## _cr0386 ## Source details **Canonical URL:** [_cr0386](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2003/_cr0386.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2003/_cr0386.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2003/_cr0386.pdf.json) --- ### Executive Summary — GDDS and SDDS: coverage, periodicity, and timeliness - Review against GDDS and where relevant SDDS. - Main producers: State Statistical Committee (SSC), Ministry of Finance (MOF), National Bank of Azerbaijan (NBA). - Mission visit: April 8–23, 2002. - Principal conclusions: - Azerbaijan meets and in many cases substantially exceeds GDDS recommendations on periodicity and timeliness for macroeconomic statistics. - To meet SDDS requirements fully, Azerbaijan would need to: - extend data coverage to include central government operations with required detail and the external debt schedule; - improve timeliness of international reserves data; - disseminate general government operations with required detail and the reserves template. - If prioritized and implemented via a forceful action plan, subscription to the SDDS could be achievable within about one year. - Examples of periodicity and timeliness comparisons: - National Accounts: GDDS periodicity Q; Azerbaijan timeliness 2 weeks (GDDS: 10-14 mths). - Balance of payments: GDDS periodicity Q; Azerbaijan timeliness 75 days (GDDS: 6-9 mths). - Consumer Price Index: Periodicity M; Timeliness 15 days (GDDS: 1-2 mths). - Broad money survey: Periodicity M; Timeliness 1 month (GDDS: 2-3 mths). - Central govt. budgetary aggregates: Central coverage incomplete; Periodicity Q; Timeliness 4-6 weeks (GDDS: 6-9 mths). ### Prerequisites of quality — legal, institutional, resources, organization - Legal and institutional arrangements: - SSC mandate under the Law on Statistics (1994); Article 6 guarantees SSC access to administrative records. - MOF collection mandated by the Law on Statistics and the Law on the Budget System; data sharing with SOF regulated under Presidential Decree No. 511 and draft Budget System Law (in Parliament April 2002) but arrangements not yet operational. - NBA authority under Law on the National Bank (1996) and Law on Banks and Banking Activity (1996); reporting mandatory with penalties; confidentiality guaranteed. - Resources and organization: - Resources generally adequate; SSC has shortage of computers; NAD national accounts staff: nine people compile national accounts; NAD has 30 staff across divisions. - NBA staffing: eight professionals in BSD; five in EID; 22 professional staff in DSLIA spend an average of one week a month on compilation. - Plans: NBA to introduce fully automated statistical system and concentrate monetary statistics activities in the Statistics Department by the fourth quarter of 2002. - Treasury Information Management System (TIMS) pilot in 2003; full computerization expected during 2004. - Quality awareness: - Management emphasizes quality; Methodology Council meets weekly. - Users Committee exists but has not met recently (last meeting March 2001); national accounts user group "has not met for a year." ### Integrity — staff conduct, access, pre-release - Staff professional, experienced, with high ethical standards across SSC, MOF, NBA. - Pre-release access: - Limited pre-release governmental access to national accounts, monetary, fiscal, and prices data. - NBA (balance of payments) does not provide BOP statistics to any government authorities prior to publication. - Recommendation: formally disclose pre-release arrangements to the public to aid transparency. - Confidentiality and legal protections: - Law on Statistics Article 11 guarantees confidentiality; planned amendment to replace “secret” with “confidential.” - Penalties exist for breaches (Administrative Code Article 223; Criminal Code Article 202; NBA can fine banks per Article 35). ### Methodological soundness — alignment with international standards and planned improvements - General alignment: - Statistics broadly in line with 1993 SNA, MFSM, and BPM5; notable deviations identified in some datasets. - Priority methodological improvements: - Adopt GFSM 2001 best-practice methodology for fiscal statistics. - Produce subannual estimates as discrete quarterly values. - Produce quarterly GDP volume figures using the same fixed base year. - Bring GFS classification and selected BOP components into conformity with international guidelines. - Planned improvements (as posted on IMF’s DSBB, April 2002) — selected items: - National accounts: industry classification alignment; oil industry estimates; separate estimation of informal activities; inventory valuation adjustments; discrete quarterly GDP; constant price estimates at more disaggregated level; seasonal adjustment; financial accounts; consolidated report forms; ad hoc surveys for informal activities. - CPI: introduce COICOP into the CPI; update CPI item sample; adopt new index calculation system; introduce self-correcting imputation for seasonal/missing prices (HBS introduced COICOP from beginning of 2002; imputation introduced; rebase planned August 2002). - GFS: new budget classification in line with international standards via new Treasury system; improved recording of government debt implemented; joint procedures with NBA to estimate external private debt outstanding. - Monetary: new chart of accounts conforming to international accounting standards (migrated January 2002); expand monthly Bulletin. - External sector: preliminary estimates of migrants’ capital transfers; review and revise international reserves for international standard consistency; mirror statistics comparisons; extend exchange rate currencies list; publish exchange rate methodology; initiate international investment position (published in IFS from 1999). ### Accuracy and reliability — source data, compilation practices, specific dataset issues - National accounts: - Source data generally comprehensive; SOF data not currently collected but a questionnaire is being developed. - Exceptions/limitations: volume figures for the oil industry should be calculated using value added rather than production weights for enterprises; imputed rent for owner-occupied dwellings derived from national aggregate may overstate result; limitations in deflation of services; taxes and subsidies at constant prices obtained using implicit value added deflator may be inaccurate. - Informal activity estimates based on expert knowledge (about "10–15 percent" of GDP missed by regular statistics); methodology using Labor Force Surveys being developed. - Sub-annual estimates presented cumulatively; recommendation to express discrete quarterly values. - Statistical discrepancy between production and expenditure generally "less than three percent." - Consistent national accounts available since "1990." - CPI: - Weights from annual HBS; HBS coverage in excess of 95 percent of households; HBS excludes rental of owner-occupied dwellings (housing materials substitute). - Prices: weekly for all food items; mostly monthly otherwise. - Conversion of HBS data to CPI weights flawed; correction planned in August 2002 rebase. - Consistent CPI series available back to "1995"; monthly CPI available "by the middle of the following month." - PPI: - Source coverage around "some ninety five percent" of in-scope businesses; official PPI produced since January 2001; rebased February 2002. - Prices for 870 items collected monthly between the 20th and the 25th of the month. - Oil price measurement problems cause annual revision in oil sector index. - Government Finance Statistics: - Detailed monthly government operations data available for budget sector and, since January 2002, for extrabudgetary funds excluding SOF. - SOF-related revenues equivalent to about 22 percent of total revenues in 2001 and are not yet integrated into fiscal statistics. - Quarterly GFS not compiled though data would be available; annual GFS compiled with substantial lag; no formal revision studies. - Recording basis: revenues and expenditures recorded on a cash basis. - Monetary statistics: - Compiled from consolidated balance sheets of NBA and 53 commercial banks; excludes 63 credit unions (restricted from taking deposits since August 2000; participation in total loans less than one percent). - Commercial banks report monthly within ten days after month-end; NBA accounting department produces daily balance sheet transmitted next day. - Chart of accounts revised multiple times; migrated to a 4-digit chart in January 2002; valuation at market prices; accrual basis applied for interest with January 2002 chart change. - Most consistency checks performed manually; EID cannot cross check individual interbank positions. - Balance of payments: - Primary source ITRS; supplementary: SCC customs, SSC surveys, MOF external loan liabilities, NBA oil enterprise survey. - ITRS open-type report form lacks completeness checks; some transactions not covered (repairs on goods, migrants’ transfers not in customs stats, reinvested earnings). - Deviations from BPM5 in definitions for FDI, international reserves, treatment of net errors and omissions. - BOP data disseminated quarterly within "75 days following the reference period." ### Serviceability — timeliness, consistency, revisions, user interaction - Timeliness and periodicity: - Generally in line with GDDS; some datasets meet SDDS prescriptions. - Monetary survey produced by the 20th of following month; published in NBA Bulletin with lag of 35 days; website posting by 25th. - BOP disseminated quarterly within "75 days" (exceeds GDDS). - Consistency and revisions: - Datasets generally consistent with each other, but breaks exist (government and monetary statistics). - Presentation of sub-annual aggregates on a cumulative basis complicates time-series derivation. - Preliminary and revised data: national accounts clearly identify preliminary and revised data; GFS and price indexes do not always. - Revision practices: - Preliminary data not always clearly identified. - Monetary data tend to be final; public not informed about revisions; revision studies seldom carried out. - For GFS: annual data final after Parliament approval (about six months after fiscal year end); no formal revision studies. - User consultation: - Limited formal consultation with non-government users; no proactive policy at NBA to consult users. - Staff recommendations: formalize interaction with broad spectrum of users; update DSBB metadata and link to national websites; give all users advance notification of early data release and major methodology changes. ### Accessibility — dissemination formats, metadata, internet presence - Dissemination formats: - Statistics disseminated in variety of forms; some presentations lack detail. - MOF bulletin limited circulation (850 copies); SSC and NBA publish in Azeri and English. - Publications constrained by printing budgets. - Metadata and documentation: - Metadata generally not easily available domestically; summarized metadata on IMF’s DSBB. - Detailed documentation on