## 1slvea2020001

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---

### Mission overview and context
- TA Mission from the Regional Technical Assistance Center for Central America, Panama, and the Dominican Republic visited San Salvador, El Salvador, on August 13–24, 2018, to provide TA to the Central Reserve Bank of El Salvador (BCRES) on compiling annual accounts by institutional sectors (AAIS) from 2014 onwards, as part of the data series from the base year of 2005.
- In March 2018, BCRES published a dataset of quarterly and annual national accounts series by economic activity; a monthly volume indicator; backcasted series from 1990–2014; and Supply and Use Tables (SUT) from 2005 and 2014, with a base year of 2005.
- Authorities requested TA to compile annual accounts focusing on institutional sectors starting in 2014.

### Key factual comparisons — percent share of GDP by institutional sector (exact values preserved)
- Gross Domestic Product by Institutional Sector, 2005 (Current Value):
  - Net taxes on goods S.11: 8.8%
  - S.12: 48.1%
  - S.13: 5.8%
  - S.14: 10.4%
  - S.15: 26.5%
  - RoW: 0.3%
- Gross Domestic Product by Institutional Sector, 2014 (Current Value):
  - Net taxes on goods S.11: 8.7%
  - S.12: 48.6%
  - S.13: 6.0%
  - S.14: 11.8%
  - S.15: 24.5%
  - RoW: 0.3%
- Observed changes:
  - General government sector (S.14) increased from 10.4 percent in 2005 to 11.8 percent in 2014.
  - Household sector (S.15) declined from 26.5 percent in 2005 to 24.5 percent in 2014.
  - Other institutional sectors did not report major changes in their contribution to GDP.

### Issues identified and initial TA findings
- Differences in 2008 SNA approaches (establishment/economic activity vs. enterprise/institutional unit) and the sequencing approach: institutional sector accounts are developed from the economic activity framework and then sequenced.
- Progress: incorporation of 2008 SNA classifications for current transactions and financial and non-financial assets in institutional unit work files (banking, insurance, central government, decentralized institutions).
- Rest of World (RoW) account differences versus Balance of Payments (BoP) driven by SUT balancing adjustments to imports and exports, assembly-plant treatment, and allocations for smuggling.
- At mission time the final 2014 SUT had not been finalized, delaying full integration of institutional accounts; after the mission the 2014 SUT was received and comparisons with base year 2005 were performed.

### Recommended focus areas for AAIS compilation (mission)
- Develop a sequence of institutionally grouped annual accounts for the government, the financial sectors, and the RoW, for 2014 to 2016 and thereafter, based on the 2008 SNA. Prepare economic classifications of current transactions and balance sheets.
- Prepare both the Goods and Services and the RoW accounts from 2014 to 2016, base year 2005. Prepare comparative tables identifying and explaining numerical and conceptual differences between RoW and BoP and establish an internal working group to solve the differences in the medium term.
- Identify the benchmark variables for each transaction and institutional sector to validate figures and provide the basis for the transaction matrices.

### Priority recommendations and target dates (exact dates preserved)
- October 2018
  - Provide the Office of Economic Statistics’ the priorities for the DCN’s work in terms of scope and time required for the compilation of the 2014 AAIS. The AAIS should be reviewed internally and approved for subsequent dissemination. — Responsible: BCRES
- December 2018
  - Complete the sequence of accounts for the following sectors; the financial sector, the general government sector, the Non-Profit Institutions Serving Households (NPISH), public enterprises and the RoW for 2014–16. — Responsible: BCRES
- December 2018
  - Strengthen the process and adjust the time assigned for compiling the 2014–16 SUTs — Responsible: BCRES

### Detailed technical assessment — priorities, actions, and target dates
- Financial Corporations sector (priority: High)
  - Complete the 2014–2016 sequence of accounts for banking and insurance, aggregate public and private sectors, and for foreign accounts; aggregate intermediaries for validation. — Target Completion Date: December 2018
  - Review number of enterprises that control non-financial and financial entities and obtain their financial statements to compile estimates for 2014–2016 and onwards. Documentation including research findings. — Target Completion Date: December 2018
  - For unregulated intermediaries, define the group that represents at least 80 percent of the credit or deposit portfolio. If an entity accepts deposits, prepare the sequence of accounts based on classifications created for banks. Obtain sample of intermediaries. — Target Completion Date: December 2018
- General Government sector (priority: High)
  - Obtain from the government-accounting department a complete listing of public-entity accounts to prepare a unique classification of accounting items and intermediate accounts; develop a frame of entities that make up the public sector in El Salvador. — Target Completion Date: October 2018
  - Request more detailed information on current and capital transfers from the four government subsectors to identify beneficiaries of transfers and reconcile intra-governmental amounts. — (no explicit date listed in excerpt)
  - Reconcile social security fund figures from contributions and social benefits received and paid between accounting sources and official published annual reports; classify contributions and benefits for life and non-life (assign pensions as life and the rest as non-life). — (no explicit date listed in excerpt)
  - Complete classifications of decentralized institutions, social security funds and municipalities for years 2014 and 2016 based on mission work. — (no explicit date listed in excerpt)
  - Revise the social-contribution amount that CEFAFA receives when consolidating social contributions and distributing social benefits to ensure proper recording as a benefit received by social-security households; document CEFAFA’s operation and define handling in current base year change and propose next steps for the following rebase year.
- Goods and Services Account and Rest of World (priority: Medium/High)
  - GEECO should create a working group with the BoP and the DCN to agree on appropriate changes to the foreign-trade database so estimates will be consistent and coherent; establish working group to reconcile trade estimates. — Target Completion Date: February 2019
  - National account series should be reviewed in periods closer to the study year; SUT compilation should be timelier and with fewer review checks; review GEECO priorities and work processes. — Target Completion Date: March 2019
  - DCN should ask DEFF for annual statistics on the financial system’s liquidity from December 2013 on; develop an Agreement/MOU to obtain liquidity data. — Target Completion Date: September 2018
  - Review time required to complete a full production cycle including dissemination and publication of data; review tracking of work processes and timeliness for complying with BCRES’s committed statistics. — Target Completion Date: September 2018
- CASI consolidated file (priority: High)
  - Review the consolidated institutional sector file based on transactions already defined by the 2008 SNA. Modify the CEI’s process to allow transactions to be balanced before being entered into the CEI. — Target Completion Date: December 2018
- Non-Financial Corporations, NPISH, and Households as Producers (priority: High/Low)
  - Complete review of CEL liabilities and reproduce classifications for other public enterprises; follow bank procedures to reproduce sequence of accounts. — Target Completion Date: August 2018 (public enterprise work file completed and reviewed)
  - For 69 private non-financial corporations, consider obtaining information from financial statements (information newsletter) for 2013–14 to validate data; assign a person to gather and analyze information. — Target Completion Date: January 2019 (implementation status planned March 2019)
  - Complete reclassification of NPISH transactions from the 1993 SNA to the 2008 SNA using correspondence table; prepare sequence of accounts. — Target Completion Date: December 2018 (implementation status planned March 2019)
  - Before finalizing SUT balancing, review consistency of production accounts by economic activity for households as producers and non-financial corporations to ensure each sector’s activity share is consistent; review contributions to GDP by institutional sector concurrently with SUT completion. — Target Completion Date: August 2018 and thereafter

