average) changes. The dissemination structure is common with the CPI and may be confusing for average user analyzing PPI trends over time. The Quarterly Bulletin includes longer consistent time-series for sub-industries.

Even though the data are available, some users may find the presentation difficult to interpret, especially since the PPI release does not include any commentary in form of text or graphs.

Recommendation:

Release the PPI with a monthly press release explains both recent changes in the index as well as showing longer-term trends.

5.1.2 Dissemination media and format are adequate.

The monthly PPI data by industry are available on the GEOSTAT website. Longer, consistent time-series are published on the Quarterly Bulletin, also on the website.

5.1.3 Statistics are released on a preannounced schedule.

An annual Statistical Calendar for all GEOSTAT publications is published in advance in the Publication calendar on the GEOSTAT website.

5.1.4 Statistics are made available to all users at the same time.

The PPI data are first released through the GEOSTAT website and is available for all users at the same time.

5.1.5 Statistics not routinely disseminated are made available upon request.

As a policy, all nonconfidential data are available from GEOSTAT upon request and special compilations can be provided to users. A list of available additional products and their fees is published on the GEOSTAT website.

5.2.1 Documentation on concepts, scope, classifications, basis of recording, data sources, and statistical techniques is available, and differences from internationally accepted standards, guidelines, or good practices are annotated.

There are currently no written metadata on the Georgian practices available from the GEOSTAT, even though the website provides the link to the SDDS metadata and international price statistics manuals (CPI and PPI Manuals). Need for improving the accessibility of metadata in general and within the price statistics is acknowledged by the GEOSTAT and requested by users. Improvement in this field is a key area of the ongoing 3-year cooperation program with the Statistics Sweden.

Recommendation:

Develop and disseminate metadata describing the concepts and methods to compile the PPI.

5.2.2 Levels of detail are adapted to the needs of the intended audience.

Currently the only PPI metadata available is the SDDS metadata on the dsbb.imf.org. The GEOSTAT is planning to produce a short metadata for the general user and a more detailed PPI Handbook during next year.

Recommendation:

Produce and disseminate both detailed (for internal use and advanced users) and more general information about the use, compilation practices and methodology of the PPI.

5.3.1 Contact points for each subject field are publicized.

A general email and telephone contacts are available on the GEOSTAT website and main publications. Main users are directly in contact with specific technical staff or the head of the Price Division.

5.3.2 Catalogs of publications, documents, and other services, including information on any charges, are widely available.

The GEOSTAT website provides list of all available publications and calendar or publication dates. In addition, a document “Prices for dissemination of statistical data generated beyond the statistical activity program of National Statistics Office of Georgia” (Degree No. 14, 2011, of Board of GEOSTAT) which sets the fees for disseminating additional statistical data.

Table 4.

Data Quality Assessment Framework (July 2003): Summary of Results for Price Statistics (Producer Price Index)

(Compiling Agency: National Statistics Office of Georgia)

Table 4.

Data Quality Assessment Framework (July 2003): Summary of Results for Price Statistics (Producer Price Index)

(Compiling Agency: National Statistics Office of Georgia)

Key to symbols: NA = Not Applicable; O = Practice Observed; LO = Practice Largely Observed; LNO = Practice Largely Not
Observed; NO = Practice Not Observed; SDDS = Complies with SDDS Criteria
	NA	Assessment				Comments
Element		O	LO	LNO	NO
0. Prerequisites of quality
0.1 Legal and institutional environment			X			No sanctions for nonreporting are stipulated by law.
0.2 Resources				X		The resources are inadequate to develop the quality of price statistics. The PPI IT system needs replacing.
0.3 Relevance			X			No user group exists for price statistics.
0.4 Other quality management		X
1. Assurances of integrity
1.1 Professionalism		X
1.2 Transparency		X
1.3 Ethical standards		X
2. Methodological soundness
2.1 Concepts and definitions			X			Industry turnover is used instead of production value. Only primary
2.2 Scope			X			activity products included.
2.3 Classification/sectorization		X				Product PPIs and not produced.
2.4 Basis for recording		X
3. Accuracy and reliability
3.1 Source data			X			Weights at detailed level refer to only main activity turnover. Incomplete product specifications.
3.2 Assessment of source data		X
3.3 Statistical techniques			X			Treatment of missing prices and quality adjustment methods are inadequate. No product replacement.
3.4 Assessment and validation of intermediate data and		X				No supplementary data collection.
statistical outputs
3.5 Revision studies		X
4. Serviceability
4.1 Periodicity and timeliness		X
4.2 Consistency		X
4.3 Revision policy and practice		X
5. Accessibility
5.1 Data accessibility			X			No analysis provided. Consistent time series need to be reconstructed monthly apart from Quarterly publication.
5.2 Metadata accessibility				X		No metadata available.
5.3 Assistance to users		X

View Table

Table 4.

Data Quality Assessment Framework (July 2003): Summary of Results for Price Statistics (Producer Price Index)

(Compiling Agency: National Statistics Office of Georgia)

Key to symbols: NA = Not Applicable; O = Practice Observed; LO = Practice Largely Observed; LNO = Practice Largely Not
Observed; NO = Practice Not Observed; SDDS = Complies with SDDS Criteria
	NA	Assessment				Comments
Element		O	LO	LNO	NO
0. Prerequisites of quality
0.1 Legal and institutional environment			X			No sanctions for nonreporting are stipulated by law.
0.2 Resources				X		The resources are inadequate to develop the quality of price statistics. The PPI IT system needs replacing.
0.3 Relevance			X			No user group exists for price statistics.
0.4 Other quality management		X
1. Assurances of integrity
1.1 Professionalism		X
1.2 Transparency		X
1.3 Ethical standards		X
2. Methodological soundness
2.1 Concepts and definitions			X			Industry turnover is used instead of production value. Only primary
2.2 Scope			X			activity products included.
2.3 Classification/sectorization		X				Product PPIs and not produced.
2.4 Basis for recording		X
3. Accuracy and reliability
3.1 Source data			X			Weights at detailed level refer to only main activity turnover. Incomplete product specifications.
3.2 Assessment of source data		X
3.3 Statistical techniques			X			Treatment of missing prices and quality adjustment methods are inadequate. No product replacement.
3.4 Assessment and validation of intermediate data and		X				No supplementary data collection.
statistical outputs
3.5 Revision studies		X
4. Serviceability
4.1 Periodicity and timeliness		X
4.2 Consistency		X
4.3 Revision policy and practice		X
5. Accessibility
5.1 Data accessibility			X			No analysis provided. Consistent time series need to be reconstructed monthly apart from Quarterly publication.
5.2 Metadata accessibility				X		No metadata available.
5.3 Assistance to users		X

0.1.1 The responsibility for collecting, processing, and disseminating the statistics is clearly specified.

For budget monitoring and management purposes, the MOF collects and compiles data covering the operations of the consolidated central government (“State Budget,”) local governments, and the consolidated general government under the provisions of the Budget Code (No. 2440-IIs of December 18, 2009) and the annual budget laws.²

Under Decree No. 241, article 61.e of April 20, 2011 the Fiscal Forecasting Department (FFD) of the MOF is assigned responsibility for collecting, processing, and disseminating information on general government’s finances in accordance with the budget classification system. As part of the reform of public sector accounting in Georgia, in 2008 the existing budget classification was replaced with the economic classification of the Government Finance Statistics Manual 2001 (GFSM 2001). GFS, compiled on a cash basis in accordance with the methodology of the GFSM 2001, are an integral part of fiscal policy formulation. GFS are published on the MOF’s website and reported to the IMF for publication in the IMF’s International Financial Statistics (IFS) and Government Finance Statistics Yearbook (GFSY).

0.1.2 Data sharing and coordination among data-producing agencies are adequate.

Formal and informal arrangements exist for the exchange of data with other data producing agencies (both inside and outside the MOF.) On a formal basis—through a letter signed by the Minister of Finance—data are obtained from other government agencies, and local governments. The letter defines the required data, the level of detail, the periodicity and timeliness, and the format of the data transmission. Also, through a letter signed by the Head of FFD, data are obtained from other departments in the MOF. While management of the MOF clearly demonstrates the commitment to improve data quality through bi-lateral meetings and collaboration with other data producing agencies, there is no arrangement for regular meetings of all technical staff responsible for macroeconomic statistics. Such meetings provide a comprehensive arena for exchanging information on current and forthcoming projects for statistical development, promoting cross-sectoral data consistency crucial for macro-economic policy making, and coordinating work programs to avoid duplication of effort, ensure coherent application of methodology at all stages of data collection, and enhance effectiveness. No specific mechanisms exist to maintain close liaison between the FFD and the users of the fiscal statistics.

Recommendation:

Establish periodic, regular meetings with the technical data compilers of macroeconomic statistics at the NBG and GEOSTAT.

0.1.3 Individual reporters’ data are to be kept confidential and used for statistical purposes only.

Confidentiality of the data is not normally applicable to general government units. The General Administrative Code (2181 of June 25, 1999) states that all central government units should make their information public (i.e., to any public or private sector entity) no later than ten days after the request, unless such information is declared as being secret according to the Law of Georgia on Official Secrecy (No. 455-Is of October 29, 1996).

