## 1. Priority Recommendations

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**Canonical URL:** [1. Priority Recommendations](https://www.imf.org/-/media/files/publications/cr/2020/english/1geoea2020003.pdf)

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---

### Summary of mission outcomes and priority recommendations
- Purpose: assist the National Statistics Office of Georgia (Geostat) with expanding PPI coverage to additional services activities under the three-year Project to Improve National Accounts and Price Statistics in Eastern and Southeastern Europe (funded by the Government of the Netherlands).
- Rationale:
  - Services comprised 58.4 percent of 2018 GDP on a value-added basis.
  - Expanded PPIs will improve measurement of real output, size, growth, and productivity of the Georgian economy and provide clearer indicators of producer-level price developments.
- Progress and deliverables:
  - Geostat ready to disseminate new PPIs for transportation and storage services and telecommunications services in reference period January 2020.
  - New indexes published with CPA 2008 classification update and organized in a separate services PPI release.
  - Producer prices for travel agency and tour operator services to be directly collected beginning in January 2020; target to publish results in reference period January 2021.
  - New surveys for warehousing and telecommunications producer prices were successfully collected in 2019.
- Strategic focus for future expansion:
  - Emphasize transportation and tourism sectors: support services for transportation and accommodation services (cargo handling, airport operations; port operations considered).
  - Consider using CPI data to estimate producer prices for food and beverage services.
- Efficiency recommendations:
  - Implement sampling efficiencies: select samples at a less detailed classification level, truncate coverage of detailed product areas with minimal weight, and evaluate annual re-selection of samples versus staff and respondent burden.

- Priority action plan (selected items and responsible party):
  - February 2020 — Disseminate PPIs on CPA 2008 basis, with new PPIs for transportation and storage and telecommunications services (reference period January 2020). Responsible: Geostat.
  - February 2020 — Begin collection and calculation of new PPIs for travel agency and tour operator services (reference period January 2020). Responsible: Geostat.
  - February 2021 — Disseminate new PPIs for travel agency and tour operator services (reference period January 2021). Responsible: Geostat.
  - February 2021 — Begin collection and calculation of new PPIs for support services for transportation and hotel accommodation services (reference period January 2021). Responsible: Geostat.

### A. Classification and Coverage Updates — January 2020
- Classification change and indexing:
  - Update PPIs to CPA 2008 with January 2020 reference period release in February 2020.
  - New industrial PPIs published beginning in the January 2020 reference period with the annual average of 2010 equal to 100.
  - Indexes for CPA 2008 categories were calculated back to 2010 but Geostat is not planning to re-publish historical data (these data provided to national accounts compilers).
- Services PPI release:
  - New telecommunications and transportation services PPIs introduced in reference period January 2020 in a distinct services PPI release organized on CPA 2008 structure with detail to the three-digit product category level.
  - Indexes will be published with the annual average of 2019 equal to 100.
- Freight transportation and aggregation:
  - Freight transportation indexes exist since 2008; under CPA 2008 freight transportation appears across multiple categories depending on mode (rail, road, air).
  - Recommendation to maintain historical freight transportation series as a special index outside CPA 2008 with annual average of 2010 equal to 100.
  - Consider a new aggregated index for all passenger transportation services across all travel modes.
- Coverage notes:
  - New aggregate index for CPA H, Transportation and storage services, will include less than 50 percent coverage of product output — this should be noted in the data release.
  - CPA 52.2, Support services for transportation (more than half of total output in section H), is not yet covered and is a target for future expansion.
- Detailed inclusions and methods:
  - Transportation and storage index includes CPA 49 Land transport; CPA 51 Air transport; CPA 52.1 Warehousing and storage.
  - Freight transportation and warehousing and storage covered by directly collected producer prices (warehousing and storage prices collected since January 2019 — annual average of 2019 usable as reference period for this detailed index).
  - Producer prices for passenger transportation services will be estimated based on relevant CPIs; adjustments applied when tax rates change to ensure tax changes do not affect the PPI.
  - CPA 50 Water transport is excluded due to very little Georgian production.
- Passenger air transport guidance:
  - Consider direct collection of producer prices for passenger air transportation in the future.
  - CPI for air transportation is an adequate estimator for PPI where prices across carriers changed at similar rates; however, PPI ideally should include sales to all buyer types — unit value prices are an attractive option (unit value = total fare revenue from all passengers in a specified class/route ÷ number of passengers).
- Telecommunications:
  - New CPA 61 Telecommunications activities index will consist of detailed indexes for wired, wireless, satellite, and other telecommunications activities at the three-digit CPA level.
  - Satellite telecommunications category will not be published to avoid disclosure for a dominant company but will be included in aggregate calculations.
- Recommendations:
  - Organize the new January 2020 services PPI release based on the CPA 2008 publication structure with detail to the 3-digit product category level, and the annual average of 2019 equal to 100.
  - Indicate in the release that the aggregate index for CPA H, Transportation and storage services, will include less than 50 percent coverage of product output.
  - Maintain existing time series for freight transportation services as a special index outside of the CPA 2008 structure, with annual average of 2010 equal to 100.
  - Consider direct collection of unit value producer prices for passenger air transportation services in the future.

