## Double Deflation of Bhutan’s Annual GDP Statistics

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**Canonical URL:** [Double Deflation of Bhutan’s Annual GDP Statistics](https://www.imf.org/-/media/files/publications/cr/2018/cr1879.pdf)

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---

### Summary of mission outcomes and priority recommendations
- Mission: SARTTAC national accounts statistics TA mission to Thimphu, Bhutan during June 19–23, 2017; follow-up to IMF STA mission in May 2016.
- Main purpose: assist authorities in improving estimates of annual GDP and developing methods for compiling quarterly GDP estimates.
- Ongoing/upcoming data sources:
  - 2017 Bhutan Living Standards Survey results being tabulated.
  - Quarterly Household Consumption Expenditure Survey (QHCES) initiated early 2017.
  - First Economic Census (EC) planned for fall 2017.
  - Price statistics improvement program expected to begin in July 2017 and produce results within one year.
- Expected outcomes:
  - Rebasing annual GDP estimates from 2000 to 2015.
  - Development of quarterly GDP by expenditure.
  - Improved data quality and timelier information for policymakers.
- Three-step process recommended:
  1. Finalize, adopt, and implement Results Based Management (RBM) workplans for annual and quarterly GDP.
  2. Perform early tests of EC and QHCES results for accuracy and reliability.
  3. Accelerate planned acquisition of new employees to handle increased workload.
- Double-deflation findings:
  - Currently, GVA in volume terms is derived using direct deflation methods and double deflation is not used.
  - Sufficient source data are currently available to produce double-deflated GVA estimates for five economic activities.
  - With anticipated new source data and price statistics, NSB should be able to expand double-deflation to selected components of 10 economic activities during the upcoming benchmark.

### Priority recommendations
- July 2017
  - Finalize, adopt, and begin implementing RBM workplans for annual GDP and quarterly GDP.
  - Responsible: National Accounts and Price Division (NAPD)
- Summer/Fall 2017
  - Test EC and QHCES results for accuracy and reliability.
  - Responsible: NAPD and Survey Division
- Summer 2017
  - Accelerate staff acquisition plan.
  - Responsible: NSB Leadership

### Improving annual GDP and developing quarterly GDP statistics — Ongoing and upcoming surveys
- Findings:
  - QHCES initiated early 2017; EC planned for fall 2017.
  - EC may address source data for 2015 benchmark but selected annual surveys may still be required for annual indicators.
  - Bhutan plans collaboration with Department of Revenue and Customs, ADB, and other agencies to develop a Business Register as part of EC effort; caution that Business Register is typically a starting point for, not a product of, an EC.
- Recommendations:
  - Perform accuracy and reliability tests of QHCES and EC as soon as possible; for QHCES validate a subsample by revisiting respondents; for EC pretest the form.
  - Decide on the need for selected annual surveys to supplement EC data; design forms; educate potential respondents.
  - Evolve Business Register and EC data collection to ensure comprehensive EC coverage; develop plan for continuous updating—preferably by the Department of Revenue and Customs.

### Status of recommendations from previous TA missions
- Findings:
  - Steady progress since May 2016 TA mission.
  - "Complete" recommendations included:
    - Obtaining funds to conduct the 2017 Bhutan Living Standards Survey.
    - Developing plans to rebase Bhutan’s PPI and develop XMPI using UNESCAP resources.
    - Developing quarterly volume indicators for compiling quarterly GDP.
    - Developing a commodity-flow approach for measuring annual GVA for construction.
  - "In progress" items:
    - Plan to assist the Ministry of Agriculture and Forestry in preparing forecasts of crop output with US Foreign Agriculture Service assistance.
    - Developing a volume extrapolator for selected general government services due to lumpy expenditure data.
  - "Incomplete" items:
    - Undertaking seasonal adjustment training.
    - Developing high-quality business process documentation.
- Recommendation:
  - Use the status list to track progress on important tasks.