concepts, scope, classifications, basis of recording, data sources, and statistical techniques not widely published domestically. - Internet: - Public internet sites noted: - State Statistical Committee: http://www.statcom.baku-az.com - Ministry of Finance: http://www.minfin_az.com - National Bank of Azerbaijan: http://www.nba.az - Websites introduced but potential not yet fully realized. ### Dataset-specific key recommendations (summary) - National Accounts: - Produce discrete quarterly estimates; publish quarterly real GDP using same fixed base year (e.g., "1995") and change the base every five years; use value added as weights for oil industry constant price estimates; implement remaining planned improvements (industry classification, seasonal adjustment, financial accounts). - Consumer Price Index: - Introduce COICOP into CPI; update item sample; adopt new index calculation system; introduce self-correcting imputation; implement August 2002 rebase and correct HBS-to-CPI weight conversion. - Producer Price Index: - Prepare and disseminate documentation on sources and methods; expand coverage to agriculture, transport, construction and distribution; continue to build longer series and document revisions. - Government Finance Statistics: - Implement GFSM 2001 methodology; expand coverage and detail of central government aggregates; finalize inclusion of SOF and extrabudgetary funds starting with data for "2003"; implement new Treasury classification and consolidated reporting; develop a medium-term plan to migrate to GFSM 2001. - Monetary Statistics: - Continue implementation of new chart of accounts; introduce automatic consistency checks; expand published series in monthly Bulletin; indicate contact persons and improve methodological notes; ensure staffing for expanded compilation needs; introduce fully automated system by the fourth quarter of 2002. - Balance of Payments Statistics: - Modify ITRS to ensure completeness; develop international investment position compilation; revise reserve assets methodology to exclude SOF assets from reserves; cooperate with oil consortia to record oil exports at market prices at change of ownership; identify separately goods for processing, transportation services by modes, insurance services, reinvestment earnings, and subcomponents of reserve assets; establish BPD-commercial banks task force to improve ITRS. ### Key tabulated figures, dates, and targets (exact) - Mission visit: April 8–23, 2002. - GDDS periodicity for National Accounts: Q. - Azerbaijan National Accounts timeliness: 2 weeks. - GDDS periodicity for Balance of payments: Q. - Azerbaijan Balance of payments timeliness: 75 days. - CPI periodicity: M; CPI timeliness: 15 days. - Broad money survey periodicity: M; Timeliness: 1 month. - Central govt. budgetary aggregates timeliness: 4-6 weeks. - Statistical discrepancy between production and expenditure: "less than three percent." - Consistent national accounts available since "1990." - CPI series available back to "1995." - Annual BOP statistics date from "1995"; quarterly data for "2001" available. - Oil revenues collected through SOF equivalent to about 22 percent of total revenues in 2001. - Monetary statistics automation target: "by the fourth quarter of 2002." - Inclusion of oil revenues in GFS starting with data for "2003." - Authorities’ ROSC response dated "March 20, 2003." - Plans and metadata posted on DSBB as of April 2002. *Source: ROSC data module — Executive Summary and Detailed Assessment (IMF mission visit April 8–23, 2002; ROSC response by authorities dated March 20, 2003).* ### Executive Summary ...................................................................................................... ### Executive Summary ### GDDS and SDDS: coverage, periodicity, and timeliness - Azerbaijan’s data dissemination practices were reviewed against the IMF’s General Data Dissemination System (GDDS) and, where relevant, the Special Data Dissemination Standard (SDDS). - Main producers: State Statistical Committee (SSC), Ministry of Finance (MOF), National Bank of Azerbaijan (NBA). - Mission visit: April 8–23, 2002. - Principal conclusions: - Azerbaijan meets and in many cases substantially exceeds GDDS recommendations on periodicity and timeliness for macroeconomic statistics. - To meet SDDS requirements fully, Azerbaijan would need to: - extend data coverage to include central government operations with required detail and the external debt schedule; - improve timeliness of international reserves data; - disseminate general government operations with required detail and the reserves template. - If prioritized and implemented via a forceful action plan, subscription to the SDDS could be achievable within about one year. - Examples of periodicity and timeliness comparisons (as presented in the source): - National Accounts: GDDS periodicity Q; Azerbaijan timeliness 2 weeks (GDDS: 10-14 mths). - Balance of payments: GDDS periodicity Q; Azerbaijan timeliness 75 days (GDDS: 6-9 mths). - Consumer Price Index: Periodicity M; Timeliness 15 days (GDDS: 1-2 mths). - Broad money survey: Periodicity M; Timeliness 1 month (GDDS: 2-3 mths). - Central govt. budgetary aggregates: Central coverage incomplete; Periodicity Q; Timeliness 4-6 weeks (GDDS: 6-9 mths). ### Prerequisites of quality - Legal and institutional arrangements: - The three main agencies have broadly adequate legal powers. - Appropriate data sharing arrangements are in place, though arrangements within the MOF concerning the State Oil Fund (SOF) appear not yet fully operational. - Resources and organization: - Resources generally adequate but SSC has a shortage of computers. - A full compilation of Government Finance Statistics (GFS) and improvements in balance of payments would expose staff shortages in MOF and NBA. - User focus and internal quality emphasis: - Data quality is viewed as very important, but little emphasis on formally assessing user needs. - Very strong timeliness in some areas may reflect under-emphasis on other quality dimensions. ### Integrity - Staff conduct and access: - Staff are experienced, professional, and have high ethical standards. - In most cases data sources are used impartially. - Restrictions on comprehensive access to SOF data reduce full transparency; resolution would improve integrity. - Pre-release: - Limited pre-release governmental access to national accounts, monetary, fiscal, and prices data. - Recommendation: formally disclose pre-release arrangements to the public to aid transparency. ### Methodological soundness - Alignment with international standards: - Statistics are broadly in line with the 1993 SNA, MFSM, and BPM5. - Priority areas for methodological improvement: - Adopt GFSM 2001 best-practice methodology for fiscal statistics. - Produce subannual estimates as discrete quarterly values. - Produce quarterly GDP volume figures using the same fixed base year. - Bring GFS classification and selected balance of payments components into conformity with international guidelines. - Planned improvements (as posted on the IMF’s DSBB, April 2002): - National accounts: industry classification alignment, oil industry estimates, separate estimation of informal activities, inventory valuation adjustments, discrete quarterly GDP, constant price estimates at more disaggregated level, seasonal adjustment, financial accounts, consolidated report forms, ad hoc surveys for informal activities. - CPI: introduce COICOP into CPI, update CPI item sample, adopt new index calculation system, introduce self-correcting imputation for seasonal/missing prices (HBS introduced COICOP from beginning of 2002; imputation introduced; rebase planned August 2002). - GFS: new budget classification in line with international standards via new Treasury system; improved recording of government debt implemented; joint procedures with NBA to estimate external private debt outstanding. - Monetary: new chart of accounts conforming to international accounting standards (migrated January 2002); expand monthly Bulletin; include credit unions (no need since August 2000 credit unions restricted from taking deposits). - External sector: preliminary estimates of migrants’ capital transfers, review and revise international reserves for international standard consistency, mirror statistics comparisons, extend exchange rate currencies list, publish exchange rate methodology, initiate international investment position (published in IFS from 1999). ### Accuracy and reliability - Source data and techniques: - Source data are generally comprehensive with elaborate collection programs; statistical techniques mostly follow sound procedures. - Specific data issues: - National accounts: volume figures for the oil industry should be calculated using value added rather than production weights for enterprises. - CPI: quality affected by no changes to the basket since 1993 (plans noted to update). - Government operations: data are becoming more complete; extrabudgetary funds excluding SOF available since January 2002; SOF funds scheduled to be included. - Balance of payments: International Transactions Reporting System (ITRS) should be modified to ensure completeness of reporting. ### Serviceability - Periodicity and timeliness: - Generally in line with GDDS recommendations; some datasets meet SDDS prescriptions. - Consistency and revisions: - Datasets are generally consistent with each other, but consistency with past data is not always assured due to statistical breaks (e.g., government and monetary statistics). - Presentation of sub-annual aggregates on a cumulative basis complicates the derivation of time series. - PPI series is new; long time series not yet available. - National accounts clearly identify preliminary and revised data; GFS and price indexes do not. ### Accessibility - Dissemination formats and availability: - Statistics disseminated in a variety of forms; some presentations lack detail. - Financial constraints limit availability of some publications. - Non-government users are rarely formally consulted about their needs. - Metadata are generally not easily available. - Websites have been introduced but their potential is not yet fully realized. - Public internet sites noted: - State Statistical Committee: http://www.statcom.baku-az.com - Ministry of Finance: http://www.minfin_az.com - National Bank of Azerbaijan: http://www.nba.az ### Staff’s key recommendations (summary by dataset) - National Accounts: - Produce discrete quarterly estimates; calculate quarterly GDP volume using same fixed base year; improve oil industry volume decomposition; align industry classification with international standards; implement remaining planned improvements. - Consumer Price Index: - Introduce COICOP into the CPI; update item sample; adopt new index calculation system; continue planned August 2002 rebase. - Producer Price Index: - Continue development to build longer time series and improve presentation consistency. - Government Finance Statistics: - Implement GFSM 2001 methodology; improve coverage and detail of central government aggregates; finalize inclusion of SOF and extrabudgetary funds; implement new Treasury classification and consolidated reporting. - Monetary Statistics: - Continue implementation of new chart of accounts; expand published series in the monthly Bulletin; ensure staffing for expanded compilation needs. - Balance of Payments Statistics: - Modify ITRS to ensure completeness; develop international investment position compilation; improve classification and presentation to align with BPM5 guidance. *Source: ROSC data module — Executive Summary (mission visit April 8–23, 2002).