## Section 1 — REPORT ON THE CAPACITY DEVELOPMENT NATIONAL ACCOUNTS STATISTICS MISSION (MAY 14–18, 2018) ## Source details **Canonical URL:** [Section 1 — REPORT ON THE CAPACITY DEVELOPMENT NATIONAL ACCOUNTS STATISTICS MISSION (MAY 14–18, 2018)](https://www.imf.org/-/media/files/publications/cr/2020/english/1slvea2020004.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2020/english/1slvea2020004.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2020/english/1slvea2020004.pdf.json) --- ### Summary of mission outcomes and priority recommendations - TA Mission by CAPTAC-DR: May 14 to 18, 2018, objective to support the Central Reserve Bank of El Salvador (CBR) to strengthen national accounts statistics for decision making. - Mission coverage: - Compilation of an Input-Output Table (IOT) for 2014. - Follow up on recommendations to disseminate Supply and Use Tables (SUT) for 2015 and thereafter, as part of the national accounts’ series with base year 2005. - Training for the Department of National Accounts (DNA) team on methodological and conceptual aspects for analysis and application of the IOT. - Role of SUTs: - Foundation for verifying and validating source data and for overcoming data gaps in national accounts compilation. - Basis for deriving an IOT to analyze interdependence between industries and intermediate transactions. - Publication and coordination: - 2014 IOT compiled during the mission should be published after incorporating the most recent revision of the balance of payments data (data became available after completion of the 2014 SUT). - Proposed improvement: integrate and coordinate production of the balance of payments series with the annual national accounts compilation process. - Base year: - Room for improvement in SUT compilation to be incorporated in a future rebasing project. - Authorities intend to begin the process for a new base year; the reference year is yet to be determined. ### Priority recommendations (Table 1) - Target dates, recommendations, and responsible institution: - September 2018: Evaluate the publication of the 2005 and 2014 IOT for El Salvador, once the updating of the balance of payments series have been incorporated in the 2014 SUT. — CBR - September 2018: Evaluate the publication of the final version of the 2014 SUT. — CBR - March 2019: Publication of the 2015 SUT. — CBR - September 2019: Disseminate the annual series by economic activity with additional detail that is currently available. — CBR ### Compilation of Input-Output Table — A. Creation of a work plan to compile the IOT - Agreement to prepare the IOT for 2014. - Focus: - Creation of the SUT table using CIF valued imports. - Development of a valuation matrix to obtain a use table at basic prices consistent with the valuation of the supply chart. ### Compilation of Input-Output Table — B. Valuation table estimation - Principle: Valuation at basic prices is the preferred basis for economic analysis in input-output models. - Steps and observations: - Valuation tables disaggregated using balance worksheets at the demand components level (intermediate consumption; final consumption expenditure; gross fixed capital formation; variation of stocks; exports). - VAT cannot be deducted from exempt branches for intermediate consumption or gross fixed capital formation. - For VAT purposes, exempt branches were identified; preliminary valuation distributed VAT for intermediate consumption per product with intermediate consumption at market prices for exempt branches, but VAT value due to intermediate demand is overestimated in the equilibrium and cannot be precisely estimated for exempt branches. - Import Taxes and Duties should be distributed according to the CIF import use table structure; instead distribution was carried out according to total use at buyer prices, potentially causing inconsistencies. - Remaining taxes on goods were distributed in proportion to the use table’s intermediate consumption of the total economy at market prices for taxed goods. - Subsidies on goods for intermediate consumption apply only to two products: - 3205, Petroleum gases and other gaseous hydrocarbons (distributed in proportion to the use table’s intermediate consumption of the total economy at market prices). - 4502, Road passenger transport services and chauffeur-driven hire vehicles (allocated to subsidized land transport activity). - Trade and transport margins: - Ideally estimated separately for wholesale, retail trade, and transport margins (by transport type). - Initial 2005 base year studies included detailed margin analysis by demand components for imported and domestic goods but did not consider market purchases by government or NPISH margins; this caused incorrect distribution and underestimated trade production. - Eurostat Manual and United Nations handbook recommend focusing on wholesale trade margins for changes in stocks; margins related to finished products, work in progress or stock outflows do not apply. - Recommended actions (valuation tables and SUT balancing): - Create separate valuation tables for domestic and imported use. - Distribute taxes on imports similar to the distribution