### RBM workplans — planning, timelines, and key milestones
- Mission assisted authorities in developing a workplan comprising three components:
  1. RBM workplan with overarching outcomes, indicators, baselines, and milestones.
  2. Detailed schedule of events/activities for rebenchmarking and rebasing annual GDP statistics.
  3. Detailed schedule of events/activities for compilation and dissemination of quarterly GDP statistics.
- Recommendations:
  - Finalize milestone dates in the RBM workplan.
  - Revise annual and quarterly GDP events/activities dates to align with data availability as determined by data-supplying partners.
  - Adopt the workplans and begin implementation.
- Key RBM milestones and targets:
  - Objective: Strengthen compilation and dissemination of macroeconomic and financial statistics according to internationally accepted statistical standards.
    - Published annual benchmark and related national accounts statistics conforming to SNA 2008 by March 2019.
    - Assumptions: Resources and inter-agency cooperation sufficient; NSB staff to absorb TA and participate in training organized by SARTTAC in FY 2017 and 2018.
  - SUTs and 2015 benchmark:
    - Prepare SUTs to form basis of new 2015 benchmark; address conceptual issues by end of March 2020.
  - Source data improvements:
    - Improvements to source data for annual estimates by June 2019.
  - Classification updates:
    - Update classifications to conform more closely to international systems (2008 SNA, ISIC/NACE, CPC/CPA, COICOP, COFOG) by March 2020.
  - Metadata:
    - Prepare and release metadata describing preparation of the 2015 SUT; inter-benchmark and post-benchmark period (current-, constant-price, and prices) by March 2020.
  - Higher frequency data:
    - Improve frequency from annual to quarterly compilation and/or dissemination by June 2021.

### Phased Annual GDP Rebasing Program (selected milestones and timing)
- Phase 1
  - Identify statistical, methodological, and definitional/conceptual revisions including adoption of ISIC 4. Jul 17
- Phase 2: Data preparation Aug 17 – Jun18
  - 2a Complete the 2014 SUT that is currently under development Aug 17
  - 2b Finalize plans (form preparation and logistics) for the Economic Census Sep 17
  - 2c Conduct the Economic Census Oct – Dec 17
  - 2d Tabulate Economic Census results Jan – Jun 18
- Phase 3: Prepare a 2015 SUT using Economic Census and other available data Jul 18 – May 19
  - 3a Deciding SUT configuration Jul 18
  - 3b Prepare supply table Aug – Oct 18
  - 3c Prepare valuation matrices Nov 18
  - 3d Prepare intermediate consumption table Dec – Jan 19
  - 3e Prepare final uses Feb – Mar 19
  - 3f Manual balancing Apr – May 19
- Phase 4: Compiling consistent historical annual price series: 2000 – 2018 Jun – Jul 19
  - 4a Rereferencing prices, 2015=100 (2000-2018) (Product and Expenditure) Jun – Jul 19
- Phase 5: Compiling consistent historical annual constant- and current-price series and deflators: 2000 – 2018 Aug -Dec 19
  - 5a Develop consistent constant- and current-price series and, where necessary, wedging 2015 differences back to 2001 Aug – Sep 19
  - 5b Extrapolating 2015 benchmark estimates out to 2018 (Product and Expenditure) Oct – Nov 19
  - 5c Deflating, reflating, and checking the consistency of implicit price deflators Dec 19
- Phase 6: Review/Analyze the estimates and prepare sources, methods, and revisions metadata text Jan – Feb 20
- Phase 7: Announcing and conducting the GDP release (2000 -2018) Mar 20