* ### 9. Interest in assessing the quality of data derives from the objectives of complementing ### _cr0386 - 9. Interest in assessing the quality of data derives from the objectives of complementing ### Overview - STA developed the DQAF comprising a generic framework and a set of dataset-specific frameworks covering five dimensions of data quality—integrity, methodological soundness, accuracy and reliability, serviceability, and accessibility—and a set of prerequisites. - An assessment of six macroeconomic datasets (national accounts, consumer price index (CPI), producer price index (PPI), government finance (GFS), monetary, and the balance of payments statistics) was conducted using the dataset-specific DQAF. - The assessment information for the Azerbaijan statistical system follows the DQAF structure; conclusions are also presented in standardized summary tables using a four-part qualitative scale. ### Key conclusion on data adequacy - The data provided to the Fund are considered by the Fund’s European II Department broadly adequate to conduct effective surveillance. - Shortcomings were identified in the quality of some statistics that could detract from accurate and timely analysis and policy formulation. ### Prerequisites of quality - SSC - Mandate under the Law on Statistics (1994) to compile and disseminate real sector statistics. - Azerbaijan International Operating Company (AIOC) is not legally obliged to provide data. - Resources broadly adequate, but finance restrictions limit print copies of publications. - Quality awareness present, but some data suffer from requirement to publish early, "way beyond the requirements of the SDDS." - MOF / Treasury Operations Department - Collection mandated by the Law on Statistics and the Law on the Budget System. - Data sharing with the State Oil Fund (SOF) regulated under Presidential Decree No. 511 and draft Budget System Law (in discussion in Parliament in April 2002), but sharing arrangements not yet put in place. - Staff and technological resources broadly adequate for budget execution data, but may need supplementation to compile quarterly GFS according to international standards. - Staff need substantial training in GFSM 2001; dissemination-monitoring processes not yet developed. - NBA (National Bank of Azerbaijan) - Legal framework: Law on the National Bank (1996) and Law on Banks and Banking Activity (1996) provide collection and dissemination authority. - Reporting mandatory with penalties; confidentiality guaranteed by the Law on Statistics and the Law on the National Bank. - Basic sources are commercial banks’ and NBA balance sheets which comply with international accounting standards. - Staff highly qualified and experienced in monetary statistics. - Plans: introduce by the fourth quarter of 2002 a fully automated statistical system and concentrate monetary statistics activities in the Statistics Department (SD). - Balance of Payments Division (BPD) at NBA - Designated by Resolution of the Cabinet of Ministers No. 25 of February 8, 1995 as compiling/disseminating agency. - Data sharing and coordination adequate; confidentiality provisions sound; staff experienced and highly qualified. - Staff resources and computing technology support not entirely adequate for improving balance of payments and international investment position statistics. - Strategic development plan for 2001–2004 endorsed implementation of advanced computing technology for data processing to achieve resource savings and quality improvements. ### Integrity - SSC - Policies and practices guided by professional and ethical standards; sources selected and data compiled on impartial basis. - Some limited pre-release access to statistics exists and is not publicly announced. - No advance notification given of major methodological changes, though changes are clearly identified when implemented. - MOF - Treasury data compiled on an impartial basis, but source choices are not informed solely by statistical considerations, notably regarding revenue invested in the SOF. - Internal governmental access to data prior to public release is not fully disclosed. - Staff professional and guided by ethical standards; Law on Public Servants (approved in July 2000) provides formal ethical guidelines. - NBA (monetary statistics) - Law on the National Bank guarantees independence; EID staff operate in an environment fostering integrity. - Ethical standards set high and well known by staff. - Laws on Statistics, National Bank, and Banks and Banking Activities are broadly disseminated and posted on the internet; NBA website (www.nba.az) does not contain specific information on terms and conditions for compiling monetary statistics. - The Board of the NBA and the SSC have access to monetary data prior to general dissemination; the public is not aware of this. - NBA (balance of payments) - Does not provide balance of payments statistics to any government authorities prior to publication. - Professionalism actively promoted; procedures in place to ensure transparency of policies and practices. - NBA’s Bulletin and Annual Report clearly identified as NBA products. ### Methodological soundness - National accounts - Based on the System of National Accounts 1993 (1993 SNA). - Published constant price estimates measured cumulatively at the prices of the same period of the previous year. - Expenditure estimates derived using 1995 as the base year. - Planned fixed base year for production estimates: 1997. - Financial accounts not yet published but being developed. - Classifications and sectorization conform to international standards. - Most flows and stocks recorded at market prices; imports and exports converted from US dollars using average quarterly exchange rates rather than actual transaction rates. - All government transactions, including taxes and subsidies, recorded on a cash basis. - CPI - Concepts and definitions generally in line with international standards. - Weights derived from data consistent with household final consumption in the national accounts. - Prices collected have good geographical coverage; market prices collected with required frequency; grossing and netting procedures followed where applicable. - PPI - Follows international guidelines; weights generally consistent with the 1993 SNA; prices at basic market producers’ values. - Indexes based on a modified Laspeyres formula and use standard European classification systems. - Both economic activity-based and product-based indexes produced, covering mining and quarrying, manufacturing and electricity production as of April 2002; plans to extend coverage to agriculture, transport, construction and distribution. - These are chain indexes, using December of the previous year as a base, and are rebased annually. - Government finance statistics (GFS) - Overall structure approximates GFSM 1986 guidelines, but country-specific concepts and definitions differ from international guidelines. - Scope not comprehensive because part of oil revenues invested in the SOF are not yet covered — a significant departure from international guidelines. - Until end-2001, some subsidies were netted out against tax liabilities. - MOF intends to prepare the 2003 budget including all extrabudgetary funds according to the Budget System Law under discussion. - Execution data prepared by the Treasury for 2002 include all extrabudgetary funds except for the SOF and all taxes and subsidies on gross basis. - Budget classification is a mix of functional, economic and administrative classification and does not allow compilation of expenditures by function as recommended internationally. - MOF plans a new budget classification system drafted in line with Manual on Government Finance Statistics 2001 as part of implementing the new Treasury Information Management System (full computerization of treasury operations) with external technical and financial assistance. - Monetary statistics - EID prepares a monthly monetary survey consolidating the balance sheet of the NBA and the consolidated balance sheet of the 53 commercial banks. - Excludes 63 credit unions (since August 2000 restricted from taking deposits; participation in total loans less than one percent). - Classification of financial instruments and sectorization follow the Fund’s Monetary and Financial Statistics Manual (MFSM). - Distinction between residents and nonresidents follows the "center of economic interest" concept recommended by the MFSM. - NBA and commercial banks apply market prices when valuing financial assets/liabilities, record on an accrual basis, and present assets and liabilities on a gross basis. - Balance of payments - Overall structure broadly conforms with BPM5, except deviations in definitions for foreign direct investment, international reserves, and treatment of net errors and omissions. - In principle, all transactions with nonresidents are covered. - Main source: International Transactions Reporting System (ITRS) aggregating reports from commercial banks and enterprises with foreign accounts abroad. - Some transactions not covered: repairs on goods, migrants’ transfers (not in customs statistics), and reinvested earnings. - Some components (goods for processing, subcomponents of reserve assets) not identified separately. - Under current ITRS, banks classify transactions per instructions modeled on BPM5; loans guaranteed by the government should be reclassified to relevant sectors. - Transactions valued at market prices when legal ownership changes; balance of payments data generally recorded on an accrual basis. ### Accuracy and reliability - National accounts - Source data generally comprehensive and meet needs; SOF data not currently collected, though unlikely to significantly impact GDP and a questionnaire is being developed. - Data generally recorded cumulatively; quarterly enterprise surveys collect revised figures up to end of previous quarter. - Appropriate statistical techniques usually employed. - Exceptions/limitations: - Volume figures for oil industry should be calculated using value added rather than production weights for enterprises. - Imputed rent for owner-occupied dwellings derived using national aggregate data, which may overstate the result. - Limitations in deflation of production data for services. - Taxes and subsidies at constant prices obtained using implicit value added deflator, which could give an inaccurate result. - Estimates for informal activity currently based on expert knowledge and undertaken separately