A. Total Economy

5. The annual accounts by institutional sector compilation is distributed among various units within the Macroeconomic Statistics Department (DEM). The Strengthening Macroeconomic Statistics Project (FEM) unit is responsible for the integration of current and accumulation accounts by institutional sector that are published annually, known as the Integrated Economic Accounts (IEA), which are part of the series with 2012 as the base year.

6. The financial and government sectors are compiled by the institutional sector unit, which is also responsible for government finance statistics. This unit utilizes information on the financial sector that is provided by the Office for the Supervision of Financial Institutions (SUGEF), the Office for Insurance Supervision (SUGESE), and the Office for the Supervision of Securities (SUGEVAL). The measurements of the financial and government sectors are integrated within the IEA. The FEM unit compiles the accounts for the non-financial corporations sector, households, and nonprofit institutions serving households. Both units prepare the full sequence of accounts from production to asset balances.

7. With regard to institutional sectors whose information source is administrative records, there are balances of non-financial and financial assets, with the feature that the closing balance does not coincide with the opening balance for the following year. There are no balance sheets for the following sectors/subsectors: other financial corporations for which only a minimum amount of information is available from the Business Economic Survey (BES); local governments; some of the public non-profit institutions that are part of the government; and the household sector.

8. During the mission an estimate was made of the balance for the total economy based on a method for estimating the stock on the basis of limited information. This was done for the purpose of obtaining a figure that could serve as a reference for estimates of balances of non-financial assets of other non-financial corporations, considering that it is more representative in terms of production, and that there is no basis for inferring what percentage this might be in the balances of non-financial assets.

9. The reference to the method applied is in the Measuring Capital Manual of the Organization for Economic Co-operation and Development (OECD), which notes that the Perpetual Inventory Method (PIM) is the most commonly used approach for the measurement of stocks and flows of fixed assets, and it is based on the simple idea that stocks constitute cumulative flows of investment, corrected for retirement and loss of efficiency.

10. It should be noted that these measurements are provisional and for the purposes of referring to the total economy, the best alternative is the calculation of gross and net capital stocks for the total economy and by asset segments based on the PIM constructed for the longest series possible. The CBCR does not yet use this measurement and the mission was informed that research is in progress and that it could be available in 2019. In the meantime, the asset balance sheet project is under way and TA has been requested for this purpose.

11. With regard to the measurement of stocks, the Measuring Capital Manual reconciles these measurements with the 2008 System of National Accounts (2008 SNA) balances of non-financial assets, as stated in the following paragraph: Section 19.7 … However, net stocks are also of interest in their own right when it comes to measuring wealth and when balance sheets are set up. A principle for balance sheets in the national accounts is that assets recorded in the opening or closing balance are valued at the prices prevailing on the dates to which the balance sheets relate. Only net or wealth stocks enter balance sheets... The difference between the value of opening and closing balance sheet can now be de-composed into a basic identity that links balance sheets, transactions and holding gains and losses... There is one omission in the formula above: no account was taken of other changes in volumes. Other volume changes in assets imply a discrete shift in the level of the capital stocks and few more general statements can be made about them.

12. For the purposes of this mission, the stock that will serve as a reference is the net stock, and the information used is the series of gross fixed capital formation by type of asset (GFCF) and the implicit price indices (IPIs). The tax depreciation rates available for Costa Rica in the regulations associated with the Income Tax Law for fixed assets and for radio and television services, films, videos, and other related products that are considered to be intellectual property were used for the service life assumptions, and the Regulation on Radio Communications was consulted to identify the time periods for which rights are granted and to assign service life assumptions.

13. Three variables α, b, and δ per type of asset are needed in order to obtain a provisional stock. Using this information a factor C is calculated, which represents the rate of new investments for the net stock of an asset. The formula is as follows:

where:

α is the asset improvement rate;

b is the asset growth rate;

δ is the depreciation rate.

14. A theoretical assumption was used for the improvement rate (0.2), the asset growth rate was the average growth in GFCF for each type of asset, and the rates mentioned in the previous paragraph identified by type of GFCF asset were used for the depreciation rate.

15. This information was used to estimate a factor C by type of asset, which was applied to the amounts by type of GFCF asset for 2012, taken as the starting point of the series of stocks and a basis for asset prices (implicit price indices). The results achieved are presented in Table 2.