### B. Coverage Expansion to Travel Agency and Tour Operator Services
- Data collection and dissemination schedule:
  - Collection for CPA 79.1 Travel agency and tour operator services begins January 2020.
  - New index series targeted for dissemination in reference period January 2021 with the 2020 annual average index equal to 100, pending pilot results; if pilot inadequate, December 2020 can be used as the index reference period instead of the 2020 annual average.
- Questionnaire and classification:
  - Two separate questionnaires drafted for travel agency and tour operator services due to different transaction characteristics; fieldworkers should clarify company activities before administering the relevant questionnaire.
  - Business statistics sampling frame revealed misclassifications between travel agents and tour operators; corrected classification information should be shared with the business statistics program.
- Price measurement specifics:
  - Tour operators:
    - Price collected should represent gross fees received for operating the tour (bundled fees including local transport, lodging, guide, food, attraction admissions).
    - Gross price acceptable as producer price because tour operators bundle services and cannot report net/gross splits; unit value prices preferred if available (unit value = total revenue from all customers on a specific tour in a month ÷ number of those customers).
    - If unit value not available, collect a transaction price reflecting the tour price for a single customer in a double occupied room; specifications should detail services included, destinations, class of accommodation, and quality aspects (e.g., air-conditioned coach, English speaking guide).
  - Travel agents:
    - Collect net commission and/or flat fee transaction prices for bookings (plane ticket, hotel room, car rental, other travel service).
    - If commissions are charged, price = current price for the travel service × commission rate; respondents should update both commission rate percentages and travel service price each period.
- Recommendations:
  - A new sample of travel agent and tour operators should be fielded in January 2020.
  - Fieldworkers should contact each selected company and clarify classification of their activities before the relevant questionnaire is administered.
  - Gross prices inclusive of the full cost of travel should be collected for tour operators. Unit value prices should be collected if available.
  - Commissions or fees net of the full cost of travel should be collected for travel agents. Both commission rate percentages and the cost of travel should be updated in future periods to obtain the monetary value of commissions.
  - The new index series should be disseminated in reference period January 2021 with annual average of 2020 equal to 100, pending results of the pilot data collection.