of the CIF import use table. - Within the new base framework, create separate valuation tables for wholesale trade, retail trade and transport margins, accounting for imported and domestic goods, and include margins for final consumption by government and NPISH. - Prepare a detailed study of VAT allocation to various demand components in the form of a valuation table. - Balance the SUT at basic prices, requiring robust and well-defined valuation tables. ### Compilation of Input-Output Table — C. Construction of the import use table, valued CIF - Purpose and importance: - Import use matrix separates use of imported goods and services from domestic ones; same structure as the use table and shows intermediate and final demand for imports by product and economic activity. - For economic analysis and national accounts balances, obtaining domestic supply at basic prices and subtracting the CIF import use table from the total use table is paramount. - Separate estimates of price and volume changes for domestic production and imports improve consistency when estimating GDP in volume terms from the SUT. - Data and methods: - Ideally conduct a survey of key importers to determine end-use of main imported products, but regional experience shows low response rates. - Definitions: - Competitive import: import competing with domestically produced products. - Complementary import: imported goods not produced domestically; imported use coincides with estimated use in destination table for total economy at basic prices. - Import data inconsistency: imports are not consistent with the balance of payments because the balance of payments uses an economic classification by tariff codes allowing classification by intermediate demand, final consumption, and capital goods. - Prior BCN staff studies on domestic production distribution and imported goods distribution were considered; only the distribution of imported goods study was used as it showed greater economic consistency. - To estimate missing demand categories in DNA staff exercise, the distribution of the use table for the economy was used. - Disparity between the use table at basic prices and the CIF imports use table produced negative values in only 10 of 182 products in the detailed SUT; for these products with considerable imbalance, it was considered acceptable to assume a distribution equal to that of the use table at basic prices. - Recommended actions for next base year: - Record the end-use of domestic production to provide input to the SUT — implying a complete use table for each activity. - Estimate a CIF import use table to provide input to the SUT. ### Compilation of Input-Output Table — D. Inconsistencies detected - Significant inconsistencies observed in the SUT: - Discrepancies greater than 0.5 percent of product taxes between the VAT values for the EQOU (file containing the balance for each SUT product) and the VAT column in the supply table; discrepancies offset each other so that the sum of all is 0. - Intermediate consumption for product 4101, Jewelry and related items, of activity 27.2, manufacturing industries, shows a negative value of 0.2 thousand dollars due to an adjustment that ignored decimals. - Final demand for product 0301 Sugarcane is negative in 2014 because changes in stocks are negative and there is minimal household demand for this product, which is inconsistent. - Recommended action: - Improve detection of SUT negative values using Excel data tools, and detect supply and demand imbalances including issues not displayed in publications but affecting valuation tables. ### Compilation of Input-Output Table — E. Compilation of Input-Output Table and outputs - Publication decision: - Observations are not considered an obstacle to publishing the IOT since it is fully consistent with the 2014 SUT data already published. - IOT compilation results: - Mission compiled a product-product and industry-industry IOT for 2014 in accordance with the 2014 SUT balance information and the CIF import use table created by DNA technical personnel. - A preliminary version contains 53 branches of homogeneous production and 53 homogeneous products; results require review and validation. - Consistency of the IOT was reviewed during the mission and no data anomalies were found. - Files and deliverables provided to CBR technical personnel: - Valuation tables. - Conversion of the use table from market prices to basic prices. - Grouping of activities to ensure matrix symmetry. - Macros to obtain input-output matrices using two common assumptions: fixed product technology and fixed market structure by product; verification of two basic equations for common I-O models: - Leontief: x = (IA) -1 y (x = production; I = identity matrix; A = matrix of technical coefficients; y = final demand). - Ghosh: p = (IB) -1 d (p = price level; B = coefficients of distribution matrix; d = vector of primary inputs or demands). - Identification of key homogeneous industries in the Salvadoran economy according to technical and distribution coefficients. - Compilation process: - Work carried out across three files: valuation tables creation; grouping the