^{Table 2.}

Stocks and Balances of Assets

^{Table 2.}

Stocks and Balances of Assets

Item	Millions of Colones
Net stocks of assets in 2012, total economy	29 704 144
Balance of assets of sectors with administrative records	18 081 917

View Table

^{Table 2.}

Stocks and Balances of Assets

Item	Millions of Colones
Net stocks of assets in 2012, total economy	29 704 144
Balance of assets of sectors with administrative records	18 081 917

16. The provisional balance of net stocks indicates that the difference between the two amounts corresponds to the balance of the four sectors/subsectors for which no balances are available: other non-financial corporations; local governments; some of the non-profit institutions that are part of the government; and the household sector.

17. In the particular case of the household sector, it is very important to calculate the housing stock, as the main fixed asset that households possess. In the case of local governments, and given that balances are needed for all of the sectors, alternatives for available information should be explored. The mission offered suggestions for the measurement of balances of non-financial assets for other non-financial corporations, based on information available from the BES and the income base, as well as statistical methods described in sections B and C.

18. An asset account needs to be compiled for each produced and non-produced non-financial asset, which was explained during the previous mission. The balance sheet format is used, which has an opening balance, a capital account, accounts of other changes in volume, a revaluation account, and a closing balance, which must be the opening balance of the next period.

19. During the mission a balance sheet calculation was performed for the pool of assets (asset accounts) based on information available in the FEM unit. The available opening balance and estimates of other non-financial corporations developed using statistical methods during the mission were used as a base. Following the simplified method described in paragraph 13, estimates were made for local governments and households based on their capital account for 2012. Accounts of other changes in volume already available to the FEM unit and developed on the basis of information from the administrative record or from the BES were used; the IPIs by type of asset of the same GFCF were used for the revaluation account. This recommendation is based on 2008 SNA, which states that the nominal gain is measured based on the price of the particular asset. Since the CBCR currently does not calculate nominal, neutral, and real gains, and only does so for a total and based on business accounting criteria, the valuation should be performed using the specific price of the asset.

20. The asset balances of the change in inventories were not addressed during the mission, however the respective measurement needs to be performed starting in 2012, in line with the balances developed to complete the set of produced assets.

Recommended Actions:

• Change the valuation criteria for the revaluation account which is currently being prepared, with the aim of applying the IPI of the relevant asset, and ensure that the same price is applied in the balance sheet of the institutional sectors/subsectors.

• Analyze the valuations that are presented in the information contained in the financial statements or annexes to the BES, with the aim of determining whether the information is based on market prices for the reference year.

B. Other Non-Financial Private Corporations, Simplified Perpetual Inventory Method

21. The previous mission of March 2018 made recommendations regarding the use of databases for other corporations and large companies, as well as the income database, in order to bring together all of the information available for the measurements of other companies. The FEM unit addressed these recommendations prior to the mission.

22. The purpose of this mission was to define possible methods that would enable the FEM unit to obtain balances of non-financial assets for other non-financial corporations for which not all information is available through the BES. Based on the information available, the mission assisted in the development of two methodological proposals, the first to follow up on the recommendations by the previous mission and using all of the information available from the BES for non-financial private corporations in all of their forms: large, special regimes, and others. The work performed on the basis of statistical methods is described in section C. The second is based on a proposal developed for the total economy with the simplified PIM that was described in section A.

23. The purpose of developing both of the proposals was to have elements that would make it possible to determine whether the amount obtained through statistical means had the necessary consistency, considering the data from the other segments of non-financial corporations, and the resulting gap by type of asset.

24. The results obtained by the two methods are consistent with the total for the segment representing other non-financial corporations. There are differences in the gaps between non-residential structures and machinery and equipment given the composition of the variables used to determine them, which is the large companies segment of the BES. The underlying assumption of the proposal developed using statistical methods is that the composition of the fixed assets used to generate the production of large companies is similar to that of other non-financial corporations, while the underlying assumption of the proposal developed using a capitalization factor is that the structure of capital formation in 2012 is similar to that of the general stocks of other companies for which no stocks are available.

25. The estimate developed using statistical methods is presented below in section C. The data obtained for both of the proposals are as follows (Table 3).

^{Table 3.}

Balances of Total Fixed Assets for Other Non-Financial Private Corporations for 2012, in Millions of Colones

^{Table 3.}

Balances of Total Fixed Assets for Other Non-Financial Private Corporations for 2012, in Millions of Colones

	Estimate
Estimate with simplified PIM	12,692,281
Estimate with expansions by statistical area	11,830,431
Estimate with expansions by statistical area and asset type	12,836,461

View Table

^{Table 3.}

Balances of Total Fixed Assets for Other Non-Financial Private Corporations for 2012, in Millions of Colones

	Estimate
Estimate with simplified PIM	12,692,281
Estimate with expansions by statistical area	11,830,431
Estimate with expansions by statistical area and asset type	12,836,461

Recommended Actions:

• Review the consistency of the variables obtained in Annex 5 of the BES and specify to the reporting entity the valuations with which assets are requested.

