Abstract
This paper discusses key findings of the Report on the Observance of Standards and Codes—Data Module for Uruguay. Uruguay exceeds the Special Data Dissemination Standard (SDDS) timeliness requirements for labor market (employment, unemployment, and wages/earnings), price (consumer prices and producer prices), and international investment position data. The legal and institutional basis for Uruguayan statistics is sound and follows international good practice. Under institutional integrity, based on the mission’s meetings with data users, the Central Bank of Uruguay and National Institute of Statistics possess a high level of “trust capital” to deliver impartially compiled and technically sound statistics within their resource envelopes.
The Central Bank of Uruguay (CBU) has coordinated and compiled the responses to recommendations of the institutions whose statistics were evaluated. Responses concerning the cross-cutting recommendations have been jointly prepared by the National Institute of Statistics (NIS) and the CBU. Responses on price statistics were prepared by the NIS and responses on National Accounts were elaborated by the CBU.
Cross-Cutting Recommendations
A. High priority
1. Ensure that the NIS has adequate financial resources, staff, facilities, and training, and take further steps to increase retention of qualified staff.
Various measures have been implemented. On the one hand, new staff is being recruited shortly. Complementary, a series of promotions has been implemented which allows for better paying skilled personnel, and six new posts of advisers have been created in order to retain qualified personnel in the institution.
2. The legal framework to hire/contract staff by the NIS and the CBU (e.g., approval from the National Office of Civil Service) need to be more flexible to accelerate filling vacancies with technical qualifications in economic statistics.
This matter is beyond the scope of the NIS’s and CBU’s authorities but rather needs to be addressed under the legal framework governing civil servants recruitment.
3. Sign an agreement between the CBU and the Ministry of Economy and Finance (MEF) so that the CBU can have access to income tax records by economic activity in order to improve the coverage of national accounts and compile integrated economic accounts by institutional sector.
On November 7, 2012 Law 18.996 was approved establishing that the information captured in tax records can be used for statistical purposes by the directing authority of the National Statistical System. Such information may be used by member agencies of the National Statistical System for conducting official statistics. This new regulation enables the use of tax data for statistical purposes by the NIS and CBU among others.
4. Expedite the filling of the ten vacancies in the CBU Economic Statistics Area. Additional staff will be needed for changing the base of the national accounts and implementing the System of National Accounts 2008 (2008 SNA).
Eight vacancies have been filled in July and August 2013. The remaining two vacancies are expected to be filled by the end of this year. Additional temporary staff is expected to be available for next year.
5. Conduct a new household Income and Expenditure Survey every five years to strengthen estimates for household final consumption expenditure and update the CP weights.
Uruguay is considering moving towards this new recommended standard which is broadly sensible. However it is necessary to assess if it is feasible in the short and medium term. The NIS is just working on raising funds for a new income and expenditure survey. Once this study is carried out, the office should consider the feasibility of doing it again five years later.
B. Other recommendations
6. Initiate regular consultations with public and private sector users, including through fostering users’ groups and an advisory group to improve the usefulness of statistics and advise on statistical program priorities. The advisory committee should include participation of academics, private sector analysts, and producers’ associations and meet on a regular basis (e.g., twice a year).
CBU has included in its annual planning to regularly consult users on the usefulness of the statistics provided. A users’ survey of this type is going to take place for the first time in November 2013.
7. Announce in advance any planned changes in concepts and methodology. With major changes, users should be invited to provide feedback before they are implemented.
On July 10, 2013, CBU’s authorities approved by RD 173-2013 a new Plan for the Adoption of International Standards (PLAE) to be developed during 2013–2019. In the context of the PLAE, a set of working papers will be released regularly, so as users will be informed about changes in advance and will be able to provide feedback. The first working paper of this type is already finished and is going to be released shortly.
8. Analyze data requests and comments from users periodically in order to improve the service provided to them.
This initiative will be carried out in response to users’ queries in the consultation plan starting this year.
9. Initiate an employee rotation program to enhance the versatility of professionals and the redundancy of skills of statistical units and teams in view of limited staff complements.
In the case of CBU the PLAE calls for a working policy that promotes cross working teams and cross training with the aim of providing more versatility to professionals. This initiative was included in 2013 strategic planning in the context of CBUs 2010–2014 Strategic Plan. It is expected that these actions will strengthen technical capacities of the CBU staff.
Response by the Central Bank of Uruguay
A. High priority
10. Update the base year of the national accounts and develop plan for implementing the 2008 SNA as soon as possible with a clear timetable.
On July 10, 2013, CBU’s authorities approved by RD 173-2013 a new PLAE for national accounts and balance of payments statistics to be developed during 2013–2019. The PLAE includes the adoption of the 2008 SNA and the Balance of Payments Manual, Sixth Edition (BPM6), with a new base year for national accounts and wider harmonization between balance of payments and national accounts compilations.