### Phased Development of Quarterly GDP Expenditure Estimates (selected milestones and timing)
- Phase 1
  - Determine expected configuration, data sources, and methods July – Sep 17
- Phase 2: Collect and assemble source data and methods; ensure timeliness Jan – Dec 18
  - 2a Household and NPISH final consumption expenditures Jan – Mar 18
  - 2b Government final consumption expenditures Apr – Jun 18
  - 2c Gross Fixed Capital Formation Jul – Sep 18
  - 2d Inventories Oct – Dec 18
  - 2e Net Exports (Exports – Imports) Oct – Dec 18
- Phase 3: Develop quarterly current-price indicators for 2014 – 2018, and related price deflators Jan – Dec 19
  - 3a Household and NPISH final consumption expenditures (begin with 2017 using QHCES data); for 2014-2016, this category will be estimated as a residual Jan – Mar 19
  - 3b Government final consumption expenditures Apr – Jun 19
  - 3c Gross Fixed Capital Formation Jul – Sep 19
  - 3d Inventories Oct – Dec 19
  - 3e Net Exports (Exports – Imports) Oct – Dec 19
- Phase 4: Interpolate new annual benchmark current-price controls using quarterly indicators (2014 – 2018) Apr – Jun 20
  - 4a Household and NPISH final consumption expenditures Apr 20
  - 4b Government final consumption expenditures Apr 20
  - 4c Gross Fixed Capital Formation May 20
  - 4d Inventories May 20
  - 4e Net Exports (Exports – Imports) Jun 20
- Phase 5: Interpolate new annual benchmark price controls (2015=100) using quarterly prices (2014 – 2018) Jul – Sep 20
  - 5a Household and NPISH final consumption expenditures Jul 20
  - 5b Government final consumption expenditures Jul 20
  - 5c Gross Fixed Capital Formation Aug 20
  - 5d Inventories Aug 20
  - 5e Net Exports (Exports – Imports) Sep 20
- Phase 6: Deflate quarterly GDP Expenditure estimates (2014 – 2018) Oct – Nov 20
  - 6a Household and NPISH final consumption expenditures Oct 20
  - 6b Government final consumption expenditures Oct 20
  - 6c Gross Fixed Capital Formation Nov 20
  - 6d Inventories Nov 20
  - 6e Net Exports (Exports – Imports) Nov 20
- Phase 7: Compute quarterly GDP Expenditure implicit price deflators and ensure consistency with annual controls Dec 20
- Phase 8: Conduct a thorough review of the estimates in current and constant prices (2014-2018) Jan 21
- Phase 9: Prepare sources, methods, and revisions metadata text; develop prototype for quarterly GDP Expenditure press release; gather current-price source data and price statistics for QI 19 – QIV 20 Feb – Mar 21
- Phase 10: Compile new quarterly GDP Expenditure estimates for the period QI 19 – QI 21 Apr – Jun 21
  - 10a Prepare current-price estimates Apr 21
  - 10b Prepare constant-price estimates May 21
- Phase 11: Announce release, finalize press release, and conduct the quarterly GDP Expenditure release (2015:I - 2021:I) June 30, 2021

### Appendix IV — Status of Recommendations (status as of June 2017) — selected items
- 1 Increase staff to compile and disseminate quarterly GDP estimates.
  - In progress. The intent is to increase staff; the timing is uncertain.
- 2 Collaborate with other Government of Bhutan agencies to develop a Business Register.
  - In progress. NSB implementing plan with Department of Revenue and Customs; assistance from ADB.
- 3 Develop a memorandum of understanding/agreement with the revenue authority to ensure access to VAT data when they become available.
  - Incomplete. Operationalization of a VAT in Bhutan is in the future.
- 4 Secure funds from the World Bank to perform a household Living Standards Survey (LSS)
  - Complete. A 2017 LSS has been conducted using World Bank resources. The results are awaited.
- 5 Develop plans for expanding Bhutan’s producer price index (PPI).
  - Complete. Plan being implemented to rebase and expand the PPI relying on Economic Census data.
- 6 Consider the development of export and import price indexes (XMPI)
  - Complete. NSB will collaborate with UNESCAP to develop XMPIs beginning in July 2017. The work should yield results by mid-2018.
- 14 Adopt double-deflation of electricity in the GDP accounts.
  - Incomplete. Double deflation is complicated by the very high input-output ratio associated with hydro-electricity; and inadequate deflators. Volume extrapolation may be an alternative.
- 18 Develop high-quality business process documentation.
  - Incomplete. This will be a future undertaking.

### Appendix V — Comments on Draft EC Data Collection Form (selected recommendations)
- General Information
  - Request respondent’s email address.
  - Request that respondent indicate the types of primary goods/services being produced to assist with industry classification.
- Employment
  - Request information on the number of “part-time” workers.
  - Separately identify “bonuses” as a type of compensation.
  - Request information on compensation in kind (uniforms, meals, equipment, vehicles) for accrual accounting purposes.
- Revenue and Expenses
  - Create a “Property income” category (include “interest,” “dividends,” “rent/royalty”).
  - Among costs/expenses, include “Depreciation,” “Contracted costs, including consultancies,” and “Board of Directors costs.”
- Assets
  - Include “Intellectual property assets” (e.g., “R&D,” “Computer software,” “Databases”).
  - Create a category for “Valuables.”
  - For “Capital Expenditures,” indicate inclusion of “Additions and alterations and Major replacements.”
  - Consider collecting data on eight categories each of Financial Assets and Liabilities for later development of the “sequence of accounts.”
- Inventories
  - Include a category for “Normal inventory losses” due to wastage, pilferage, etc.