• Study the accounting standards that need to be applied by companies by regime and size in order to identify the differences between the accounting valuation and the economic valuation. Consider the fact that Annex 5 of the BES expresses “Balances at historical value,” which differ from the market values that are required for asset measurements in national accounts.

C. Other Non-Financial Private Corporations, Statistical Method

26. For the measurement of the non-financial private sector (NFPS), the CBCR has various sources of information that are comprised of administrative records and surveys. In particular, the business register (REVEC), the income database of the Ministry of Finance, and the BES are available for the estimation of gross capital formation in this institutional sector. The income database includes variables such as assets and liabilities, revenue, costs, credits, expenditures and deductions, for all of the companies that declare income.

27. The REVEC is a register of all economic entities at the national level, and it contains approximately 176,478 non-financial corporations in its coverage. It is updated annually with information from the income database and other sources of information and it is the sampling framework that serves as the basis for the design and selection of the sample of companies for the BES.

28. The BES is a survey whose purpose is to collect data from non-financial private companies in order to develop national accounts statistics. It is based on a sample designed according to the probabilistic method. The BES collects information in two segments: large companies and a group of other non-financial companies. Both segments include companies with the Inward Processing (IP) and Free Zone (FZ) special regimes. In terms of production output, large companies account for 14 percent, while the rest contribute 48 percent. Given that the availability of information is more limited for the latter segment, the CBCR is seeking to define measurement methods that will allow for more robust measurements of the non-financial corporate sector.

29. Within the BES, the corporations that are most important in terms of revenues are classified as large. They are included in the survey every year and they are asked questions in what is called the expanded form. The form contains profit and loss statements, balance sheets, and seven annexes that provide details about income and expenditures, as well as non-financial and financial assets. Information related to GFCF is contained in Annex 5 of the BES (Annex 1 herein). It is not necessary to perform estimates for the group of large companies because the population data are available. The FZ and IP companies are subject to special monitoring due to their importance and form of operation, and there is a census for which financial statements provided by the Foreign Trade Promotion Board (Procomer) are obtained.

30. From the subpopulation comprised of other non-financial private corporations with more than five employees, a sample with a self-represented stratum is selected which contains the largest companies by economic activity in terms of income and some with very particular characteristics within the activity, as well as a random sample that represents all of those companies that are included in the rest of the NFPS.

31. It is important to mention that the same economic activities are not investigated in the BES every year. Each year a group of activities is selected that will be included in the sample, according to criteria set by experts. The activities that are not measured in a given year are estimated on the basis of the behavior of other indicators and taking into consideration the data for the activity the previous year, if it was covered in the BES.

32. A shorter form is used for the 1,427 companies that make up the sample, including those in the self-represented stratum (814) and in the random stratum (613); this form does not include the balance sheets. This group of companies is, however, asked to provide Annex 5, which, as mentioned above, is where detailed information about balances of non-financial fixed assets by type of asset and by economic activity is included (Annex 1 herein).

33. The mission focused on the evaluation of various estimation methods using the balance of non-financial fixed assets declared by companies in the random sample, with the aim of determining the total balance of said variable by type of asset and by economic activity, but in this case there are 19,751 companies comprising the rest of the non-financial private sector (Table 4), which are represented by this sample and for which this information is not available.

^{Table 4.}

Importance of Each Subpopulation in the Total Population (REVEC)

^{Table 4.}

Importance of Each Subpopulation in the Total Population (REVEC)

Subsectors of the Population	Number of Companies	Income (millions)	Share
BES 2012 population	21,289	23,657,754	100.00%
Large (includes the Special Regime (SR) and Definitive Regime (DR))	111	8,187,471	34.61%
Sample of other companies (includes SR and DR)	1,427	12,593,059	53.23%
Self	814	11,481,094	48.53%
Random	613	1,111,964	4.70%
Outside of sample (RNFPS)	19,751	2,877,225	12.16%

View Table

^{Table 4.}

Importance of Each Subpopulation in the Total Population (REVEC)

Subsectors of the Population	Number of Companies	Income (millions)	Share
BES 2012 population	21,289	23,657,754	100.00%
Large (includes the Special Regime (SR) and Definitive Regime (DR))	111	8,187,471	34.61%
Sample of other companies (includes SR and DR)	1,427	12,593,059	53.23%
Self	814	11,481,094	48.53%
Random	613	1,111,964	4.70%
Outside of sample (RNFPS)	19,751	2,877,225	12.16%

34. It was decided to perform the estimates using the data for 2012 since it is the base year for the current series and it is where the BES starts. A larger number of economic activities was also investigated for this year (69 of 132), than in the rest of the period up to 2016. The information for 2017 is still being processed.