### Specific operational recommendations — financial corporations and insurance treatment
- Complete sequence of banking and insurance accounts from 2014 to 2016, and aggregate private, public, and foreign data.
- Research number of corporations that control financial and non-financial corporations and request accounting data necessary to prepare the sequence of economic accounts for 2014–16 and thereafter.
- For unregulated intermediaries, define institutional units that account for at least 80 percent of the credit portfolio or deposits, if deposit-takers, and prepare the sequence of accounts based on classifications developed for banks.
- Insurance-specific:
  - Identify imported and exported reinsurance transactions to and from overseas based on insurance sector statistics and reconcile with BoP figures.
  - Estimate a cost-of-service component for non-life insurance output, including property income and a net premium of this cost for reinsurance transactions to and from overseas.
  - Record property income in the primary income assignment account; record net premium as a current transfer in the secondary distribution of income account (net premium for purchased reinsurance; net compensation for ceded reinsurance). Counterparties are with the RoW.
- Definition of foreign-controlled entities: control is based on the residency of the owners of the banks’ and insurers’ foreign capital; prepare relevant sequence of accounts for inclusion in the financial corporation sector per 2008 SNA.

### Institutional classification and coordination with public-finance statistics (GEECO meeting)
- Meeting participants: GEECO, Resident Expert on Public Finance Statistics from CAPTAC-DR, Ministry of Finance, Government Accounting, BCRES, Head of National Accounts Department, Head of Department of Financial and Tax Statistics (DEFF).
- Public Finance Resident Expert: progress on harmonizing the classification of entities among levels of interest in El Salvador; institutional classification of public finances can be continuously revised.
- National accounts view: reclassification of an institutional unit requires broad review based on main source of income, type of output generated, and composition of capital.
- Parties concluded institutional-subsector proposal could not be included in public-sector reconciliation list because format not agreed; NA classifications and data sources will differ from BCRES public-finance statistics.

### Central government, decentralized institutions, and transaction classifications (2008 SNA)
- Progress: department preparing government measurements reviewed classifications of transactions based on the 2008 SNA during the mission.
- Decentralized institutions data grouped into four segments to allow proper measurements by economic activity and to facilitate sequence of accounts.
- Central government aggregated with its entities; municipalities and social-security funds remain pending.
- All public-sector levels share same accounting catalogue; advantage for preparing accounts if catalogue is not revised.

Recommendations (public entities and transactions)
- Obtain complete catalogue of public-entity accounts from government accounting to create a single, uniform classification of accounting items and intermediate accounts for transfer to national accounts.
- Request more detailed information on current and capital transfers from the four government subsectors to identify beneficiaries and reconcile intra-governmental transfers.
- Complete classifications based on the 2008 SNA of decentralized institutions, social security funds, and municipalities for 2014 and thereafter.

### Social-security funds and CEFAFA — findings and recommendations
- Transactions for social-security funds should be reclassified based on work done for the central government.
- Attention required to contributions and social benefits, which government records present as transfers.
- NA composition should analyze contributors by: employer, employee, volunteers, supplemental, allocated; origin: social security and other unemployment insurance; use: life and non-life.
- DCN has four public entities registered as social security funds, including the Pharmaceutical Center of the Armed Forces (CEFAFA).
- CEFAFA provides benefits in-kind (medications), has permission to sell to third parties; income includes a social contribution, income from sale of medications, and corresponding costs.
- Since the 2005 base year, CEFAFA measured as a non-market producer (sum of costs) and included in SUT as an expenditure on final consumption.
- CEFAFA could be a public enterprise with market output and a non-market component owing to individual social benefits; cannot be reclassified in the current base year because of potential revision and distortion to the time series.

Recommendations (social-security funds and CEFAFA)
- Reconcile contributions and benefits figures between accounting sources and officially published annuals and reports; use reconciled figures to classify contributions and benefits to life and non-life, assigning pensions to life and everything else to non-life.
- Revise the amount of social contributions that CEFAFA receives when it consolidates social contributions and distributes social benefits from social security funds to ensure the transaction is recorded properly as a benefit received by households provided by social security.

### Goods and Services Account, RoW Account, SUTs, and AAIS prerequisites
- BCRES decided to prepare annual SUTs starting in 2014; at mission date the 2014 SUT was being closed out with series adjusted for foreign trade and assembly-plant data.
- 2014 SUT planned to be published in September 2018; SUTs from 2015 and 2016 planned for March 2019.
- DCN could not provide the 2014 SUT prior to the mission due to considerable changes to previous series; technicians had to verify data.
- Necessary condition to produce AAIS: availability of SUTs, production and income accounts for full economy, and activities of government and financial corporations sector.
- SUT aggregates the Goods and Services Account tying measurement by economic activity and institutional sector; AAIS compilation cannot begin until SUT process completed.
- Lack of SUTs or partial SUTs without definitive accounts may impede AAIS work and reconciliation between non-financial corporations and households may introduce additional risk factors.