tables; and final file containing matrix calculation, coefficient calculation, model equation verification, and some applications. - Draft methodological note with basic notes on input-output matrix application was prepared. - Presentation given to DNA staff explaining methodology to obtain the IOT and some applications and extensions; file provided to CBR authorities. - CBR technical personnel applied the methodology to obtain the 2014 IOT to the base year 2005 data, obtaining a base year, industry-industry and product-product IOT. ### Compilation of Input-Output Table — F. Monitoring of the National Accounts System of El Salvador 2005 - The 2014 compilation and the applied methodology were extended to the 2005 base year to obtain analogous IOTs for 2005. *Source: IMF Country Report No. 20/216 — Technical Assistance Report on El Salvador; Report on the Capacity Development National Accounts Statistics Mission (May 14–18, 2018).* ### Section 2 ### Input-Output Table (IOT) adjustments and RAS-based method - Purpose: Enhance input-output analysis to study structural change in the Salvadoran economy between 2005 and 2014. - Proposed method: Procedure based on the RAS idea that treats macroeconomic estimates as exogenous inputs and derives both intermediate inputs and final demand endogenously through an iterative procedure. - Starting assumptions: - An input-output matrix known for a given year. - Known values for GDP, imports, components of final demand, and value-added of activities. - Derive, through successive approximations, an input-output matrix consistent, within a predetermined confidence interval, with known values. - Status: Procedure was not pursued in detail during the mission; remains a possibility for future missions. - Recommended Actions: - Review and validate results for valuation tables and import use tables from 2005 and 2014, aggregating at basic and buyer prices in respect of supply and demand. - Create the IOT applications document. - Publication of 2005 and 2014 IOT pending finalization of the 2014 SUT, which is still pending review. ### Monitoring of the National Accounts System of El Salvador 2005 (Section 2) - Authorities interested in developing a new base year to: - Correct previous inconsistencies. - Implement further improvements where the growing maturity of the new system of accounts is needed. - Recommendation: Update the annual review calendar to allow greater disaggregation of data when the SUT is not yet available; there is considerable demand for more disaggregated data. - Authorities’ commitment: Continue publishing annual SUTs to provide greater consistency to the accounting framework. - Recommended Actions: - Update the annual review calendar so that in August-September of year t a greater disaggregation for year t-1 is incorporated. - Consider using information in the valuation tables and the IOT to estimate annual data for periods when there is still no SUT available, based on the observed coefficients and projections in accordance with paragraph 31. - Have a calendar of data revisions that allow for a definitive SUT to be published annually, not subject to revision. ### Detailed Technical Assessment and Recommendations (selected outcomes, priorities, milestones) - Improve coordination between national accounts and balance of payments: - Priority/Action: CBR should seek to make the SUT foreign trade figures compatible with those of the balance of payments figures. - Priority Recommendation: SUT balance of payments and foreign trade data. - Target Completion Date: December 2020. - Implementation note: CBR staff are aware of the problem and are taking action. - Compile use of domestic production and CIF imports: - Priority/Action: Compile a table of domestic production utilization based on information provided by each branch operator (elaborador de rama). - Priority Recommendation: Table of domestic production utilization at basic prices. - Target Completion Date: May 2018. - Implementation note: The exercise already carried out must have continuity and be extended to include all demand components and acquiring branches. - Compile retail and wholesale trade valuation tables within the new base year framework: - Priority/Action: Compile independent retail and wholesale trade valuation tables for imported and domestic goods. - Priority Recommendation: Wholesale and retail trade margins. - Target Completion Date: December 2020. - Implementation note: A guideline have been established to ensure a correct measurement of these margins. - Update annual review calendar: - Priority/Action: Update the annual review calendar. - Priority Recommendation: Disaggregated data and annual SUTs. - Target Completion Date: December 2019. - Implementation note: Under consideration. ### Officials Who Participated in the Mission - Edgar Cartagena — CBR — Economic Statistics Manager - Yudis Bonilla — CBR — Head of the National Accounts Department - Wilfredo Viera — CBR — National Accounts Coordinator - Neftalí Gallardo — CBR — Senior National Accounts *Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1slvea2020004.pdf — Section 2* ### Section 1 ### Section 1 — REPORT