for each industry; a methodology based on labor force survey data is being developed. - Checks performed on all data; statistical discrepancy between production and expenditure published. - Revision studies made; identified biases applied in correcting preliminary figures. - CPI - Weights derived from an annual household budget survey (HBS) covering Azeri households; include production for own consumption other than owner-occupied dwellings. - Classification system being updated to COICOP. - Prices measured weekly for all food items and mostly monthly otherwise. - Arithmetical price averaging used; index formula is a modified Laspeyres. - Need to include new items and cross-check weighting data against other sources. - Conversion of HBS data to CPI weights is flawed; issue to be addressed in August 2002 revision. - PPI - Weights derived from annual business surveys timely and achieve coverage around "some ninety five percent" of in-scope businesses. - Compilation statistically sound; missing prices estimated using price changes of similar products; new items introduced at beginning of each year. - Prices carefully checked for unusual movements and against CPI. - Problem measuring oil prices accurately and timely leads to annual revision in oil sector index; efforts underway to solve this problem. - Government finance statistics - Detailed and timely monthly government operations data available for the budget sector and, since January 2002, for extrabudgetary funds excluding the SOF. - Debt data available quarterly. - Quarterly GFS are not compiled though data would be available to compile them. - Annual GFS compiled with substantial lag owing to low priority; no estimation of missing data undertaken in annual GFS compilation. - Government operations data revised as needed by incorporating revisions detected in cumulative data. - Preliminary annual data replaced by actual data following Parliament approval of budget execution report (about six months after fiscal year end). - No formal studies made of such revisions. - Monetary statistics - Compiled from balance sheets of NBA and commercial banks. - Commercial banks report monthly data within ten days after month-end. - NBA Accounting Department produces its balance sheet daily and transmits to SD the following day. - Chart of accounts revised three times during last five years to adapt from Gosbank system to international accounting standards. - Most consistency checks performed manually by the EID comparing aggregated balance sheet data with sectoral distribution of loans/deposits, checking net position with central government, and consistency with balance of payments. - EID does not receive information permitting cross checking of individual interbank positions. - Balance of payments - Data collection program comprises the ITRS and survey of oil sector enterprises; supplemented with customs information from State Customs Committee (SCC), SSC surveys on international services and FDI in non-oil sector, and external loan liabilities from MOF. - ITRS generally dependable; errors, inconsistencies, and large/unusual transactions identified and followed up. - Open-type ITRS report form does not provide a check of completeness of reporting and should be substantially modified. - Sound validation procedures should be developed for SSC surveys on foreign trade in services and FDI. - NBA has developed specific procedures to adjust data from various sources. - Estimates by NBA on shuttle trade, freight, and direct investment income in the oil sector employ sound statistical techniques. - Detail provided by the AIOC is insufficient to permit appropriate estimation of direct investment income flows. - Data received from various sources are timely. ### Serviceability - Serviceability focuses on how well datasets meet users’ needs with respect to relevance, timeliness, periodicity, consistency, and revisions policy. - (Text on serviceability begins in the source but detailed findings under this heading are not included in the supplied content.) *IMF staff assessment text as presented in the source PDF.* ### 32. There is a user group to support the national accounts program, but it has not met for ### _cr0386 - 32. There is a user group to support the national accounts program, but it has not met for ### Summary assessment: National accounts (NAS) - A user group exists to support the national accounts program, but it "has not met for a year." - Timeliness and periodicity follow GDDS recommendations and conform to the requirements of the SDDS. - Statistical discrepancy between production and expenditure is generally "less than three percent." - Consistent national accounts are available since "1990" and are reconcilable with other datasets. - Estimates are generally revised only once when annual figures are first produced; preliminary and revised data are clearly identified in publications. - Results of revision studies are not made public. - Plans for improvement (excerpted from Table 2): - NAS: "Sector financial accounts are currently being developed." - NAS (short term recommendations): express sub-annual estimates as discrete quarterly values; publish quarterly real GDP estimates using the same fixed base year (e.g., "1995") and change the base every five years; use value added as weights for estimating production at constant prices when available; improve estimates of intermediate consumption for AIOC. - NAS (medium term): review methodologies for volume estimates for service industries; investigate feasibility of calculating imputed rent for owner-occupied dwellings using regional/district data. - Specific technical improvements noted: improved estimates for informal activities to be introduced with publication of the "2001" accounts. ### Consumer Price Index (CPI) - CPI is available monthly and "by the middle of the following month." - A consistent series is available back to "1995"; revisions are not normally undertaken. - CPI figures are consistent with national accounts and other datasets. - Accessibility issues: monthly CPI publication has restricted circulation; sources and methods documentation and summary metadata are available on the IMF website but "need to be updated to include recent improvements." - Short term recommendation: "Incorporate the required methodological improvements in conjunction with the next rebase which should, for example, include the introduction of new items and the correct use of HBS data." - Table 2 assessments: CPI scores show some "LO" (Practice Largely Observed) and "O" (Practice Observed) across dimensions; see paragraphs "32, 33" for comments. ### Producer Price Index (PPI) - Primary users are national accounts and other SSC divisions; broader user needs are not directly addressed although series are published in detail. - Economic activity-based indexes and product prices are available monthly and "by the middle of the following month." - Series is new; "no long term consistent data are available yet," and revisions policy is still being established. - Figures are consistent within the PPI framework and with national accounts. - Accessibility: metadata and sources and methods documentation for the PPI "need to be completed as soon as possible." - Recommendations: - Short term: "Prepare and disseminate documentation on sources and methods." - Medium term: continue to expand PPI scope (include agriculture, transport, construction and distribution per Table 2 note). ### Government Finance Statistics (GFS) - GFS are not disseminated in sufficient detail for fiscal policy analysis; statistics are mainly produced for government use. - No processes to seek user views on practical utility and analytical usefulness of disseminated data. - Periodicity and timeliness meet GDDS; central government debt timeliness "exceed the GDDS recommendations." - Data on financing are not disseminated with recommended breakdowns (by currency, maturity, debt holder, or instrument). - Automated checks assess internal consistency; improvements in coverage and classifications in recent years make reconciliation of historical series difficult. - Consistency exists with monetary and balance of payments statistics. - Revisions to monthly data are not made known to the public, since data are published on a cumulative basis. - Accessibility: MOF publishes monthly budget execution in "Finance and Accounting" (Azeri) with an English table of contents; only cumulative latest month’s data are published in the bulletin; historical data published in SSC quarterly and yearly publications; MOF website set up in early "2002" in Azeri and English. - Short term recommendations: - Expand coverage to include all operations recorded by Treasury Operations Department (budget and extrabudgetary); publish details of domestic and foreign financing, and debt outstanding as recommended in GDDS; disseminate quarterly data. - Clearly assign responsibility and authority for collecting/processing/disseminating GFS with staff and computer resources. - Implement new budget classification system under discussion to comply with GFSM 2001. - Further expand coverage to include oil revenues collected and invested in the SOF, starting with data for "2003." - Medium term recommendations: - Develop medium-term plan for adopting GFSM 2001 framework and ensure new Treasury Information Management System can generate comprehensive GFS. - Disseminate all fiscal data in a single publication, with tables showing budget (and extrabudgetary) and GFS presentations and annotations to facilitate reconciliation and identify breaks. ### Monetary Statistics (MS) - NBA does not have an active policy of regular consultation with users on quality and relevance of monetary statistics. - Monetary data are disseminated monthly and posted on NBA’s website before the end of the following month. - Monetary statistics are consistent within the dataset; published data tend to be final but revisions are carried out if needed; public lacks access to documentation on revisions. - The Bulletin does not indicate breaks in time series or changes in methodology. - Accessibility: monetary statistics available in Azeri and English through NBA’s monthly Bulletin and Annual Report posted on NBA’s website; EID produces a Quarterly Economic Survey for internal use only. - Short term recommendations: - Increase quality controls in processing of data reported by commercial banks. - In NBA publications and on website, indicate name and telephone number of a contact person for monetary statistics. - Medium term recommendations: - Introduce automatic consistency checks and flaggings, seasonal adjustment of series, and other quality controls. - Improve monthly Bulletin: clearer identification of table sources, expanded methodological notes, analysis of recent economic developments, explanation of relevant changes. - Table 2 plan: "Introduction of a fully automated statistical system and concentration of all activities related to compilation and dissemination of monetary statistics in the Statistics Department. (by the fourth quarter of 