0.1.4 Statistical reporting is ensured through legal mandate and/or measures to encourage response.

By decrees of the Minister of Finance, the source data producing departments in the MOF provide data to the FFD for GFS compilation. Mechanisms exist for reporting of local government data to the Local Government Division in the MOF’s Budget Department.

The providers of source data are aware that their data are used by the FFD for GFS compilation and dissemination.

0.2.1 Staff, facilities, computing resources, and financing are commensurate with statistical programs.

The number of staff is adequate for the compilation and dissemination of cash-based GFS. Staff retention is high. Three staff members in the FFD compile GFS.

Knowledge of the GFSM 2001 methodology is very good, and two staff members have attended the IMF’s GFS training courses on the GFSM 2001 methodology. In other MOF departments, knowledge of the GFSM 2001 methodology is also good. The FFD provided internal training on the economic and functional classifications of the GFSM 2001 when the budget classification was replaced in 2008 with the GFSM 2001 classifications.

Sufficient computer resources are allocated. All fiscal data compilation and dissemination by the MOF are automated. The FFD staff members each have a computer. The MOF is accommodated in a relatively new building with more than adequate office furniture and equipment.

Funding is secure and senior management advised that additional funding will be made available for future expansion of GFS as accrual accounting is introduced under the accounting reforms for public sector accounting.

0.2.2 Measures to ensure efficient use of resources are implemented.

There are no formal processes for the review of staff performance. When necessary, the MOF seeks outside expert assistance to evaluate methodologies and compilation systems; for example, accounting and GFS advice have been an integral part of the accounting reform.

No separate cost information on the compilation of GFS is available as the allocation of resources is part of the overall management process of the MOF.

0.3.1 The relevance and practical utility of existing statistics in meeting users’ needs are monitored.

The use of GFS is largely limited to users within government and international organizations. GFS is an integral part of the budget process and fiscal forecasting and policy making. Although there is regular contact with users in the MOF, the NBG, GEOSTAT, and the IMF, there is no formal consultation with external users. There has been little contact with external users since the MOF commenced dissemination of GFS on their website, as data and methodological requirements have generally been met by material on the website. However, the MOF promptly and readily responds to users’ requests.

No special studies are undertaken to identify emerging data requirements. The MOF monitors developments in international statistical and accounting standards.

Recommendation:

Introduce a structured and periodic process of consultation with users.

0.4.1 Processes are in place to focus on quality.

The GFS are compiled from accounting data which are subject to the application of the budget law and accounting standards, audit, and review by the parliament.

Particular attention is placed on the quality of accounting data. The ongoing reform of public sector accounting included the adoption in 2008 of the GFSM 2001 classification as the budget classification for central and local governments. This program will see the changing of accounting standards and procedures to adopt the International Public Sector Accounting Standards (IPSASs) by 2020. Adoption of the IPSASs includes the implementation of accrual accounting.

0.4.2 Processes are in place to monitor the quality of the statistical program.

The MOF uses various means to monitor the quality of GFS. Central government and local governments use the same chart of accounts, which enhances the consistency of the data reported. Annual data for central government and local governments are audited by the Chamber of Control against published accounting standards.

The FFD verifies the quality of the monthly source data by comparing the data with those of the previous period. Large changes in trends are also investigated. The FFD relies on the professional judgment of the staff working with the GFS data.

There are no surveys using estimates. Quality control processes for GFS compilation have not been formally documented.

0.4.3 Processes are in place to deal with quality considerations in planning the statistical program.

Quality considerations are taken into account in the work program planning process; for example, the ongoing accounting reform which includes the full implementation of the GFSM 2001 methodology.

The FFD made a trade-off between timeliness and accuracy in the case of GFS for the general government sector, with data being released two months, rather than the preferred one month, after the reference month. GFS for the central government are released one month after the reference month.

There are no systematic arrangements in place to obtain feedback from users of GFS on the quality of the statistics.

1.1.1 Statistics are produced on an impartial basis.

There are no specific laws that establish the professional independence of those responsible for GFS compilation. Fiscal data are compiled under the budgetary laws primarily for purposes of budget monitoring and fiscal policy analysis, and for reporting to international organizations in accordance with international standards. These laws and standards establish detailed procedures to be followed for all aspects of data collection and processing and hence ensure the production of fiscal data on an impartial basis. The GFS compilers cannot change any of the source data provided by the Treasury and other MOF Departments, unless such changes are the result of revisions.

Recruitment is based on relevant expertise and educational qualifications and in accordance with The Law of Georgia on the Public Service (No. 1022 of October 31, 1997). Staff retention is very good. Two out of three GFS staff members have attended the IMF’s GFS courses on the GFSM 2001 and on-the-job training is provided internally.

1.1.2 Choices of sources and statistical techniques, as well as decisions about dissemination, are informed solely by statistical considerations.

The GFS compilers are free of political influence in the choice of the most appropriate data sources and methods for compiling GFS, and changes in the statistical procedures are made on the basis of technical rather than political criteria. Data sources are selected according to both the basis of recording and the availability of the information needed to compile and disseminate fiscal statistics.

Selection of statistics for publication or other dissemination is in accordance with the recommendations of the GFSM 2001 and the timing of release follows the requirements of the SDDS.

1.1.3 The appropriate statistical entity is entitled to comment on erroneous interpretation and misuse of statistics.

Apart from international organizations, use of GFS is very limited outside the government sector in Georgia. Generally, erroneous interpretation and misuse of statistics are rare. Nevertheless, GFS compilers are allowed to provide expert advice on technical aspects of GFS and to respond to public misinterpretation of statistics. Data provided to the GEOSTAT and the NBG for dissemination in their media are not accompanied by any explanatory material to avoid misinterpretation. Extensive explanatory material is provided by the MOF when the State Budget is tabled in Parliament.

1.2.1 The terms and conditions under which statistics are collected, processed, and disseminated are available to the public.

The current compilation of fiscal data takes place under the provisions of the Budget Code (No. 2440-IIs of December 18, 2009) and annual budget laws, as it is done mainly for budget monitoring and management purposes. Information about this law, like all other government laws, is freely available to the public. GFS published by GEOSTAT and the NBG are sourced to the MOF.

1.2.2 Internal governmental access to statistics prior to their release is publicly identified.

The MOF provides GFS to the NBG two to three days prior to the simultaneous release of GFS on the MOF’s and NBG’s websites. This is to enable the NBG to prepare the National Data Summary Page. Generally, there is no other internal government access prior to the release of GFS. However, in the event that GEOSTAT requires the data for input to their statistics, they are prohibited from publishing any GFS ahead of the MOF’s release. These arrangements are not publicized.

Recommendation:

Publicly identify the arrangements with the NBG and GEOSTAT for internal government access to GFS prior to their release.

1.2.3 Products of statistical agencies/units are clearly identified as such.

The MOF releases GFS on its website and provides data to both the GEOSTAT and NBG for release in their products. The GEOSTAT and NBG source GFS to the MOF.

1.2.4 Advance notice is given of major changes in methodology, source data, and statistical techniques.

Methodological changes are usually announced in advance in the Budget Law and other laws for the corresponding year. Major changes, such as the accounting reform, are announced in advance on the MOF’s website.

1.3.1 Guidelines for staff behavior are in place and are well known to the staff.

There is no specific code of conduct for the compilation of GFS. However, all state employees are governed by a code of conduct according to the Law of Georgia on Public Service (No. 1022 of October 31, 1997), which also includes penalties for violations. This Law was disseminated to all staff when it was promulgated. When employees sign their employment contracts, they are referred to the existence of this law. The MOF has its own internal code of conduct (The Home Rule of the Central Apparatus of the Ministry of Finance of Georgia) approved under the decree of the Minister of Finance of October 10, 2007.

2.1.1 The overall structure in terms of concepts and definitions follows internationally accepted standards, guidelines, or good practices.

Compilation of monthly, quarterly, and annual fiscal data follows the analytic framework prescribed by the annual budget laws. The annual budget laws are consistent with the analytic framework and methodology of the GFSM 2001.

Georgia is in the process of reforming public sector accounting. The strategy for the reform set out a phased plan for the migration to the full GFSM 2001 methodology, and the adoption of the IPSASs³. In 2007 the functional classification of the GFSM 2001 was implemented and, in the 2008 budget, the budget classification was replaced with the GFSM 2001 economic classification and applied to central governments’ cash-based accounting data in 2008 and to local governments’ data in 2009. There is to be a phased transition to full accrual accounting by 2020 as the IPSASs are incrementally introduced. The transition to accrual-based GFS will follow the transition to full accrual IPSASs. Where there are differences between IPSASs and the GFSM 2001, it is planned to set up the system so that it will produce both IPSASs and GFSM 2001-compliant reports.

In 2011 eight pilot organizations are to prepare financial statements on a modified cash basis. This will be extended in 2012 to all central government organizations and LEPLs, other than public corporations, that will be required to prepare consolidated financial statements compliant with the cash-based IPSAS and include, as voluntary additional disclosure, modified cash information.

2.2.1 The scope is broadly consistent with internationally accepted standards, guidelines, or good practices.

2.4.1 Market prices are used to value flows and stocks.

Transactions are valued on the basis of the amount of receipts and payments in cash.