ON THE CAPACITY DEVELOPMENT NATIONAL ACCOUNTS STATISTICS MISSION (MAY 14–18, 2018) ### Summary of mission outcomes and priority recommendations - A Technical Assistance (TA) Mission was conducted by CAPTAC-DR from May 14 to 18, 2018 with the objective of supporting the Central Reserve Bank of El Salvador (CBR) to strengthen national accounts statistics for decision making. - Mission coverage: - Compilation of an Input-Output Table (IOT) for 2014. - Follow up on recommendations to disseminate Supply and Use Tables (SUT) for 2015 and thereafter, as part of the national accounts’ series with base year 2005. - Training for the Department of National Accounts (DNA) team on methodological and conceptual aspects for analysis and application of the IOT. - SUTs role: - Provide a foundation for verifying and validating source data and for overcoming data gaps in national accounts compilation. - Can be used to derive an IOT to analyze interdependence between industries and intermediate transactions. - Publication and coordination: - The 2014 IOT compiled during the mission should be published after incorporation of the most recent revision of the balance of payments data (data became available after completion of the 2014 SUT). - Mission proposed improving SUT compilation by integrating and coordinating the production process of the balance of payments series with the annual national accounts compilation process. - Base year: - Some room for improvement identified in SUT compilation to be incorporated in a future rebasing project. Authorities intend to begin the process for a new base year; the reference year is yet to be determined. ### Priority recommendations (Table 1) - Target dates, recommendations, and responsible institution: - September 2018: Evaluate the publication of the 2005 and 2014 IOT for El Salvador, once the updating of the balance of payments series have been incorporated in the 2014 SUT. — CBR - September 2018: Evaluate the publication of the final version of the 2014 SUT. — CBR - March 2019: Publication of the 2015 SUT. — CBR - September 2019: Disseminate the annual series by economic activity with additional detail that is currently available. — CBR ### Compilation of Input-Output Table — A. Creation of a work plan to compile the IOT - Mission and CBR agreed a work plan to prepare the IOT for 2014. - Focus of mission: - Creation of the SUT table using CIF valued imports. - Development of a valuation matrix to obtain a use table at basic prices consistent with the valuation of the supply chart. ### Compilation of Input-Output Table — B. Valuation table estimation - Valuation at basic prices is the preferred basis for economic analysis in input-output models. - Steps and observations: - Valuation tables were disaggregated using balance worksheets at the demand components level (intermediate consumption; final consumption expenditure; gross fixed capital formation; variation of stocks; exports). - VAT cannot be deducted from exempt branches for intermediate consumption or gross fixed capital formation. - For VAT purposes, exempt branches were identified; in preliminary valuation, VAT for intermediate consumption per product was distributed with intermediate consumption at market prices for exempt branches, but VAT value due to intermediate demand is overestimated in the equilibrium and cannot be precisely estimated for exempt branches. - Import Taxes and Duties should be distributed according to the CIF import use table structure; instead, distribution was carried out according to total use at buyer prices, potentially causing inconsistencies. - Remaining taxes on goods were distributed in proportion to the use table’s intermediate consumption of the total economy at market prices for taxed goods. - Subsidies on goods for intermediate consumption apply only to two products: - 3205, Petroleum gases and other gaseous hydrocarbons (distributed in proportion to the use table’s intermediate consumption of the total economy at market prices). - 4502, Road passenger transport services and chauffeur-driven hire vehicles (allocated to subsidized land transport activity). - Trade and transport margins: - Ideally estimated separately for wholesale, retail trade, and transport margins (by transport type). - Initial 2005 base year studies included detailed margin analysis by demand components for imported and domestic goods but did not consider market purchases by government or NPISH margins; this caused incorrect distribution and underestimated trade production. - Eurostat Manual and United Nations handbook recommend focusing on wholesale trade margins for changes in stocks; margins related to finished products, work in progress or stock outflows do not apply. - Recommended actions (valuation tables and SUT balancing): - Create separate valuation tables for domestic and imported use. - Distribute taxes on imports similar to the distribution of the CIF import use table. - Within the new base framework, create separate valuation tables for wholesale trade, retail trade and transport margins, accounting for imported and domestic goods, and include margins for final consumption by government