11. Update the business register regularly.
The NIS provides the business register to CBUs estimates. The NIS updates the business register every year with data from both social security contributions register and taxes revenues register. Last update was in July 2013 with social security contributions registry and tax registry data from December 2012.
B. Other recommendations
12. The NIS should review and update the classification by economic activity of the business register obtained from income tax records and provide an improved version to the MEF, so that the MEF and the CBU can use the income tax records data with an updated and improved classification.
In 2013 there is an ongoing program which via telephone call allows to confirm or update the activity classification of the majority of the bigger enterprises included in the NIS register. This business register is publicly available. It is delivered at request.
13. Adapt the functions of the CBU ESA’s departments to an integrated organization by institutional sector (non-financial sector, financial sector, public sector, and external sector), so that the supply and use table by economic activity and product by sector and the economic integrated accounts by sector are compiled and analyzed by the same staff with coordinators by type of statistic.
In the framework of the PLAE 2013–2019, a restructure of the ESA work is taking place. In the first part of the plan (Phase 0) the team is organized by projects so as to conduct the 29 basic statistics projects included in this phase. Next phase refers to the compilation of SUT by Industry and by Institutional Sectors and the compilation of Integrated Economic Accounts. So the rearrangement of the ESA work towards a better division of labor to deal with institutional sectors is going to be implemented in this second phase.
14. Apply the standard ISIC Rev. 4 and CPC Ver. 2 for classifying activities and products, respectively, the COICOP for classifying household financial consumption expenditure and the COFOG to classify government final consumption expenditure in order to facilitate international comparisons.
In 2013 the first basic statistics project of phase 0 was to evaluate the adoption of the main recommended classifications and to propose adapted versions for the new series. This Working Group, integrated by technicians from CBU and NIS, has finished its work by defining a CPC Ver.2 and ISIC Rev. 4 versions adapted to the compilation of the new reference year.
15. Increase the level of detail of disseminated national accounts data at three digits of the ISIC.
The defined new industry classification for the compilation of the new reference year has taken into account this recommendation.
16. Improve estimates of non-observed activities by using available income data from the permanent household surveys.
One of the 29 basic statistics projects included in Phase 0 of the PLAE 2013–2019 is to develop the Employment Matrix for the base year and ongoing years of the series. These estimates will be based on the permanent household surveys and the 2011 population census.
17. Consider the use of chain indices for calculating volume measures.
This recommendation has been taken into account and the PLAE 2013–2019 will estimate chained volume measures for the series 2012 and ahead.
18. Reconstruct historical series as far back as reasonably possible when changing the base year. The linked series of main national accounts aggregates for 1997–2011 should be disseminated.
This recommendation will be considered, probably by linking new series with previous ones since 2005 or since 1997. The availability of appropriate information is going to be evaluated in the framework of the PLAE 2013-2019.
19. Apply the economic activity classification of the economic survey (ISIC Rev. 4) to the permanent household survey in order to reduce the volatility of employment data by economic activity which is preventing greater use of the data in the national accounts. Include an expenditure module every two to three years to monitor changes in consumption patterns and improve estimates on household consumption.
ISIC Rev. 4 is already in use for the classification of economic activity in the permanent household survey. The inclusion of an expenditure module every three years in this survey is going to be evaluated in the framework of resources availability.
20. Improve the coverage of the economic survey, the surveys on construction, domestic trade and services (annual, quarterly, and monthly) to 80 percent of the economic activity in the country.
This recommendation is currently being implemented. A new Annual Economic Activity Survey is currently being implemented by NIS with partial funding by CBU. This survey has expanded the scope to include mining and manufacturing activities, trade services and the majority of business, social and household services activities. The new survey design will allow updating not only the level of outputs but also intermediate consumption and compensation of employees estimates. A new Big Constructions Survey conducted by NIS has begun in February 2013 with CBU funding. New improvements in construction annual statistics are going to be considered in the near future.
21. Use monthly value-added tax (VAT) data by economic activity to improve the coverage of quarterly national accounts estimates.
This statistic produced by the tax office is currently available. However, the classification of activities and the coverage for some of them are not good enough to use this statistic in all cases. Sometimes indirect indicators are preferable for the sake of coverage. Also in some cases volume measures are difficult to derive from nominal values. Anyway these figures are always used as parameters to monitor results.
22. Conduct a quarterly survey on sales of services and on inventories of inputs and finished and resale products.
This has not been considered a priority in the phase 0 of the PLAE 2013–2019. Notwithstanding, it could be considered in the following phases, once the generation of annual basic statistics is finished.
23. Improve the coverage of the monthly index of economic activity in order to disseminate it and use it in all its potential for policy decision making.
This recommendation will probably be considered in the context of new annual, quarterly (and monthly) series in the second and third phase of the PLAE. It has to be related to the availability of monthly indicators for some activities (previous bullet).
24. Review the Economic Survey to collect data of inputs and outputs of the establishments that integrate an enterprise at least for the new base year of the national accounts. Apply a standard product coding in the survey, preferably CPC.