35. The two first scenarios considered were direct estimation methods. The first consisted in applying to the sample data the expansion factor defined for each company in the design of the original sample; in the second case, an expansion factor defined as the size of the population of companies in each activity (N) compared to the sample size in said economic activity (n) was applied.

36. A third option was to use the information from the income database to obtain population data on the balance of fixed assets of companies that declare income and that are not included in the BES sample.

37. Table 5 below is a synthesis of the results obtained from the three first scenarios evaluated:

^{Table 5.}

Initial Balance of Fixed Assets in 2012 (Millions of Colones)

^{Table 5.}

Initial Balance of Fixed Assets in 2012 (Millions of Colones)

Random Sample	Expanded by Company	Expanded by Statistical Area	Income Base
277,945	7,603,697,714	6,567,274	1,580,669

View Table

^{Table 5.}

Initial Balance of Fixed Assets in 2012 (Millions of Colones)

Random Sample	Expanded by Company	Expanded by Statistical Area	Income Base
277,945	7,603,697,714	6,567,274	1,580,669

38. In the fourth scenario an indirect estimation method was used that consisted in applying the conceptual framework of the ratio estimators to the BES sample information.

39. The indirect estimation methods use the known information of an auxiliary variable “Y,” which in our case is production, correlated with the study variable related to the GFCF, in order to obtain estimates that are more precise than calculations based on the sample alone. In this case, the ratios were estimated using the data declared by the companies that comprise the rest of the non-financial private sector and that are included in the BES random sample.

40. The linear correlation between these variables was estimated for all of the economic activities with information reported by companies in the BES and it is calculated to be 0.84. (the detailed calculation is presented in Annex 2).

41. Sample ratios were estimated for all of the economic activities that were investigated in the BES sample in 2012 by applying the formula described in the previous paragraph (Annex 4). Based on the sample ratios by activity we can also estimate the totals using the following formula:

where:

$$\hat{X}$$ is the total balance of fixed assets estimated for the total population;

Y is the total production for the population measured by Gross Production Value (GPV).

42. By applying this method, an estimate of the balance in fixed assets for the population of those activities included in the 2012 sample will be obtained (Annex 5).

43. In addition, based on the sample ratio $$\hat{R}=\left(Balanceoffixedassets\right)/\mathrm{Pr}oduction$$ obtained with the sample information for 2012, the ratios were calculated for each of the activities that were not investigated in 2012, by imputing the values based on the contribution of each economic activity to the total GPV (Annex 3).

44. Table 6 below provides the aggregated data for all of the activities, with the monetary amounts expressed in millions of colones:

^{Table 6.}

Estimate of the Initial Balance of Fixed Assets by Economic Activity for the Rest of the Non-Financial Private Sector Under the Definitive Regime

^{Table 6.}

Estimate of the Initial Balance of Fixed Assets by Economic Activity for the Rest of the Non-Financial Private Sector Under the Definitive Regime

Statistical areas included in the 2012 sample		Income	Initial balance of fixed assets for the sample	R	GPV for DR RPNFS population	Initial balance of fixed assets, expanded
Yes	69	1,201,023	277,945	0.2036	12,423,855	4,840,914
No	63	-	-	0.4657	5,639,300	6,989,517
Total	132	1,201,023	277,945	0.2729	18,063,155	11,830,431

View Table

^{Table 6.}

Estimate of the Initial Balance of Fixed Assets by Economic Activity for the Rest of the Non-Financial Private Sector Under the Definitive Regime

Statistical areas included in the 2012 sample		Income	Initial balance of fixed assets for the sample	R	GPV for DR RPNFS population	Initial balance of fixed assets, expanded
Yes	69	1,201,023	277,945	0.2036	12,423,855	4,840,914
No	63	-	-	0.4657	5,639,300	6,989,517
Total	132	1,201,023	277,945	0.2729	18,063,155	11,830,431

45. In addition, using the same methodology based on ratio estimators, the balance by each type of non-financial fixed asset was calculated. A detailed estimate was made for each of the following types of produced assets:

• Other buildings and structures

• Machinery and equipment

• Cultivated biological resources

• Costs of ownership transfer on non-produced assets

• Intellectual property products

• Inventories

  • - Materials and supplies

  • - Work in progress

  • - Other work in progress

  • - Finished goods

  • - Military inventories, foreclosed assets, and assets held under financial leases

  • - Goods for resale

• Valuables

• Acquisitions less disposals of non-produced assets

• Land and property.