### Appendix VI — Compiling GVA for Insurance (Example: Bhutan Insurance Limited, 2015)
- Gross output of Insurance (non-life)
  - Premiums Earned (152.9 mil Nu)
  - Premium supplements (54.4 mil Nu)
  - Actual Claims (100.4 mil Nu)
  - Change in Equalization Provision (33.6 mil Nu)
  - Gross output is derived as (152.9+54.4)-(100.4+33.6) = 73.3 mil Nu.
- Intermediate consumption (IC)
  - Operating Expense (46.5 mil Nu) plus Commission Expense (9.4 mil Nu), reduced by Employees Remuneration and welfare benefits (29.0 mil Nu) and Depreciation and Amortization (4.1 mil Nu).
  - Intermediate consumption is computed as: 46.5 + 9.4 – 29.0 – 4.1 = 22.8 mil Nu.
- Gross Value Added
  - Gross Value Added is calculated as: (GO – IC) 73.3 – 22.8 = 50.5 mil Nu.
- Notes:
  - Necessary to compile GO (mainly investment returns) and IC (investment-related and adjusted expenses) for BIL’s financing operation.
  - Similar compilations for other Bhutan insurance companies are made difficult because separate delineation of insurance and financing operations is not presented in the related annual reports for recent years.

*International Monetary Fund — SARTTAC, Bhutan — material extracted from Appendix III of the mission documentation.*

### 1. Double Deflation of Bhutan’s Annual GDP Statistics ____________________________________________ 6

### 1. Double Deflation of Bhutan’s Annual GDP Statistics

### Summary of mission outcomes and priority recommendations
- Mission: SARTTAC national accounts statistics TA mission to Thimphu, Bhutan during June 19–23, 2017; follow-up to IMF STA mission in May 2016.
- Main purpose: assist authorities in improving estimates of annual GDP and developing methods for compiling quarterly GDP estimates.
- Ongoing/upcoming data sources noted:
  - 2017 Bhutan Living Standards Survey results being tabulated.
  - Quarterly Household Consumption Expenditure Survey (QHCES) initiated early 2017.
  - First Economic Census (EC) planned for fall 2017.
  - Price statistics improvement program expected to begin in July 2017 and produce results within one year.
- Expected outcomes:
  - Rebasing annual GDP estimates from 2000 to 2015.
  - Development of quarterly GDP by expenditure.
  - Improved data quality and timelier information for policymakers.
- Three-step process recommended to achieve significant improvements:
  1. Finalize, adopt, and implement Results Based Management (RBM) workplans for annual and quarterly GDP.
  2. Perform early tests of EC and QHCES results for accuracy and reliability.
  3. Accelerate planned acquisition of new employees to handle increased workload.
- Double-deflation findings:
  - Currently, GVA in volume terms is derived using direct deflation methods and double deflation is not used.
  - Sufficient source data are currently available to produce double-deflated GVA estimates for five economic activities.
  - With anticipated new source data and price statistics, NSB should be able to expand double-deflation to selected components of 10 economic activities during the upcoming benchmark.

### Priority recommendations (Table 1)
- July 2017
  - Finalize, adopt, and begin implementing RBM workplans for annual GDP and quarterly GDP.
  - Responsible: National Accounts and Price Division (NAPD)
- Summer/Fall 2017
  - Test EC and QHCES results for accuracy and reliability.
  - Responsible: NAPD and Survey Division
- Summer 2017
  - Accelerate staff acquisition plan.
  - Responsible: NSB Leadership

### Improving annual GDP and developing quarterly GDP statistics — A. Ongoing and upcoming surveys
Findings:
- QHCES initiated early 2017; EC planned for fall 2017.
- EC may address source data for 2015 benchmark but selected annual surveys may still be required for annual indicators.
- Bhutan plans collaboration with Department of Revenue and Customs, ADB, and other agencies to develop a Business Register as part of EC effort; caution that Business Register is typically a starting point for, not a product of, an EC.
Recommendations:
- Perform accuracy and reliability tests of QHCES and EC as soon as possible; for QHCES validate a subsample by revisiting respondents; for EC pretest the form.
- Decide on the need for selected annual surveys to supplement EC data; design forms; educate potential respondents.
- Evolve Business Register and EC data collection to ensure comprehensive EC coverage; develop plan for continuous updating—preferably by the Department of Revenue and Customs.