External sector and revisions
- NA (2005 base year) were published; in March 2018 BCRES’s External Sector department published a revised series of BoP data from 2012 onwards incorporating changes to foreign-trade data.
- BoP data were included in the national account series from the 2005 base year at a later date; NA figures published in March 2018 have been revised from 2012 on.
- DSE lacks detailed knowledge of NA’s reconciliations or revision policy: BoP series published quarterly and revised only one quarter before and two years prior to the study year.
- Annual NA data gathered at end of February and revised over longer periods, producing a major lag in revisions across statistics.

Recommendations (GEECO, DSE, DCN)
- GEECO should set up a working group between the DSE and the DCN to agree on appropriate changes to the foreign trade database consistent across statistics.
- National Accounts series should be revised during periods closer to the study year; complete SUT work on time with more frequent revision controls.
- DCN should ask the DEFF for financial-system liquidity statistics from December 2013 onwards, on an annual basis.
- DCN should improve timeliness for annual calculations considering dissemination timeliness for annual, quarterly, and monthly data.

### AAIS consolidation file — methods and reconciliation
- Mission revised the AAIS consolidation file from 2005; revisions need incorporation for transactions from the 2008 SNA so sequence of accounts for banks, insurance, and central government can be used as basis.
- Excel consolidation file comes directly from subsector and sector consolidation with discrepancies up to the total economy.
- Proposed improvement: horizontal reconciliation mechanism by transaction to control and resolve differences, based on Goods and Services accounts or directly measured variables used as transaction totals.
- Proposed method: balance of uses and resources on an independent spreadsheet separate from the integrated economic accounts (CEI) for all SNA transactions with codes P, D, AN and F.
  - Uses goods and services accounts for P codes where transactions have defined amounts; institutional accounts present by institutional sector according to sequencing framework.
  - Advantages: avoids building matrices for transactions that do not require one; enables discrepancies to be resolved before CEI stage and emphasizes reconciling national economic aggregates.

Recommendations (AAIS consolidation)
- Revise institutional subsector and sector consolidation file based on transactions already defined in the 2008 SNA, including the Goods and Services account.
- Develop a step before integration of the CEI to allow transactions to be balanced prior to entry into the CEI.

### Sequence of non-financial corporations, NPISH, and households as producers
- Data sources and methods for non-financial corporations and NPISH reviewed.
- Previous consolidation considered a non-financial private sector bringing together non-financial corporations, households, and NPISH from income allocation account to financial account.
- Public enterprises: six public enterprises covered, but assigned to different technicians working independently leading to inconsistent results.
- Measurements done by economic activity and FBCF, not sequenced as for banking and insurance; sequencing of economic accounts has not continued.

Case study: CEL
- Comisión Ejecutiva Hidroeléctrica Rio Lempa (CEL) assets reviewed; recommendation to review liabilities next.
- CEL has four subsidiaries requiring research on origin of capital to allocate them to public or private non-financial corporations; BCRES lacks accounting opinions for public entities to identify sources of income and capital composition.

Private corporations and NPISH
- BCRES gathered accounting information from a set of 160 private companies, 69 of which have complete accounting information from 2014; lack of information prior to 2014.
- One private company reviewed and validated could be used as AAIS reference, but information is archived and not processed; DCN lacks analysts assigned to this activity.
- NPISH sector: DCN gathered information through a biannual survey for 39 economic units selected from a directory authorized by the Ministry of Governance and Territorial Development; economic-activity work done individually for each.
- Mission proposed aggregating sequencing of accounts for NPISH since distinction by economic activity is not necessary.
- In 2005 base year, NPISH economic units measured as non-market producers (sum of costs) with income from sales and cost of goods sold left aside.
- 2008 SNA acknowledges NPISH can have market production less than non-market production and can have profits without ability to distribute them.
- Not advisable to change NPISH measurement now; should be done in next base-year change.

Households as producers and SUT balancing
- As part of SUT calculations, economic-activity accounts calculate households as producers used as basis for production and income generation by institutional sector.
- Important to revise composition of economic accounts for households and non-financial corporations before final balancing and SUT closure because unresolved inconsistencies can affect institutional-sector composition explicit in AAIS.

### Work schedule review and recommendations (February 2018 mission follow-up)
- Work schedule prepared during February 2018 mission reviewed; timing adjusted and activities related to public enterprises and NPISH included.
- Sequence of accounts should be prepared for the same period 2014–2016, based on recommendations made.

Recommendations (follow-up)
- Complete review of CEL’s liabilities and reproduce same classifications for the five other public enterprises, as well as the sequence of accounts.
- Consider gathering available information from private non-financial enterprises (69 financial statements with a data sheet) to validate data and assess inputs usable for compiling the non-financial private sector.
- Complete reclassification of transactions from the 1993 SNA to the 2008 SNA for NPISH, based on concordance table, and prepare a sequence of accounts for the sector.
- Review consistency of production accounts by economic activity in composition of households as producers and non-financial corporations before final balancing of the SUT.