### C. Additional Future Coverage Expansion
- Priority product areas for research and collection:
  - CPA 52.2 Support services for transportation (contributes more than half of transportation and storage output): focus on largest products only (airport operation and cargo handling services); consider port operations as potential growth area.
  - CPA 55.1 Hotel and similar accommodation services: create new PPI distinct from CPI (CPI covers resident consumer expenditures only); PPI would cover all domestic production including sales to nonresident consumers and businesses — recommend distinct PPI hotel sample rather than relying solely on CPI.
  - CPI acceptable as proxy for producer prices for food and beverage serving services (but distinct PPI sample recommended for accommodation).
- Operational guidance:
  - Research and questionnaire preparation should start in 2020, with collection and calculation of indexes in reference period January 2021.
- Recommendations:
  - Begin research for future expansion to coverage of support services for transportation and hotel and similar accommodation services in 2020.
  - Collect and calculate new PPIs for these activities in reference period January 2021.

### D. Sampling
- Current practice and limitations:
  - Geostat selects domestic PPI and export index respondents by subsampling business statistics respondents by six-digit CPA using a cutoff of 80 percent of weighted production value; weights come from business statistics program and include geographic detail not relevant to the PPI and cover activities at less detailed product levels.
  - Business survey weights may represent non-selected respondents that primarily offer products not covered by the PPI.
- Recommended sampling improvements:
  - Select cutoff samples using unweighted production value directly from the business register; if production values not available, use turnover.
  - Since cutoff sampling is not probability proportionate-to-size or stratified probability selection, sampling weights are not needed; non-selected companies (below cutoff cumulative output) are truncated from coverage.
  - Moving to a cutoff sample of unweighted output from the business register is likely to result in larger sample sizes compared to current methods.
  - Allow more flexibility in the level of CPA detail at which samples are selected (e.g., select at three-digit CPA level for transportation and telecommunications) to achieve adequate coverage with smaller sample sizes; many six-digit product categories include few producers and small shares of aggregated output but current design selects producers from each category.
- Operational gains:
  - A less detailed selection level and truncation of minimal-weight product areas will reduce sample burden and may improve allocation efficiency while maintaining aggregate index quality.
- Additional sampling guidance:
  - A cutoff approach can prevent allocating data collection resources to activities that represent a small share of output.
  - Example policy: include activities until 80 percent coverage of the two-digit product aggregate is achieved.
  - Activities that contribute small amounts of production would be input-based on the prices for products that generate more output.
- Resampling:
  - Geostat currently resamples all PPI producers and products every year.
  - Observation: resampling every year "may not produce benefits commensurate with the data collection and respondent burden costs" because producers in most product categories are stable year-to-year.
  - Under the cutoff sampling method, the next largest producer can be added to the sample whenever an existing producer stops or changes production.
  - Geostat can periodically review business survey results and add new producers of significant size.
  - Technical assistance was provided on changing the composition of items in elementary aggregates without impacting price trends.
  - Annual updates of index activity weights should continue regardless of the methods used to select producers and products.
- Sampling recommendations:
  - Geostat should transition to selecting cutoff product samples based on unweighted production values taken directly from the business register.
  - To improve efficiency of data collection, Geostat should allow for more flexibility in the level of CPA detail that is used for selecting cutoff samples of producers.
  - Geostat should consider applying a cutoff method to determine coverage of detailed activities within two-digit aggregates.
  - Geostat should evaluate the costs and benefits of annual PPI resampling in comparison to alternative approaches.

