## 1. Elapsed Years Since GDP Base Period ## Source details **Canonical URL:** [1. Elapsed Years Since GDP Base Period](https://www.imf.org/-/media/files/publications/cr/2019/cr1906.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2019/cr1906.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2019/cr1906.pdf.json) --- ### Summary of mission outcomes and objectives - A technical assistance mission was conducted during July 2–13, 2018 to support measurement of Lao PDR’s national accounts statistics. - Mission objectives: - Assist development of a quarterly GDP time series. - Review the published annual GDP time series. - Develop recommendations to continue improving national accounts statistics compiled by the Lao Statistics Bureau (LSB). - The mission built upon previous national accounts statistics missions conducted in April 2017 and January 2018. - Lao PDR’s GDP time series is compiled using a contemporary base period (2012), which is the second most contemporary of eight countries in Emerging and Developing Asia and broadly adequate as there are less than 10 elapsed years since the base period. - The LSB is assembling source data, reviewing adequacy, and implementing international best practice to produce a quarterly GDP time series; the LSB expects to implement further improvements and publish a preliminary quarterly time series for mining industry value added by December 2018. ### Importance of reliable national accounts - Reliable and detailed national accounts statistics are essential for: - Informed economic policy-making. - Providing inputs to the private sector, foreign investors, rating agencies, and the public. - Informing IMF surveillance and domestic policy-making. ### Key objectives identified by the mission - Publish estimates of quarterly GDP to enable timely policy-making. - LSB has assembled timely quarterly source data for many GDP components since the base period. - Further work needed to enhance source data, obtain missing components, incorporate into national accounting framework, and compile quarterly GDP estimates. - The mission estimated existing (unpublished) estimates of mining industry value added are overstated by as much as 2.1 percent of GDP in Quarter 4, 2014. - Foster coordination within the statistical system to enhance data quality. - National accounts depend on data from Bank of the Lao PDR, Ministry of Finance, Ministry of Energy and Mines, and Ministry of Public Work and Transport. - Enhancing coordination and consistent classifications will improve reliability and minimize duplication. - Enhance GDP compilation and source data to better reflect economic developments. - Compiling a new base period is a large undertaking requiring several years; planning and data collection are necessary. - LSB has commenced development of a form for the 2018 Economic Census; further improvements when national accounts detail replaces historical items. - Seek to show functions for which government final consumption expenditure was undertaken. ### Priority recommendations (tabled actions and dates) - December 2018: Develop quarterly indicator series for intermediate consumption of the mining industry in current prices. Publish preliminary results on the LSB website. — Responsible: LSB - December 2018: Replace unused data items on the economic census form with essential national accounts detail such as own account capital formation. — Responsible: LSB - June 2019: Establish memorandums of understanding with the Ministry of Finance, Ministry of Energy and Mines, and Ministry of Public Work and Transport which specify expectations regarding classifications, consistency, format, quality, and timeliness of source data. — Responsible: LSB ### A. Publish estimates of quarterly GDP to enable timely policy-making - Current practice and issues: - Quarterly estimates of value added for several industries (e.g., mining, transportation and storage) have been compiled and continue to be enhanced. - Most quarterly estimates in constant prices are constructed using single extrapolation from the base year, and converted to current prices using a measure of quarterly price change. - Quarterly price changes for output should not be applied directly to value added in current prices because value added = output − intermediate consumption; price changes for output and intermediate consumption must be considered separately. - Use of the price change for output versus intermediate consumption makes a significant difference (as much as 537 million Kip in Quarter 4, 2014) for the mining industry. - Assuming GDP in 2014Q4 is 25,000 million Kip, the 537 million Kip difference amounts to 2.1 percent of GDP. - Mission assistance and recommendations: - The mission assisted the LSB to develop a separate series for the quarterly price change of intermediate consumption (based on prices of imported fuel) and recompile industry value added. - The LSB is encouraged to enhance this measure (e.g., a weighted sum of other significant products within intermediate consumption) and publish preliminary results on the LSB website. - Recommended actions: - Implement enhancements to source data and methods used to compile industry value added identified by the mission to ensure consistency with the national accounting framework. - Develop quarterly indicator series for intermediate consumption of the mining industry in current prices. Publish preliminary results on the LSB website. [Priority Recommendation] ### B. Foster coordination within the statistical system to enhance data quality - Key inter-agency coordination needs: - Ministry of Finance: customs records, value added tax data, Government Finance Statistics—critical for GDP compilation. - Ministry of Energy and Mines: turnover, product detail, issuance of licenses, current and capital expenditures in mining, and supply and use of energy. - Ministry of Public Work and Transport: passenger numbers by air, land, and water; new vehicle registrations by type; government expenditure and investment on transportation projects. - Recommended institutional actions: - LSB should convene meetings with these three government agencies to clarify availability of source data and establish expectations regarding classifications, consistency, format, quality, and timeliness; these should be documented