2002)." ### Balance of Payments Statistics (BPS) - BOP data are disseminated quarterly within "75 days following the reference period" — this "exceeds the GDDS timeliness and periodicity recommendation." - No established process of consultation with a broader group of users; NBA monitors government needs closely. - Annual BOP statistics date from "1995" and quarterly data for "2001" are available in time series format using BPM5 classifications. - Consistency exists with monetary and financial statistics, merchandise trade statistics, and government external debt data. - Current account data are consistent with rest of world account in national accounts. - All disseminated data are considered final and there is "no written policy on revisions." - Recommendations (short term): - Revise methodology for compiling reserve assets by excluding SOF assets of government and reclassifying them into other investment assets of the government. - Assign responsibilities for compiling nonguaranteed external debt of depository corporations, enterprises, and individuals following External Debt Guide concepts and definitions. - Cooperate with international oil consortia to modify survey forms so oil exports are recorded at market prices at change of ownership and direct investment income is calculated on internationally accepted methods. - Improve scope/classification by identifying separately errors and omissions, goods for processing, transportation services by modes, insurance services, reinvestment earnings, subcomponents of reserve assets. - Recommendations (medium term): - Improve reliability of ITRS; establish task force from BPD and representatives from commercial banks and allocate resources. - Evaluate and, if necessary, improve statistical techniques used for services and FDI surveys by SSC. - Develop and publish documentation on sources and methods. - Introduce advanced computing technology for data compiling and processing. - Strengthen methodology on travel (shuttle traders and per capita expenditures of travelers). ### Accessibility (general) - Quarterly national accounts publication lacks detail; annual publication in Azeri and English is "clear and comprehensive." - Only printed quarterly estimates are produced despite strong user demand to post these on the website. - There is no preannounced release schedule; the monthly GDP total is given to the Prime Minister in advance of other users. - Unpublished but nonconfidential data can be supplied on request. - Comprehensive metadata on GDP estimates exist and plans to produce metadata for other figures. - All publications identify appropriate contact persons and there is an annual catalogue. - CPI/PPI monthly publications have restricted circulation; PPI metadata and sources/methods need completion. - MOF lacks a preannounced schedule for budget execution release; detailed documentation of concepts, scope, classifications, basis of recording, data sources, and statistical techniques do not exist (only summary info on DSBB). - NBA Bulletin lists only the bank’s central telephone number and an extension as contact; metadata with contact persons are available on the Fund’s website. - Balance of payments dissemination format is adequate; publications include analysis, charts, and tables; documentation published in IMF Balance of Payments Statistics Yearbook and GDDS metadata on DSBB; users’ needs for more comprehensive sources/methods documentation are not being met. ### Key tabulated findings and action points (selected exact figures & dates) - Statistical discrepancy between production and expenditure: "less than three percent." - Consistent national accounts available since "1990." - CPI series available back to "1995." - Quarterly BOP dissemination within "75 days following the reference period." - Annual BOP statistics dating from "1995"; quarterly data for "2001" available. - Authorities’ plans as of "April 23, 2002" appear in Table 2. - Specific system implementation target: monetary statistics automation "by the fourth quarter of 2002." - Inclusion of oil revenues in GFS starting with data for "2003." - ROSC response by authorities dated "March 20, 2003." ### Staff recommendations (structure and priority) - General (short term): formalize interaction with broad spectrum of users; update metadata on IMF’s DSBB and link to national websites; give all users advance notification of early data release and major methodology changes; expand use of institutional websites. - General (medium term): work toward SDDS subscription. - Dataset-specific short- and medium-term recommendations as detailed above for NAS, CPI, PPI, GFS, MS, and BPS (see respective subsections). *International Monetary Fund — Azerbaijan: Report on the Observance of Standards and Codes (ROSC)—Data Module; Detailed assessment and staff recommendations (paragraphs and tables referenced within).* ### 1. DQAF: Summary Presentation of Results for National Accounts Statistics....................... 18 ### 1. DQAF: Summary Presentation of Results for National Accounts Statistics ### 0. Prerequisites of quality — Legal and institutional environment - The national accounts are compiled and disseminated by the State Statistical Committee of the Azerbaijan Republic (SSC), governed by the “Law of the Azerbaijan Republic on Statistics" (dated November 16, 1994). - Article 2 establishes the SSC as the main organization responsible for producing official statistics; Article 5 holds it responsible for: (i) disseminating statistical information of broad interest to the public; (ii) guaranteeing the reliability and objectivity of statistical information; and (iii) assuring the accuracy, quality, and timeliness of the data produced. - Article 6 of the Law on Statistics guarantees the SSC’s access to administrative records and other data produced by legal entities, including data from government ministries and the National Bank of Azerbaijan (NBA). - Other agencies with important statistical roles: - NBA compiles monetary data and balance of payments statistics. - Ministry of Finance (MOF) compiles budget statistics. - State Customs Committee compiles international merchandise trade data. - Confidentiality: - Article 11 guarantees confidentiality; SSC plans an amendment to replace “secret” with “confidential” and to remove a provision allowing law enforcement agencies to obtain these data under certain conditions. - Staff required to keep individual data confidential and sign a form on joining SSC; access to individual data is restricted. - Legal mandates and enforcement: - Article 6 empowers SSC to obtain data from registered economic units and households, including commercially confidential data. - Azerbaijan International Operating Company (AIOC) legally may not submit data to SSC. - Articles 15 and 16 provide penalties (disciplinary, administrative or criminal) for violations or noncompliance. - Measures to encourage response: - Reporting burden reduced on small enterprises (quarterly rather than monthly). - Total number of report forms reduced by over two thirds. - Full assistance available to respondents. ### 0. Prerequisites of quality — Resources and quality awareness - Staffing and organization: - National Accounts Department (NAD) has 30 staff across national accounts, government finance and banking statistics, and “shadow economy” divisions; includes two divisions of the Computing Center. - Nine people compile national accounts estimates. - Training and computing: - No formal internal training program in national accounts; knowledge gained via experience and on-the-job training. - NAD participates in international training opportunities, including IMF courses. - Computing resources generally adequate but constrained: more staff share computers than desirable; problems with age of personal computers; out of date software especially in regional offices. - Budget and retention: - Budget limitations affect number of publications; salary rates significantly increased two years ago, improving recruitment and reducing turnover. - Management and efficiency: - SSC Board (chairman, deputy chairpersons, head of Computing Center) supervises organization of statistical work, strategic planning, prioritization, and ensures compatible methodologies. - Quality assurance processes: - Management emphasizes quality; careful review of figures prior to final tabulation. - SSC regularly reviews and plans internal improvements; formal five year plans produced and approved by the President of the Republic. - Users Committee exists (heads of ministries, agencies, academics); last meeting was in March 2001. - Methodology Council (SSC senior staff) meets weekly to monitor current work. - Timeliness currently driven by traditional user needs rather than quality considerations, creating potential quality tradeoffs. ### 1. Integrity - Professionalism: - Law on Statistics guarantees professional independence of SSC; Chairman appointed by the President. - Article 1 provides statutory basis for independent selection of sources and methods. - SSC responds to external criticism as appropriate, usually via the news media. - Transparency: - Law on Statistics and methodological documents (sources and methods for GDP estimates) are publicly available. - National accounts figures can be released to the Prime Minister before other users; this practice is not publicized. - All SSC outputs are clearly identified as such. - No advance notification of major methodological changes; major changes are clearly identified and explained when introduced. - Ethical standards: - No formal ethical guidelines for official statistics presently; NAD staff barred from outside employment to avoid conflicts of interest. ### 2. Methodological Soundness - Concepts and definitions: - National accounts conform to the System of National Accounts 1993 (1993 SNA). - Scope and products: - NAD produces: - Annual value added and GDP at current and constant prices by activity. - Annual expenditures of GDP at current and constant prices. - Annual value added components at current prices by activity. - Sets of accounts for each sector up to the capital account; financial accounts under development and to be produced for 2002 by the end of 2003. - Quarterly products: - Quarterly value added and GDP at current and constant prices by activity; constant price figures are expressed in terms of the prices of the corresponding period of the previous year rather than average prices of the whole previous year. - NAD plans to produce constant price figures with a base year of 1997 by the end of 2002. - Quarterly expenditure estimates of GDP produced at current and constant prices; constant price figures calculated in terms of 1995 prices and those of the same period of the previous year. - Annual supply and use tables not currently produced; planned for 2001 with production planned for July 2003. - Production and asset boundaries: - Delimitation of constituent units generally in accordance with 1993 SNA; Azerbaijani embassies included; no free zones/bonded warehouses/factories under customs