### Data review, visualization, and dissemination
- Findings:
  - Geostat has developed outstanding tools to identify impactful price changes and outlier price observations in all price indexes, including PPIs; these tools employ data visualization to guide staff to observations that may require further evaluation.
  - Current practice: separate press releases are disseminated on the same day for the total PPI (domestic plus export), domestic PPI, export index, and import index.
  - Definition: the domestic PPI refers to production made and sold in the domestic market or stored as inventory.
- Recommended consolidation and presentation changes:
  - Consolidate PPI and related index releases to two: one for industrial activities and one for services activities.
    - Industrial activities release would highlight two aggregations: the total PPI (domestic plus export), and a new domestic supply index (domestic plus import). Individual components would then be described in detail.
    - Services activities release would not include detailed indexes for exports or imports (since they are not available). Services indexes should be noted as inclusive of all production of domestic producers, including sales to residents and to the export market.
    - Indexes in the services release will have variable index reference periods, as coverage is expanded to new services activities in future years.
  - Incorporate visualizations similar to those currently used in the CPI release to present key index changes and contributions in a user-friendly summary.
  - Modify measures of monthly and annual change in the releases from index values to percentage points.
    - Example given: if a PPI increased from an index value of 150 to 200 in a given month, the increase would currently be reflected as one month change of 133.3, rather than 33.3 percent; the latter presentation is recommended as clearer.
  - Expand the user base for PPI statistics by highlighting the value of PPI indexes as tools for contract adjustment by Georgian businesses.
    - Prepare a description of how PPIs could be used for contract adjustment and post it on the Geostat website, highlight it with a press release, and communicate it to key business organizations.
- Dissemination recommendations:
  - Consolidate PPI and related index releases to two: one for industrial activities and one for services activities.
  - Allow for variable index reference periods in the services activities release.
  - Incorporate visualizations similar to those currently used for the CPI in the PPI releases.
  - Modify presentation of monthly and annual changes to percentage points.
  - Prepare a document highlighting how PPIs can be used for contract adjustment and share it with potential users in the business community.

### Recommendation Action Plan (selected items and target completion dates)
- Outcome: Expand PPI coverage of service activities
  - H — Train fieldworkers on proper procedures for classifying, specifying, and pricing travel agency and tour operator services. — January 2020
  - H — Begin data collection for pilot of new PPI for travel agency and tour operator services. — February 2020
  - H — Disseminate new services PPI release, including transportation and telecommunications indexes at the three-digit CPA level with annual average 2019 equal to 100. — February 2020
  - M — Maintain historical time series for freight transportation services outside of the CPA 2008 structure with annual average 2010 equal to 100. — February 2020
  - H — Evaluate quality of pilot PPI for travel agency and tour operator services and determine if changes are needed. — October 2020
  - M — Complete research and questionnaire preparation for transportation support services, hotels, and similar accommodation services. — December 2020
  - M — Train fieldworkers on proper procedures for classifying, specifying, and pricing transportation support services, hotels, and similar accommodation services. — January 2021
  - M — Begin data collection for pilot of new PPI for transportation support services, hotels, and similar accommodation services. — February 2021
  - H — Disseminate the PPI for travel agency and tour operator services in the services PPI release. — February 2021
  - M — Evaluate quality of pilot PPI for transportation support services, hotels, and similar accommodation services and determine if changes are needed. — October 2021
  - M — Disseminate the PPI for transportation support services, hotels, and similar accommodation services in the services PPI release. — February 2022

- Outcome: Improve quality and efficiency of PPI compilation
  - H — Release PPIs based on CPA 2008 classifications. — February 2020
  - M — Consolidate total industrial PPI, domestic PPI, exports, and imports releases to a single industrial indexes release. — February 2020
  - M — Modify presentation of monthly and annual index changes in the press releases and on the website to percentage points. — February 2020
  - M — Produce document explaining how PPIs can be used as a tool for contract adjustment and publicize it to the business community. — July 2020
  - M — Evaluate the benefits and costs of annual re-sampling of all products and businesses in relation to alternative approaches, such as ad hoc sample substitution. — September 2020
  - H — Select cutoff samples of businesses based on unweighted production or turnover from the business register. — December 2020
  - M — Implement flexibilities in the level of CPA detail at which cutoff samples are selected. — December 2020
  - M — Apply cutoff of detailed product coverage within two-digit CPA to promote efficient allocation of sample units. — December 2020