In accordance with the GFSM 2001, loans are valued at nominal value. Securities are not valued at market value, as recommended by the GFSM 2001, but at nominal value.

Amounts denominated in foreign currency are converted to Georgian Lari using the official exchange rate, as provided by the NBG, on the day of the transaction and, in the case of debt stocks, at the balance date.

Recommendation:

Value securities at current market prices.

2.4.2 Recording is done on an accrual basis.

All transactions are recorded on the basis of cash received or paid.

The Treasury, in the MOF, currently has information on accrued interest and accounts receivable and payable. The next phase of the accounting reform will require central government units in 2012 to prepare financial data on a modified cash basis: i.e., financial statements on a cash basis with voluntary disclosures of some accrual items. The strategy for the accounting reform includes the full implementation of accrual accounting by 2020.

2.4.3 Grossing/netting procedures are broadly consistent with internationally accepted standards, guidelines, or good practices.

Government finance transactions are correctly recorded in accordance with the grossing/netting procedures recommended in the GFSM 2001. Tax refunds are correctly classified as (negative) revenue transactions.

3.1.1 Source data are obtained from comprehensive data collection programs that take into account country-specific conditions.

Comprehensive and timely data are available for budgetary central government, local governments and the consolidated general government.

3.1.2 Source data reasonably approximate the definitions, scope, classifications, valuation, and time of recording required.

3.1.3 Source data are timely.

Source data for compiling GFS for the general government and its subsectors are extremely timely. Central and local government data are available within 15-20 days after the end of the reference month. Central government debt data are available approximately 15 days after the end of the reference period.

Cash flow data are provided monthly on a cumulative year-to-date basis. As the months and quarters are calculated from the cumulative data, the months sum to the quarters, and the quarters to the year. Regular contact is maintained with the Treasury and any discrepancies are investigated in consultation with the Treasury.

The fiscal year ends December 31. Fiscal data are compiled and audited within three months of the end of the year then submitted to Parliament for approval. Parliament approves the data within three months. Once approval is received, preliminary GFS are replaced with the final, audited data.

3.2.1 Source data—including censuses, sample surveys, and administrative records—are routinely assessed, e.g., for coverage, sample error, response error, and nonsampling error; the results of the assessments are monitored and made available to guide statistical processes.

The GFS are compiled from complete administrative records for transactions and debt stocks. The GFS compilers routinely assess the accuracy of the source data from the various departments of the MOF. Data inconsistencies and out-of-trend values are confirmed with the reporting departments, and documented.

3.3.1 Data compilation employs sound statistical techniques to deal with data sources.

GFS are compiled from comprehensive source data. Preliminary data are subsequently replaced by final audited data for each period.

3.3.2 Other statistical procedures (e.g., data adjustments and transformations, and statistical analysis) employ sound statistical techniques.

GFS are compiled from a comprehensive actual data and do not need any other statistical procedures.

3.4.1 Intermediate results are validated against other information, where applicable.

The same GFS data are published on the MOF’s and GEOSTAT’s websites. No validations of intermediate government finance data are carried out, as no similar data are published elsewhere. Instead, validation of GFS compilation is done against the original source data (e.g., against the Treasury Department’s data provided to the FFD).

3.4.2 Statistical discrepancies in intermediate data are assessed and investigated.

Data are from accounting systems that are subject to cross-checks for accuracy.

Reported financial flow data on liabilities are reconciled with changes in the corresponding debt stock data.

3.4.3 Statistical discrepancies and other potential indicators of problems in statistical outputs are investigated.

There are no statistical discrepancies as GFS are compiled from Treasury records, and outputs are verified against the original source data.

3.5.1 Studies and analyses of revisions are carried out routinely and used internally to inform statistical processes (see also 4.3.3).

Reliability of source data is continuously assessed. Revisions to final budget execution data, and hence GFS, are rare, and occur only when an accounting error is detected. A GFS time series is maintained and any revisions are documented, so information can be retrieved for revision studies. However, as revisions are rare, no studies of revisions are carried out.

4.1.1 Periodicity follows dissemination standards.

The periodicity of fiscal sector statistics meets or exceeds the SDDS periodicity requirements. GFS are released monthly, quarterly, and annually for central government and the consolidated general government. Central government debt is released quarterly and annually.

4.1.2 Timeliness follows dissemination standards.

The timeliness of fiscal sector statistics meets or exceeds the SDDS timeliness requirements. GFS for central government are released within one month of the reference month and for general government within two months of the end of the reference month. Central government debt data are released within two months of the reference quarter.

4.2.1 Statistics are consistent within the dataset.

As quarterly and annual data are the sum of the months, concepts, definitions, and classifications are the same for all periodicities. GFS compiled by the FFD from consistent sources (e.g., those data compiled from the Treasury Department’s records on revenues, expenditure and financing) are internally consistent. The cash deficit/surplus is equal to financing and major aggregates are equal to the sum of their components. Total expense and the net acquisition of nonfinancial assets according to the economic classification correspond with that in the functional classification of expenditure. Transfers paid by one level of government are equal to transfers received by another level of government.

Domestic financing is reconcilable with the change in domestic debt. Foreign financing data are reconcilable with the changes in foreign debt.

4.2.2 Statistics are consistent or reconcilable over a reasonable period of time.

GFS are compiled from budget execution data which follow the annual budget laws. Since 2008, the budget classification is fully consistent with the GFSM 2001 economic classification. An historical time series has been reconstructed on the basis of the new classification. Annual data back to 2002 are available on the MOF’s website.

No official explanations of changes in trends, etc., are disseminated with the data, but the FFD can explain them, if users inquire.

4.2.3 Statistics are consistent or reconcilable with those obtained through other data sources and/or statistical frameworks.

National accounts and balance of payments statistics are compiled from general government data provided by the MOF to the GEOSTAT, and monetary and financial statistics are compiled from NBG records. All these data are largely consistent or reconcilable with GFS. The MOF, the NBG, and GEOSTAT have no formal mechanism in place for the reconciliation of the datasets.

4.3.1 Revisions follow a regular and transparent schedule.

Ad hoc revisions to cumulative year-to-date data are made when needed. With the move to the TSA and a fully automated accounting system, revisions occur infrequently and generally are small. In the event of large revisions, the revisions are identified and recorded in the appropriate month. Users, on request, are advised of any such revisions.

Preliminary annual data are replaced by final audited data according to a regular, well-established and transparent schedule, as required by law.

4.3.2 Preliminary and/or revised data are clearly identified.

Preliminary data published in the GEOSTAT and NBG bulletins are clearly identified. However, preliminary data on the MOF website are not identified. Data provided by the FFD to users, within government and international organizations, are identified as preliminary. A footnote is added to tables to advise the revision of data when final data are available.

4.3.3 Studies and analyses of revisions are made public (see also 3.5.1).

Studies and analysis of revisions are not undertaken by the FFD as revisions are rare. Reasons for revisions are investigated and documented by the FFD, and are only made public when individual users enquire about the reasons for the revisions.

5.1.1 Statistics are presented in a way that facilitates proper interpretation and meaningful comparisons (layout and clarity of text, tables, and charts).

The GFS are disseminated on the MOF’s website in accordance with the requirements of the SDDS, and with a time series. The FFD is seeking management approval to release more detailed data on the MOF’s website. Additional data are available on request. No commentary is provided with the disseminated tables.

GFS tables are available on the GEOSTAT’s website, fiscal data are available in the National Summary Data Page on the NBG’s website, and highly aggregate summary fiscal data are included in the NBG’s bulletins.

GFS for Georgia are also published by the IMF in their IFS and GFSY publications.

5.1.2 Dissemination media and format are adequate.

The GFS are disseminated on the MOF’s and GEOSTAT’s websites in a format (Excel files) that facilitates re-dissemination. Additional data are available free of charge in paper and/or electronic formats.

5.1.3 Statistics are released on a preannounced schedule.

In accordance with the requirements of the SDDS, the MOF releases data as per the advance release calendar publicized on the MOF’s website.

5.1.4 Statistics are made available to all users at the same time.

The GFS are released on the MOF’s and NBG’s websites simultaneously in accordance with the preannounced advanced release calendar on the MOF’s website.

5.1.5 Statistics not routinely disseminated are made available upon request.

Detailed GFS, not released on the MOF’s website, are made available to users on request. Although the availability of additional statistics is not made known on the MOF’s website, national users are aware of the procedures for obtaining additional data.

5.2.1 Documentation on concepts, scope, classifications, basis of recording, data sources, and statistical techniques is available, and differences from internationally accepted standards, guidelines, or good practices are annotated.

Budget documentation and SDDS metadata provide information about the methodology used to collect and process the data. The SDDS metadata is regularly reviewed and updated. The budget documentation is available on the MOF’s website and the SDDS metadata on the IMF’s website. Reference is also made to the GFSM 2001. Methodological guidelines for central government debt are set out in the Law of Georgia on Public Debt.

5.2.2 Levels of detail are adapted to the needs of the intended audience.

Budget documentation and SDDS metadata are available to the public from the MOF’s and IMF’s websites, respectively. These are the two main sources of information on the GFS metadata.

