A. Progress in Implementing the 2021 Action Plan and FISIM

10. The mission found that many of the recommendations made during the January 2021 mission had been implemented.² The steering committee comprising senior managers of (BelStat, NBRB, and MOF) was formalized in June 2021. Through this steering committee and the implementation of an important set of recommendations made in the November 2019 and January 2021 missions, BelStat has compiled the preliminary FABSs for 2017 that were reviewed during this mission.

11. The recommendations still not implemented that should be attended were discussed at the beginning and end of the mission. BelStat staff has participated in an IMF National Accounts course and compiled a preliminary set of FABSs following the recommendations made in the November 2019 and 2021 missions.

12. NBRB queried about the treatment of provisions as part of the ODC expenses due to their impact on the output compilation. The mission explained that provisions are not transactions and should not be part of the output computation.

13. The NBRB is the data provider for compiling the entire sequence of financial sector accounts, including FISIM. At the request of the NBRB, during the mission were reviewed the FISIM results for 2017 and 2020. The FISIM compilation is made by adopting the reference rate approach, as recommended in the January 2021 mission. However, for 2020 negative values have resulted for the general government and the financial institutions. In this last case, the FISIMs cover those financial institutions out of the scope of intermediation. The origin of negative FISIM in both cases is because the effective interest rate in the deposits is higher than the basic interest rate; this is not a common situation. The interest rate represents the middle point used by financial institutions to charge their service cost.

14. The negative FISIM might have different origins depending if the problem emerged on the loans or deposits side. If the negative value is on loans, it might be due to any subsidy in the interest rate, but if it raises on the deposits side, the cause might be a prime interest rate. In both cases is needed to review the stocks and interests involved in the FISIM estimates to eliminate any possible errors in the composition of these figures.

15. The estimates of FISIM need to be revised continuously to verify that the interbank interest rate, or in this case, basic interest rate, serves the purpose of being the middle point between the interest rate of loans and deposits. Interbank interest rate might be available, but sometimes it is not possible to use it due to erratic trends and the implausible results obtained applying it; in these cases, other alternatives need to be tested to introduce a basic interest rate.

16. To verify the consistency of the basic interest rate used in the FISIM estimates, it is suggested to compute an endogenous reference rate for various years as follows:

• a. Calculate the average interest rate on all loans (rL) by dividing the total interest income receivable on all loans made by resident deposit-taking corporations by the average stock of all loans and then multiply the result by 100.0.

• b. Calculate the average interest rate on all deposits (rD) by dividing the total interest payable on all deposits with resident deposit-taking corporations by the average stock of all deposits and then multiply the result by 100.0.

• c. Obtain the domestic reference rate (rrDOM) by taking the simple average of the two values.

17. Compare the endogenous reference rate with the basic interest currently used. If the differences are erratic over five years, it is recommendable to verify the causes. The FISIM estimates should be compiled separately for the domestic economy and the imports and exports of financial services in the BoP.

Actions recommended:

• Exclude the provisions from the computation of output of the ODC.

• Compute an endogenous interest rate for FISIM and compare it against the current basic interest rate.

• To verify the consistency of the FISIM obtained as part of the production of the financial intermediaries, BelStat should sum up the domestic and imported FISIM and compare it against the FISIM distributed to the users of financial services (intermediate and final consumption plus FISIM exported).

B. Review of Preliminary 2017 FABSs Estimates

18. The mission reviewed the preliminary results compiled by BelStat following the recommendations made in January 2021 and worked on compiling the revaluation and other changes in volume accounts. As for the revaluation account, the recordings that should be included in this step of the estimates are those coming from the exchange rate changes between the opening and closing stocks for 2017. For the other changes in volume accounts, the recordings should be only those coming from the replacements of data sources; the ending stocks should correspond to the original data source. Table 3 presents the NLB matching between flows of assets and liabilities, and the total (domestic economy plus RoW) is equal in assets and liabilities.