*Source: 1. Priority Recommendations (GEORGIA, INTERNATIONAL MONETARY FUND).*

### 1. Priority Recommendations _____________________________________________________________________ 5

### 1. Priority Recommendations

### Summary of mission outcomes and priority recommendations
- Purpose: assist the National Statistics Office of Georgia (Geostat) with expanding PPI coverage to additional services activities under the three-year Project to Improve National Accounts and Price Statistics in Eastern and Southeastern Europe (funded by the Government of the Netherlands).
- Rationale:
  - Services comprised 58.4 percent of 2018 GDP on a value-added basis.
  - Expanded PPIs will improve measurement of real output, size, growth, and productivity of the Georgian economy and provide clearer indicators of producer-level price developments.
- Progress and deliverables:
  - Geostat ready to disseminate new PPIs for transportation and storage services and telecommunications services in reference period January 2020.
  - New indexes published with CPA 2008 classification update and organized in a separate services PPI release.
  - Producer prices for travel agency and tour operator services to be directly collected beginning in January 2020; target to publish results in reference period January 2021.
  - New surveys for warehousing and telecommunications producer prices were successfully collected in 2019.
- Strategic focus for future expansion:
  - Emphasize transportation and tourism sectors: support services for transportation and accommodation services (cargo handling, airport operations; port operations considered).
  - Consider using CPI data to estimate producer prices for food and beverage services.
- Efficiency recommendations:
  - Implement sampling efficiencies: select samples at a less detailed classification level, truncate coverage of detailed product areas with minimal weight, and evaluate annual re-selection of samples versus staff and respondent burden.
- Priority action plan (as presented in the source):
  - February 2020 — Disseminate PPIs on CPA 2008 basis, with new PPIs for transportation and storage and telecommunications services (reference period January 2020). Responsible: Geostat.
  - February 2020 — Begin collection and calculation of new PPIs for travel agency and tour operator services (reference period January 2020). Responsible: Geostat.
  - February 2021 — Disseminate new PPIs for travel agency and tour operator services (reference period January 2021). Responsible: Geostat.
  - February 2021 — Begin collection and calculation of new PPIs for support services for transportation and hotel accommodation services (reference period January 2021). Responsible: Geostat.

### A. Classification and Coverage Updates — January 2020
- Classification change:
  - Update PPIs to CPA 2008 with January 2020 reference period release in February 2020.
  - New industrial PPIs published beginning in the January 2020 reference period with the annual average of 2010 equal to 100.
  - Indexes for CPA 2008 categories were calculated back to 2010 but Geostat is not planning to re-publish historical data (these data provided to national accounts compilers).
- Services PPI release:
  - New telecommunications and transportation services PPIs introduced in reference period January 2020 in a distinct services PPI release organized on CPA 2008 structure with detail to the three-digit product category level.
  - Indexes will be published with the annual average of 2019 equal to 100.
- Freight transportation and aggregation:
  - Freight transportation indexes exist since 2008; under CPA 2008 freight transportation appears across multiple categories depending on mode (rail, road, air).
  - Recommendation to maintain historical freight transportation series as a special index outside CPA 2008 with annual average of 2010 equal to 100.
  - Consider a new aggregated index for all passenger transportation services across all travel modes.
- Coverage notes:
  - New aggregate index for CPA H, Transportation and storage services, will include less than 50 percent coverage of product output — this should be noted in the data release.
  - CPA 52.2, Support services for transportation (more than half of total output in section H), is not yet covered and is a target for future expansion.
- Detailed inclusions and methods:
  - Transportation and storage index includes CPA 49 Land transport; CPA 51 Air transport; CPA 52.1 Warehousing and storage.
  - Freight transportation and warehousing and storage covered by directly collected producer prices (warehousing and storage prices collected since January 2019 — annual average of 2019 usable as reference period for this detailed index).
  - Producer prices for passenger transportation services will be estimated based on relevant CPIs; adjustments applied when tax rates change to ensure tax changes do not affect the PPI.
  - CPA 50 Water transport is excluded due to very little Georgian production.
- Passenger air transport guidance:
  - Consider direct collection of producer prices for passenger air transportation in the future.
  - CPI for air transportation is an adequate estimator for PPI where prices across carriers changed at similar rates; however, PPI ideally should include sales to all buyer types — unit value prices are an attractive option (unit value = total fare revenue from all passengers in a specified class/route ÷ number of passengers).
- Telecommunications:
  - New CPA 61 Telecommunications activities index will consist of detailed indexes for wired, wireless, satellite, and other telecommunications activities at the three-digit CPA level.
  - Satellite telecommunications category will not be published to avoid disclosure for a dominant company but will be included in aggregate calculations.
- Recommendations (exact phrasing preserved where numeric/term-sensitive):
  - Organize the new January 2020 services PPI release based on the CPA 2008 publication structure with detail to the 3-digit product category level, and the annual average of 2019 equal to 100.
  - Indicate in the release that the aggregate index for CPA H, Transportation and storage services, will include less than 50 percent coverage of product output.
  - Maintain existing time series for freight transportation services as a special index outside of the CPA 2008 structure, with annual average of 2010 equal to 100.
  - Consider direct collection of unit value producer prices for passenger air transportation services in the future.