### Annex I — Reporting requirements and items to reconcile (selected)
- Income-generating and production account by economic activity.
- SUT, including income-generating account by economic activity.
- Sequence of Economic Accounts by Groups of Institutional Units, Aggregated for Institutional Subsectors.
- Sequence of accounts by institutional subsectors: Financial corporations (12 groups); Government sector (13 groups); Account 0, Goods and Services account.
- Balance of Payments: Balance of Trade (Trade BD), Current account, International investment position.
- Department of Financial Statistics: Financial and Statistical Information System (SINEF), Bank balance sheets, sector balance sheets for monetary and financial statistics.
- Government reporting: budget execution, economic income report, financial situation report, contributions and social benefits (ISSS, IPSFA, INPEP), social contributions to pension funds, government debt securities.
- Non-financial corporations: sequence for 1 CEL (subsidiaries), 2 CEPA, 3 ANDA, 4 National Lottery, 5 International Fair Executive Committee, 6 Salvadoran Investment Corporation; 69 major private companies to prepare sequence and review representativeness.
- Households and NPISH: annual calculation of households as producers; NPISH sample of 30 companies with information requested from Finance on grants.
- Reconciliation matrices (items to reconcile): Interest; Current transfers intra and outside of the government; NPISH transfers; Dividends; Withdrawal of quasi-governmental corporations; Taxes; Contributions and social benefits; Indemnity and net premiums; Financial assets.

### Work schedule (August 2018 mission) — scope and tasks for 2014–2016 series (selected items)
- 1 Sequencing of accounts for S.1 Total Economy, annual basis (up to net lending): Prepare framework for integrating 2014; inclusion of 2015 and 2016.
- 2 Sequencing of accounts for S.12 Finance Sector, annual basis. Current accounts, cumulative, balance sheets. 2014-2016: Classification of assets/liabilities based on SCN 2008; Preparing intermediate system on financial statistical balance sheet/national accounts 2013-2016; Central Bank, Banking and Insurance; Financial intermediaries with non-homogenous information, 2014.
- 3 Sequencing of accounts for S.13 General Government, Current accounts, cumulative, balance sheets. 2014-2016: Classification of assets/liabilities based on SCN 2008; Preparing intermediate system on government accounting/national accounts; Central Government, Decentralized Institutions (group); Social Security and Municipality.
- 4 Sequencing of accounts for S.11001 Public Enterprises and S.15 NPISH, Current accounts, cumulative, balance sheets 2014-2016: Classification of assets/liabilities based on SCN 2008; Preparing intermediate system on government accounting/national accounts (public enterprises) and survey/national accounts (NPISH).
- 5 Sequencing of accounts for S.14 Households, annual basis. Production and income-generating account.
- 6 Sequencing of accounts for S.2 Rest of World, Current accounts, cumulative, balance sheets. 2014-2016: Classification of current account transactions, SCN 2008; Classification of capital and financial account, SCN 2008; Classification of PII based on SCN 2008; Preparing an intermediate system on the balance of payments/national accounts; Obtaining the Rest of World account.
- 8 Matrices of current transactions by institutional sector. 2014 Series: Revision of classification and incorporation of the SCN 2008; Interest matrix; Dividends matrix; Removal of quasi-corporations matrix; Current transactions matrix.
- 9 Financial transaction matrices. 2014-2016 Series: Revision of the classification and incorporation of the SCN 2008; Deposit matrix; Debt securities matrix; Loan matrix; Other accounts payable and receivable matrix.
- 10 Fund flow matrices. 2014-2016 Series: Revision of classification and incorporation of the SCN 2008; Asset flows table; Liabilities flows table.
- 11 Preparation of file to integrate accounts by institutional sector: Review of aggregated transactions; Review of grouping by institutional sectors; Review of accounting balances obtained; Incorporation of documented evidence and validations; Preparation of scheme - summary of accounts.
- 12 Integration of accounts by institutional sector to obtain results for the 2014 series.

_International Monetary Fund — EL SALVADOR_

### 1. Comparisons of Percent Share of GDP by Institutional Sector, from Base Years 2005

### 1. Comparisons of Percent Share of GDP by Institutional Sector, from Base Years 2005 and 2014

### Mission overview and context
- A Technical Assistance (TA) Mission from the Regional Technical Assistance Center for Central America, Panama, and the Dominican Republic visited San Salvador, El Salvador, on August 13–24, 2018, to provide TA to the Central Reserve Bank of El Salvador (BCRES) on compiling annual accounts by institutional sectors (AAIS) from 2014 onwards, as part of the data series from the base year of 2005.
- In March 2018, the BCRES published a dataset of quarterly and annual national accounts series by economic activity; a monthly volume indicator; backcasted series from 1990–2014; and Supply and Use Tables (SUT) from 2005 and 2014, with a base year of 2005.
- The authorities requested TA to compile annual accounts focusing on institutional sectors starting in 2014.

### Key factual comparisons of percent share of GDP by institutional sector (exact values preserved)
- Gross Domestic Product by Institutional Sector, 2005 (Current Value):
  - Net taxes on goods S.11: 8.8%
  - S.12: 48.1%
  - S.13: 5.8%
  - S.14: 10.4%
  - S.15: 26.5%
  - RoW: 0.3%
- Gross Domestic Product by Institutional Sector, 2014 (Current Value):
  - Net taxes on goods S.11: 8.7%
  - S.12: 48.6%
  - S.13: 6.0%
  - S.14: 11.8%
  - S.15: 24.5%
  - RoW: 0.3%
- Observed changes:
  - General government sector (S.14) increased from 10.4 percent in 2005 to 11.8 percent in 2014.
  - Household sector (S.15) declined from 26.5 percent in 2005 to 24.5 percent in 2014.
  - Other institutional sectors did not report major changes in their contribution to GDP.

### Issues noted and initial TA findings
- The 2008 SNA approaches (establishment/economic activity vs. enterprise/institutional unit) were discussed; institutional sector accounts are developed from the economic activity framework and then sequenced.
- Progress observed: incorporation of 2008 SNA classifications for current transactions and financial and non-financial assets in institutional unit work files (banking, insurance, central government, decentralized institutions).
- Rest of World (RoW) account differences versus Balance of Payments (BoP) were identified, driven by SUT balancing adjustments to imports and exports, assembly-plant treatment, and allocations for smuggling.
- At mission time the final 2014 SUT had not been finalized, delaying full integration of institutional accounts; after the mission the 2014 SUT was received and comparisons with base year 2005 were performed.