### B. Status of recommendations of previous TA missions
Findings:
- Steady progress since May 2016 TA mission (see Appendix IV).
- Important "Complete" recommendations included:
  - Obtaining funds to conduct the 2017 Bhutan Living Standards Survey.
  - Developing plans to rebase Bhutan’s PPI and develop XMPI using UNESCAP resources.
  - Developing quarterly volume indicators for compiling quarterly GDP.
  - Developing a commodity-flow approach for measuring annual GVA for construction.
- "In progress" items:
  - Plan to assist the Ministry of Agriculture and Forestry in preparing forecasts of crop output with US Foreign Agriculture Service assistance.
  - Developing a volume extrapolator for selected general government services due to lumpy expenditure data.
- "Incomplete" items:
  - Undertaking seasonal adjustment training.
  - Developing high-quality business process documentation.
Recommendation:
- Use the status list to track progress on important tasks.

### C. TA provided (technical details)
FISIM:
- Bhutan currently follows 1993 SNA standard (property income earned less interest paid).
- 2008 SNA calls for reference rate approach.
- Mission recommended using:
  - “Base rate” (up to 2016) and
  - “Minimum Lending Rate” (beginning in 2016)
  - as the reference rate established by the Royal Monetary Authority (RMA) for computing FISIM.
- Mission developed standardized EXCEL worksheets in time series format for computing FISIM on deposits and Loans (SNA interest) adaptable to annual or quarterly compilations. (Worksheets available from the mission upon request.)

Insurance:
- Authorities were using 2008 SNA-like methods based on company financial reports; complication arises because two major insurance companies produce both insurance and financial services.
- One company issues combined reports since 2014 with no easy disaggregation.
- Mission recommended contacting the company to request disaggregated insurance versus financial services data.
- Mission used the financial report of the second major insurance company as a prototype for compilation (Appendix V).

Other TA:
- Comments provided on QHCES and EC report forms (Appendix VI contains EC form comments).
Recommendations:
- Obtain time series data from RMA on deposits, loans, and respective interest rates to compile FISIM statistics.
- Contact relevant insurance company to obtain disaggregated insurance vs financial services accounts as soon as possible.
- Incorporate mission’s suggested improvements to EC and QHCES data collection forms.

### D. RBM workplans (planning and timelines)
Findings:
- Mission assisted authorities in developing a workplan comprising three components:
  1. RBM workplan with overarching outcomes, indicators, baselines, and milestones (Appendix I).
  2. Detailed schedule of events/activities for rebenchmarking and rebasing annual GDP statistics (Appendix II).
  3. Detailed schedule of events/activities for compilation and dissemination of quarterly GDP statistics (Appendix III).
Recommendation:
- Finalize milestone dates in the RBM workplan.
- Revise annual and quarterly GDP events/activities dates to align with data availability as determined by data-supplying partners.
- Adopt the workplans and begin implementation.

Key RBM milestones and targets (as stated in Appendix I):
- Objective: Strengthen compilation and dissemination of macroeconomic and financial statistics according to internationally accepted statistical standards.
  - Published annual benchmark and related national accounts statistics conforming to SNA 2008 by March 2019.
  - Assumptions: Resources and inter-agency cooperation sufficient; NSB staff to absorb TA and participate in training organized by SARTTAC in FY 2017 and 2018.
- SUTs and 2015 benchmark:
  - Prepare SUTs to form basis of new 2015 benchmark; address conceptual issues by end of March 2020 (see Appendix II).
- Source data improvements:
  - Improvements to source data for annual estimates by June 2019.
- Classification updates:
  - Update classifications to conform more closely to international systems (2008 SNA, ISIC/NACE, CPC/CPA, COICOP, COFOG) by March 2020.
- Metadata:
  - Prepare and release metadata describing preparation of the 2015 SUT; inter-benchmark and post-benchmark period (current-, constant-price, and prices) by March 2020.
- Higher frequency data:
  - Improve frequency from annual to quarterly compilation and/or dissemination by June 2021.

*Source: NSB and SARTTAC Mission (IMF SARTTAC technical assistance mission report, June 19–23, 2017).*

### Appendix III.)

### Appendix III.)

### Business processes documentation for compilation and/or dissemination of macroeconomic and financial statistics
- Adequate business processes documentation exists, is well stored, accessible, and regularly updated to enable the compiling/disseminating statistical agency to sustain good statistical practices.
- As of April 2017, business process documentation either does not exist, is inadequate, or is not well stored, accessible, and/or regularly updated.
- Relative to the baseline, business processes documentation has been improved by becoming adequate, stored, accessible, and/or regularly updated by June 2019.