^{Table 3.}

Differences between Transactions in Asset and Liabilities for Each Instrument Domestic sectors, ROW and Total (BYN Thousands) (As of April 2022)

^{Table 3.}

Differences between Transactions in Asset and Liabilities for Each Instrument Domestic sectors, ROW and Total (BYN Thousands) (As of April 2022)

	Total, resident sectors	ROW	Total
Assets - Liabilities	-738 056	738 056	0
Assets	27 130 527	4 878 815	32 009 341
F.1 Monetary gold and SDRs	0	0	0
F.2 Currency and deposits:	12 430 995	-33 728	12 397 268
F.3 Debt securities:	-2 398 424	2 339 420	-59 004
F.4 Loans:	6 601 127	546 648	7 147 775
F.5 Equity and investment fund shares	1 941 202	2 074 813	4 016 015
F.6 Insurance, pension, and standardized guarantee schemes	263 406	3	263 410
F.7 Financial derivatives	-758	-2 205	-2 962
F.8 Other Accounts receivable/payable	8 293 078	-46 138	8 246 940
Liabilities	27 868 583	4 140 759	32 009 341
F.1 Monetary gold and SDRs	0	0	0
F.2 Currency and deposits:	9 680 675	2 716 593	12 397 268
F.3 Debt securities	167 569	-226 573	-59 004
F.4 Loans:	7 081 535	66 140	7 147 775
F.5 Equity and investment fund shares	3 926 132	89 883	4 016 015
F.6 Insurance, pension, and standardized guarantee schemes	263 410	0	263 410
F.7 Financial derivatives	-1 227	-1 736	-2 962
F.8 Other Accounts receivable /payable	6 750 489	1 496 451	8 246 940

View Table

^{Table 3.}

Differences between Transactions in Asset and Liabilities for Each Instrument Domestic sectors, ROW and Total (BYN Thousands) (As of April 2022)

	Total, resident sectors	ROW	Total
Assets - Liabilities	-738 056	738 056	0
Assets	27 130 527	4 878 815	32 009 341
F.1 Monetary gold and SDRs	0	0	0
F.2 Currency and deposits:	12 430 995	-33 728	12 397 268
F.3 Debt securities:	-2 398 424	2 339 420	-59 004
F.4 Loans:	6 601 127	546 648	7 147 775
F.5 Equity and investment fund shares	1 941 202	2 074 813	4 016 015
F.6 Insurance, pension, and standardized guarantee schemes	263 406	3	263 410
F.7 Financial derivatives	-758	-2 205	-2 962
F.8 Other Accounts receivable/payable	8 293 078	-46 138	8 246 940
Liabilities	27 868 583	4 140 759	32 009 341
F.1 Monetary gold and SDRs	0	0	0
F.2 Currency and deposits:	9 680 675	2 716 593	12 397 268
F.3 Debt securities	167 569	-226 573	-59 004
F.4 Loans:	7 081 535	66 140	7 147 775
F.5 Equity and investment fund shares	3 926 132	89 883	4 016 015
F.6 Insurance, pension, and standardized guarantee schemes	263 410	0	263 410
F.7 Financial derivatives	-1 227	-1 736	-2 962
F.8 Other Accounts receivable /payable	6 750 489	1 496 451	8 246 940

19. The sum of NLB of the financial account for the domestic sectors and the ROW is zero, but institutional sectors still have discrepancies with the NLB of the capital account that needs further improvement. Table 4, prepared by BelStat, shows two kinds of discrepancies: (i) the difference between the Gross Domestic Product by the production approach (GDP-P) and the GDP by the expenditure approach (GDP-E), which is also part of the capital accounts, and (ii) the discrepancy of the financial account, which is a total representing the discrepancies of the domestic sectors.

^{Table 4.}

Statistical Discrepancy: Capital and Financial Accounts (BYN Millions) (As of April 2022)

^{Table 4.}

Statistical Discrepancy: Capital and Financial Accounts (BYN Millions) (As of April 2022)

Sector/Subsector	Net Lending/Borrowing Capital account	Net Lending/Borrowing Financial account	Statistical Discrepancy
Central Bank	-203	-853	650
Deposit Taking Corporations	1 349	139	1 210
Other Financial Corporations	725	775	-50
General Government	2 283	1 839	444
Nonfinancial Corporations	-5 182	-1 537	-3 645
Households and Non-Profit Institutions serving Households	1 005	-1 100	2 105
Total domestic sectors	-23 (NLB including statistical discrepancy, SNA capital account)	-738	715
Statistical Discrepancy	1 744 (Between GDP-P and the GDP-E)		1 744
Net Lending / Borrowing	-1 767 = (-23 - 1744) (Between the current account and the capital account of the Balance of payments)	-738	-1 029
Rest of the Word (ROW)	1 767	738	1 029 (Between the financial account and the capital account of the Balance of Payments)
Total	0	0	0