in a memorandum of understanding signed by senior staff to ensure continuity. - Clarify responsibility for compilation of Balance of Payments Statistics with the Bank of the Lao PDR; key series required for GDP and Gross National Income (imports and exports of goods and services, Primary Income Credits and Debits) are priority requirements of the LSB. - LSB can assist the Bank of the Lao PDR by providing results from its economic census and annual enterprise survey; results from the international investment position survey (discussed in the November 2017 Balance of Payments Statistics mission) will complement national accounts compilation. - Liaise with the Ministry of Finance to include additional detail within Lao PDR’s implementation of the Harmonized System to ensure imports and exports include sufficient detail to compile GDP and derive real GDP. - Additional recommendations: - Backcast and publish the current (2012) benchmark to the previous benchmark (2002) where constant price estimates are non-additive. - The LSB’s methodology to backcast current prices (allocating a proportion of rebasing (8.0 percent) across the ten-year period to ensure the 2002 benchmark remains unchanged) is considered appropriate for current prices. - Revisions to real GDP obtained by applying historical movements to 2012 levels produced implausible results and should not be published; instead compile real GDP using existing historical movements to ensure consistency with published estimates—this ensures GDP using the production approach is non-additive in constant prices prior to 2012. ### C. Enhance GDP compilation and source data to better reflect economic developments - Base period and timing: - Lao PDR’s GDP time series is compiled using base period 2012 in accordance with international best practice. - Unless a more contemporary GDP base period is implemented by 2022, changes in Lao PDR’s real GDP are unlikely to be adequate for policy-making. - Recommended base year and data collection: - Lao PDR’s Strategy for the Development of National Statistical System (2010–2020) commits to an economic census for 2017 (during 2018) and the Lao Expenditure and Consumption Survey (LECS) during 2017/18; both were postponed due to budget changes. - The 2018 Economic Census will now collect data for 2018 during 2019, while the LECS will collect household data over the period June 2018 to May 2019. - The mission recommends the LSB select 2018 as the next base year to enable inclusion of key source data with minimal transformation; existing plans to select 2017 as the next base year should be abandoned due to delayed collection of key source data. - Note: It will be necessary to convert LECS data collected in January to May 2019 inclusive to the prices of January to May 2018 using the relevant components of the CPI to ensure the household survey data relates to the selected base period. This approach assumes the volumes in January to May 2018 and January to May 2019 are identical. - Economic census form and survey detail: - The current economic census form comprises eight pages; the mission estimated 44 percent of the form (3.5 of 8 pages) does not support compilation of GDP and recommends these be replaced with essential national accounts detail, such as own account capital formation. - A large proportion of national accounts detail is likely to come from the existing annual enterprise survey form, designed to collect data supporting the Asian Development Bank’s program to compile an annual time series of supply and use tables; these supply and use tables will support publication of consistent estimates for GDP calculated using the production and expenditure approach. - Informal sector: - Significant amounts of Lao PDR’s economy are expected to come from informal activity; the significance will be known once LECS source data have been incorporated into the new GDP base year. - The mission recommends the new GDP base year includes a distinction between formal and informal activity to support estimation and policy-making. *Source — IMF technical assistance mission report (July 2–13, 2018) on national accounts statistics for Lao People’s Democratic Republic, "Elapsed Years Since GDP Base Period" section.* ### 16. Published estimates for final consumption expenditure of general government ### Final consumption expenditure by function (2016) - Estimates for 2016 use the international standard Classification of the Functions of Government (COFOG). - Individual agencies of general government were classified to the function for which they were established; estimates require further refinement in consultation with the Ministry of Finance to ensure all general government units are identified and correctly classified. - The mission provided guidelines for compiling output and final consumption expenditure by COFOG, assigning each government agency, department and ministry to a COFOG division as a general principle. Where entities perform multiple functions, expenditure was assigned to multiple functions based on judgment in consultation with LSB staff. - Government output and final consumption expenditure which benefits individual households can now be identified to derive aggregates for actual final consumption of households (actual individual consumption). The COFOG divisions covering individual and collective consumption expenditures of government are indicated in the international standards. - Quality gaps in government expenditure data transmitted to the LSB were identified: - Expenditure data for key ministries including the Ministry of Defense and the Ministry of Security could not be identified (citing confidentiality/sensitivity concerns) and is likely to cause under coverage of GDP. - LSB lacked sufficient information to classify separate expenditures by purpose for Recreation, Culture and Religion (COFOG Division 08) and Education (COFOG Division 09) provided by the Ministry of Education and Sport. - The Ministry of Finance should be responsible for compilation of government expenditure by COFOG, with coordination between the LSB and the Ministry of Finance essential. ### Recommended Actions (selected) - Revise project plan to reflect 2018, rather than 2017, as the new base year. Finalize and publish project plan to the LSB website on this basis. - Replace