46. First, sample ratios were estimated for the 69 activities that were included in the sample for 2012 and these data were used to obtain the expanded total for the balances by type of activity corresponding to the rest of activities (Annex 5). The estimates obtained for all of the types of assets except changes in inventories and valuables are presented below (Table 7):

^{Table 7.}

Estimates by Type of Asset Based on Ratio Estimators

^{Table 7.}

Estimates by Type of Asset Based on Ratio Estimators

Type of Asset	R	Expanded Balance Millions of Colones
Other buildings and structures	0.092499	2,692,692
Machinery and equipment	0.298827	8,258,895
Cultivated biological resources	0.000070	2,112
Costs of ownership transfer on non-produced assets	0.000027	660
Intellectual property products	0.004126	132,166
Land	0.038081	563,762
Total		11,650,287

View Table

^{Table 7.}

Estimates by Type of Asset Based on Ratio Estimators

Type of Asset	R	Expanded Balance Millions of Colones
Other buildings and structures	0.092499	2,692,692
Machinery and equipment	0.298827	8,258,895
Cultivated biological resources	0.000070	2,112
Costs of ownership transfer on non-produced assets	0.000027	660
Intellectual property products	0.004126	132,166
Land	0.038081	563,762
Total		11,650,287

47. The produced fixed assets corresponding to inventories and other valuables were estimated according to the same indirect method based on the ratio estimator, but using information reported by large companies by economic activity, since the information reported in the random sample for types of assets has limitations. There are economic activities that are not represented in the estimate owing to the fact that there are activities in which there is no company classified in the group of large companies.

48. In the case of the change in inventories and valuables, the population ratios were calculated for fixed assets based on the GPV by type of activity (manufacturing, trade, and services) for large companies and this quotient was multiplied by the GPV of the activity for the rest of the non-financial private sector.

49. The results obtained are shown in Table 8 below:

^{Table 8.}

Estimates by Type of Asset Based on Ratio Estimators, Inventories and Valuables

^{Table 8.}

Estimates by Type of Asset Based on Ratio Estimators, Inventories and Valuables

Type of Asset	Ratios	Expanded Balance Millions of Colones
Inventories	0.123075	1,185,821
Valuables	0.000014	353
Total		1,186,174

View Table

^{Table 8.}

Estimates by Type of Asset Based on Ratio Estimators, Inventories and Valuables

Type of Asset	Ratios	Expanded Balance Millions of Colones
Inventories	0.123075	1,185,821
Valuables	0.000014	353
Total		1,186,174

50. Table 9 below provides a summary of the population total for the balance of fixed assets corresponding to all of the companies in the rest of the non-financial private sector estimated using the ratio estimator by economic activity and type of asset.

^{Table 9.}

Population Totals for the Balance of Fixed Assets for the Rest of the Non-Financial Private Sector

^{Table 9.}

Population Totals for the Balance of Fixed Assets for the Rest of the Non-Financial Private Sector

Type of Asset	R	Expanded Balance Millions of Colones
Other buildings and structures	0.092499	2,692,692
Machinery and equipment	0.298827	8,258,895
Cultivated biological resources	0.000070	2,112
Costs of ownership transfer on non-produced assets	0.000027	660
Intellectual property products	0.004126	132,166
Land	0.038081	563,762
Inventories	0.123075	1,185,821
Valuables	0.000014	353
POPULATION TOTAL – ESTIMATED GROSS CAPITAL FORMATION		12,836,461

View Table

^{Table 9.}

Population Totals for the Balance of Fixed Assets for the Rest of the Non-Financial Private Sector

Type of Asset	R	Expanded Balance Millions of Colones
Other buildings and structures	0.092499	2,692,692
Machinery and equipment	0.298827	8,258,895
Cultivated biological resources	0.000070	2,112
Costs of ownership transfer on non-produced assets	0.000027	660
Intellectual property products	0.004126	132,166
Land	0.038081	563,762
Inventories	0.123075	1,185,821
Valuables	0.000014	353
POPULATION TOTAL – ESTIMATED GROSS CAPITAL FORMATION		12,836,461

D. General Government Sector and Households

51. The household sector and nonprofit public institutions and municipal governments subsectors do not have balances of non-financial and financial assets. In the case of households, there is no housing stock, however, the CBCR is developing a housing price index that will serve for these estimates in the medium term, together with additional information on the physical housing stock.