### Recommended focus areas for AAIS compilation (from mission)
- Develop a sequence of institutionally grouped annual accounts for the government, the financial sectors, and the RoW, for 2014 to 2016 and thereafter, based on the 2008 SNA. Prepare economic classifications of current transactions and balance sheets.
- Prepare both the Goods and Services and the RoW accounts from 2014 to 2016, base year 2005. Prepare comparative tables identifying and explaining numerical and conceptual differences between RoW and BoP and establish an internal working group to solve the differences in the medium term.
- Identify the benchmark variables for each transaction and institutional sector to validate figures and provide the basis for the transaction matrices.

### Priority recommendations and target dates (exact dates preserved)
- October 2018
  - Provide the Office of Economic Statistics’ the priorities for the DCN’s work in terms of scope and time required for the compilation of the 2014 AAIS. The AAIS should be reviewed internally and approved for subsequent dissemination. — Responsible: BCRES
- December 2018
  - Complete the sequence of accounts for the following sectors; the financial sector, the general government sector, the Non-Profit Institutions Serving Households (NPISH), public enterprises and the RoW for 2014–16. — Responsible: BCRES
- December 2018
  - Strengthen the process and adjust the time assigned for compiling the 2014–16 SUTs — Responsible: BCRES

### Detailed technical assessment — priorities, actions, and target dates (high-level bullets preserving terminology)
- Financial Corporations sector (priority: High)
  - Complete the 2014–2016 sequence of accounts for banking and insurance, aggregate public and private sectors, and for foreign accounts; aggregate intermediaries for validation. — Target Completion Date: December 2018
  - Review number of enterprises that control non-financial and financial entities and obtain their financial statements to compile estimates for 2014–2016 and onwards. Documentation including research findings. — Target Completion Date: December 2018
  - For unregulated intermediaries, define the group that represents at least 80 percent of the credit or deposit portfolio. If an entity accepts deposits, prepare the sequence of accounts based on classifications created for banks. Obtain sample of intermediaries. — Target Completion Date: December 2018
- General Government sector (priority: High)
  - Obtain from the government-accounting department a complete listing of public-entity accounts to prepare a unique classification of accounting items and intermediate accounts; develop a frame of entities that make up the public sector in El Salvador. — Target Completion Date: October 2018
  - Request more detailed information on current and capital transfers from the four government subsectors to identify beneficiaries of transfers and reconcile intra-governmental amounts. — (no explicit date listed in excerpt)
  - Reconcile social security fund figures from contributions and social benefits received and paid between accounting sources and official published annual reports; classify contributions and benefits for life and non-life (assign pensions as life and the rest as non-life). — (no explicit date listed in excerpt)
  - Complete classifications of decentralized institutions, social security funds and municipalities for years 2014 and 2016 based on mission work. — (no explicit date listed in excerpt)
  - Revise the social-contribution amount that CEFAFA receives when consolidating social contributions and distributing social benefits to ensure proper recording as a benefit received by social-security households; document CEFAFA’s operation and define handling in current base year change and propose next steps for the following rebase year.
- Goods and Services Account and Rest of World (priority: Medium/High)
  - GEECO should create a working group with the BoP and the DCN to agree on appropriate changes to the foreign-trade database so estimates will be consistent and coherent; establish working group to reconcile trade estimates. — Target Completion Date: February 2019
  - National account series should be reviewed in periods closer to the study year; SUT compilation should be timelier and with fewer review checks; review GEECO priorities and work processes. — Target Completion Date: March 2019
  - DCN should ask DEFF for annual statistics on the financial system’s liquidity from December 2013 on; develop an Agreement/MOU to obtain liquidity data. — Target Completion Date: September 2018
  - Review time required to complete a full production cycle including dissemination and publication of data; review tracking of work processes and timeliness for complying with BCRES’s committed statistics. — Target Completion Date: September 2018
- CASI consolidated file (priority: High)
  - Review the consolidated institutional sector file based on transactions already defined by the 2008 SNA. Modify the CEI’s process to allow transactions to be balanced before being entered into the CEI. — Target Completion Date: December 2018
- Non-Financial Corporations, NPISH, and Households as Producers (priority: High/Low)
  - Complete review of CEL liabilities and reproduce classifications for other public enterprises; follow bank procedures to reproduce sequence of accounts. — Target Completion Date: August 2018 (public enterprise work file completed and reviewed)
  - For 69 private non-financial corporations, consider obtaining information from financial statements (information newsletter) for 2013–14 to validate data; assign a person to gather and analyze information. — Target Completion Date: January 2019 (implementation status planned March 2019)
  - Complete reclassification of NPISH transactions from the 1993 SNA to the 2008 SNA using correspondence table; prepare sequence of accounts. — Target Completion Date: December 2018 (implementation status planned March 2019)
  - Before finalizing SUT balancing, review consistency of production accounts by economic activity for households as producers and non-financial corporations to ensure each sector’s activity share is consistent; review contributions to GDP by institutional sector concurrently with SUT completion. — Target Completion Date: August 2018 and thereafter

### Specific operational recommendations for financial corporations and insurance treatment
- Complete the sequence of banking and insurance accounts from 2014 to 2016, and aggregate private, public, and foreign data.
- Research the number of corporations that control financial and non-financial corporations and request the accounting data necessary to prepare the sequence of economic accounts for 2014–16 and thereafter.
- For unregulated intermediaries, define the institutional units that account for at least 80 percent of the credit portfolio or deposits, if they are deposit-takers, and prepare the sequence of accounts based on classifications developed for banks.
- For insurance:
  - Identify imported and exported reinsurance transactions to and from overseas based on insurance sector statistics and reconcile with BoP figures.
  - Estimate a cost-of-service component for non-life insurance output, including property income and a net premium of this cost for reinsurance transactions to and from overseas.
  - Record property income in the primary income assignment account; record net premium as a current transfer in the secondary distribution of income account (net premium for purchased reinsurance; net compensation for ceded reinsurance). Counterparties are with the RoW.
- Definition of foreign-controlled entities: control is based on the residency of the owners of the banks’ and insurers’ foreign capital; prepare relevant sequence of accounts for inclusion in the financial corporation sector per 2008 SNA.