5.3.1 Contact points for each subject field are publicized.

Although the GFS data are sourced to the MOF in the products of the GEOSTAT or NBG, no contact person is publicized. Users (outside government) of GFS disseminated by the FFD know who to contact for enquiries. Otherwise, users contact either the FFD or any other MOF department for the specific data they require. The MOF provides prompt and knowledgeable service and support to users.

Recommendation:

Provide users with contact points and material to raise awareness on the use of GFS.

5.3.2 Catalogs of publications, documents, and other services, including information on any charges, are widely available.

The MOF does not have any catalogues of publications, documents, or other services.

Table 5.

Data Quality Assessment Framework (July 2003): Summary of Results for Government Finance Statistics

(Compiling Agency: Ministry of Finance)

Table 5.

Data Quality Assessment Framework (July 2003): Summary of Results for Government Finance Statistics

(Compiling Agency: Ministry of Finance)

Key to symbols: NA = Not Applicable; O = Practice Observed; LO = Practice Largely Observed; LNO = Practice Largely Not
Observed; NO = Practice Not Observed; SDDS = Complies with SDDS Criteria
Element	NA	Assessment				Comments
		O	LO	LNO	NO
0. Prerequisites of quality
0.1 Legal and institutional environment			X			No periodic, regular meetings of technical staff of the data producing agencies.
0.2 Resources		X
0.3 Relevance			X			No formal consultation with users.
0.4 Other quality management		X
1. Assurances of integrity
1.1 Professionalism		X
1.2 Transparency			X			The public are not made aware of internal government access prior to release of GFS.
1.3 Ethical standards		X
2. Methodological soundness
2.1 Concepts and definitions		X
2.2 Scope		X
2.3 Classification/sectorization			X			Sectorization of LEPLs requires review.
2.4 Basis for recording			X			Securities are valued at nominal value.
3. Accuracy and reliability
3.1 Source data		X
3.2 Assessment of source data		X
3.3 Statistical techniques		X
3.4 Assessment and validation of intermediate data and		X
statistical outputs
3.5 Revision studies		X
4. Serviceability
4.1 Periodicity and timeliness		X
4.2 Consistency		X
4.3 Revision policy and practice		X
5. Accessibility
5.1 Data accessibility		X
5.2 Metadata accessibility			X			Methodology is available from legislation on the MOF website. Link is on the MOF website to SDDS metadata.
5.3 Assistance to users			X			No contact points or material available to raise awareness on the use of statistics.

View Table

Table 5.

Data Quality Assessment Framework (July 2003): Summary of Results for Government Finance Statistics

(Compiling Agency: Ministry of Finance)

Key to symbols: NA = Not Applicable; O = Practice Observed; LO = Practice Largely Observed; LNO = Practice Largely Not
Observed; NO = Practice Not Observed; SDDS = Complies with SDDS Criteria
Element	NA	Assessment				Comments
		O	LO	LNO	NO
0. Prerequisites of quality
0.1 Legal and institutional environment			X			No periodic, regular meetings of technical staff of the data producing agencies.
0.2 Resources		X
0.3 Relevance			X			No formal consultation with users.
0.4 Other quality management		X
1. Assurances of integrity
1.1 Professionalism		X
1.2 Transparency			X			The public are not made aware of internal government access prior to release of GFS.
1.3 Ethical standards		X
2. Methodological soundness
2.1 Concepts and definitions		X
2.2 Scope		X
2.3 Classification/sectorization			X			Sectorization of LEPLs requires review.
2.4 Basis for recording			X			Securities are valued at nominal value.
3. Accuracy and reliability
3.1 Source data		X
3.2 Assessment of source data		X
3.3 Statistical techniques		X
3.4 Assessment and validation of intermediate data and		X
statistical outputs
3.5 Revision studies		X
4. Serviceability
4.1 Periodicity and timeliness		X
4.2 Consistency		X
4.3 Revision policy and practice		X
5. Accessibility
5.1 Data accessibility		X
5.2 Metadata accessibility			X			Methodology is available from legislation on the MOF website. Link is on the MOF website to SDDS metadata.
5.3 Assistance to users			X			No contact points or material available to raise awareness on the use of statistics.

0.1.1 The responsibility for collecting, processing, and disseminating the statistics is clearly specified.

The NBG is the sole official agency designated to compile monetary statistics for Georgia. NBG’s functions and powers are established by the Organic Law on the National Bank of Georgia. Article 3 (paragraph 3) of this law defines NBG’s responsibility for “compiling and disseminating Georgia’s financial and external sector statistics following international standards and methodology.” Article 33 (section Informational Support of Execution of Monetary and Statistical Functions of the National Bank) ^- of the same law authorizes the NBG to request statistical and accounting reports, including confidential information, from the financial sector. Article 45 of the Organic Law authorizes the NBG to “request and receive from both public and private entities all statistical reports, accounting data, and other data (including confidential ones) necessary to perform the functions assigned to the NBG.”

Chapter 12, Article 6 of the Regulation on the NBG’s Activities confers responsibility for collection and processing of monetary data on the Macroeconomic and Statistics Department (MESD) of the NBG. The department comprises four divisions: the Macroeconomic Research Division (MRD), the Monetary Policy Division (MPD), the Monetary Statistics Division (MSD), and the Balance of Payment Division (BoPD). Of these four divisions, the MSD is responsible for compiling monetary and financial data.

Article 29 of the Law of Georgia on Activities of Commercial Banks requires that all banks operating in Georgia prepare and submit to the NBG reports in such a form and detail and with such a frequency as the NBG’s regulations prescribe.

The MSD is responsible for reviewing and improving the statistical methodology and disseminating financial and external sector statistics as well as data within the SDDS framework.

0.1.2 Data sharing and coordination among data-producing agencies are adequate.

NBG’s structural units exchange data and information via email. Computers within the department are linked by a local network. NBG’s local network is protected from outside by the CISCO security appliance and the Threat Management Gateway. Staff from different NBG’s departments did not have open access to shared drives of other departments. During the mission Information Technology (IT) Department of the NBG established a shared drive to facilitate information and data exchange between the MESD and the BSD.

The NBG uses an Excel-based framework for the MFS compilation. Commercial banks transmit their data to the NBG over the Internet. Transmitted data are encrypted. Collected data are backed-up on a daily basis. Currently, the back-up server is located on-site in a remote building at a distance of about 100 meters away from the NBG’s main administrative building. The mission was informed that the NBG was installing a remote back-up server at an off-site location about 15-20 km from the NBG headquarters. The server will ensure that no data will be lost in case of fire or a natural disaster.

Banks submit their daily balance sheets to the Banking Supervision Department (BSD) of the NBG. In addition, they provide the MSD with 54 supplementary reports for statistical purposes on a monthly basis. The MPD compiles daily monetary aggregates and aggregates on liquidity of the banking system and submits them to the MSD. The MSD posts the aggregates on the NBG’s website.⁵

Bi-lateral meetings and arrangements for collaboration on data issues are maintained with other data producing agencies to promote a proper understanding of data requirements, to avoid duplication of effort, and to take into account reporting burden (e.g., by discussing changes to administrative processes before they take place.) To ensure efficient data sharing and coordination, the NBG and the GEOSTAT signed in 2010 a Memorandum of Understanding (MoU), which contains a set of rights and responsibilities for both of agencies to facilitate the exchange of information between these agencies. However, there is no arrangement for regular meetings of all technical staff responsible for macroeconomic statistics (NBG, MOF, and GEOSTAT). Such meetings provide a comprehensive arena for exchanging information on current and forthcoming projects for statistical development, promoting cross-sectoral data consistency crucial for macro-economic policy making, coordinating work programs to avoid duplication of effort, ensure coherent application of methodology at all stages of data collection, and enhance effectiveness.

Recommendation:

Conduct pre-established, regular meetings, such as one per year, to improve communication among data compilers at NBG, GEOSTAT, and MOF, by discussing issues of common interest, avoid duplication of efforts, and ensure the consistency of macroeconomic statistics (national accounts, monetary, fiscal, and external sector).

0.1.3 Individual reporters’ data are to be kept confidential and used for statistical purposes only.

The NBG does not disclose confidential data of individual institutions or transactions. Article 20 (paragraph 1) of the Organic Law on the National Bank of Georgia establishes a legal framework for protection of information and confidentiality and states that “no present or former member of the Board of the National Bank and no employee or auditor of the National Bank of Georgia and the Georgian Financial Monitoring Office shall be entitled to permit access of an unauthorized person to confidential information, disclose, or publicize such information or use it for personal gain.” The same law (Article 20, paragraph 3) stipulates that information on accounts and/or transactions of individuals and legal entities may be disclosed only by the decision of a court. A similar provision is specified in Article 17 of Law of Georgia on Activities of Commercial Banks.

The Staff Manual of the NBG addresses the obligation of NBG’s staff to protect confidential information in Article 3.2.

Article 202 of the Criminal Code of Georgia envisages administrative, financial, and criminal sanctions for breach of confidentiality.

The NBG disseminates aggregated data only. Access to individual data is available to all MSD staff.