### Appendix II. Phased Annual GDP Rebasing Program
- Phase 1
  - Identify the statistical, methodological, and definitional/conceptual revisions that will be incorporated during the rebenchmarking and rebasing program, including adoption of a new industrial classification scheme (ISIC 4). Jul 17
- Phase 2: Data preparation Aug 17 – Jun18
  - 2a Complete the 2014 SUT that is currently under development Aug 17
  - 2b Finalize plans (form preparation and logistics) for the Economic Census Sep 17
  - 2c Conduct the Economic Census Oct – Dec 17
  - 2d Tabulate Economic Census results Jan – Jun 18
- Phase 3: Prepare a 2015 SUT using Economic Census and other available data Jul 18 – May 19
  - 3a Deciding SUT configuration (industries and products) Jul 18
  - 3b Prepare supply table Aug – Oct 18
  - 3c Prepare valuation matrices Nov 18
  - 3d Prepare intermediate consumption table Dec – Jan 19
  - 3e Prepare final uses Feb – Mar 19
  - 3f Manual balancing of the table Apr – May 19
- Phase 4: Compiling consistent historical annual price series: 2000 – 2018 Jun – Jul 19
  - 4a Rereferencing prices, 2015=100 (2000-2018) (Product and Expenditure) Jun – Jul 19
- Phase 5: Compiling consistent historical annual constant- and current-price series and deflators: 2000 – 2018 Aug -Dec 19
  - 5a Develop consistent constant- and current-price series and, where necessary, wedging 2015 differences (new benchmark versus published values) back to 2001 Aug – Sep 19
  - 5b Extrapolating 2015 benchmark estimates out to 2018 (Product and Expenditure) Oct – Nov 19
  - 5c Deflating, reflating, and checking the consistency of implicit price deflators Dec 19
- Phase 6: Review/Analyze the estimates and prepare sources, methods, and revisions metadata text Jan – Feb 20
- Phase 7: Announcing and conducting the GDP release (2000 -2018) Mar 20

### Appendix III. Phased Development of Quarterly GDP Expenditure Estimates
- Phase 1
  - Determine the expected configuration (categories), data sources, and methods for compiling quarterly GDP Expenditure estimates in current and constant prices July – Sep 17
- Phase 2: Collect and assemble source data and methods; ensure timeliness Jan – Dec 18
  - 2a Household and NPISH final consumption expenditures Jan – Mar 18
  - 2b Government final consumption expenditures Apr – Jun 18
  - 2c Gross Fixed Capital Formation Jul – Sep 18
  - 2d Inventories Oct – Dec 18
  - 2e Net Exports (Exports – Imports) Oct – Dec 18
- Phase 3: Develop quarterly current-price indicators for 2014 – 2018, and related price deflators Jan – Dec 19
  - 3a Household and NPISH final consumption expenditures (begin with 2017 using QHCES data); for 2014-2016, this category will be estimated as a residual Jan – Mar 19
  - 3b Government final consumption expenditures Apr – Jun 19
  - 3c Gross Fixed Capital Formation Jul – Sep 19
  - 3d Inventories Oct – Dec 19
  - 3e Net Exports (Exports – Imports) Oct – Dec 19
- Phase 4: Interpolate new annual benchmark current-price controls using quarterly indicators (2014 – 2018) Apr – Jun 20
  - 4a Household and NPISH final consumption expenditures (begin with 2017 using QHCES data); for 2014-2016, this category will be estimated as a residual Apr 20
  - 4b Government final consumption expenditures Apr 20
  - 4c Gross Fixed Capital Formation May 20
  - 4d Inventories May 20
  - 4e Net Exports (Exports – Imports) Jun 20
- Phase 5: Interpolate new annual benchmark price controls (2015=100) using quarterly prices (2014 – 2018) Jul – Sep 20
  - 5a Household and NPISH final consumption expenditures Jul 20
  - 5b Government final consumption expenditures Jul 20
  - 5c Gross Fixed Capital Formation Aug 20
  - 5d Inventories Aug 20
  - 5e Net Exports (Exports – Imports) Sep 20
- Phase 6: Deflate quarterly GDP Expenditure estimates (2014 – 2018). Ensure quarterly constant-price estimates are consistent with annual controls. Oct – Nov 20
  - 6a Household and NPISH final consumption expenditures Oct 20
  - 6b Government final consumption expenditures Oct 20
  - 6c Gross Fixed Capital Formation Nov 20
  - 6d Inventories Nov 20
  - 6e Net Exports (Exports – Imports) Nov 20
- Phase 7: Compute quarterly GDP Expenditure implicit price deflators and ensure consistency with annual controls (2014 - 2018) Dec 20
- Phase 8: Conduct a thorough review of the estimates in current and constant prices (2014-2018) Jan 21
- Phase 9: Prepare sources, methods, and revisions metadata text, including a revision policy. Develop prototype for quarterly GDP Expenditure press release. Also, gather current-price source data and price statistics for QI 19 – QIV 20. Feb – Mar 21
- Phase 10: Compile new quarterly GDP Expenditure estimates for the period QI 19 – QI 21 Apr – Jun 21
  - 10a Prepare current-price estimates Apr 21
  - 10b Prepare constant-price estimates May 21
- Phase 11: Announce release, finalize press release, and conduct the quarterly GDP Expenditure release (2015:I - 2021:I) June 30, 2021