*IMF mission report: “1. Comparisons of Percent Share of GDP by Institutional Sector, from Base Years 2005 and 2014”*

### 17. The Office of Economic Statistics (GEECO) held a joint meeting with the Resident

### 17. The Office of Economic Statistics (GEECO) held a joint meeting with the Resident Expert on Public Finance Statistics from the CAPTAC-DR, representatives from the Ministry of Finance, Government Accounting, the BCRES, the Head of the National Accounts Department, and the Head of the Department of Financial and Tax Statistics (DEFF), who also signed this report.

### Institutional classification and coordination between NA and public-finance statistics
- Meeting requested by BCRES authorities to provide guidance on work by the National Accounts (NA) mission on institutional sectors and reconciliation with the Public Finance Statistics mission.
- Public Finance Resident Expert: progress on harmonizing the classification of entities among levels of interest in El Salvador; institutional classification of public finances can be continuously revised.
- National accounts view: once an institutional unit is defined in an economic activity or institutional subsector, reclassification requires a broad review based on main source of income, type of output generated, and composition of capital.
- Parties asked whether an institutional-subsector proposal could be included on the list of public-sector entities for reconciliation with NA; answer: no, because the format had not been agreed upon.
- Note recorded that classifications of units and data sources used for NA would differ from BCRES public-finance statistics.

### Central government, decentralized institutions, and transaction classifications (2008 SNA)
- Progress: department preparing government measurements reviewed classifications of transactions based on the 2008 SNA during the mission.
- Decentralized institutions data were grouped into four segments to allow proper measurements for each economic activity and to facilitate the sequence of accounts.
- Central government aggregated with the various entities that comprise it; municipalities and social-security funds remain pending.
- All levels of public sector share the same accounting catalogue; advantage for preparing accounts and reproducing measurements by institutional subsector and series of years, provided the catalogue is not revised.

Recommendations (public entities and transactions):
- Obtain from the government accounting department a complete catalogue of public-entity accounts to create a single, uniform classification of accounting items and intermediate accounts to be uniformly transferred from government accounting to national accounts for the general government.
- Request more detailed information on current and capital transfers from the four government subsectors to identify transfers’ beneficiaries and properly reconcile intra-governmental transfers.
- Complete the classifications based on the 2008 SNA of decentralized institutions, social security funds, and municipalities, based on work done during the mission for the central government for 2014 and thereafter.

### Social-security funds and CEFAFA
- Transactions for social-security funds should be reclassified based on work done for the central government.
- Attention needed to contributions and social benefits, which government records present as transfers.
- National accounts composition to be analyzed by: employer, employee, volunteers, supplemental, allocated; origin: social security and other unemployment insurance; use: life and non-life.
- Use official data sources (annuals or management reports) and reconcile records among available sources.

Findings on social security entities:
- DCN has four public entities registered as social security funds, including the Pharmaceutical Center of the Armed Forces (CEFAFA).
- CEFAFA provides benefits in-kind (medications) and has permission to sell to third parties; income includes a social contribution, income from sale of medications, and corresponding costs.
- Since the 2005 base year, CEFAFA has been measured as a non-market producer (sum of costs) and included in the SUT as an expenditure on final consumption.
- Records indicate CEFAFA could be a public enterprise with market output and a non-market component owing to individual social benefits; it cannot be reclassified in the current base year because of potential revision and distortion to the time series.

Recommendations (social-security funds and CEFAFA):
- For social-security funds, reconcile contributions and benefits figures between accounting sources and officially published annuals and reports; use reconciled figures to classify contributions and benefits to life and non-life, assigning pensions to life and everything else to non-life.
- Revise the amount of social contributions that the CEFAFA receives when it consolidates social contributions and distributes social benefits from social security funds to ensure the transaction is recorded properly as a benefit received by households provided by social security.

### Goods and Services Account and Rest of World (RoW) Account; SUTs and AAIS prerequisites
- Starting in 2014, BCRES decided to prepare annual SUTs; at mission date the 2014 SUT was being closed out with series adjusted for foreign trade and assembly-plant data.
- 2014 SUT planned to be published in September 2018; SUTs from 2015 and 2016 planned for March 2019.
- DCN could not provide the 2014 SUT prior to the mission due to considerable changes to previous series; technicians had to verify data.
- Necessary condition to produce the AAIS: availability of the SUTs, production and income accounts for full economy, and activities of the government and financial corporations sector.
- The SUT aggregates the Goods and Services Account tying measurement by economic activity and institutional sector; AAIS compilation cannot begin until SUT process completed.
- Lack of SUTs or partial SUTs without definitive accounts may impede AAIS work and reconciliation between non-financial corporations and households may introduce additional risk factors.
- Mission drew up a list to complete institutional sectors (Annex I referenced).

External sector and revisions:
- National accounts (2005 base year) were published; in March of 2018 BCRES’s External Sector department published a revised series of Balance of Payments (BoP) data from 2012 onwards incorporating changes to foreign-trade data.
- The BoP data were included in the national account series from the 2005 base year at a later date; NA figures published in March 2018 have been revised from 2012 on.
- DSE (External Sector Department) lacks detailed knowledge of NA’s reconciliations or revision policy: BoP series published quarterly and revised only one quarter before and two years prior to the study year.
- Annual NA data gathered at end of February and revised over longer periods, producing a major lag in revisions across statistics.

Public finance and financial statistics alignment issues:
- BCRES publishes public finance figures in accordance with the 1986 Public Finance Statistics Manual; differences exist in coverage of institutional units relative to NA.
- NA department uses Government Accounting as source data on an accrual basis for central government, decentralized institutions, social-security funds, and municipalities; however AAIS measurements for general government will not match BCRES public finance statistics.
- Some financial-statistics series already used for financial corporations sector calculations based on mission recommendations from February.
- NA should provide additional data to be coherent with financial statistics: identify issuers of public offerings, bank and private debt, and individual pension fund accounts managed by AFPs; figures should be reconciled with financial corporations sector data.
- DCN should provide financial-system liquidity information at close of 2014, 2015, and 2016.