### B. Coverage Expansion to Travel Agency and Tour Operator Services
- Data collection schedule:
  - Collection for CPA 79.1 Travel agency and tour operator services begins January 2020.
  - New index series targeted for dissemination in reference period January 2021 with the 2020 annual average index equal to 100, pending pilot results; if pilot inadequate, December 2020 can be used as the index reference period instead of the 2020 annual average.
- Questionnaire and classification:
  - Two separate questionnaires drafted for travel agency and tour operator services due to different transaction characteristics; fieldworkers should clarify company activities before administering the relevant questionnaire.
  - Business statistics sampling frame reveled misclassifications between travel agents and tour operators; corrected classification information should be shared with the business statistics program.
- Price measurement specifics:
  - Tour operators:
    - Price collected should represent gross fees received for operating the tour (bundled fees including local transport, lodging, guide, food, attraction admissions).
    - Gross price acceptable as producer price because tour operators bundle services and cannot report net/gross splits; unit value prices preferred if available (unit value = total revenue from all customers on a specific tour in a month ÷ number of those customers).
    - If unit value not available, collect a transaction price reflecting the tour price for a single customer in a double occupied room; specifications should detail services included, destinations, class of accommodation, and quality aspects (e.g., air-conditioned coach, English speaking guide).
  - Travel agents:
    - Collect net commission and/or flat fee transaction prices for bookings (plane ticket, hotel room, car rental, other travel service).
    - If commissions are charged, price = current price for the travel service × commission rate; respondents should update both commission rate percentages and travel service price each period.
- Recommendations (exact phrasing preserved where numeric/term-sensitive):
  - A new sample of travel agent and tour operators should be fielded in January 2020.
  - Fieldworkers should contact each selected company and clarify classification of their activities before the relevant questionnaire is administered.
  - Gross prices inclusive of the full cost of travel should be collected for tour operators. Unit value prices should be collected if available.
  - Commissions or fees net of the full cost of travel should be collected for travel agents. Both commission rate percentages and the cost of travel should be updated in future periods to obtain the monetary value of commissions.
  - The new index series should be disseminated in reference period January 2021 with annual average of 2020 equal to 100, pending results of the pilot data collection.

### C. Additional Future Coverage Expansion
- Priority product areas for research and collection:
  - CPA 52.2 Support services for transportation (contributes more than half of transportation and storage output): focus on largest products only (airport operation and cargo handling services); consider port operations as potential growth area.
  - CPA 55.1 Hotel and similar accommodation services: create new PPI distinct from CPI (CPI covers resident consumer expenditures only); PPI would cover all domestic production including sales to nonresident consumers and businesses — recommend distinct PPI hotel sample rather than relying solely on CPI.
  - CPI acceptable as proxy for producer prices for food and beverage serving services (but distinct PPI sample recommended for accommodation).
- Operational guidance:
  - Research and questionnaire preparation should start in 2020, with collection and calculation of indexes in reference period January 2021.
- Recommendations (exact phrasing preserved where numeric/term-sensitive):
  - Begin research for future expansion to coverage of support services for transportation and hotel and similar accommodation services in 2020.
  - Collect and calculate new PPIs for these activities in reference period January 2021.