control issue. - Production for workers operating part of year in another country are not covered. - Production boundary follows 1993 SNA; own-account production included; illegal output sold to willing buyers not estimated. - Asset boundary in line with 1993 SNA; defense-related assets usable for civilian purposes included in GFCF; valuables included; agricultural work-in-progress calculated in conformity with 1993 SNA. - Intangible assets included in GFCF (mineral exploration successful or not; computer software and data bases used for more than one year; entertainment, literary or artistic originals; patented entities). - Classification systems: - 1993 SNA followed for institutional units, transactions and flows. - Azerbaijan Classification of Economic Activities (ACEA) fully consistent with NACE used to classify establishments and enterprises. - Classification of Products by Activity (CPA) used for products. - Classification of Individual Consumption by Purpose (COICOP) to be used for household consumption from 2002. - Classification of the Functions of the Government (COFOG) used to classify government functions. - Basis for recording: - Market prices used to value flows and stocks with explicit practices: - Market output valued at basic prices. - Output for own use valued at equivalent market prices. - Sales and excise taxes included in valuation of intermediate consumption. - Nondeductible value added taxes included in valuation of intermediate consumption. - Deductible part of value added taxes excluded from valuation of final uses. - Corrections made when transfer prices detected (e.g., oil exports). - Total imports and exports valued on a free on board basis. - Imports and exports converted to manat using the quarterly average U.S. dollar mid-point exchange rate rather than rate prevailing at transaction time. - Azerbaijan does not have a system of multiple official exchange rates. - Recording is mainly on an accrual basis, except government transactions, which are recorded on a cash basis. - Transactions between establishments within the same enterprise are recorded as output and intermediate consumption. ### 3. Accuracy and Reliability — Source data - Business register and coverage: - State Business Register considered to be of very good quality; new businesses must obtain an identification number from the SSC prior to registering with the Ministry of Justice. - Register covers individual producers and small holdings; some enterprises believed to be unregistered but few and small. - Coverage of total economic activities (in terms of value added) by regular business statistics considered to be good, with only 10–15 percent of total GDP being missed; missing activities concentrated in agriculture and the service industries. - Classification and updating: - Business Register classifies units using five-digit ACEA code; stores number of employees and value of production for each establishment. - Register kept up to date through an annual census covering enterprises of all size; details checked against tax records, Land Use Committees (small holdings) and Ministry of Justice records to remove defunct businesses. - Survey coverage and nonresponse: - All enterprises fully covered in annual surveys. - Complete coverage of large and medium sized enterprises in monthly and quarterly surveys. - No adjustments currently made for nonresponse due to resource constraints and lack of computerized system. - Small enterprises sampled quarterly but fully covered annually (examples: less than 50 employees in production and transport industries; less than 25 employees in trade and services industries). - Random sampling technique based on employment. - Grossing of respondents’ data undertaken using value of production from annual surveys. - Data detail and form design: - Data collected generally sufficiently detailed for national accounts, but “other costs” are equally split between intermediate consumption and value added. - Current forms collect data on a cumulative basis and are required within five days of the end of the month or quarter. - Quarterly forms ask for revised figures for the period to end of previous quarter (accurate discrete quarterly figures could be derived, but are not currently done). - Annual returns due around three months after year end; revisions in annual surveys allocated to last month/quarter of the year. - Household and government data: - New household budget survey (HBS), developed with World Bank assistance, conducted quarterly; covers all geographic areas and all households except those headed by foreign nationals; own-account consumption and valuables separately identified. - Government data cover all activities, including extra-budgetary funds except State Oil Fund (SOF) which has operated since December 2000; a report form for SOF is being developed. - Government figures cover defense related expenditures, local government and municipalities, and data on capital stocks; detailed enough to measure output, intermediate consumption, fixed capital formation, and final consumption expenditure of government services. - Source data consistency and timeliness: - Source data are consistent with definitions, scope, classifications, valuation, and time of recording required for national accounts estimates. - Most source data are received on a timely basis but reminders are sometimes needed. *Source: Detailed Assessment Using the Data Quality Assessment Framework (DQAF), Azerbaijan ROSC — Data Module.* ### 3.2 Statistical techniques ### 3.2 Statistical techniques ### 3.2.1 Data compilation employs sound statistical techniques - Production estimates compiled at the 2-digit level of the NACE classification; source data available to the 4-digit level. - Intermediate consumption broken down into 128 product groups based on the CPA, adapted to local needs. - Output, intermediate consumption, and value added are generally derived directly from source data without need for benchmark data. - Oil industry (AIOC) limitations: - 2000 is the latest year for which intermediate consumption for the AIOC is available; that 2000 ratio to output has been used for all subsequent periods. - Value added for the AIOC is estimated for 2001 onwards. - SSC calculates output from quantities and prices due to other limitations with data from oil companies. - SSC has set up a working group with representatives of the oil companies to improve their data reporting. - Use of intermediate consumption ratios: - Intermediate consumption collected only in annual surveys; quarterly estimates derived using previous year’s intermediate consumption to output ratio (common procedure). - NAD currently applies ratios at each level of aggregation (e.g., the 2000 ratio for the total oil industry applied to 2001 figures and to components), causing components not to add to totals for intermediate consumption and value added. - Strong advice: apply ratios at the most detailed level only and calculate all aggregates by addition. - Imputed rent of owner-occupied dwellings: - Calculated from collected floor space and actual rental rates. - Only a single national calculation is done though regional figures are available. - Work-in-progress correctly recorded after adjustment for holding gains. - Consumption of fixed capital estimates derived from depreciation figures supplied by producers. - Long runs of balance sheet data available to base a perpetual inventory method (preferred), but introduction would require technical assistance. - No adjustments are made to convert government data from a cash to an accruals basis (see section 2.4.2). ### Constant price measurement, deflation, and industry specifics - Agriculture and production industries: - Constant price figures based on quantities. - Detailed-level calculations; considered quite reliable. - Oil: - Only a single quantity series is used for oil despite separate figures being available for two producing organizations with different growth rates. - Recommendation: apply each oil producer’s quantity growth to their respective value added for more accurate constant price estimates. - Trade industry: - Output deflated by the CPI for goods to obtain constant price growth in value added (conforms to international standards). - Services: - Extensive use of employment numbers to produce constant price values. - Taxes and subsidies on products: - Currently deflated by the total value added deflator. - 1993 SNA recommends applying base year rates for each tax and subsidy to the constant price value of the related transaction. - NAD approach causes changes in tax/subsidy rates to be reflected in volume figures rather than recorded as price changes, contrary to 1993 SNA. - Interim improvement suggested: apply growth in total value added at constant prices to the base period value for taxes less subsidies even without a detailed breakdown. - Price expression convention: - Figures shown at comparable prices (cumulative in terms of prices of the corresponding period of the previous year), standard in CIS countries but not conforming to international recommendations. ### Expenditure components and treatment - Expenditure components of GDP derived independently from production estimates. - Classifications follow 1993 SNA recommendations. - No reliance on benchmark data for expenditure components. - Government final consumption calculated net of receipts from incidental sales of goods and services. - Household final consumption based on the HBS, adjusted for HBS under-coverage using retail sales data. - Expenditure by Azerbaijan residents abroad and by non-resident visitors correctly treated across household consumption, imports, and exports. - Valuables included in capital formation rather than household consumption, per 1993 SNA. - Constant price estimates for expenditure components align with international recommendations, using detailed breakdowns where possible. ### Sub-annual estimates and seasonal adjustment - Sub-annual estimates are presented as cumulative throughout the year rather than for discrete periods (not internationally recommended). - GDP estimates produced monthly and quarterly. - Sub-annual figures are not seasonally adjusted; NAD would require technical assistance to undertake seasonal adjustment. ### 3.2.2 Other statistical procedures (adjustments, transformations, analysis) - Adjustments made to cover informal and hidden activities, but not illegal activities. - Adjustments made separately for each relevant industry and account for around 10–15 percent of total formal GDP. - Current estimates for informal activity based on expert knowledge; a system using Labor Force Surveys is being developed. - Informal activity figures being derived for the year 2001; method for carrying them back to earlier years not yet decided. ### Assessment, validation, and revisions (linked material in sections 3.3–3.5) - Detailed assessment of survey data undertaken by survey teams. - Sampling used only for small enterprises and then only quarterly. - NAD does not routinely investigate sampling or nonsampling