Foreign trade classification and RoW:
- RoW account prepared by DCN department in charge of SUT; adjustments to foreign-trade database in annual supply-demand balancing create differences between BoP balances and National Accounts.
- Foreign trade data classified on Central American Customs System (SAC); SUT prepared using Nomenclature of Products from El Salvador (NPES).
- Reclassification SAC to NPES plus balancing supply and demand are sources of differences between BoP and National Accounts.
- For Goods and Services Accounts by economic activity, NA will use Foreign Sector accounts; AAIS based on RoW account.
- Recommendation: align both statistics fully in classifications and criteria at national level; changing base year and adopting new method manuals (e.g., Balance of Payments Manual, Version 6) are opportunities for alignment.

Recommendations (GEECO, DSE, DCN):
- GEECO should set up a working group between the DSE and the DCN to agree on appropriate changes to the foreign trade database consistent across statistics.
- National Accounts series should be revised during periods closer to the study year; complete SUT work on time with more frequent revision controls.
- DCN should ask the DEFF for financial-system liquidity statistics from December 2013 onwards, on an annual basis.
- DCN should improve timeliness for annual calculations considering dissemination timeliness for annual, quarterly, and monthly data.

### AAIS Consolidation File: methods and reconciliation
- Mission revised the file used for the AAIS from 2005; revisions need incorporation for transactions from the 2008 SNA so sequence of accounts for banks, insurance, and central government can be used as basis.
- Excel consolidation file comes directly from subsector and sector consolidation with discrepancies up to the total economy.
- Improvement proposed: horizontal reconciliation mechanism by transaction to control and resolve differences, based on Goods and Services accounts or directly measured variables used as transaction totals.
- Proposed method: balance of uses and resources on an independent spreadsheet separate from the integrated economic accounts (CEI) for all SNA transactions with codes P, D, AN and F.
  - Uses goods and services accounts for P codes where transactions have defined amounts; institutional accounts present by institutional sector according to sequencing framework.
  - Advantages: avoids building matrices for transactions that do not require one; enables discrepancies to be resolved before CEI stage and emphasizes reconciling national economic aggregates.

Recommendations (AAIS consolidation):
- Revise institutional subsector and sector consolidation file based on transactions already defined in the 2008 SNA, including the Goods and Services account.
- Develop a step before integration of the CEI to allow transactions to be balanced prior to entry into the CEI.

### Sequence of non-financial corporations, NPISH, and households as producers
- Data sources and methods for non-financial corporations and NPISH were reviewed.
- Previous consolidation considered a non-financial private sector bringing together non-financial corporations, households, and NPISH from income allocation account to financial account.
- Public enterprises: six public enterprises covered, but assigned to different technicians working independently leading to inconsistent results.
- Measurements done by economic activity and FBCF, not sequenced as for banking and insurance; sequencing of economic accounts has not continued.

Case study: CEL
- Comisión Ejecutiva Hidroeléctrica Rio Lempa (CEL) assets reviewed; recommendation to review liabilities next.
- CEL has four subsidiaries requiring research on origin of capital to allocate them to public or private non-financial corporations; BCRES lacks accounting opinions for public entities to identify sources of income and capital composition.

Private corporations and NPISH:
- BCRES gathered accounting information from a set of 160 private companies, 69 of which have complete accounting information from 2014; lack of information prior to 2014.
- One private company reviewed and validated could be used as AAIS reference, but information is archived and not processed; DCN lacks analysts assigned to this activity.
- NPISH sector: DCN gathered information through a biannual survey for 39 economic units selected from a directory authorized by the Ministry of Governance and Territorial Development; economic-activity work done individually for each.
- Mission proposed aggregating sequencing of accounts for NPISH since distinction by economic activity is not necessary.
- In 2005 base year, NPISH economic units measured as non-market producers (sum of costs) with income from sales and cost of goods sold left aside.
- 2008 SNA acknowledges NPISH can have market production less than non-market production and can have profits without ability to distribute them.
- Not advisable to change NPISH measurement now; should be done in next base-year change.

Households as producers and SUT balancing:
- As part of SUT calculations, economic-activity accounts calculate households as producers used as basis for production and income generation by institutional sector.
- Important to revise composition of economic accounts for households and non-financial corporations before final balancing and SUT closure because unresolved inconsistencies can affect institutional-sector composition explicit in AAIS.

_El Salvador — International Monetary Fund_

### 49. The work schedule prepared during the February 2018 mission was reviewed, the

### 1slvea2020001 - 49. The work schedule prepared during the February 2018 mission was reviewed, the

### Mission review and adjustments
- The work schedule prepared during the February 2018 mission was reviewed, the timing was adjusted and the activities related to public enterprises and NPISH were included.
- The sequence of accounts should be prepared for the same period 2014–2016, based on the recommendations made. (See Annex II)

### Recommendations
- Complete the review of CEL’s liabilities and reproduce the same classifications in the records of the five other public enterprises, as well as the sequence of accounts.
- Consider the possibility of gathering available information from private non-financial enterprises (69 financial statements with a data sheet) to validate the data and assess which inputs can be used in compiling the non-financial private sector.
- Complete the reclassification of transactions from the 1993 SNA to the 2008 SNA for the NPISH, based on the concordance table, and prepare a sequence of accounts for the sector.
- Review the consistency of production accounts by economic activity in their composition of households as producers and non-financial corporations, before the final balancing of the SUT, to make sure that share of each of the sectors in each economic activity is consistent across the series under consideration.