unused data items on the economic census form with essential national accounts detail such as own account capital formation. - Ensure the GDP benchmark for 2018 can be disaggregated between formal and informal activity with appropriate indicators identified to enable annual extrapolation. - Review distribution by function of 2016 government output and final consumption expenditure estimates, and compile a time series commencing in 2012. ### Priority actions / milestones and target completion dates (selected) - Outcome: Publish estimates of quarterly GDP to enable timely policy-making. - Develop quarterly indicator series for intermediate consumption of the mining industry in current prices. Publish preliminary results on the LSB website. [Priority Recommendation] — December 2018 - Implement enhancements to source data and methods used to compile industry value added identified by the mission to ensure consistency with the national accounting framework. — March 2019 - Outcome: Foster coordination within the statistical system to enhance data quality. - Establish memorandums of understanding with the Ministry of Finance, Ministry of Energy and Mines, and Ministry of Public Work and Transport specifying expectations regarding classifications, consistency, format, quality, and timeliness of source data. [Priority Recommendation] — June 2019 - Determine responsibility for compilation of Balance of Payments with the Bank of the Lao PDR and agree upon a prioritized list of improvements. — December 2018 - Ensure the classification of imports and exports used to administer customs procedures includes sufficient detail to support concordances with other international statistical standards. — June 2019 - Backcast and publish the current (2012) benchmark to the previous benchmark (2002) where constant price estimates are non-additive. — December 2018 - Outcome: Enhance GDP compilation and source data to better reflect economic developments. - Revise project plan to reflect 2018, rather than 2017, as the new base year. Finalize and publish project plan to the LSB website on this basis. — December 2018 - Replace unused data items on the economic census form with essential national accounts detail such as own account capital formation. [Priority Recommendation] — December 2018 - Ensure the GDP benchmark for 2018 can be disaggregated between formal and informal activity with appropriate indicators identified to enable annual extrapolation. — December 2021 - Review distribution by function of 2016 government output and final consumption expenditure estimates, and compile a time series commencing in 2012. — December 2018 ### Quarterly indicator for intermediate consumption of the mining industry (analysis and impacts) - Problem with current method: - Current price estimates for intermediate consumption are derived using a constant intermediate consumption to output ratio from the 2012 benchmark year estimates. This implicitly assumes changes in the price of output are identical to changes in price of intermediate consumption, which is unlikely given volatility of mining output prices (copper and gold) vs. stability of imported fuel prices. - Proposed approach: - Compile a deflator for intermediate consumption as the weighted sum of price deflators for the significant products within intermediate consumption for the mining industry. - The mission developed a series for the quarterly price change of intermediate consumption based on prices of imported fuel and recompiled industry value added. - Impact (preliminary): - Differences are most significant during 2014 and 2015, likely because imported fuel prices were relatively stable compared to significant falls in prices of copper and gold. - Preliminary estimates suggest revisions to the deflator will reduce the level of nominal GDP by as much as 2.1 percent in Quarter 4, 2014. While there is no change to output in current prices, intermediate consumption increases by as much as 537 million Kip as the price of intermediate consumption has declined by less than price of output. ### Table 2 — Estimated Impact of a Quarterly Indicator for Intermediate Consumption of the Mining Industry in Current Prices (2013–2016) (million Kip unless otherwise stated) - Value Added, current prices [1]: - 2013 Q1 2,089; Q2 2,004; Q3 2,214; Q4 2,312. - 2014 Q1 2,305; Q2 1,854; Q3 1,957; Q4 2,223. - 2015 Q1 1,805; Q2 1,817; Q3 1,603; Q4 1,590. - 2016 Q1 1,555; Q2 1,591; Q3 1,634; Q4 1,820. - Value Added, constant prices (Reference period 2012) [2]: - 2013 Q1 2,187; Q2 2,437; Q3 2,542; Q4 2,653. - 2014 Q1 2,671; Q2 2,393; Q3 2,470; Q4 2,973. - 2015 Q1 2,662; Q2 2,608; Q3 2,627; Q4 2,742. - 2016 Q1 2,730; Q2 2,720; Q3 2,732; Q4 2,898. - Intermediate consumption, constant prices (Reference period 2012) [3] a: - 2013 Q1 1,183; Q2 1,318; Q3 1,375; Q4 1,434. - 2014 Q1 1,445; Q2 1,294; Q3 1,336; Q4 1,608. - 2015 Q1 1,439; Q2 1,410; Q3 1,420; Q4 1,483. - 2016 Q1 1,476; Q2 1,471; Q3 1,477; Q4 1,567. - Deflator, output (Reference period 2012) [4] 2012=100: - 2013 Q1 95.46; Q2 82.20; Q3 87.06; Q4 87.13. - 2014 Q1 86.26; Q2 77.41; Q3 79.20; Q4 74.73. - 2015 Q1 67.77; Q2 69.65; Q3 61.02; Q4 57.96. - 2016 Q1 56.92; Q2 58.48; Q3 59.79; Q4 62.75. - Estimated Deflator, intermediate consumption (Reference period 2012) [5] 2012=100: - 2013 Q1 98.58; Q2 96.85; Q3 100.81; Q4 98.09. - 2014 Q1 97.91; Q2 95.98; Q3 96.73; Q4 107.89. - 2015 Q1 98.06; Q2 93.63; Q3 88.60; Q4 80.53. - 2016 Q1 69.32; Q2 67.84; Q3 70.42; Q4 71.44. - Output, current prices [6] b: - 2013 Q1 3,219; Q2 3,088; Q3 3,411; Q4 3,563. - 2014 Q1 3,552; Q2 2,856; Q3 3,016; Q4 3,425. - 2015 Q1 2,781; Q2 2,800; Q3 2,470; Q4 2,450. - 2016 Q1 2,395; Q2 2,451; Q3 2,518; Q4 2,803. - Intermediate consumption, current prices [7] = [3]*[5]/100: - 2013 Q1 1,169; Q2 1,279; Q3 1,389; Q4 1,410. - 2014 Q1 1,418; Q2 1,245; Q3 1,295; Q4 1,739. - 2015 Q1 1,415; Q2 1,323; Q3 1,261; Q4 1,197. - 2016 Q1 1,026; Q2 1,000; Q3 1,043; Q4 1,122. - Value Added#, current prices [8] = [6]-[7]: - 2013 Q1 2,050; Q2 1,809; Q3 2,022; Q4 2,153. - 2014 Q1 2,135; Q2 1,611; Q3 1,721; Q4 1,687. - 2015 Q1 1,366; Q2 1,477; Q3 1,209; Q4 1,253. - 2016 Q1 1,370; Q2 1,452; Q3 1,475; Q4 1,681. - Estimated Impact [9] = [8]-[1]: - 2013 Q1 (39); Q2 (195); Q3 (192); Q4 (160). - 2014 Q1 (171); Q2 (243); Q3 (237); Q4 (537). - 2015 Q1 (439); Q2 (341); Q3 (394); Q4 (337). - 2016 Q1 (185); Q2 (140); Q3 (159); Q4 (138). - Notes accompanying table: - a: Values obtained by applying the movement in value added in constant prices to intermediate consumption recorded in 2012 supply and use table. - b: Values obtained by applying a composite output price deflator for copper and gold to constant price output. ### National accounts detail essential for the economic census (requirements and findings) - Objective: Provide sufficient detail about activities and expenditure of enterprises to compile the annual national accounts for the benchmark year; designed to collect operational and business statistics about all enterprises excluding agricultural and general government. - Current form coverage and gaps: - The form contains questions covering identification, employment and wages, main activities and commodities, total income, total expenditure, borrowing and use of IT equipment. - No information is collected on breakdown of total income, expenditure and gross capital formation. - The form will also be used to develop a Statistical Business Register. - Mission assessment and recommendation: - The mission estimated 44 percent of the form (3.5 of 8 pages) does not support compilation of GDP and recommends these are replaced with essential national accounts detail. - Modify the form to explicitly collect breakdown of total income and total expenditure: - Identify turnover by activities, income from government subsidies and grants, and other operational income (interest, dividend, commission, rental etc.). - Disaggregate total expenditure to distinguish expenditure on producing goods and services (raw materials, utilities, products for resale, freight and taxes), salaries and wages, and other operational expenditure (interest, dividend, income tax paid etc.). - Add detail to identify gross capital formation: - Explicitly collect details of acquisitions (“increases”) and disposals of fixed assets. - Include a question to identify own account capital formation (important for mineral exploration and site preparation). - Collect information on change in inventories of raw materials, goods for resale, and finished goods for the reference year. ### Recommended changes to the survey questionnaire on business units, enterprises and commercial entities - Objective: Provide sufficient detail to compile the annual national accounts; designed to collect business statistics about non-agricultural, non-financial and financial business enterprises. - Current form: - Sent to significant and large enterprises (usually 100 or more employees). - The survey contains 14 modules (identification; type of business license; business type; business group structure; main activities and products; employment; total revenue and breakdown by activities; total expenditure and breakdown by types of expenditure; gross fixed capital formation; inventories and stocks; business operations and use of ICT; problems and obstacles; workforce requirements; preferred survey method). - Current survey form is 30 pages. - Mission recommendations to reduce compliance burden while ensuring utility: - Remove modules XI, XII, XIII and XIV (not critical to compiling economic statistics), reducing form size by 13 percent (4 of 30 pages). - Reduce information collected on production, employment and expenditure; collect detailed information for the main three products, commodities and inputs from each respondent. - Simplify employment section (Module VI) by replacing detailed monthly rate by employment type with total salary and wages paid disaggregated between domestic and foreign employees; add average number of regular employees over a 12-month period. - Reduce Module VIII on types of expenditure by aggregating some expenditure types (particularly questions 8.3, 8.4 and 8.5). - Modify Module IX (gross fixed capital formation) to explicitly collect details of own account investment activity and to differentiate purchases (“increases”), estimated asset life and disposals. ### Industry-specific recommended improvements to quarterly indicators (selected) - Agriculture, Forestry and Fishing (ISIC Section A): - Update volume indicator to reflect informal activity; consider weighted average of changes in sales volumes and population growth with weights from base year. - Update volume indicator to reflect production rather than sales; allocate sales volumes to quarters based on historical growth patterns. - Mining and Quarrying (ISIC Section B): - Obtain volume indicator for mineral exploration from the Ministry of Energy and Mines; correct benchmark classification and measure own account production. - Manufacturing (ISIC Section C): - Exclude capital formation from expenses reported in value added tax data to avoid distorting intermediate consumption. - Electricity, Gas, Steam and Air Conditioning Supply (ISIC Section D) + Water Supply; Sewerage, Waste Management and Remediation Activities (ISIC Section E): - Compile volume indicators from regulatory data interpolated using results from the LSB’s quarterly surveys; use the quarterly survey to determine quarterly allocation where regulatory quarterly data are set equal to one quarter of annual totals. - Construction (ISIC Section F): - Confront changes in quarterly value added against regulatory employment data; current volume indicator is a weighted sum of imported and domestically produced construction materials due to incomplete source data. - Transport sectors and others: - Update volume indicators to reflect production rather than passenger movements reported in regulatory data and compile separate estimates where activity commenced (example: rail transportation from 2014). - Financial and Insurance Activities (ISIC Section K): - Negotiate with the Bank of Lao PDR to cease production of monthly year to date data; cease price deflation with exchange rates; consider employment data for volume extrapolation. - Real Estate Activities (ISIC Section L): - Implement volume extrapolation rather than price deflation; suggested volume indicators include changes in dwelling stock or changes in population. *Source: cr1906 - 16. Published estimates for final consumption expenditure of general government can (chapter/section content).