errors in survey data; source data routinely compared with previous figures and unusual movements queried. - Limited cross-checks possible (e.g., oil production vs. export data limited by long lags in customs declarations). - Discrepancies in intermediate data are investigated. - Difference between production and expenditure GDP measures is investigated and shown explicitly in published accounts. - Supply and use tables for 2001 planned to be produced in 2003. - Differences between preliminary and final annual estimates routinely assessed for each series; when regular bias is found preliminary figures are suitably adjusted. - GDP estimates usually revised once when annual figures become available; preliminary figures are clearly identified; routine analyses of revisions are not made public, though unusual revisions are explained. *Source: _cr0386 - 3.2 Statistical techniques* ### 0.2 Resources ### _cr0386 - 0.2 Resources ### Resources and staffing - CPI section: two persons for day-to-day operations. - Support: computer staff and fifteen price collectors in Baku plus fifty one others in the districts. - Computing resources: generally adequate but more staff must share computers than desirable; problem with the age of the personal computers and use of out of date software, especially in regional offices. - Salaries: salary rates were significantly increased two years ago, improving recruitment quality and reducing turnover. - Training: staff are trained regularly in price collection procedures and participate in international training opportunities, including IMF courses. ### Resource management and governance - SSC Board (chairman, deputy chairpersons, head of the Computing Center) provides overall supervision, coordinates departmental activities, advises on priorities, determines funding requirements, establishes data collection priorities, and ensures compatible methodologies and classifications. ### Quality awareness and quality processes - Management emphasizes quality; index quality maintained by careful review of price changes prior to final index tabulation. - SSC produces regular internal process reviews and formal five year plans for statistical development; five year plans are approved by the President of the Republic. - Users Committee headed by SSC (members: heads of ministries, agencies and academics) exists but meets infrequently—the last meeting was in March 2001. - Methodology Council (SSC senior staff) meets weekly to discuss and approve technical issues and monitor current work. ### Professionalism and integrity - Law on Statistics guarantees professional independence of the SSC; Chairman appointed directly by the President. - Article 1 of the Law provides statutory basis for independent selection of sources and methods for CPI data. - SSC responds to external criticism of estimates, usually via the news media. - No formal ethical guidelines for official statistics presently, but CPI staff are professional; staff are not allowed to undertake outside employment. ### Transparency practices - Law on Statistics is publicly available and specifies terms and conditions for collection, processing, and dissemination. - Monthly CPI figures can be released to the Prime Minister before other users, but this is not publicized. - All SSC outputs are clearly identified as such. - There is an established pattern of annual CPI rebasing. ### Concepts, scope, and classification - Concepts and definitions are generally in line with ILO, IMF, United Nations and others. - Classification system is outdated; pending rebase will incorporate a system similar to COICOP and be completely converted in 2003. - HBS coverage: all resident private households except those headed by non-Azerbaijani citizens; estimated coverage in excess of 95 per cent of all households. - HBS excludes rental of owner-occupied dwellings; weights derived consistent with household final consumption expenditure, including production of food for own consumption but excluding rental of owner-occupied dwellings; expenditure on building materials included as a substitute. - Prices collected from a sample of districts across the country and a wide range of outlets; index represents price changes for the whole of Azerbaijan. - Institutional units/transactions: in line with 1993 SNA except exclusion of resident foreigners. - COICOP: being used for HBS from 2002; CPI to be converted to COICOP proper when next rebasing completed in August 2002. ### Basis for recording and valuation - HBS and CPI price collections measure consumption at market purchasers’ prices. - HBS recording: three month recall period for non-diary items collected at the end of each quarter. - Grossing/netting: weights for purchases where sales might occur (e.g., cars, furniture, appliances) are measured net of sales. ### Source data: coverage, timeliness, and sample details - HBS sample frame derived from the 1999 Census of Population; updated when enumerators find new households. - HBS frequency: conducted each quarter; allows CPI weights to be updated annually (not updated since 1999 due to teething problems with 2000 HBS revision). - HBS sample: potential 8,800 reduced to around 7,800 due to no imputation for nonresponse. - Price collection: some 9,500 outlets covered; prices collected for 390 different products representing 268 CPI items. - 2001 HBS collected point of purchase data to assist outlet selection. - Prices: weekly for all food items; monthly for others except items changing less frequently (utilities, education, health). - Timeliness: slight delay in receipt of data from the 2001 HBS but expected delivery date of August remains timely; prices normally collected in time for the monthly deadline. - Website availability: as of mid-April 2002 the SSC website only had annual figures to the year 2000. ### Statistical techniques and compilation - 2001 HBS collected expenditure data at the 5-digit level; classification system similar to COICOP; COICOP proper used since beginning of 2002. - CPI weights based on household consumption as measured in the 1993 SNA; housing materials substitute for rent of owner-occupied dwellings. - Elementary level indexes: arithmetic means of observed commodity prices. - Aggregate index: modified Laspeyres formula. - Rebase practice: index normally rebased each year, by February of the following year, linked to the January index. - Imputation: temporarily missing prices imputed using group mean approach; seasonal product imputations use a variety of methods still under review. - Permanently unavailable products are replaced; no adjustments for quality differences; no new products introduced to the item sample since 1993. - IMF mission identified lack of self-correcting imputations for missing prices; corrected in February 2001. - Conversion of HBS data to CPI weights is flawed: new weights for CPI items are not adjusted to subgroup totals, so relative weights of each subgroup are not maintained—this needs correction at next rebasing. ### Assessment, validation, and revisions - Published HBS results include estimates of sampling errors and methodology discussion, including nonsampling errors and treatment of nonresponse. - No imputation for nonresponse; sample reduced from potential 8,800 to around 7,800. - No investigations or adjustments made for understatement of alcohol and tobacco consumption. - PPI figures now available; CPI changes cross-checked against PPI and show similar trends. - Unusual price movements and geographical trends are monitored and investigated for data entry errors, commodity misspecification, or regional problems. - Imputation of seasonal products may lead to revisions of previous month’s data if estimates prove inaccurate; technical assistance requested from IMF to improve seasonal product price estimation. - Revisions: occasional between-rebasing revisions for seasonal product estimate inaccuracies; index normally rebased annually using HBS results for previous year; new products are not introduced between rebases. ### Serviceability, dissemination, and accessibility - Users Committee exists but meets infrequently. - Timeliness: monthly figures published between the 12th and 15th of the following month (within GDDS recommendation of one to two months). - Periodicity: monthly, in line with GDDS recommendations. - Consistency: consistent time series available back to 1995 (official CPI); unofficial series to 1990. - Methodology notes published in the Annual Statistical Yearbook. - Consistency with National Accounts (NA): theoretically consistent except owner-occupied dwellings; methodological rebasing error causes weight pattern error and inconsistency with NA—will be addressed at rebasing in 2002. - Revision policy: index rebased annually and published in a range of publications; rebasing treated as normal part of CPI production so preliminary data are not specially identified. - Accessibility of publications: SSC does its own printing so monthly publication appears within a day or two of CPI release; need to ensure wider availability to unrestricted range of users. - Release practices: statistics are released early to the Prime Minister, then to government departments via the Monthly Statistics Bulletin, prior to general public release. - Data presentation: CPI data published in considerable detail, with charts in some publications and prices of individual goods; some commentary included; no seasonally adjusted series produced. - Metadata: posted on IMF’s GDDS website since February 2001 and need updating in view of recent improvements. - Contact information: contact persons and telephone numbers published in annual prices publication; monthly publication contains general SSC contact number. - Catalog: annual publication “Catalog of Statistical Publications” contains contact addresses, phone numbers, and expected publication dates of SSC products. *Source: _cr0386 - 0.2 Resources (Compiling Agency: State Statistical Committee) — extracted content* ### 0. Prerequisites of quality ### 0. Prerequisites of quality ### Legal and institutional environment - The Producer Price Index (PPI) figures are compiled and disseminated by the SSC, which is governed by the Law on Statistics. - Article 2 establishes the SSC as the main organization responsible for producing official statistics; Article 5 holds it responsible for (i) disseminating statistical information of broad interest to the public; (ii) guaranteeing the reliability and objectivity of statistical information; and (iii) assuring the accuracy, quality, and timeliness of the data produced. - Article 6 guarantees the SSC’s access to administrative records and other data produced by legal entities, including data from government ministries and the NBA; Article 6 empowers the SSC to obtain data from registered economic units and households, including commercially confidential data. - Confidentiality is guaranteed under Article 11; the SSC plans an amendment to replace the word “secret” with “confidential” and to remove a provision allowing law enforcement agencies access