and NPISH. - Prepare a detailed study of VAT allocation to various demand components in the form of a valuation table. - Balance the SUT at basic prices, requiring robust and well-defined valuation tables. ### Compilation of Input-Output Table — C. Construction of the import use table, valued CIF - Purpose and importance: - The import use matrix separates use of imported goods and services from domestic ones; same structure as the use table and shows intermediate and final demand for imports by product and economic activity. - For economic analysis and national accounts balances, obtaining domestic supply at basic prices and subtracting the CIF import use table from the total use table is paramount. - Separate estimates of price and volume changes for domestic production and imports improve consistency when estimating GDP in volume terms from the SUT. - Data and methods: - Ideally conduct a survey of key importers to determine end-use of main imported products, but regional experience shows low response rates. - Definitions: - Competitive import: import competing with domestically produced products. - Complementary import: imported goods not produced domestically; imported use coincides with estimated use in destination table for total economy at basic prices. - Import data inconsistency: imports are not consistent with the balance of payments because the balance of payments uses an economic classification by tariff codes allowing classification by intermediate demand, final consumption, and capital goods. - Prior studies by BCN staff on domestic production distribution and imported goods distribution were considered; only the distribution of imported goods study was used as it showed greater economic consistency. - To estimate missing demand categories in DNA staff exercise, the distribution of the use table for the economy was used. - Disparity between the use table at basic prices and the CIF imports use table produced negative values in only 10 of 182 products in the detailed SUT; for these products with considerable imbalance, it was considered acceptable to assume a distribution equal to that of the use table at basic prices. - Recommended actions for next base year: - Record the end-use of domestic production to provide input to the SUT — implying a complete use table for each activity. - Estimate a CIF import use table to provide input to the SUT. ### Compilation of Input-Output Table — D. Inconsistencies detected - Significant inconsistencies observed in the SUT: - Various discrepancies greater than 0.5 percent of product taxes between the VAT values for the EQOU (file containing the balance for each SUT product) and the VAT column in the supply table; discrepancies offset each other so that the sum of all is 0. - Intermediate consumption for product 4101, Jewelry and related items, of activity 27.2, manufacturing industries, shows a negative value of 0.2 thousand dollars due to an adjustment that ignored decimals. - Final demand for product 0301 Sugarcane is negative in 2014 because changes in stocks are negative and there is minimal household demand for this product, which is inconsistent. - Recommended action: - Improve detection of SUT negative values using Excel data tools, and detect supply and demand imbalances including issues not displayed in publications but affecting valuation tables. ### Compilation of Input-Output Table — E. Compilation of Input-Output Table and outputs - Publication decision: - Observations are not considered an obstacle to publishing the IOT since it is fully consistent with the 2014 SUT data already published. - IOT compilation results: - Mission compiled a product-product and industry-industry IOT for 2014 in accordance with the 2014 SUT balance information and the CIF import use table created by DNA technical personnel. - A preliminary version contains 53 branches of homogeneous production and 53 homogeneous products; results require review and validation. - Consistency of the IOT was reviewed during the mission and no data anomalies were found. - Files and deliverables provided to CBR technical personnel: - Valuation tables. - Conversion of the use table from market prices to basic prices. - Grouping of activities to ensure matrix symmetry. - Macros to obtain input-output matrices using two common assumptions: fixed product technology and fixed market structure by product; verification of two basic equations for common I-O models: - Leontief: x = (IA) -1 y (x = production; I = identity matrix; A = matrix of technical coefficients; y = final demand). - Ghosh: p = (IB) -1 d (p = price level; B = coefficients of distribution matrix; d = vector of primary inputs or demands). - Identification of key homogeneous industries in the Salvadoran economy according to technical and distribution coefficients. - Compilation process: - Work carried out across three files: valuation tables creation; grouping the tables; and final file containing matrix calculation, coefficient calculation, model equation verification, and some applications. - A draft methodological note with basic notes on input-output matrix application was prepared. - Presentation given to DNA staff explaining methodology to obtain the IOT and some applications and extensions; file provided to CBR authorities. - CBR technical personnel applied the methodology to obtain the 2014 IOT to the base year 2005 data, obtaining a base year, industry-industry and product-product IOT. ### Compilation of Input-Output Table — F. Monitoring of the National Accounts System of El Salvador 2005 - The mission noted that the 2014 compilation and the applied methodology were extended to the 2005 base year to obtain analogous IOTs for 2005. *Source: IMF Country Report No. 20/216 — Technical Assistance Report on El Salvador; Report on the Capacity Development National Accounts Statistics Mission (May 14–18, 2018).