0.1.4 Statistical reporting is ensured through legal mandate and/or measures to encourage response.

The National Bank of Georgia has the legal authority to collect data from credit institutions as required for compiling statistics and to enforce mandatory reporting provisions as necessary. The authority is established by the Organic Law on the NBG, the Law of Georgia on Activities of Commercial Banks, and NBG’s regulations and instructions.

As stated earlier, Article 33 (section Informational Support of Execution of Monetary and Statistical Functions of the National Bank) of the Organic Law on the NBG authorizes the NBG to collect statistical and accounting reports (including confidential ones) from the financial sector as it deems necessary to perform NBG’s responsibilities under this law.

Article 29 of the Law of Georgia on Activities of Commercial Banks requires that banks submit to the NBG reports defined by the NBG norms. Article 30 of the same law envisages a wide range of sanctions and penalties for noncompliance and misreporting. Similar provisions are specified in NBG’s Directive 242/01 of December 25, 2009 and Directive 92/01 of June 25, 2010. Financial institutions systematically comply with their reporting obligation, and there were no cases of nonreporting during the past years.

NBG’s Directive 184 On Statistical Reporting Forms for Georgian Commercial Banks and Compiling Procedures of July 17, 2008 sets out specific requirements for compiling and reporting statistical forms by commercial banks, their periodicity, and timeliness.

NBG’s directives contain detailed instructions and explanations on the preparation of statistical reports by credit institutions and their submission to the NBG. Meetings, seminars, and consultations with representatives of reporting institutions are held on an ad hoc basis. Their purpose is to respond to questions on the compilation of data and other information report forms to ensure that these are completed in accordance with the specified requirements. Draft new report forms and amended compilation instructions are shared with data reporters for comments. Data reporters also participate in regular meetings with the BSD where they can provide feedback to the BSD on data reporting requirements and obtain clarification on data reporting issues.

0.2.1 Staff, facilities, computing resources, and financing are commensurate with statistical programs.

The MSD compiles monetary statistics for Georgia. At the end of September 2011, the MSD had seven full-time staff assigned to compile and disseminate monetary statistics. The staff has university degrees in economics and accounting. Their experience ranges from six months for two newly appointed staff to 9 and 17 years for two senior staff. Key staff has long work experience in monetary statistics, and all staff periodically participates in seminars, conferences, and trainings organized by international organizations and other central banks. The NBG considers that staff numbers are adequate for compilation and dissemination of monetary statistics.

Funding is provided for statistical products within a short-term planning horizon of one year. The MESD prepares an annual budget of expenditures, which covers departmental needs (software, hardware, operational travel, stationery, etc.). Every department submits its budget of expenditures to the Finance and Accounting Department (FAD). The FAD incorporates budget needs of all departments into the NBG’s unified budget.

Article 19 of the Organic Law on the NBG stipulates that remuneration of NBG’s employees shall be comparable to the average wages across the Georgian banking system.

Computer resources appear adequate for performing the designated tasks. Each staff member at the MSD is assigned a desktop computer.

0.2.2 Measures to ensure efficient use of resources are implemented.

The NBG implements specific measures to ensure efficient use of resources. The NBG has established a performance appraisal procedure for its staff. The appraisal is conducted every three years and is used as a basis for personnel decisions: salary increases or decreases, promotions, etc.

0.3.1 The relevance and practical utility of existing statistics in meeting users’ needs are monitored.

User requirements are monitored annually by means of user surveys. In addition, data users can provide their comments and feedback to the NBG using contact information on the NBG’s website or a phone number specified both on the NBG’s website and in the NBG’s Bulletin of Monetary and Banking Statistics (BMBS).

The MESD conducts regular discussions with other NBG’s departments involved in the design and implementation of monetary policy. These departments are internal users of monetary statistics and are in position to identify emerging data needs.

As stated earlier, the NBG staff periodically participates in statistical seminars and trainings organized by international organizations and other central banks.

0.4.1 Processes are in place to focus on quality.

The NBG recognizes that official statistics must have confidence of users. The NBG’s management and MSD staff ensures that the quality of compiled and disseminated data is in compliance with key parameters of quality standards such as methodological soundness, accuracy and reliability, serviceability, and accessibility. To demonstrate their commitment to data quality, the NBG website provides information on various aspects of data quality such as reporting forms and guide and revision policies.

Data reported by ODCs are subject to validation checks at the collection and processing stages.

The NBG and banks are subject to annual mandatory audits (Article 59 of the Organic Law on the NBG and NBG’s Directive 134/01 On Rules about External Audit for Commercial Banks).

0.4.2 Processes are in place to monitor the quality of the statistical program.

The NBG has established a process to routinely monitor the quality of statistical data. In case problems are identified, the MSD works with banks to bring the quality of reported data in line with the standards recommended in the Monetary and Financial Statistics Manual (MFSM) and the Monetary and Financial Statistics Compilation Guide (MFSCG).

The MSD has access to expert guidance through established contacts with experts of international organizations, including the Fund. The process of compiling monetary statistics is continually reviewed and assessed in order to improve data quality requirements.

0.4.3 Processes are in place to deal with quality considerations in planning the statistical program.

One of the main goals of the work programs of the statistical divisions of the NBG is to focus on high quality statistics by extensive use of international standards. Taking into account the findings from the internal audit, the statistical programs and processes are revised and updated. Timeliness of data is considered one of the main priorities, as recognized by the recent SDDS subscription.

Feedback from users on quality standards and on new and emerging data requirements is taken into account in the work program planning process. The NBG receives comments from data users by distributing a questionnaire. Data users can also contact the NBG by telephone and email posted on the NBG’s website and the BMBS.

1.1.1 Statistics are produced on an impartial basis.

The NBG’s independence is guaranteed by the Constitution of Georgia (Article 95, paragraph 4) and by the Organic Law on the National Bank of Georgia. Article 4, paragraph 1 of the Organic Law on the National Bank of Georgia states that the National Bank shall be independent in its activity. Legislative, executive, and other authorities shall not interfere in its activity or monitor its activity except for cases set forth by the Constitution of Georgia and the Organic Law.

The NBG is professionally independent. The NBG uses professional considerations and established methodological principles when compiling statistics. Staff of the NBG is free from political or other influences in choosing the most appropriate sources and methods.

Recruitment and promotion of staff are based on skills and expertise in relevant areas. Hiring to the NBG is regulated by the Law on Civil Service. Vacancies for open-ended positions are posted on the website of the Public Service Bureau and are open for everyone. Applicants are required to be citizen of Georgia, be fluent in Georgian, and have a university degree in a relevant discipline. Applicants for positions in the MSD must have a university degree in economics, finance, or accounting. The NBG has a three-month probationary period policy for newly hired employees.

Staff is promoted based on performance. All promotion proposals shall be approved by the president of the NBG.

Research and analysis are encouraged and published on the NBG website.

1.1.2 Choices of sources and statistical techniques, as well as decisions about dissemination, are informed solely by statistical considerations.

Balance sheets of the NBG and all commercial banks are the basic source for compiling monetary data. All commercial banks follow a standard chart of accounts. Reporting forms are designed to meet the requirements of the MFSM methodology and to follow best international practices. NBG’s staff takes steps to ensure that the statistical methodology and source data applied for compilation of monetary statistics are consistent with the source data applied for BOP, GFS, and national accounts statistics.

Monetary data are disseminated following established procedures and are in line with SDDS requirements and the advance release calendar (ARC) posted on the NBG’s website.

1.1.3 The appropriate statistical entity is entitled to comment on erroneous interpretation and misuse of statistics.

Public Relations Division of the NBG monitors financial press and mass media on a regular basis. Cases of misinterpretations or misuse of monetary statistics are brought to the attention of the publisher with a request to make appropriate corrections in the publication.

Provision of metadata in the BMBS is also intended to prevent misinterpretation or misuse of monetary statistics.

In order to prevent misinterpretation of monetary statistics, journalists usually consult with the MSD’s specialists regarding the content of information to be published.

1.2.1 The terms and conditions under which statistics are collected, processed, and disseminated are available to the public.

The NBG’s website provides a broad description of the terms, condition and dissemination practices of statistics. The relevant laws and legislative acts are posted in Georgian and English on the NBG’s website. Copies of the legal documents can be obtained from the contact point. The NBG’s website contains an ARC for major macroeconomic and financial data dissemination.

Georgia participates in the IMF’s SDDS. Its metadata on monetary statistics are posted on the IMF’s Dissemination Standards Bulletin Board (DSBB). The NBG’s website provides a link to the country page on the DSBB.

Electronic versions of the relevant laws and legislative acts are available to the public in Georgian and English on the NBG’s website. Copies of legal documents can be obtained from the contact point. The NBG’s website contains an ARC for major macroeconomic and financial data dissemination.

1.2.2 Internal governmental access to statistics prior to their release is publicly identified.

There is no internal government access to the data before they are released to the public.

1.2.3 Products of statistical agencies/units are clearly identified as such.

The NBG’s website and the BMBS present monetary statistics compiled by the NBG and some macroeconomics statistics compiled by other agencies. Data compiled by the NBG are clearly identified. Both the BMBS and the NBG’s website include references to the source of statistics provided by other agencies.