### Officials who participated in the mission
- Yudis Yanette Bonilla BCRES
- Celso Ricardo Coto Romero BCRES
- Hazel Mireya González BCRES
- Edgardo Ovidio Luna Escobar BCRES
- Wilfredo Antonio Viera BCRES
- Linda Elizabeth Ramírez Palomo BCRES
- José Alfredo Calderón BCRES
- Julio Roberto Torres BCRES
- Joaquin Alberto Pinto Medrano BCRES
- Jaime Méndez Solorzano BCRES
- Aída Mercedes Alvarez Rodríguez BCRES
- Sandra Teresa Pérez Avelar BCRES
- Carolina Beatriz Molina Medina BCRES

### Annex I — Reporting requirements for the AAIS (Annual Accounts)
Income and supply-use requirements
- Income-generating and production account by economic activity.
- SUT, including income-generating account by economic activity.
- Sequence of Economic Accounts by Groups of Institutional Units, Aggregated for Institutional Subsectors

Sequence of accounts by institutional subsectors
- Financial corporations (12 groups).
- Government sector (13 groups).
- Account 0, Goods and Services account.

Balance of Payments: Sector 2 Rest of World Account
- Balance of Trade (Trade BD), reconciling with national accounts.
- Current account.
- International investment position.

Department of Financial Statistics
- Financial and Statistical Information System (SINEF).
- Bank balance sheets, sector balance sheets for monetary and financial statistics, standard forms, and non-accounting reports.

Government reporting
- Report on budget execution of income and expenditures: income and expenditures from a budget perspective.
- Economic income report.
- Financial situation report (balance sheet).
- Contributions and social benefits, ISSS, IPSFA, and INPEP.
- Social contributions to pension funds.
- Government debt securities and total public sector (state financial-management report).
- Breakdown of current and capital transfers.

Non-financial corporations
- Sequence of economic accounts for public/private enterprises: 1 CEL (subsidiaries), 2 CEPA, 3 ANDA (National Administration of Aqueducts and Sewers), 4 National Lottery [Lotería Nacional de Beneficencia], 5 International Fair Executive Committee (now the International Convention and Fair Center), and 6 Salvadoran Investment Corporation.
- 69 major private companies: prepare the sequence of accounts and review their representativeness by economic activity.

Households and NPISH
- Annual calculation of households as producers.
- The NPISH, sample of 30 companies, information is being requested from Finance on grants as reported by NPISH, review it to check whether it might represent a total.

Reconciliation matrices (items to reconcile)
- Interest
- Current transfers intra and outside of the government
- NPISH transfers
- Dividends
- Withdrawal of quasi-governmental corporations, check it
- Taxes
- Contributions and social benefits
- Indemnity and net premiums
- Financial assets

### Work schedule of accounts by institutional sectors (August 2018 mission) — scope and tasks for the 2014–2016 series
Period covered: 2014, 2015 & 2016 (and thereafter)
- 1 Sequencing of accounts for S.1 Total Economy, annual basis (up to net lending)
  - 1.1 Preparing framework for integrating 2014
  - 1.2 Inclusion of 2015 and 2016
- 2 Sequencing of accounts for el S.12 Finance Sector, annual basis. Current accounts, cumulative, balance sheets. 2014-2016
  - 2.1 Classification of assets/liabilities based on SCN 2008
  - 2.2 Preparing intermediate system on financial statistical balance sheet/national accounts 2013-2016
  - 2.3 Central Bank, Banking and Insurance
  - 2.4 Financial intermediaries with non-homogenous information, 2014
- 3 Sequencing of accounts for el S.13 General Government, Current accounts, cumulative, balance sheets. 2014-2016
  - 3.1 Classification of assets/liabilities based on SCN 2008
  - 3.2 Preparing intermediate system on government accounting/national accounts
  - 3.3 Central Government, Decentralized Institutions (group)
  - 3.4 Social Security and Municipality
- 4 Sequencing of accounts for S.11001 Public Enterprises and S.15 NPISH, Current accounts, cumulative, balance sheets 2014-2016
  - 4.1 Classification of assets/liabilities based on SCN 2008
  - 4.2 Preparing intermediate system on government accounting/national accounts (public enterprises) and survey/national accounts (NPISH)
- 5 Sequencing of accounts for S.14 Households, annual basis. Production and income-generating account
- 6 Sequencing of accounts for S.2 Rest of World, Current accounts, cumulative, balance sheets. 2014-2016
  - 6.1 Classification of current account transactions, SCN 2008
  - 6.2 Classification of capital and financial account, SCN 2008
  - 6.3 Classification of PII based on SCN 2008
  - 6.4 Preparing an intermediate system on the balance of payments/national accounts
  - 6.5 Obtaining the Rest of World account
- 7 Grouped estimate of non-financial private sectors. Financial Allocation Account to Financial Account
- 8 Matrices of current transactions by institutional sector. 2014 Series
  - 8.1 Revision of classification and incorporation of the SCN 2008
  - 8.2 Interest matrix
  - 8.3 Dividends matrix
  - 8.4 Removal of quasi-corporations matrix
  - 8.5 Current transactions matrix
- 9 Financial transaction matrices. 2014-2016 Series
  - 9.1 Revision of the classification and incorporation of the SCN 2008
  - 9.2 Deposit matrix
  - 9.3 Debt securities matrix
  - 9.4 Loan matrix
  - 9.5 Other accounts payable and receivable matrix
- 10 Fund flow matrices. 2014-2016 Series
  - 10.1 Revision of classification and incorporation of the SCN 2008
  - 10.2 Asset flows table
  - 10.3 Liabilities flows table
- 11 Preparation of file to integrate accounts by institutional sector
  - 11.1 Review of aggregated transactions
  - 11.2 Review of grouping by institutional sectors
  - 11.3 Review of accounting balances obtained
  - 11.4 Incorporation of documented evidence and validations
  - 11.5 Preparation of scheme - summary of accounts
- 12 Integration of accounts by institutional sector to obtain results for the 2014 series

Annex II: Revised Work Program for the AAIS

*International Monetary Fund — EL SALVADOR*

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_Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1slvea2020001.pdf_