View Table

^{Table 4.}

Statistical Discrepancy: Capital and Financial Accounts (BYN Millions) (As of April 2022)

Sector/Subsector	Net Lending/Borrowing Capital account	Net Lending/Borrowing Financial account	Statistical Discrepancy
Central Bank	-203	-853	650
Deposit Taking Corporations	1 349	139	1 210
Other Financial Corporations	725	775	-50
General Government	2 283	1 839	444
Nonfinancial Corporations	-5 182	-1 537	-3 645
Households and Non-Profit Institutions serving Households	1 005	-1 100	2 105
Total domestic sectors	-23 (NLB including statistical discrepancy, SNA capital account)	-738	715
Statistical Discrepancy	1 744 (Between GDP-P and the GDP-E)		1 744
Net Lending / Borrowing	-1 767 = (-23 - 1744) (Between the current account and the capital account of the Balance of payments)	-738	-1 029
Rest of the Word (ROW)	1 767	738	1 029 (Between the financial account and the capital account of the Balance of Payments)
Total	0	0	0

20. The mission reviewed the two kinds of NLB discrepancies (capital and financial account). The first is in the income and expenditure data processing to compute the financial corporations' production account, which might include non-transactions or missing others due to a lack of pre balance in the financial statements. The second is in the compilation and source data of the financial account by domestic sector, which is the subject of this report. The NBRB is the data provider for compiling the financial sector accounts.

21. During the mission, a chart of accounts with incomes and expenses items was reviewed, identifying that some items are not classified either included in the sequence of accounts, of which some are revaluations, valuation effects, or provision and need to be controlled outside the sequence of accounts, and others are transactions. The mission recommended classifying all the items according to the SNA categories, controlling those transactions and non-transactions, and then verifying if the statistical discrepancy is not originated in this compilation step. See Table 5. Appendix II presents the reconciliation of the saving and NLB based on financial statements.

^{Table 5.}

Steps to Verify the Business Accounting Data to Start the Compilation of the Sequence of Accounts

^{Table 5.}

Steps to Verify the Business Accounting Data to Start the Compilation of the Sequence of Accounts

Checks to start the compilation of the sequence of accounts
1. Verify the balance between income and expenditures; this difference should be the net profit/loss.
2. Check that the figure indicated as net profit/loss equals the item included in the equity in the balance sheet.
3. Proceed to classify all the items with the goods and services, distribution, and financial assets/liabilities SNA categories and distinguish those that are transactions from those that are not.
4. The economic classification of income and expenditures needs to be done for all the concepts, no matter the classification.
5. The items and sum up of non-transactions need to be controlled before starting and during the compilation of the sequence of accounts for determining accurately the balance items.
6. All the balance items for NA purposes can be obtained out of the sequence just by controlling the economic classification. This is an alternative way to verify the NA balance items.
• Basic equations
• Incomes - Expenditures=Net profit/loss
• Assets = Liabilities + Equity (including Net profit/loss)

View Table

^{Table 5.}

Steps to Verify the Business Accounting Data to Start the Compilation of the Sequence of Accounts

Checks to start the compilation of the sequence of accounts
1. Verify the balance between income and expenditures; this difference should be the net profit/loss.
2. Check that the figure indicated as net profit/loss equals the item included in the equity in the balance sheet.
3. Proceed to classify all the items with the goods and services, distribution, and financial assets/liabilities SNA categories and distinguish those that are transactions from those that are not.
4. The economic classification of income and expenditures needs to be done for all the concepts, no matter the classification.
5. The items and sum up of non-transactions need to be controlled before starting and during the compilation of the sequence of accounts for determining accurately the balance items.
6. All the balance items for NA purposes can be obtained out of the sequence just by controlling the economic classification. This is an alternative way to verify the NA balance items.
• Basic equations
• Incomes - Expenditures=Net profit/loss
• Assets = Liabilities + Equity (including Net profit/loss)