* ### Section 2 ### Section 2 ### Input-Output Table (IOT) adjustments and RAS-based method - Purpose: Enhance input-output analysis to study structural change in the Salvadoran economy between 2005 and 2014. - Proposed method: Use a procedure based on the RAS idea that treats macroeconomic estimates as exogenous inputs and derives both intermediate inputs and final demand endogenously through an iterative procedure. - Starting assumptions for the procedure: - An input-output matrix known for a given year. - Known values for GDP, imports, components of final demand, and value-added of activities. - Derive, through successive approximations, an input-output matrix consistent, within a predetermined confidence interval, with known values. - Status: During the mission the procedure was not pursued in detail; remains a possibility for future missions. - Recommended Actions: - Review and validate the results, for both the valuation tables and import use tables from 2005 and 2014, aggregating at basic and buyer prices in respect of supply and demand. - Creation of the IOT applications document. - Publication of 2005 and 2014 IOT pending finalization of the 2014 SUT, which is still pending review. ### Monitoring of the National Accounts System of El Salvador 2005 - Authorities expressed interest in developing a new base year to: - Correct previous inconsistencies. - Implement further improvements where the growing maturity of the new system of accounts is needed. - Recommendation to update the annual review calendar to allow greater disaggregation of data when the SUT is not yet available; there is considerable demand for more disaggregated data. - Authorities’ commitment: Continue publishing annual SUTs to provide greater consistency to the accounting framework. - Recommended Actions: - Update the annual review calendar so that in August-September of year t a greater disaggregation for year t-1 is incorporated. - Consider the use of information in the valuation tables and the IOT to estimate the annual data for periods when there is still no SUT available, based on the observed coefficients and projections in accordance with paragraph 31. - Have a calendar of data revisions that allow for a definitive SUT to be published annually, not subject to revision. ### Detailed Technical Assessment and Recommendations (selected outcomes, priorities, milestones) - Outcome: Improve the coordination between the national accounts section and the balance of payments section. - Priority/Action: The CBR should seek to make the SUT foreign trade figures compatible with those of the balance of payments figures. - Priority Recommendation: SUT balance of payments and foreign trade data. - Target Completion Date: December 2020. - Implementation note: The CBR staff are aware of the problem and are taking action. - Outcome: Compilation of the use of domestic production and CIF imports. - Priority/Action: Compile a table of domestic production utilization based on the information provided by each branch operator (elaborador de rama). - Priority Recommendation: Table of domestic production utilization at basic prices. - Target Completion Date: May 2018. - Implementation note: The exercise already carried out must have continuity and be extended to include all demand components and acquiring branches. - Outcome: Compilation of retail and wholesale trade valuation tables within the new base year framework. - Priority/Action: Compile independent retail and wholesale trade valuation tables for imported and domestic goods. - Priority Recommendation: Wholesale and retail trade margins. - Target Completion Date: December 2020. - Implementation note: A guideline have been established to ensure a correct measurement of these margins. - Outcome: Update of the annual review calendar. - Priority/Action: Update the annual review calendar. - Priority Recommendation: Disaggregated data and annual SUTs. - Target Completion Date: December 2019. - Implementation note: Under consideration. ### Officials Who Participated in the Mission - Edgar Cartagena — CBR — Economic Statistics Manager - Yudis Bonilla — CBR — Head of the National Accounts Department - Wilfredo Viera — CBR — National Accounts Coordinator - Neftalí Gallardo — CBR — Senior National Accounts *Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1slvea2020004.pdf — Section 2* --- _Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1slvea2020004.pdf_