The NBG provides the GEOSTAT with tables with monetary data to be published in the GEOSTAT’s monthly Social and Economic Situation of the Republic of Georgia, where the NBG is identified as the source for such data.

1.2.4 Advance notice is given of major changes in methodology, source data, and statistical techniques.

There is currently no established procedure in place of NBG’s giving an advance notice of major changes in the methodology, source data, and statistical technique. Major changes in source data and statistical techniques are announced and explained when a new data are published.

Recommendation:

Provide advance notice of major changes in methodology, source data, and statistical techniques, for example, within the press release of the previous period.

1.3.1 Guidelines for staff behavior are in place and are well known to the staff.

The NBG’s Staff Manual identifies rules and standards of ethical conduct for NBG’s staff. The Manual is available to all employees and establishes rights, responsibilities, and disciplinary actions for failure to meet standards prescribed by the Manual.⁶

2.1.1 The overall structure in terms of concepts and definitions follows internationally accepted standards, guidelines, or good practices.

The concepts and definitions used by the MSD to compile the central bank survey and the ODC survey are broadly consistent with the guidelines of the MFSM. The ODCs survey covers commercial banks only. The depository corporations survey (DCS) is based on the balance sheets of the NBG and the sectoral balance sheet of commercial banks.

The NBG compiles the following main monetary aggregates:

• Reserve Money: currency outside the NBG, required and excess reserves of commercial banks with the NBG in national and foreign currency.

• Cash in Circulation: notes and coins outside the NBG.

• M0: cash in circulation excluding cash in vaults of commercial banks.

• M1: M0 plus transferable deposits in national currency excluding deposits of commercial banks and the government sector.

• M2: M1 plus time deposits in national currency excluding deposits of commercial banks and the government sector.

• M3: M2 plus foreign currency deposits excluding deposits of commercial banks and the government sector.

2.2.1 The scope is broadly consistent with internationally accepted standards, guidelines, or good practices.

The ODCs survey covers commercial banks only. Data on credit unions, which represent less than one percent of total assets of the financial system, are collected by the NBG but not included into the coverage of the ODCs. As of end September 2011, Georgia’s depository corporations sector comprised the NBG and 19 commercial banks. Banks in liquidation are not included into coverage of ODCs survey⁷. Commercial banks report balance sheets, financial statements, special reporting forms for supervisory purposes, and statistical reporting forms to the NBG. Data reported by commercial banks to the NBG cover headquarters and domestic branches.

There are 18 credit unions in Georgia which accept deposits from their own members. Since their assets are very small (less than one percent of the total assets of the financial system), they are not included in the ODCs survey. Credit unions report to the NBG’s Non-Banking Institutions Supervision Department (NBISD).

All other financial corporations (except exchange bureaus)—such as insurance corporations, microfinance organizations, and the stock exchange - also report to the NBG’s NBSD. Data are used for supervision purposes only.

Going beyond the scope of monetary statistics, the NBG plans to compile the other financial corporations (OFC) survey with the accounts of insurance corporations representing the bulk of the OFC subsector.

2.3.1 Classification/sectorization systems used are broadly consistent with internationally accepted standards, guidelines, or good practices.

Sectorization of monetary statistics broadly follows the recommendations of the MFSM and the BPM5. Charts of accounts for the NBG and commercial banks do not provide for distinction between residents and nonresidents (except for resident and nonresident commercial banks). The definition of residency is provided in the NBG’s Guidelines for Filling the Monthly Statistical Data Reporting Forms F4 on Loans and in the Tax Code of Georgia.

The share of other assets and other liabilities within the balance sheet of the NBG is around two percent; and within the aggregated balance sheet of ODCs is around 13 and 25 percent, respectively. The high ratio for other assets and liabilities in the balance sheets of commercial banks is related to commercial banks’ capital, provisions for loans, and fixed assets (primarily buildings). Currently, NBG’s prudential norms require 12 percent capital adequacy while in fact an average capital adequacy ratio for commercial banks amounts about 16.2 percent.

Sectorization of domestic positions is mainly consistent with the MFSM recommendations and is presented in the DCS as follows: general government, central government, local government, nonfinancial corporations, households, and other private sector. However, OFCs are not presented separately as the MFSM recommends. Nonprofit institutions (NPIs) are not classified either. Financial instruments with both OFCs and NPIs are classified with Other Nonfinancial Corporations (ONFC) in the central bank survey (CBS) and the ODCS. However, amounts in these accounts are not considerable.

Classification of financial instruments in the monetary statistics largely follows the recommendations of the MFSM. Instruments are classified in the source data by type, currency denomination (national and foreign), and by maturity (short-term and long term) for loans. However, part of debit card deposits, check book deposits, credit guarantee deposits, deposits for letters of credit, and deposits for other payment documents are classified as Other Items Net in DCS and not as Deposits Included in Broad Money as the MFSM recommends⁸. As of end August 2011, the share of these deposits in M2 and M3 was about 7 and 3 percent respectively.

Accrued interests are classified together with the outstanding amount of assets or liabilities for most of financial instruments. However, accrued interest for some financial instruments such deposits and loans to nonresidents, deposits and loans to central and local government, deposits and loans to OFCs and NPIs are not classified together with the outstanding amount of respective deposits or loans.

The NBG does not include deposits of nonfinancial corporations with the NBG in the definition of monetary base as the MFSM recommends. The mission was informed that amounts in those accounts were very small (less than one percent) and those accounts would be removed from NBG’s balance sheet soon.

Repurchase agreements are classified as collateralized loans as the MFSM recommends.

Financial derivatives are recorded off- balance sheet. However, their volume is not considerable.

Recommendations:

Include into the definition of broad money debit card deposits, check book deposits, credit guarantee deposits, deposits for letters of credit, and deposits for other payment documents.

Separate positions on financial instruments with OFC’s and NPI’s from positions with ONFC. Depending on governance structure and financing sources classify NPI’s either as part of the government or as ‘Other Resident Sectors’.

Classify accrued interest for deposits and loans to nonresidents, deposits and loans to central and local government, deposits and loans to OFCs and NPIs together with the outstanding amount of respective deposits or loans.

Include in monetary statistics data on positions on financial derivatives consistent with recommendations of the MFSM and the MFSMCG.

2.4.1 Market prices are used to value flows and stocks.

Accounting rules at the NBG broadly follow recommendations of the International Financial Reporting Standards (IFRS). The practices are set out in the table below.

Table 6.

Valuation Methods in the National Bank of Georgia and Commercial Banks

^*According to the IFRS (standards 27, 28, and 39). Banks have an option to value investments more than 20 percent in market value but in practice they value them in historical cost.

^**These are gold coins. The NBG record them in the balance sheet on inventory cost (cost of production + transportation).

^***Recorded as cost of assets plus depreciation

Table 6.

Valuation Methods in the National Bank of Georgia and Commercial Banks

Financial instrument	National valuation method at the NBG	National valuation method at ODCs	MFSM 2000 Guidance
Monetary Gold	London gold market price	---	At end-period market price
SDR holdings	At end-period exchange rate. Exchange rate is obtained from IMF’s website.	---	At end-period exchange rate
Deposits	At book value	At book value	At book value
Loans	At book value		At book value
Securities other than shares (assets)	The NBG has three types of securities: i) securities held to maturity, ii) securities available for sale, and iii) securities for trading. Securities held to maturity are valued at amortized cost (acquisition cost plus accruals); securities available for sale and securities for trading are valued at the latest available market price. The NBG usually uses quotation from Bloomberg.	Fair value	At end period market price or market price equivalent
Securities other than shares (liabilities)	At book value	At book value	At end period market price or market price equivalent
Shares and other equity (assets)	Market prices	Commercial banks use two methods to value shares: (i) Fair value, (ii) < 20% fair value, >20% historical cost*	At end period market price or market price equivalent
Shares and other equity (liabilities):
(i) Funds contributed by owners	(i) At nominal amount	(i) At nominal amount	(i) At nominal amount of the proceeds from the initial and subsequent issuance of ownership shares
(ii) Retained earnings	(ii) At nominal amount	(ii) At nominal amount	(ii) At nominal amount
(iii) General and special reserves	(iii) At nominal amount	(iii) At nominal amount	(iii) At nominal amount
(iv) Valuation adjustment	(iv) At nominal amount	(iv) At nominal amount	(iv) At nominal amount
(v) Current-year results	(v)At nominal amount	(v)At nominal amount	(v) At nominal amount
SDR allocation	At end period exchange rate	---	At end period exchange rate
Financial derivatives	At market prices	Fair value	At end period market price or market price equivalent
Foreign currency denominated positions	At end-period exchange rate	At end-period exchange rate	At end period exchange rate. (The mid-point between the buying and selling rate of exchange should be used).
Nonfinancial assets
Nonmonetary gold	On inventory cost **	---	At end-period market price.
Fixed assets	On cost method***	IFRS	According to national accounting standards.

^*According to the IFRS (standards 27, 28, and 39). Banks have an option to value investments more than 20 percent in market value but in practice they value them in historical cost.

^**These are gold coins. The NBG record them in the balance sheet on inventory cost (cost of production + transportation).

^***Recorded as cost of assets plus depreciation

View Table

Table 6.