### D. Sampling
- Current practice and limitations:
  - Geostat selects domestic PPI and export index respondents by subsampling business statistics respondents by six-digit CPA using a cutoff of 80 percent of weighted production value; weights come from business statistics program and include geographic detail not relevant to the PPI and cover activities at less detailed product levels.
  - Business survey weights may represent non-selected respondents that primarily offer products not covered by the PPI.
- Recommended sampling improvements:
  - Select cutoff samples using unweighted production value directly from the business register; if production values not available, use turnover.
  - Since cutoff sampling is not probability proportionate-to-size or stratified probability selection, sampling weights are not needed; non-selected companies (below cutoff cumulative output) are truncated from coverage.
  - Moving to a cutoff sample of unweighted output from the business register is likely to result in larger sample sizes compared to current methods.
  - Allow more flexibility in the level of CPA detail at which samples are selected (e.g., select at three-digit CPA level for transportation and telecommunications) to achieve adequate coverage with smaller sample sizes; many six-digit product categories include few producers and small shares of aggregated output but current design selects producers from each category.
- Operational gains:
  - A less detailed selection level and truncation of minimal-weight product areas will reduce sample burden and may improve allocation efficiency while maintaining aggregate index quality.

*Source: 1. Priority Recommendations (GEORGIA, INTERNATIONAL MONETARY FUND).*

### 26.      A cutoff approach for including three-digit product categories can also be used to

### 26.      A cutoff approach for including three-digit product categories can also be used to

### Sampling and coverage of three-digit product categories
- A cutoff approach can prevent allocating data collection resources to activities that represent a small share of output.
- Example policy: include activities until 80 percent coverage of the two-digit product aggregate is achieved.
- Activities that contribute small amounts of production would be input-based on the prices for products that generate more output.

### Resampling of PPI producers and products
- Geostat currently resamples all PPI producers and products every year.
- Observation: resampling every year "may not produce benefits commensurate with the data collection and respondent burden costs" because producers in most product categories are stable year-to-year.
- Under the cutoff sampling method, the next largest producer can be added to the sample whenever an existing producer stops or changes production.
- Geostat can periodically review business survey results and add new producers of significant size.
- Technical assistance was provided on changing the composition of items in elementary aggregates without impacting price trends.
- Annual updates of index activity weights should continue regardless of the methods used to select producers and products.
Recommendations:
- Geostat should transition to selecting cutoff product samples based on unweighted production values taken directly from the business register.
- To improve efficiency of data collection, Geostat should allow for more flexibility in the level of CPA detail that is used for selecting cutoff samples of producers.
- Geostat should consider applying a cutoff method to determine coverage of detailed activities within two-digit aggregates.
- Geostat should evaluate the costs and benefits of annual PPI resampling in comparison to alternative approaches.

### Data review, visualization, and dissemination
Findings:
- Geostat has developed outstanding tools to identify impactful price changes and outlier price observations in all price indexes, including PPIs; these tools employ data visualization to guide staff to observations that may require further evaluation.
- Current practice: separate press releases are disseminated on the same day for the total PPI (domestic plus export), domestic PPI, export index, and import index.
- Definition: the domestic PPI refers to production made and sold in the domestic market or stored as inventory.
- Recommendation: consolidate releases to improve data accessibility, promote contextual analysis across all series, and make dissemination more efficient.