52. As for the general government, the municipal governments subsectors and 80 percent of nonprofit public institutions also lack balances of non-financial and financial assets. The Institutional Sector Statistics Unit (AESI) is the unit responsible for the compilation of data for the government and financial sector. This same unit is also responsible for Government Finance Statistics.

53. In order to obtain a balance of fixed assets for all of the institutional sectors, it is necessary to compile the balance sheets of these government subsectors. For this purpose, the AESI can provide the best elements to support the process, with regard to financial assets based on financial sector information that has already been prepared, and the issuance of available debt. In the case of non-financial assets, during the mission a balance of produced non-financial assets was developed in preliminary form, and this estimate can be revised and improved with information and references that may be available to the AESI.

54. The measurement of government sector balance sheets can be complicated if the government finance statistics records are on a cash basis, and consequently their valuation needs to be verified. As for local governments, the number of entities and the accounting information available also determine the type of measurements that can be made.

Recommended Action:

• Perform an inventory of the information available in the AESI and a valuation of assets in order to develop estimates of balances of non-financial and financial assets of local governments and non-profit public institutions for 2012.

E. Non-Produced Assets

55. The 2008 SNA recognizes three types of non-produced non-financial assets: natural resources; contracts, leases, and licenses; and purchased goodwill and marketing assets. As part of the non-financial assets, balance sheets also need to be prepared for them; it is necessary, however, to identify which of these assets can be identified as economic assets for Costa Rica, and the available information sources that will allow for their measurement.

56. The 2008 SNA identifies two characteristics that must be present in order for natural assets to meet the definition of an economic asset. In the first place, only those naturally occurring resources over which ownership rights have been established and are effectively enforced can qualify as economic assets and be recorded in balance sheets (2008 SNA, paragraph 10.167). In the second place, they must be capable of bringing economic benefits to their owners, given the technology, scientific knowledge, economic infrastructure, available resources, and set of relative prices prevailing on the dates to which the balance sheet relates or expected to do so in the near future (2008 SNA, paragraph 10.168).

57. For natural assets, the work that the statistics offices has performed is within the framework of the Environmental and Ecological Accounting System (SCAE) and would be the starting point for what can be achieved in terms of the extent of measurements of stocks of non-financial assets in national accounts. In this connection, there is an environmental accounts unit within the DEM with which a meeting was held. The CBCR compiles environmental accounts for water, forests, and energy based on the SCAE. This team explained to the mission and to the head of the FEM various aspects concerning the environmental assets for which research has been carried out, which depending on their ownership and use could cross over from the environmental to the economic arena.

58. The environmental accounts team is the unit that could help in defining which assets of those covered by these accounts would be subject to measurement as part of natural resources. The water account, which was developed from 2012 to 2015, contains measurements of hydrological resources in physical units. As part of the use of hydrological resources in monetary units, this account presents a table that shows the utilization of the resource in the production process, which has already been measured in the production account. In physical units, it presents a balance sheet that shows water bodies for economic use to which an economic valuation can be assigned, with the help of the environmental accounts unit. The valuations that can be performed would be part of Natural Asset (AN) 214 Hydrological resources.

59. The CBCR presents measurements of carbon, timber, and land in the Forest Account. In the case of carbon, it would have an impact only on the environment. In the physical assets account for timber resources, one needs to identify if the stocks of cultivated timber resources (natural forest, planted forest, palm forest, or mangroves) are owned by some institutional unit and if they bring economic benefits; this is due to the fact that afforestation and removal activities are observed, and if they are intended for economic use they could be the object of measurement of a natural asset AN 2159 Other, on the basis of which a price should be assigned for the valuation of those in stocks of timber resources. The forest cover change matrix (hectares) is where a shift to economic use can be identified. The use of timber resources that has already been measured as an input to economic activities is presented in supply and use tables expressed in monetary units.

60. With regard to the land cover account, the CBCR presents the total territory of Costa Rica by type of land: urban, crops, pasture, forest, mangrove, moors, partially forested, bare soil, and water. From the total cover and by type of land, the part corresponding to an economic asset that is the property of an institutional unit and that produces an economic benefit needs to be identified. Land use flows can be measured based on the expansion and regression by economic activities that are available in the same account. The relevant asset is AN 211 Land and property. As in the case of hydrological and timber resources, the definition of asset prices is the most critical part of the measurements, and support from the environmental accounts department is essential in the development of these measurements owing to its knowledge and the availability of information. The energy and emissions account basically concerns environmental measures.