Valuation Methods in the National Bank of Georgia and Commercial Banks

Financial instrument	National valuation method at the NBG	National valuation method at ODCs	MFSM 2000 Guidance
Monetary Gold	London gold market price	---	At end-period market price
SDR holdings	At end-period exchange rate. Exchange rate is obtained from IMF’s website.	---	At end-period exchange rate
Deposits	At book value	At book value	At book value
Loans	At book value		At book value
Securities other than shares (assets)	The NBG has three types of securities: i) securities held to maturity, ii) securities available for sale, and iii) securities for trading. Securities held to maturity are valued at amortized cost (acquisition cost plus accruals); securities available for sale and securities for trading are valued at the latest available market price. The NBG usually uses quotation from Bloomberg.	Fair value	At end period market price or market price equivalent
Securities other than shares (liabilities)	At book value	At book value	At end period market price or market price equivalent
Shares and other equity (assets)	Market prices	Commercial banks use two methods to value shares: (i) Fair value, (ii) < 20% fair value, >20% historical cost*	At end period market price or market price equivalent
Shares and other equity (liabilities):
(i) Funds contributed by owners	(i) At nominal amount	(i) At nominal amount	(i) At nominal amount of the proceeds from the initial and subsequent issuance of ownership shares
(ii) Retained earnings	(ii) At nominal amount	(ii) At nominal amount	(ii) At nominal amount
(iii) General and special reserves	(iii) At nominal amount	(iii) At nominal amount	(iii) At nominal amount
(iv) Valuation adjustment	(iv) At nominal amount	(iv) At nominal amount	(iv) At nominal amount
(v) Current-year results	(v)At nominal amount	(v)At nominal amount	(v) At nominal amount
SDR allocation	At end period exchange rate	---	At end period exchange rate
Financial derivatives	At market prices	Fair value	At end period market price or market price equivalent
Foreign currency denominated positions	At end-period exchange rate	At end-period exchange rate	At end period exchange rate. (The mid-point between the buying and selling rate of exchange should be used).
Nonfinancial assets
Nonmonetary gold	On inventory cost **	---	At end-period market price.
Fixed assets	On cost method***	IFRS	According to national accounting standards.

^*According to the IFRS (standards 27, 28, and 39). Banks have an option to value investments more than 20 percent in market value but in practice they value them in historical cost.

^**These are gold coins. The NBG record them in the balance sheet on inventory cost (cost of production + transportation).

^***Recorded as cost of assets plus depreciation

2.4.2 Recording is done on an accrual basis.

The accounts of the NBG and those of commercial banks are recorded on an accrual basis. Interest accrued but not yet due is mainly recorded together with the outstanding amount of financial assets and liabilities.

Transactions are recorded on settlement day (time of delivery), but using the price of the transaction date (change of ownership).

2.4.3 Grossing/netting procedures are broadly consistent with internationally accepted standards, guidelines, or good practices.

Assets and liabilities of the NBG and commercial banks are presented on a gross basis. Claims on particular transactors are not netted against liabilities to those transactors. Whenever a data category in a sectoral survey is shown on a net basis, the underlying gross positions are also shown. In the financial statements, loans are recorded on a gross basis at nominal values with provisions for loan losses as a negative asset item netting from the total of loans. When compiling monetary statistics, the MSD brings the provisions for loan losses to the liability side under Other Liabilities, presenting the loans at their nominal value.

Accounts in overdraft are recorded and reported as loans to the corresponding sector.

When producing the ODCs survey, the MSD consolidates the intrasectoral accounts of the commercial banks in Other Items Net. The DC survey consolidates the accounts of the NBG with the accounts of ODCs, also in Other Items Net.

3.1.1 Source data are obtained from comprehensive data collection programs that take into account country-specific conditions.

All financial institutions operating in Georgia must be licensed by the NBG, enabling it to keep its register up-to-date. Data sources for the DCS are balance sheets of the NBG and commercial banks. Commercial banks provide the NBG with supplemental statistical reports. All banks submit their reports regularly in compliance with NBG’s regulations. Reports are submitted on a daily, weekly, monthly, quarterly, and annual basis. Report forms are being continually evaluated and revised when needed, to keep them current with market and legislative changes.

Currently, the NBG works on implementing a new comprehensive statistical data collection system (Sebstat). The Sebstat is expected to automate data collection, processing, and dissemination processes. The Sebstat will also have a central database with access restricted to users from NBG’s different departments.

3.1.2 Sources data reasonably approximate the definitions, scope, classifications, valuation, and time of recording required.

The chart of accounts of the NBG and commercial banks and supplementary reporting forms submitted by commercial banks to the NBG constitute the main source data for compiling monetary statistics. All commercial banks follow the same chart of accounts.

Commercial banks sectorize nonfinancial corporations (NFC) into private and state-owned based on the Statistical Register available to them online. A corporation is deemed to be state-owned if more than half of its capital belongs to the government. Sectorization of legal entities by residency is based on the information from the Georgia Revenue Service (GRS).⁹ The GRS uses the Tax Code to define residency. The Tax Code does not give a definition of residency for legal entities consistent with the MFSM. Moreover, there are some shortcomings in sectorization of resident and nonresident individuals in commercial banks. In particular, residency for individuals is based on the foreign citizenship and not on the center of economic interest as the MFSM recommends.

The MSD does not conduct any inspections to monitor how commercial banks comply with MFSM requirements.

The balance sheet of the NBG is audited by an external well-known audit firm selected by the Parliament of Georgia (Article 59 of the Organic Law on the NBG). The 2010 audit was conducted by Deloitte. The financial statements were approved on March 30, 2011.

Recommendation:

Introduce a clear statistical definition of residency to ensure that all institutional units are sectorized on residents and nonresidents consistent with the MFSM. Conduct regular trainings/consultations with data compilers to improve the quality of source data.

3.1.3 Source data are timely.

The MSD receives the source data for the NBG’s balance sheet on the next day following the end of reference month. ODCs submit their balance sheets and financial statements to the NBG within 7 and 10 days respectively. This timeline permits compilation of the analytical accounts of the NBG and ODCs within the SDDS prescribed standards by the fifth and twentieth day of the month, respectively.

3.2.1 Source data—including censuses, sample surveys, and administrative records—are routinely assessed, e.g., for coverage, sample error, response error, and nonsampling error; the results of the assessments are monitored and made available to guide statistical processes.

The NBG has established a computerized monitoring system to detect internal inconsistencies in data reported by each bank. However, this system does not allow for monitoring out-of-trend movements, which the MSD staff implements manually.

The MSD reviews and analyzes statistical data reported by banks. First, the MSD reviews balance sheets and financial statements; then the MSD and the BSD cross-check the data for internal consistency. In case misreporting or errors are detected, the NBG sends data back for revision and correction. Compilers’ queries and questions are addressed via email or phone.

3.3.1 Data compilation employs sound statistical techniques to deal with data sources.

The DCS is based on actual accounting records of the NBG and commercial banks; therefore, no estimations are necessary. Electronic processing of all data minimizes the risk of mistakes. Data reported by commercial banks are usually complete, and the MSD does not need to estimate missing information. In case banks report their data with a delay, the NBG uses data from the previous month.

Supplemental information provided together with the monthly balance sheets in general allows for an adequate sectorization of institutional units and classification of financial instruments in compliance with recommendations of the MFSM.

3.3.2 Other statistical procedures (e.g., data adjustments and transformations, and statistical analysis) employ sound statistical techniques.

Since data used for DCS compilation are complete and based on the balance sheets of the institutions, there is no need for data adjustments or transformations.

3.4.1 Intermediate results are validated against other information, where applicable.

Balance sheet data and other supplemental data reported to the MSD are cross-checked with the data reported to other NBG’s departments, primarily to the BSD.

3.4.2 Statistical discrepancies in intermediate data are assessed and investigated.

Data are regularly monitored to investigate statistical discrepancies and to ensure data accuracy. When a large movement is noticed in the submitted data, the MSD contacts the reporting institution for clarifications.

3.4.3 Statistical discrepancies and other potential indicators of problems in statistical outputs are investigated.

The NBG is committed to investigate any significant discrepancies of major aggregates and stock vs. flow data to ensure accuracies.

All large movements in data series are subject to investigation and validation.

3.5.1 Studies and analyses of revisions are carried out routinely and used internally to inform statistical processes (see also 4.3.3).

As a general practice, monetary statistics are final upon release.

4.1.1 Periodicity follows dissemination standards.

The CBS, the ODCS, and the DCS are disseminated on a monthly basis through the NBG’s website and its monthly publication Bulletin of Monetary and Banking Statistics. Monetary aggregates are disseminated on a daily and monthly basis. This periodicity fully complies with SDDS requirements.

4.1.2 Timeliness follows dissemination standards.

Dissemination of monetary statistics follows the ARC. The CBS is disseminated by the seventh day after the end of reference month. The ODCS and the DCS are disseminated by the twentieth day of the following month. Timeliness of dissemination of monetary statistics is consistent with SDDS requirements.

4.2.1 Statistics are consistent within the dataset.

The NBG’s and commercial banks’ records for claims on and liabilities to are largely consistent with each other. The mission was provided with records on these positions and could verify the consistency of positions by main instruments.