* ### 1. Elapsed Years Since GDP Base Period __________________________________________________________ 4 ### 1. Elapsed Years Since GDP Base Period __________________________________________________________ 4 ### Summary of mission outcomes and objectives - A technical assistance mission was conducted during July 2–13, 2018 to support measurement of Lao PDR’s national accounts statistics. - Mission objectives: - Assist development of a quarterly GDP time series. - Review the published annual GDP time series. - Develop recommendations to continue improving national accounts statistics compiled by the Lao Statistics Bureau (LSB). - The mission built upon previous national accounts statistics missions conducted in April 2017 and January 2018. - Lao PDR’s GDP time series is compiled using a contemporary base period (2012), which is the second most contemporary of eight countries in Emerging and Developing Asia and broadly adequate as there are less than 10 elapsed years since the base period. - The LSB is assembling source data, reviewing adequacy, and implementing international best practice to produce a quarterly GDP time series; the LSB expects to implement further improvements and publish a preliminary quarterly time series for mining industry value added by December 2018. ### Importance of reliable national accounts - Reliable and detailed national accounts statistics are essential for: - Informed economic policy-making. - Providing inputs to the private sector, foreign investors, rating agencies, and the public. - Informing IMF surveillance and domestic policy-making. ### Key objectives identified by the mission - Publish estimates of quarterly GDP to enable timely policy-making. - LSB has assembled timely quarterly source data for many GDP components since the base period. - Further work needed to enhance source data, obtain missing components, incorporate into national accounting framework, and compile quarterly GDP estimates. - The mission estimated existing (unpublished) estimates of mining industry value added are overstated by as much as 2.1 percent of GDP in Quarter 4, 2014. - Foster coordination within the statistical system to enhance data quality. - National accounts depend on data from Bank of the Lao PDR, Ministry of Finance, Ministry of Energy and Mines, and Ministry of Public Work and Transport. - Enhancing coordination and consistent classifications will improve reliability and minimize duplication. - Enhance GDP compilation and source data to better reflect economic developments. - Compiling a new base period is a large undertaking requiring several years; planning and data collection are necessary. - LSB has commenced development of a form for the 2018 Economic Census; further improvements when national accounts detail replaces historical items. - Seek to show functions for which government final consumption expenditure was undertaken. ### Priority recommendations (tabled actions and dates) - December 2018: Develop quarterly indicator series for intermediate consumption of the mining industry in current prices. Publish preliminary results on the LSB website. — Responsible: LSB - December 2018: Replace unused data items on the economic census form with essential national accounts detail such as own account capital formation. — Responsible: LSB - June 2019: Establish memorandums of understanding with the Ministry of Finance, Ministry of Energy and Mines, and Ministry of Public Work and Transport which specify expectations regarding classifications, consistency, format, quality, and timeliness of source data. — Responsible: LSB ### A. Publish estimates of quarterly GDP to enable timely policy-making - Current practice and issues: - Quarterly estimates of value added for several industries (e.g., mining, transportation and storage) have been compiled and continue to be enhanced. - Most quarterly estimates in constant prices are constructed using single extrapolation from the base year, and converted to current prices using a measure of quarterly price change. - Quarterly price changes for output should not be applied directly to value added in current prices because value added = output − intermediate consumption; price changes for output and intermediate consumption must be considered separately. - Use of the price change for output versus intermediate consumption makes a significant difference (as much as 537 million Kip in Quarter 4, 2014) for the mining industry. - Assuming GDP in 2014Q4 is 25,000 million Kip, the 537 million Kip difference amounts to 2.1 percent of GDP. - Mission assistance and recommendations: - The mission assisted the LSB to develop a separate series for the quarterly price change of intermediate consumption (based on prices of imported fuel) and recompile industry value added. - The LSB is encouraged to enhance this measure (e.g., a weighted sum of other significant products within intermediate consumption) and publish preliminary results on the LSB website. - Recommended actions: - Implement enhancements to source data and methods used to compile industry value added identified by the mission to ensure consistency with the national accounting framework. - Develop quarterly indicator series for intermediate consumption of the mining industry in current prices. Publish preliminary results on the LSB website. [Priority Recommendation] ### B. Foster coordination within the statistical system to enhance data quality - Key inter-agency coordination needs: - Ministry of Finance: customs records, value added tax data, Government Finance Statistics—critical for GDP compilation. - Ministry of Energy and Mines: turnover, product detail, issuance of licenses, current and capital expenditures in mining, and supply and use of energy. - Ministry of Public Work and Transport: passenger numbers by air, land, and water; new vehicle registrations by type; government expenditure and investment on transportation projects. - Recommended institutional actions: - LSB should convene meetings with these three government agencies to clarify availability of source data and establish expectations regarding classifications, consistency, format, quality, and timeliness; these should be documented in a memorandum of understanding signed by senior staff to ensure continuity. - Clarify responsibility for compilation of Balance of Payments Statistics