22. The order of the source data in compiling the FABSs is as follows:

• 1. 1SRF Central Bank

• 2. Balance of Payments

• 3. 2SRF Other depository corporations

• 4. 4SRF Other financial corporations

• 5. General Government (only flows in this version)

• 6. Nonfinancial corporations (NFC), Households, and Non-Profit Institutions Serving Households (NPISH) by counterparty

23. This order responds to the data reliability and the possibility of using it as a counterparty for other sectors. The sources: Central Bank (1SR) and the BOP are usually recorded directly. For 2SR and thereafter, the recordings are for the subsector itself and the counterparties which could be data providers (and not yet recorded before from the 1SRF or BoP). Each country defines the hierarchy of the data sources.

24. The flows are obtained through the difference in stocks. The flows are disclosed between transactions recorded in the financial account and the effect of the exchange rate recorded in the revaluation account for foreign currency transactions. The revaluation account was verified during the mission, and the recordings included were discussed with the BelStat staff.

25. Regarding the other changes in volume account, the recordings presented are those related to the source data replacement. Other recordings might appear with further refinements, depending on the available data, but not necessarily. The other changes in volume accounts are such types of accounts that record specific non-transactions clearly identified in the balance sheets, such as cancellation or reduction of debt, claims resulting from write-offs, and write-downs of debt, to name some.

26. The preliminary version of the FAs also presents an effect in the other changes in volume accounts in the equity, which follow the allocation criteria suggested. Which consists in treating the total value of equity asset holdings of NFCs as NFC’s equity investments in other NFCs and taking the difference between the total NFC equity on the issues and the total of equity assets in NFCs of the financial sector, general government, nonresidents, and NFCs’ investment in other NFCs, and allocate to the household sector. These effects are part of the compilation process and only need to be controlled.

27. The mission identified some negative values in the stock of equity of the Central Bank. BelStat staff has followed the recommendations made in previous missions to value the equity base on the method of own funds at book values. However, for the case of the Central Bank, this method does not apply because the Central Bank is a non-market public institutional unit, and according to the 2008 SNA, it has ”Other equity.” The 2008 SNA specifies that the “Other equity” should be valued as equal to the value of the unit’s assets less the value of its liabilities.

13.74 Other equity covers equity in any corporation or quasi corporation that does not issue shares or units. Such corporations include public enterprises, the central bank, some special government units, partnerships, unlimited liability companies and quasi-corporations whenever they are institutional units without shares. Other equity should be valued as equal to the value of the unit’s assets less the value of its liabilities.

28. The treatment of the ODC and OFC miscellaneous items is not defined, and the amounts are similar to the assets and liabilities in the SR forms. Based on the Monetary and Financial Statistics Manual and Compilation guide, the Other accounts receivable are composed of (1) dividends receivable, (2) items in the process of collection, and (3) miscellaneous asset items. As for the other accounts payable, it is composed of (1) Dividends payable, (2) Settlements accounts, and (3) Miscellaneous. The miscellaneous assets items function as a residual category. Major types of miscellaneous asset items include suspense accounts, amounts related to taxes, and prepayment of rent or other operating expenses. Given that the transactions and amounts are similar in the assets and liabilities, it is suggested to get a net value and only leave the positive net amount on the corresponding side of the balance sheets.

29. To improve the consistency of the preliminary version of the FABS it is important to incorporate other source data by institutional sector and transactions as far as possible. In the Annex VII. Process of Compiling and Finalizing the FABS (January 2021 mission) are given several instructions to finish the first series of FABSs. This work could be improved by incorporating control figures per financial assets such as debt securities and loans.

Actions recommended:

• Collaborate with the NBRB in completing the classification of incomes and expenditures items and the sequence of current accounts according to the SNA classifications.

• Record in the other changes in volume accounts those figures emerged from the substitution of data, sum up the closing balance sheet and validate with the original stocks incorporated in the corresponding matrix.

• Obtain the equity of the Central Bank through the difference between assets and liabilities, in which case the retained earnings and valuation adjustments are not considered and should be controlled as non-transactions in determining the saving and NLB.

• To improve the consistency of the FABSs compiled in this preliminary version, it is required to define figures to control the transaction level and elaborate special analysis with debt securities issued by the government, financial and private sector, and loans.