4.2.2 Statistics are consistent or reconcilable over a reasonable period of time.

Monetary data are presented in consistent historical series since 2001. For some monetary aggregates consistent data are available since 1995 when monetary statistics started being compiled. When changes in source data or methodology are introduced, the historical data are revised as far back as possible. If any breaks occur in the time series, footnotes explaining them are added.

4.2.3 Statistics are consistent or reconcilable with those obtained through other data sources and/or statistical frameworks.

Data on net foreign assets derived from monetary statistics are reconcilable with data on net foreign assets derived from balance of payments statistics and with data on international investment position (IIP).

There is a small difference in the definition of reserve assets. The MSD includes the stock of Russian Rubles in reserve assets, while the BoPD does not. This difference has an insignificant weight in the total reserve assets (200 US$ currently). Another difference relates to the use of exchange rates. BoPD uses the exchange rates of the last day of the month, while MSD uses the last working day.

Data derived from monetary statistics differ from corresponding measure from IIP data. The main reason for these differences is that monetary statistics do not include in the definition of foreign liabilities foreign capital invested in local banks in the form of shares and other equity while the IIP definition of foreign liabilities does.¹⁰

The NBG conducted data cross-checks with the MOF and found that data on net credit to the central government (NCCG) derived from the MFS were not consistent with data derived from the Government Finance Statistics compiled by the MOF. The NBG posted a methodological note explaining those differences on the NBG’s website.

4.3.1 Revisions follow a regular and transparent schedule.

Commercial banks’ data are final when first released and are not subject to revisions except if errors are detected. In this case, revisions are explained in footnotes and comments in upcoming releases. Annual data of the NBG are preliminary, pending closing of the NBG’s books for the reference month. Data become final after their first release.

4.3.2 Preliminary and/or revised data are clearly identified.

When applicable data are clearly identified as provisional or revised in all NBG’s publications. As mentioned above, MFS are normally final when first released

4.3.3 Studies and analyses of revisions are made public (see also 3.5.1).

Revisions of monetary aggregates and other monetary data are explained through footnotes to the corresponding tables in statistical publications.

5.1.1 Statistics are presented in a way that facilitates proper interpretation and meaningful comparisons (layout and clarity of text, tables, and charts).

Monthly time series for monetary statistics are disseminated on the Statistics page of the NBG’s website in Excel and in the BMBS (posted on the Publications page). A number of analytical charts are included in the BMBS. In addition to the BMBS, the NBG issues Monthly Review, Inflation Report (quarterly), Financial Stability Report (yearly), and Annual Report. All these publications contain tables on monetary statistics at a different level of detail.

The structure of the surveys compiled by the NBG for the central bank and the banking sector is consistent with the structure of the central bank, other depository corporations, and depository corporation’s surveys, respectively, as recommended by the MFSM.

5.1.2 Dissemination media and format are adequate.

The NBG disseminates monthly monetary statistics in Georgian and in English on the NBG’s website and in the BMBS. Monetary statistics are accompanied with press releases. Data posted on the NBG’s website provide historical series from 1995 onwards. The structure of the NBG’s website and links to the Statistics page are clear.

Nonpublished but nonconfidential time series are available upon request.

5.1.3 Statistics are released on a preannounced schedule.

An ARC that includes release dates for monetary statistics is posted on the NBG’s website. Monetary statistics are released in accordance with the timetable in the calendar.

The ARC on the NBG’s website contains release dates for (i) financial sector’s statistics, (ii) exchange rates statistics, and (iii) external sector statistics.

5.1.4 Statistics are made available to all users at the same time.

Monetary statistics are released simultaneously to all users, in accordance with the ARC, through press releases, the BMBS, and the NBG’s website.

5.1.5 Statistics not routinely disseminated are made available upon request.

Additional (nonconfidential) information is available upon request. Users can request additional information through either the contact point listed on the NBG’s website or the Press Office, which will forward the inquiries to the relevant department for response.

5.2.1 Documentation on concepts, scope, classifications, and basis of recording, data sources, and statistical techniques is available, and differences from internationally accepted standards, guidelines, or good practices are annotated.

Data on monetary statistics published in the BMBS and posted on the NBG’s website include comprehensive methodological notes. The NBG updates methodological notes when necessary.

In addition, metadata are available from Georgia’s SDDS webpage posted on the IMF’s DSBB. The metadata on the DSBB were last updated in May 2010.

5.2.2 Levels of detail are adapted to the needs of the intended audience.

The NBG’s publications and electronic data posted on its website provide different levels of detail to meet users’ needs. Methodological comments are published in the BMBS, the Statistical Bulletin, and the Annual Report of the NBG. They include notes on the revised data, changes in the methodology, and any changes in the structure of the accounting and/or statistical frameworks.

5.3.1 Contact points for each subject field are publicized.

Contact information (e-mail addresses and telephone numbers) are available on the NBG website. Assistance and support are provided to users who can submit queries by addressing the contact point or the Press Office of the NBG.

5.3.2 Catalogs of publications, documents, and other services, including information on any charges, are widely available.

The NBG website provides users with considerable amount of information about electronic and hard copy publications and documents. The NBG publications can be obtained free of charge from the contact point upon request.

Table 7.

Data Quality Assessment Framework: Summary of Results for Monetary Statistics

(Compiling Agency: National Bank of Georgia)

Table 7.

Data Quality Assessment Framework: Summary of Results for Monetary Statistics

(Compiling Agency: National Bank of Georgia)

Key to symbols: NA = Not Applicable; O = Practice Observed; LO = Practice Largely Observed; LNO = Practice Largely Not
Observed; NO = Practice Not Observed; SDDS = Complies with SDDS Criteria
Element	NA	Assessment				Comments
		O	LO	LNO	NO
0. Prerequisites of quality
0.1 Legal and institutional environment			X			Meetings among data producing agencies (NBG, GEOSTAT, and MOF) do not follow a regular schedule, such as one per year, which would improve communication by discussing issues of common interest on a pre-established, regular basis.
0.2 Resources		X
0.3 Relevance 0.4 Other quality management		X X
1. Assurances of integrity
1.1 Professionalism		X				There is not advance notice of major changes in methodology, Source data, and statistical techniques.
1.2 Transparency			X
1.3 Ethical standards		X
2. Methodological soundness
2.1 Concepts and definitions		X				Deposits on debit cards, check book, credit guarantee are not included In Broad Money. Accrued interests are not classified together with the Outstanding amount of assets or liabilities for all financial instruments. OFCs and MPIs are classified together with ONFC and ODS. Financial derivatives are recorded off-balance sheet.
2.2 Scope		X
2.3 Classification/sectorization			X
2.4 Basis for recording		X
3. Accuracy and reliability
3.1 Source data			X			Residency criteria for legal entities are based on Tax Code, which does not give definition of residency for legal entities consistent with the MFSM.
3.2 Assessment of source data		X
3.3 Statistical techniques		X
3.4 Assessment and validation of intermediate data and statistical outputs		X
3.5 Revision studies		X
4. Serviceability
4.1 Periodicity and timeliness		X
4.2 Consistency		X
4.3 Revision policy and practice		X
5. Accessibility
5.1 Data accessibility		X
5.2 Metadata accessibility		X
5.3 Assistance to users		X

View Table

Table 7.

Data Quality Assessment Framework: Summary of Results for Monetary Statistics

(Compiling Agency: National Bank of Georgia)

Key to symbols: NA = Not Applicable; O = Practice Observed; LO = Practice Largely Observed; LNO = Practice Largely Not
Observed; NO = Practice Not Observed; SDDS = Complies with SDDS Criteria
Element	NA	Assessment				Comments
		O	LO	LNO	NO
0. Prerequisites of quality
0.1 Legal and institutional environment			X			Meetings among data producing agencies (NBG, GEOSTAT, and MOF) do not follow a regular schedule, such as one per year, which would improve communication by discussing issues of common interest on a pre-established, regular basis.
0.2 Resources		X
0.3 Relevance 0.4 Other quality management		X X
1. Assurances of integrity
1.1 Professionalism		X				There is not advance notice of major changes in methodology, Source data, and statistical techniques.
1.2 Transparency			X
1.3 Ethical standards		X
2. Methodological soundness
2.1 Concepts and definitions		X				Deposits on debit cards, check book, credit guarantee are not included In Broad Money. Accrued interests are not classified together with the Outstanding amount of assets or liabilities for all financial instruments. OFCs and MPIs are classified together with ONFC and ODS. Financial derivatives are recorded off-balance sheet.
2.2 Scope		X
2.3 Classification/sectorization			X
2.4 Basis for recording		X
3. Accuracy and reliability
3.1 Source data			X			Residency criteria for legal entities are based on Tax Code, which does not give definition of residency for legal entities consistent with the MFSM.
3.2 Assessment of source data		X
3.3 Statistical techniques		X
3.4 Assessment and validation of intermediate data and statistical outputs		X
3.5 Revision studies		X
4. Serviceability
4.1 Periodicity and timeliness		X
4.2 Consistency		X
4.3 Revision policy and practice		X
5. Accessibility
5.1 Data accessibility		X
5.2 Metadata accessibility		X
5.3 Assistance to users		X