with the Bank of the Lao PDR; key series required for GDP and Gross National Income (imports and exports of goods and services, Primary Income Credits and Debits) are priority requirements of the LSB. - LSB can assist the Bank of the Lao PDR by providing results from its economic census and annual enterprise survey; results from the international investment position survey (discussed in the November 2017 Balance of Payments Statistics mission) will complement national accounts compilation. - Liaise with the Ministry of Finance to include additional detail within Lao PDR’s implementation of the Harmonized System to ensure imports and exports include sufficient detail to compile GDP and derive real GDP. - Additional recommendations: - Backcast and publish the current (2012) benchmark to the previous benchmark (2002) where constant price estimates are non-additive. - The LSB’s methodology to backcast current prices (allocating a proportion of rebasing (8.0 percent) across the ten-year period to ensure the 2002 benchmark remains unchanged) is considered appropriate for current prices. - Revisions to real GDP obtained by applying historical movements to 2012 levels produced implausible results and should not be published; instead compile real GDP using existing historical movements to ensure consistency with published estimates—this ensures GDP using the production approach is non-additive in constant prices prior to 2012. ### C. Enhance GDP compilation and source data to better reflect economic developments - Base period and timing: - Lao PDR’s GDP time series is compiled using base period 2012 in accordance with international best practice. - Unless a more contemporary GDP base period is implemented by 2022, changes in Lao PDR’s real GDP are unlikely to be adequate for policy-making. - Recommended base year and data collection: - Lao PDR’s Strategy for the Development of National Statistical System (2010–2020) commits to an economic census for 2017 (during 2018) and the Lao Expenditure and Consumption Survey (LECS) during 2017/18; both were postponed due to budget changes. - The 2018 Economic Census will now collect data for 2018 during 2019, while the LECS will collect household data over the period June 2018 to May 2019. - The mission recommends the LSB select 2018 as the next base year to enable inclusion of key source data with minimal transformation; existing plans to select 2017 as the next base year should be abandoned due to delayed collection of key source data. - Note: It will be necessary to convert LECS data collected in January to May 2019 inclusive to the prices of January to May 2018 using the relevant components of the CPI to ensure the household survey data relates to the selected base period. This approach assumes the volumes in January to May 2018 and January to May 2019 are identical. - Economic census form and survey detail: - The current economic census form comprises eight pages; the mission estimated 44 percent of the form (3.5 of 8 pages) does not support compilation of GDP and recommends these be replaced with essential national accounts detail, such as own account capital formation. - A large proportion of national accounts detail is likely to come from the existing annual enterprise survey form, designed to collect data supporting the Asian Development Bank’s program to compile an annual time series of supply and use tables; these supply and use tables will support publication of consistent estimates for GDP calculated using the production and expenditure approach. - Informal sector: - Significant amounts of Lao PDR’s economy are expected to come from informal activity; the significance will be known once LECS source data have been incorporated into the new GDP base year. - The mission recommends the new GDP base year includes a distinction between formal and informal activity to support estimation and policy-making. _Italic: Source — IMF technical assistance mission report (July 2–13, 2018) on national accounts statistics for Lao People’s Democratic Republic, "Elapsed Years Since GDP Base Period" section._ ### 16. Published estimates for final consumption expenditure of general government can ### cr1906 - 16. Published estimates for final consumption expenditure of general government can ### Final consumption expenditure by function (2016) - Estimates for 2016 use the international standard Classification of the Functions of Government (COFOG). - Individual agencies of general government were classified to the function for which they were established; estimates require further refinement in consultation with the Ministry of Finance to ensure all general government units are identified and correctly classified. - The mission provided guidelines for compiling output and final consumption expenditure by COFOG, assigning each government agency, department and ministry to a COFOG division as a general principle. Where entities perform multiple functions, expenditure was assigned to multiple functions based on judgment in consultation with LSB staff. - Government output and final consumption expenditure which benefits individual households can now be identified to derive aggregates for actual final consumption of households (actual individual consumption). The COFOG divisions covering individual and collective consumption expenditures of government are indicated in the international standards. - Quality gaps in government expenditure data transmitted to the LSB were identified: - Expenditure data for key ministries including the Ministry of Defense and the Ministry of Security could not be identified (citing confidentiality/sensitivity concerns) and is likely to cause under coverage of GDP. - LSB lacked sufficient information to classify separate expenditures by purpose for Recreation, Culture and Religion (COFOG Division 08) and Education (COFOG Division 09) provided by the Ministry of Education and Sport. - The Ministry of Finance should be responsible for compilation of government expenditure by COFOG, with coordination between the LSB and the Ministry of Finance essential. ### Recommended Actions (selected) - Revise project plan to reflect 2018, rather than 2017, as the new base year. Finalize and publish project plan to the LSB website on this basis. - Replace unused data items on the economic