Recommended consolidation and presentation changes:
- Consolidate PPI and related index releases to two: one for industrial activities and one for services activities.
  - Industrial activities release would highlight two aggregations: the total PPI (domestic plus export), and a new domestic supply index (domestic plus import). Individual components would then be described in detail.
  - Services activities release would not include detailed indexes for exports or imports (since they are not available). Services indexes should be noted as inclusive of all production of domestic producers, including sales to residents and to the export market.
  - Indexes in the services release will have variable index reference periods, as coverage is expanded to new services activities in future years.
- Incorporate visualizations similar to those currently used in the CPI release to present key index changes and contributions in a user-friendly summary.
- Modify measures of monthly and annual change in the releases from index values to percentage points.
  - Example given: if a PPI increased from an index value of 150 to 200 in a given month, the increase would currently be reflected as one month change of 133.3, rather than 33.3 percent; the latter presentation is recommended as clearer.
- Expand the user base for PPI statistics by highlighting the value of PPI indexes as tools for contract adjustment by Georgian businesses.
  - Prepare a description of how PPIs could be used for contract adjustment and post it on the Geostat website, highlight it with a press release, and communicate it to key business organizations.

Recommendations (summary):
- Consolidate PPI and related index releases to two: one for industrial activities and one for services activities.
- Allow for variable index reference periods in the services activities release.
- Incorporate visualizations similar to those currently used for the CPI in the PPI releases.
- Modify presentation of monthly and annual changes to percentage points.
- Prepare a document highlighting how PPIs can be used for contract adjustment and share it with potential users in the business community.

### Recommendation Action Plan (selected items and target completion dates)
Outcome: Expand PPI coverage of service activities
- H — Train fieldworkers on proper procedures for classifying, specifying, and pricing travel agency and tour operator services. — January 2020
- H — Begin data collection for pilot of new PPI for travel agency and tour operator services. — February 2020
- H — Disseminate new services PPI release, including transportation and telecommunications indexes at the three-digit CPA level with annual average 2019 equal to 100. — February 2020
- M — Maintain historical time series for freight transportation services outside of the CPA 2008 structure with annual average 2010 equal to 100. — February 2020
- H — Evaluate quality of pilot PPI for travel agency and tour operator services and determine if changes are needed. — October 2020
- M — Complete research and questionnaire preparation for transportation support services, hotels, and similar accommodation services. — December 2020
- M — Train fieldworkers on proper procedures for classifying, specifying, and pricing transportation support services, hotels, and similar accommodation services. — January 2021
- M — Begin data collection for pilot of new PPI for transportation support services, hotels, and similar accommodation services. — February 2021
- H — Disseminate the PPI for travel agency and tour operator services in the services PPI release. — February 2021
- M — Evaluate quality of pilot PPI for transportation support services, hotels, and similar accommodation services and determine if changes are needed. — October 2021
- M — Disseminate the PPI for transportation support services, hotels, and similar accommodation services in the services PPI release. — February 2022

Outcome: Improve quality and efficiency of PPI compilation
- H — Release PPIs based on CPA 2008 classifications. — February 2020
- M — Consolidate total industrial PPI, domestic PPI, exports, and imports releases to a single industrial indexes release. — February 2020
- M — Modify presentation of monthly and annual index changes in the press releases and on the website to percentage points. — February 2020
- M — Produce document explaining how PPIs can be used as a tool for contract adjustment and publicize it to the business community. — July 2020
- M — Evaluate the benefits and costs of annual re-sampling of all products and businesses in relation to alternative approaches, such as ad hoc sample substitution. — September 2020
- H — Select cutoff samples of businesses based on unweighted production or turnover from the business register. — December 2020
- M — Implement flexibilities in the level of CPA detail at which cutoff samples are selected. — December 2020
- M — Apply cutoff of detailed product coverage within two-digit CPA to promote efficient allocation of sample units. — December 2020

*Source: IMF technical assistance report content as provided in the supplied PDF excerpt.*

---


_Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1geoea2020003.pdf_