Both recommendations have been included in the design of the new Annual Economic Activity Survey that is currently being implemented by NIS.
25. Use available data on prices and volume to apply the double deflation/inflation method to main inputs and outputs on a quarterly basis.
This improvement in the methodology used in quarterly accounts is going to be implemented for the new series in the context of the PLAE 2013–2019.
26. Use data on inventories collected in the economic survey and from income tax records in order to improve the coverage of changes in inventories.
This improvement in the methodology used in annual and quarterly accounts is going to be implemented for the new series in the context of the PLAE 2013–2019.
27. Explain current data revisions to users.
CBU has begun a new policy to get in touch with users in a more regularly way. First step of this new policy is to implement a consult to users which is going to take place next November. In the future this vehicle will be useful to explain data revisions to users.
Response by the National Statistics Institute
A. Consumer Price Index (CPI)
High priority
28. Incorporate owner-occupied housing in the CPI.
While recognizing the relevance of the recommendation, it should be noted that there is no tradition in the Institute on its inclusion in the basket so it should be analyzed with the CBU and national authorities doing so from the next base index.
29. A regular cycle for updating the CPI basket should be established. The advantages of this decision are the following:
Improve the relevance of the CPI for current economic conditions.
Improve the planning and organization of the resource requirements for updating the basket.
It is recognized by the Institute the relevance of this recommendation. In a future a timeline for a regularly base change should be established. However, it is estimated that under current conditions it is not yet possible, since it is deemed necessary to have the approval of the government of the Republic for the realization of an expenditure survey of household income that allows not only the change of the current basis but also the improvement of the estimation of the consumption component of National Accounts statistics. Data availability does not allow for an alternative procedure, based on national accounts weights, because for various reasons it was not possible to maintain a steady flow of information on the supply and use tables that would allow leading to this action.
Other recommendations
30. A basket update exercise is an opportunity, in addition to updating the weights, for a comprehensive review of the CPI procedures, concepts, and methods. For example, the choice of the sample of representative products should be refreshed when updating the basket.
It is recognized by the Institute the relevance of this recommendation. The basket update will be undertaken when the government of the Republic approves the realization of a new household expenditure survey. This survey will allow not only the change of the current basis but also a comprehensive revision of the CPI procedures and methods.
31. The NIS could undertake a study of the difference between the household expenditure survey and comparable components of national accounts household consumption expenditure and consider using the national accounts data as the source of, or as a control for, the weights of the CPI. The advantages of this option are the following:
Improved coherence of macroeconomic statistics between the CPI and the national accounts.
Weighting information that incorporates not only the most recent household expenditure survey, but also retail sales and other current information that has better coverage of certain components of household expenditure.
More timely CPI weights, which reduce the lag between the weight reference year and the price reference month.
The possibility of updating the basket weights more often and at lower cost.
The last base change followed the recommended procedure, having the weights estimated by arbitration between two sources, the income and expenditure survey of households and national accounts statistics. In future base changes this methodology is expected to be applied again and also to add new databases that could lead to a better balance of sources of consumption information.
32. Improve the analytical capacity of the NIS CPI unit.
The increase in staff that occurred in 2013 and additional staff which is expected in the course of the year will allow strengthening the technical and analytical capacity of the current team.
33. Institute more data confrontation-type analysis for validation of results using alternative data sources.
The last base change followed the recommended procedure, having the weights estimated by arbitration between two sources, the income and expenditure survey of households and national accounts statistics. In future base changes this methodology is expected to be applied again and also to add new databases that could lead to a better balance of sources of consumption information.
B. Producer Price Index (PPI)
High priority
34. A regular calendar for updating the PPI should be established. The calendar should specify an update cycle of no more than five years.
It is recognized by the Institute relevance of this recommendation. In a future a timeline for the regularly base change should be established.
35. Add additional economists/statisticians to the staff.
Four advanced students of economics and one advanced student of statistics have joined the NIS team in August 2013 to strengthen analysis and methodology group. It is expected that in October 2013 ten more students of economics will join to work on tasks of critics.
36. Institute more data confrontation-type analysis and the analysis of the third-party data used in the PPI, once more analysts are hired.
The recommendation has merit and it will be taken into account as far as the team is strengthened. New tasks could be incorporated to further analysis and to adopt different and better methods of analysis as suggested.
Other recommendations
Expand the coverage of the PPI to include first utilities, and subsequently services and construction.
Expand the coverage of the PPI to also include products destined for export, which is the international standard.
Consider delaying the release of the PPI until one or two weeks after the reference month to provide more time to analyze the results and the data sources; this is not currently done given the limited resources.
It is expected that in 2014 we can work on changing basis in conjunction with the physical volume indicator in order to set 2015 as the new joint base of both types of indicators. It also seeks to extend coverage to the recommended sectors and destinations and establish the periodicity of future base changes which, ideally, should be done every five years at most. It should be reviewed with the government authorities and the users the possibility of postponing the date of publication of the index as recommended.