census form with essential national accounts detail such as own account capital formation. - Ensure the GDP benchmark for 2018 can be disaggregated between formal and informal activity with appropriate indicators identified to enable annual extrapolation. - Review distribution by function of 2016 government output and final consumption expenditure estimates, and compile a time series commencing in 2012. ### Priority actions / milestones and target completion dates (selected) - Outcome: Publish estimates of quarterly GDP to enable timely policy-making. - Develop quarterly indicator series for intermediate consumption of the mining industry in current prices. Publish preliminary results on the LSB website. [Priority Recommendation] — December 2018 - Implement enhancements to source data and methods used to compile industry value added identified by the mission to ensure consistency with the national accounting framework. — March 2019 - Outcome: Foster coordination within the statistical system to enhance data quality. - Establish memorandums of understanding with the Ministry of Finance, Ministry of Energy and Mines, and Ministry of Public Work and Transport specifying expectations regarding classifications, consistency, format, quality, and timeliness of source data. [Priority Recommendation] — June 2019 - Determine responsibility for compilation of Balance of Payments with the Bank of the Lao PDR and agree upon a prioritized list of improvements. — December 2018 - Ensure the classification of imports and exports used to administer customs procedures includes sufficient detail to support concordances with other international statistical standards. — June 2019 - Backcast and publish the current (2012) benchmark to the previous benchmark (2002) where constant price estimates are non-additive. — December 2018 - Outcome: Enhance GDP compilation and source data to better reflect economic developments. - Revise project plan to reflect 2018, rather than 2017, as the new base year. Finalize and publish project plan to the LSB website on this basis. — December 2018 - Replace unused data items on the economic census form with essential national accounts detail such as own account capital formation. [Priority Recommendation] — December 2018 - Ensure the GDP benchmark for 2018 can be disaggregated between formal and informal activity with appropriate indicators identified to enable annual extrapolation. — December 2021 - Review distribution by function of 2016 government output and final consumption expenditure estimates, and compile a time series commencing in 2012. — December 2018 ### Quarterly indicator for intermediate consumption of the mining industry (analysis and impacts) - Problem with current method: - Current price estimates for intermediate consumption are derived using a constant intermediate consumption to output ratio from the 2012 benchmark year estimates. This implicitly assumes changes in the price of output are identical to changes in price of intermediate consumption, which is unlikely given volatility of mining output prices (copper and gold) vs. stability of imported fuel prices. - Proposed approach: - Compile a deflator for intermediate consumption as the weighted sum of price deflators for the significant products within intermediate consumption for the mining industry. - The mission developed a series for the quarterly price change of intermediate consumption based on prices of imported fuel and recompiled industry value added. - Impact (preliminary): - Differences are most significant during 2014 and 2015, likely because imported fuel prices were relatively stable compared to significant falls in prices of copper and gold. - Preliminary estimates suggest revisions to the deflator will reduce the level of nominal GDP by as much as 2.1 percent in Quarter 4, 2014. While there is no change to output in current prices, intermediate consumption increases by as much as 537 million Kip as the price of intermediate consumption has declined by less than price of output. - Table 2 — Estimated Impact of a Quarterly Indicator for Intermediate Consumption of the Mining Industry in Current Prices (2013–2016) (million Kip unless otherwise stated) - Value Added, current prices [1]: - 2013 Q1 2,089; Q2 2,004; Q3 2,214; Q4 2,312. - 2014 Q1 2,305; Q2 1,854; Q3 1,957; Q4 2,223. - 2015 Q1 1,805; Q2 1,817; Q3 1,603; Q4 1,590. - 2016 Q1 1,555; Q2 1,591; Q3 1,634; Q4 1,820. - Value Added, constant prices (Reference period 2012) [2]: - 2013 Q1 2,187; Q2 2,437; Q3 2,542; Q4 2,653. - 2014 Q1 2,671; Q2 2,393; Q3 2,470; Q4 2,973. - 2015 Q1 2,662; Q2 2,608; Q3 2,627; Q4 2,742. - 2016 Q1 2,730; Q2 2,720; Q3 2,732; Q4 2,898. - Intermediate consumption, constant prices (Reference period 2012) [3] a: - 2013 Q1 1,183; Q2 1,318; Q3 1,375; Q4 1,434. - 2014 Q1 1,445; Q2 1,294; Q3 1,336; Q4 1,608. - 2015 Q1 1,439; Q2 1,410; Q3 1,420; Q4 1,483. - 2016 Q1 1,476; Q2 1,471; Q3 1,477; Q4 1,567. - Deflator, output (Reference period 2012) [4] 2012=100: - 2013 Q1 95.46; Q2 82.20; Q3 87.06; Q4 87.13. - 2014 Q1 86.26; Q2 77.41; Q3 79.20; Q4 74.73. - 2015 Q1 67.77; Q2 69.65; Q3 61.02; Q4 57.96. - 2016 Q1 56.92; Q2 58.48; Q3 59.79; Q4 62.75. - Estimated Deflator, intermediate consumption (Reference period 2012) [5] 2012=100: - 2013 Q1 98.58; Q2 96.85; Q3 100.81; Q4 98.09. - 2014 Q1 97.91; Q2 95.98; Q3 96.73; Q4 107.89. - 2015 Q1 98.06; Q2 93.63; Q3 88.60; Q4 80.53. - 2016 Q1 69.32; Q2 67.84; Q3 70.42; Q4 71.44. - Output, current prices [6] b: - 2013 Q1 3,219; Q2 3,088; Q3 3,411; Q4 3,563. - 2014 Q1 3,552; Q2 2,856; Q3 3,016; Q4 3,425. - 2015 Q1 2,781; Q2 2,800; Q3 2,470; Q4 2,450. - 2016 Q1 2,395; Q2 2,451; Q3 2,518; Q4 2,803. - Intermediate consumption, current prices [7] = [3]*[5]/100: - 2013 Q1 1,169; Q2 1,279; Q3 1,389; Q4 1,410. - 2014 Q1 1,418; Q2 1,245; Q3 1,295; Q4 1,739. - 2015 Q1 1,415; Q2 1,323; Q3 1,261; Q4 1,197. - 2016 Q1 1,026; Q2 1,000; Q3 1,043; Q4 1,122. - Value Added#, current prices [8] = [6]-[7]: - 2013 Q1 2,050; Q2 1,809; Q3 2,022; Q4 2,153. - 2014 Q1 2,135; Q2 1,611; Q3 1,721; Q4 1,687. - 2015 Q1 1,366; Q2 1,477; Q3 1,209; Q4 1,253. - 2016 Q1 1,370; Q2 1,452; Q3 1,475; Q4 1,681. - Estimated Impact [9] = [8]-[1]: - 2013 Q1 (39); Q2 (195); Q3 (192); Q4 (160). - 2014 Q1 (171); Q2 (243); Q3 (237); Q4 (537). - 2015 Q1 (439); Q2 (341); Q3 (394); Q4 (337). - 2016 Q1 (185); Q2 (140); Q3 (159); Q4 (138). - Notes accompanying table: - a: Values obtained by applying the movement in value added in constant prices to intermediate consumption recorded in 2012 supply and use table. - b: Values obtained by applying a composite output price deflator for copper and gold to constant price output. ### National accounts detail essential for the economic census (requirements and findings) - Objective: Provide sufficient detail about activities and expenditure of enterprises to compile the annual national accounts for the benchmark year; designed to collect operational and business statistics about all enterprises excluding agricultural and general government. - Current form coverage and gaps: - The form contains questions covering identification, employment and wages, main activities and commodities, total income, total expenditure, borrowing and use of IT equipment. - No information is collected on breakdown of total income, expenditure and gross capital formation. - The form will also be used to develop a Statistical Business Register. - Mission assessment and recommendation: - The mission estimated 44 percent of the form (3.5 of 8 pages) does not support compilation of GDP and recommends these are replaced with essential national accounts detail. - Modify the form to explicitly collect breakdown of total income and total expenditure: - Identify turnover by activities, income from government subsidies and grants, and other operational income (interest, dividend, commission, rental etc.). - Disaggregate total expenditure to distinguish expenditure on producing goods and services (raw materials, utilities, products for resale, freight and taxes), salaries and wages, and other operational expenditure (interest, dividend, income tax paid etc.). - Add detail to identify gross capital formation: - Explicitly collect details of acquisitions (“increases”) and disposals of fixed assets. - Include a question to identify own account capital formation (important for mineral exploration and site preparation). - Collect information on change in inventories of raw materials, goods for resale, and finished goods for the reference year. ### Recommended changes to the survey questionnaire on business units, enterprises and commercial entities - Objective: Provide sufficient detail to compile the annual national accounts; designed to collect business statistics about non-agricultural, non-financial and financial business enterprises. - Current form: - Sent to significant and large enterprises (usually 100 or more employees). - The survey contains 14 modules (identification; type of business license; business type; business group structure; main activities and products; employment; total revenue and breakdown by activities; total expenditure and breakdown by types of expenditure; gross fixed capital formation; inventories and stocks; business operations and use of ICT; problems and obstacles; workforce requirements; preferred survey method). - Current survey form is 30 pages. - Mission recommendations to reduce compliance burden while ensuring utility: - Remove modules XI, XII, XIII and XIV (not critical to compiling economic statistics), reducing form size by 13 percent (4 of 30 pages). - Reduce information collected on production, employment and expenditure; collect detailed information for the main three products, commodities and inputs from each respondent. - Simplify employment section (Module VI) by replacing detailed monthly rate by employment type with total salary and wages paid disaggregated between domestic and foreign employees; add average number of regular employees over a 12-month period. - Reduce Module VIII on types of expenditure by aggregating some expenditure types (particularly questions 8.3, 8.4 and 8.5). - Modify Module IX (gross fixed capital formation) to explicitly collect details of own account investment activity and to differentiate purchases (“increases”), estimated asset life and disposals. ### Industry-specific recommended improvements to quarterly indicators (selected) - Agriculture, Forestry and Fishing (ISIC Section A): - Update volume indicator to reflect informal activity; consider weighted average of changes in sales volumes and population growth with weights from base year. - Update volume indicator to reflect production rather than sales; allocate sales volumes to quarters based on historical growth patterns. - Mining and Quarrying (ISIC Section B): - Obtain volume indicator for mineral exploration from the Ministry of Energy and Mines; correct benchmark classification and measure own account production. - Manufacturing (ISIC Section C): - Exclude capital formation from expenses reported in value added tax data to avoid distorting intermediate consumption. - Electricity, Gas, Steam and Air Conditioning Supply (ISIC Section D) + Water Supply; Sewerage, Waste Management and Remediation Activities (ISIC Section E): - Compile volume indicators from regulatory data interpolated using results from the LSB’s quarterly surveys; use the quarterly survey to determine quarterly allocation where regulatory quarterly data are set equal to one quarter of annual totals. - Construction (ISIC Section F): - Confront changes in quarterly value added against regulatory employment data; current volume indicator is a weighted sum of imported and domestically produced construction materials due to incomplete source data. - Transport sectors and others: - Update volume indicators to reflect production rather than passenger movements reported in regulatory data and compile separate estimates where activity commenced (example: rail transportation from 2014). - Financial and Insurance Activities (ISIC Section K): - Negotiate with the Bank of Lao PDR to cease production of monthly year to date data; cease price deflation with exchange rates; consider employment data for volume extrapolation. - Real Estate Activities (ISIC Section L): - Implement volume extrapolation rather than price deflation; suggested volume indicators include changes in dwelling stock or changes in population. *Source: cr1906 - 16. Published estimates for final consumption expenditure of general government can (chapter/section content).* --- _Source: https://www.imf.org/-/media/files/publications/cr/2019/cr1906.pdf_