### Appendix IV. Status of Recommendations from Previous TA Missions (Status as of June 2017)
- 1 Increase staff to compile and disseminate quarterly GDP estimates.
  - In progress. The intent is to increase staff; the timing is uncertain.
- 2 Collaborate with other Government of Bhutan agencies to develop a Business Register.
  - In progress. The NSB is implementing a plan to collaborate with the Department of Revenue and Customs to develop a Business Register. Assistance is also coming from the Asian Development Bank.
- 3 Develop a memorandum of understanding/agreement with the revenue authority to ensure access to VAT data when they become available.
  - Incomplete. Operationalization of a VAT in Bhutan is in the future. Appropriate actions will be taken leading up to the initiation of a VAT.
- 4 Secure funds from the World Bank to perform a household Living Standards Survey (LSS)
  - Complete. A 2017 LSS has been conducted using World Bank resources. The results are awaited.
- 5 Develop plans for expanding Bhutan’s producer price index (PPI).
  - Complete. A plan is being implemented to rebase and expand the PPI. The effort will rely on source data from an upcoming Economic Census.
- 6 Consider the development of export and import price indexes (XMPI)
  - Complete. The NSB will collaborate with UNESCAP to develop XMPIs beginning in July 2017. The work should yield results by mid-2018.
- 7 Collaborate with the Ministry of Agriculture and Forestry to develop more timely agriculture statistics.
  - In progress. The NSB is considering a plan to assist the Ministry in developing output forecasts for key crops based on training from the US Foreign Agriculture Service.
- 8 Finalize plans to rebase and re-benchmark GDP estimates.
  - In progress. Plans developed during the mission will be finalized in the near term.
- 9 Identify new indicators for the compilation of quarterly GDP estimates.
  - In progress. Indicators are being developed to compile quarterly GDP (quarterly GDP) by expenditure and by economic activity.
- 10 Undergo training in seasonal adjustment.
  - Incomplete. Will undertake seasonal adjustment training in the future; including during an upcoming SARTTAC NAS TA mission.
- 11 Incorporate certain improvements to the quarterly GDP compilation system that is under development.
  - In progress. For example, during the mission, work was performed on improving the compilation of FISIM, which would be incorporated on a quarterly basis if the decision is made to compile and disseminate GDP by economic activity.
- 12 Obtain trade data on ferrous alloys from the Royal Monetary Authority or from Indian authorities to use as an indicator for manufacturing gross value added (GVA).
  - Complete.
- 13 Develop a volume indicator for electricity output.
  - Complete. For the quarterly GDP effort, a quarterly volume indicator has been developed.
- 14 Adopt double-deflation of electricity in the GDP accounts.
  - Incomplete. Double deflation is complicated by the very high input-output ratio associated with hydro-electricity; and inadequate deflators. Volume extrapolation may be an alternative.
- 15 Develop an improved indicator for GDP construction estimates using a variety of source data.
  - Complete. Various construction products are now used to estimate construction activity using the commodity flow method.
- 16 Develop an improved indicator for estimating GVA for government services that accounts for timing inconsistencies.
  - In progress. Volume extrapolation may represent a good alternative to using government spending, which is lumpy.
- 17 For selected taxes, adopt a quarterly indicator of import duties as opposed to excise revenue because the former has fewer timing issues.
  - Complete. The issue was resolved using an adjustment to account for periodic Excise Refunds from the Government of India.
- 18 Develop high-quality business process documentation.
  - Incomplete. This will be a future undertaking.