Recommended Actions:

• Include the environmental accounts department, together with the FEM team, in the economic measurement of stocks of natural resources for the purposes of the 2017 rebasing project.

• Ask the environmental accounts team to update the measurements to 2016, in order to obtain stocks of economically measurable assets

A. Sectoral Balance Sheets: from the Office for the Supervision of Financial Institutions

61. There was an opportunity to review the sources of information available for financial assets provided by the Office for the Supervision of Financial Institutions (SUGEF) during the mission that took place last March. During this mission the AESI explained that there is an agreement with the SUGEF to make financial information on all of the institutions under supervision available on a monthly basis, institution by institution and operation by operation. This information is broken down by sector, based on the classification of economic entities used in the REVEC, and based on the 2008 SNA classification of financial assets. The SUGEF submits the information in aggregated form by institutional subsector defined for purposes of the 2012 base year by the CBCR.

62. The information that is received covers state-owned banks (4), private banks (12), cooperatives (32), financial institutions (4), mutual financial institutions (2), and two more financial institutions, for a total of 56 regulated financial institutions that comprise Costa Rica’s financial system. Based on the agreement, the grouping is that defined for the base year 2012, so if there is any revision for the purposes of the base year 2017, the corresponding reclassification should be requested.

63. It should be noted that the valuation criteria applied are the accounting criteria of the source information (restated), and it is recommended that they be verified against those applicable to national accounts, which in turn are consistent with those of financial statistics in which financial instruments are to be valued at market prices as of the date on which the balance sheets are presented.

64. The AESI prepares balance sheets of financial sector institutions, and the relevant counterparties, with this information, always following the institutional subsector already classified. It should be noted that the reconciliations with other sectors are made on the basis of the financial flows. The CBCR prepared a cash flow exercise for the year 2010.

65. With the flow reconciliation approach, the balances of the sources themselves are modified, and as years accumulate they differ from the original source. The CBCR publishes the IEA up to the financial account, and since there is interest in extending the central framework to the balance sheets, it is necessary to revise the current method, replacing it with a balance and flow approach.

66. This recommendation was made during the previous mission, which suggested the use of asset accounts and focusing on obtaining flows from the financial account and the other changes in assets and revaluation accounts based on the methods recommended in 2008 SNA. Table 10 presents an asset account. These accounts for non-financial produced assets were developed during the mission with FEM staff, based on the unit’s working files and applying the valuations suggested in 2008 SNA.

^{Table 10.}

Asset Account, Balance Sheet Format

^{Table 10.}

Asset Account, Balance Sheet Format

Code	Type of asset	IV.3 Closing balance/Opening balance Year n	IV.2 Changes in balance sheets				IV.2 Changes in balance sheets	IV.3 Closing balance/Opening balance Year n+1
			III.1 Capital account	III.2 Financial account	III.3.1 Other changes in the volume of assets account	III.3.2 Revaluation account
			P511 Acquisitions less disposals of fixed assets	Net acquisition of assets/Net issuance of liabilities	K Changes in assets	Nominal holding gains/losses
AF	Financial assets
AF1	Monetary gold and SDRs
AF2	Currency and deposits
AF3	Debt securities
AF4	Loans
AF5
AN	Non-financial assets
AN111	Dwellings
AN1121	Non-residential buildings
AN1122	Other structures
AN1123	Land and land improvements
AS1131

View Table

^{Table 10.}

Asset Account, Balance Sheet Format

Code	Type of asset	IV.3 Closing balance/Opening balance Year n	IV.2 Changes in balance sheets				IV.2 Changes in balance sheets	IV.3 Closing balance/Opening balance Year n+1
			III.1 Capital account	III.2 Financial account	III.3.1 Other changes in the volume of assets account	III.3.2 Revaluation account
			P511 Acquisitions less disposals of fixed assets	Net acquisition of assets/Net issuance of liabilities	K Changes in assets	Nominal holding gains/losses
AF	Financial assets
AF1	Monetary gold and SDRs
AF2	Currency and deposits
AF3	Debt securities
AF4	Loans
AF5
AN	Non-financial assets
AN111	Dwellings
AN1121	Non-residential buildings
AN1122	Other structures
AN1123	Land and land improvements
AS1131

67. The same data for all of the 2008 SNA assets are provided in the asset accounts, but instead of the breakdown by sectors, the columns show the entries for each type of asset coming from the capital and financial account, the other changes in the volume of assets account and the revaluation account (2008 SNA, paragraph 13.14).

68. In the measurements of financial assets it is necessary to perform a reconciliation with the Monetary and Financial Statistics (MFS) balances; these statistics are more timely and they follow the same accounting rules as the 2008 SNA, with the exception of the quadruple entry. To strengthen these reconciliations, the mission requested a meeting with the head of the MFS unit, who explained that they are working very closely with the AESI, but that to date the classification criteria for assets and institutional sectors have not yet been aligned. The SUGEF provides information to both units (MFS and AESI), but it is not the same information, since in the case of the MFS unit information is provided with the original source classifications and for the AESI the information is processed following the criteria defined for the purposes of the updating from the 2012 base year.

69. During the mission the AESI was asked to provide the head of the MFS unit with the balances of available financial assets with SUGEF sources and their own groupings. In addition, the head of the MFS unit was asked to draw up a comparison of figures, which was reviewed jointly by the head of the FEM unit, the AESI, the head of the External Sector Statistics Unit (AESE), and the MFS unit. Table 11 below is provided as an example.

^{Table 11.}

Comparison of National Accounts Data and Financial Statistics

^{Table 11.}

Comparison of National Accounts Data and Financial Statistics

2016			National Accounts Financial Account stocks	CBCR	Other Deposit-Taking Corporation (ODC)	Other Financial Corporation (OFC)
FINANCIAL ACCOUNT	F3	Debt securities
	F31	Domestic currency
	F311	Debt securities of the Central Govt	5,054,791.93		1,462,424.50
	F312	Debt securities of the CBCR	1,639,529.79		624,779.06
	F319	Other debt securities
	F32	Foreign currency
	F321	Debt securities of the Central Govt	1,213,882.57		1,001,768.99
	F322	Debt securities of the CBCR	53.63
	F329	Other debt securities	4,643,629.57
	F4	Loans
	F41	Domestic currency
	F411	Debt securities with repurchase agreement	153,136.39		131,838.16
	F412	Deferred liquidity operations	34,150.81		186,350.52
	F419	Other loans	12,323,755.04		13,121,998.27
	F42	Foreign currency
	F421	Debt securities with repurchase agreement	197,599.91		75,347.70
	F422	Deferred liquidity operations	13,603.41		29,306.22
	F429	Other loans	7,790,661.49		8,341,604.16

View Table

^{Table 11.}

Comparison of National Accounts Data and Financial Statistics

2016			National Accounts Financial Account stocks	CBCR	Other Deposit-Taking Corporation (ODC)	Other Financial Corporation (OFC)
FINANCIAL ACCOUNT	F3	Debt securities
	F31	Domestic currency
	F311	Debt securities of the Central Govt	5,054,791.93		1,462,424.50
	F312	Debt securities of the CBCR	1,639,529.79		624,779.06
	F319	Other debt securities
	F32	Foreign currency
	F321	Debt securities of the Central Govt	1,213,882.57		1,001,768.99
	F322	Debt securities of the CBCR	53.63
	F329	Other debt securities	4,643,629.57
	F4	Loans
	F41	Domestic currency
	F411	Debt securities with repurchase agreement	153,136.39		131,838.16
	F412	Deferred liquidity operations	34,150.81		186,350.52
	F419	Other loans	12,323,755.04		13,121,998.27
	F42	Foreign currency
	F421	Debt securities with repurchase agreement	197,599.91		75,347.70
	F422	Deferred liquidity operations	13,603.41		29,306.22
	F429	Other loans	7,790,661.49		8,341,604.16

70. The purpose of this comparison is to identify problems that are encountered in the preparation of asset accounts for the total balances of financial assets, in order to achieve the horizontal consistency that should be achieved by transaction and asset (Annex 6). It is noted, for example, that the level of Central Government debt holdings by the Other Deposit-Taking Corporations (figures in black) differs significantly from the AESI measurements (figures in blue). It was not possible to reconcile the numbers, since the purpose of this comparison exercise was to show that both statistics (national accounts and MFS), need to be reconciled for the purposes of asset balance sheets: balances, flows, other changes in the volume, and revaluations.

71. The same reconciliation applies to data on the International Investment Position (IIP), which the AESE prepares, and in this regard the mission was told that the reconciliation is already in place for the International Reserve, and therefore the categories of the IIP should continue to be reconciled, considering that a conversion from dollars to colones should be made according to the criteria defined by the AESE for the treatment of flows and stocks.

Recommended Actions:

• The DEM should define the unit responsible for the preparation of financial asset accounts, in order to introduce the asset account method as the proposed mechanism for the preparation of balance sheets by institutional subsector/sector and the total economy.

• Once the unit responsible has been defined, develop the financial asset accounts and align the integration criteria that will allow for the validation of reference figures from financial statistics, government finance, and the balance of payments.