### Appendix V. Comments on Draft EC Data Collection Form
- General Information
  - Request respondent’s email address.
  - Request that respondent indicate the types of primary goods/services that are being produced to assist with the industry classification process.
- Employment
  - Request information on the number of “part-time” workers.
  - Separately identify “bonuses” as a type of compensation.
  - Request information on the type and amounts associated with compensation in kind: e.g., uniforms used explicitly for work; meals provided during working shifts; equipment including vehicles that are provided to employees by employers to perform work; etc. (This applies for accrual accounting purposes. National accounts statistics should be measured on an accrual basis.)
- Revenue and Expenses
  - Create a “Property income” category, which would include “interest,” “dividends,” “rent/royalty,” etc.
  - Among costs/expenses, include “Depreciation,” “Contracted costs, including consultancies,” and “Board of Directors costs.”
- Assets
  - Among fixed assets, include a category for “Intellectual property assets, to include “R&D,” “Computer software,” “Databases,” etc.
  - Create a category for “Valuables.”
  - For the “Capital Expenditures” category, be certain to indicate that this category should include “Additions and alterations and Major replacements” to existing structures.
  - Consider collecting data on the eight categories each of Financial Assets and Liabilities for later development of the “sequence of accounts.”
- Inventories
  - Include a category for “Normal inventory losses” due to wastage, pilferage, etc.

### Appendix VI. Compiling GVA for Insurance (Example: Bhutan Insurance Limited, 2015)
- Gross output of Insurance (non-life)
  - Premiums Earned (152.9 mil Nu) [page 6 and footnote 18 on page 48]
  - Premium supplements (54.4 mil Nu) [footnote 13b on page 46] {profits for the year in the General Reserve Fund}
  - Actual Claims (100.4 mil Nu) [page 6 and footnote 22a, b, and c and footnote 23 on page 50] {Claims paid, plus outstanding claims, minus outstanding claims from the beginning of the year, less claims recovered from reinsurance.}
  - Change in Equalization Provision (33.6 mil Nu) {footnote 17a on page 48) {provisions for unexpired risks (added)).}
  - Gross output is derived as (152.9+54.4)-(100.4+33.6) = 73.3 mil Nu.
- Intermediate consumption (IC)
  - Operating Expense (46.5 mil Nu) (footnote 25, page 51) plus Commission Expense (9.4 mil Nu) (footnote 24, page 50), reduced by Employees Remuneration and welfare benefits (29.0 mil Nu) and Depreciation and Amortization (4.1 mil Nu) which are part of GVA.
  - Intermediate consumption is computed as: 46.5 + 9.4 – 29.0 – 4.1 = 22.8 mil Nu.
- Gross Value Added
  - Gross Value Added is calculated as: (GO – IC) 73.3 – 22.8 = 50.5 mil Nu.
- Notes
  - It is also necessary to compile the GO (mainly investment returns) and IC (investment-related and adjusted expenses) for BIL’s financing operation.
  - Similar compilations for other Bhutan insurance companies are made difficult because separate delineation of insurance and financing operations is not presented in the related annual reports for recent years.

### Appendix VII. Officials Met during the Mission
- 1. Mr. Chhime Tshering — NSB — ctshering@nsb.gov.bt
- 2. Mr. Riendrisonam Lhendup — NSB — r_lhendup@hotmail.com
- 3. Ms. Sangay Bida — NSB — sangayb63@gmail.com
- 4. Mr. Penjor Gyeltshen — NSB — pgyeltshen@nsb.gov.bt
- 5. Mr. Bikash Gurung — NSB — bikashgurung@nsb.gov.bt
- 6. Mr. Leki Wangdi — NSB — leki.wangdi1988@gmail.com
- 7. Sonam Chodey — NSB — sonamcee@gmail.com
- 8. Tashi Namgay — NSB — tnamgay@nsb.gov.bt
- 9. Tobden — NSB — tobden@nsb.gov.bt

*International Monetary Fund — SARTTAC, Bhutan — material extracted from Appendix III of the mission documentation.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2018/cr1879.pdf_