under certain conditions. - Survey forms state that reported data are subject to confidentiality; staff sign non-disclosure undertakings and face dismissal for breaches. Due to lack of equipment, questionnaires are destroyed by tearing up rather than shredding. - In cases of non-compliance, Articles 15 and 16 provide for disciplinary, administrative or criminal sanctions. To encourage voluntary response, reporting burden on small enterprises was reduced (quarterly rather than monthly) and the total number of report forms reduced by over two thirds. Full assistance is available to respondents. - Internal governmental access: PPI figures can be released to the Prime Minister before other users, but this fact is not publicized (Limited unpublicized pre-release access). ### Resources - PPI section staffing and field resources: - The PPI section has three persons for day-to-day operations. - Supported by computer staff and fifteen price collectors in Baku plus fifty one others, as required, in the districts. - Staff are trained regularly and participate in international training opportunities, including IMF courses. - Computing and budgetary constraints: - Computing resources are generally adequate, but more staff share computers than desirable and personal computers are aging, causing use of out of date software, especially in regional offices. - Budget limitations constrain the number of publications; salary rates were significantly increased two years ago, improving recruitment and reducing turnover. - Governance for resource efficiency: - The SSC Board (chairman, deputy chairpersons, head of the Computing Center) supervises statistical work, oversees strategic plans, coordinates departments, advises on priorities, determines funding requirements, and ensures compatible methodologies. ### Quality awareness - Management focus: - SSC management is fully aware of quality importance and instills this attitude into staff; index quality is maintained by careful review of price changes, especially unusual movements, prior to final tabulation. - Monitoring and planning: - SSC regularly reviews and plans improvements; produces formal five year development plans approved by the President of the Republic. - A Users Committee (heads of ministries, agencies, academics) exists but meets infrequently—the last meeting was in early March 2001. - Technical issues are discussed and approved by the Methodology Council (SSC senior staff) which meets weekly to monitor current work. ### Integrity - Professionalism: - The Law on Statistics guarantees professional independence of the SSC; the Chairman is appointed by the President. - Article 1 provides statutory basis for independently selecting sources and methods for PPI data. - SSC responds to external criticism, usually via the news media. - Transparency: - The Law on Statistics is publicly available and specifies terms and conditions for collection, processing and dissemination. - All SSC outputs are clearly identified as such. - Advance notice of major methodological changes: the PPI is a new series subject to annual rebasing and so far there have been no major revisions. - Ethical standards: - Presently there are no formal ethical guidelines for official statistics, but PPI staff are highly professional and are not allowed to undertake outside employment to avoid conflicts of interest. ### Methodological soundness - Concepts and definitions: - Guidelines in the PPI Manual are followed: classification systems, frequency of reweighting, tight commodity specification and use of a modified Laspeyres formula. - Weights are consistent with the 1993 SNA, except they do not include own-account capital formation. - Collected prices are at producers’ values, relate to market sales and include transactions between related reporting units. - Both economic activity-based output PPIs and product-based PPIs are produced. - Scope: - PPI covers mining and quarrying (including the oil sector), manufacturing and electricity production. - All market enterprises are in scope; weights are based on market sales but exclude own-account capital formation. - Classification/sectorization: - Institutional units and transactions defined according to the 1993 SNA. - Industry classification based on a 4-digit NACE. - Product classification is the European PRODCOM classification at the 8-digit level. - Basis for recording: - Output valuation is at producer prices; transactions between related reporting units are recorded on a gross basis. - For product indexes, weights are based on sales of each product in the previous year; for type-of-activity indexes, weighting patterns are based on total output levels, including stock change. - Prices are recorded at the time the transaction occurs, regardless of when payment takes place. - Methodology notes: - The PPI uses a Laspeyres formula with short term price relatives; weights updated annually and chain linked between each December and January. - Quality adjustments have not been made to date. ### Accuracy and reliability - Source data collection and coverage: - SSC maintains a comprehensive business register updated annually from official registrations and obtains lists from the Ministry of Taxes. - Surveys: - Survey of all large (> one hundred and fifty employees) and medium (between fifty and one hundred and fifty employees) enterprises collecting monthly data on production and labor, quarterly data on expenses and annual comprehensive summaries. - Supplemented by a quarterly survey of smaller businesses. - Joint ventures and foreign owned businesses are included. - Total coverage aims at full coverage, with response rates in the order of ninety five percent of businesses by number. - Price data: prices for eight hundred and seventy items are collected monthly between the 20th and the 25th of the month; collected prices refer to the most recent sale price, excluding output taxes. - In 2001 there was a considerable expansion in number of enterprises, commodities covered, and range of specifications—enhancing index quality. - Source data timeliness and weighting example: - Business survey data are available within a year; the PPI is updated annually using weighting patterns based on production values of the year before last, updated for price changes to the previous December. - Example: the 2002 PPI is based on 2000 survey data, price adjusted to December 2001. - Statistical techniques and validation: - Business surveys collect data at 4-digit NACE and 8-digit PRODCOM levels required for PPI calculations; output includes stock change and work-in-progress. - Price averaging uses arithmetic average weighted by base period production levels of the enterprises concerned. - Missing prices estimated using price changes of similar products; replacement items incorporated annually. - A wide range of product specifications is used to measure price changes properly. - Quality adjustments have not been made to date. - The PPI sample frame covers over 95 percent by number of in-scope enterprises; no further adjustments are made. - Source data are cross-checked against other SSC collections where possible. - Main intermediate data are validated against other information where applicable; the PPI and the CPI are cross-checked and show similar trends. - Prices are checked for unusual movements prior to entry; resulting indexes are also checked. - Because of the large weight of oil sector production, oil prices are often cross-checked with the supplier; delays in obtaining current oil prices require estimation until final data are available—this index is subject to an annual revision. - The official PPI has been produced only since January 2001; there has been only one rebase (rebased in February 2002 and series linked according to standard procedures). An experimental index was produced for 2000 and an unofficial index has been produced internally since 1990; differences in these series were not publicized. - Improvements and planned revisions: - New items need to be introduced and the estimation of weights from HBS data needs to be improved. Improvements will be made during August 2002 revision. - The lack of current oil price data is a problem across all data sets; constant efforts are being made to solve it. ### Serviceability - Relevance and users: - Primary users: the NAD, the Division of Statistical Information and the Industry Division of the SSC. - The PPI was set up to cover national accounts needs only two years ago, so there has been no subsequent review. - PPI should take account of the needs of all users. - Timeliness and periodicity: - PPI estimates are disseminated between the 12th and 15th after the end of the reference period (within the GDDS recommendation of one to two months). - Periodicity: monthly (in line with GDDS recommendations). - Consistency: - PPI and product indexes are derived from the same underlying dataset and are totally consistent with each other. - As the official index has been produced only since January 2001 there is no long-term consistent series. - Series history: official PPI since January 2001; rebased February 2002; experimental index for 2000; unofficial internal index since 1990. - PPI statistics are generally consistent with national accounts estimates. - Revision policy and practice: - Because of delays in obtaining current oil prices, these prices have to be estimated until final data are available and this index is subject to an annual revision. - Studies and analyses of revisions are limited due to the short official series history. ### Accessibility - Data accessibility and user assistance: - All outputs of the SSC are clearly identified as such. - Data should be provided to all users simultaneously. - Metadata accessibility and assistance to users: survey forms and legal provisions on confidentiality are in place; full assistance is available for respondents in completing questionnaires. *Source: IMF staff report — Producer Price Index, "Prerequisites of quality" (SSC / PPI section).* ### 4.4 Revision policy and practice ### _cr0386 - 4.4 Revision policy and practice ### 4.4 Revision policy and practice — key findings - The cycle of production is in its early days and the notes accompanying the publication mention the plan for annual revisions. - Preliminary data are not marked as such in the publications. - The official PPI has been published only since the beginning of 2001. The revision that occurred at the beginning of 2002 has not been documented in the publications, but this is planned. ### 5 Accessibility — data and metadata accessibility (summary of findings) - Presentation and detail - The PPI is published, including charts and tables. - Back series of a lesser quality have been included to assist users, but without adequate documentation this could mislead rather than inform. - Datasets are published in considerable detail, down to the level of individual commodity prices. - Dissemination media and timing - Data are released on a restricted basis to government departments in a monthly bulletin; these data then find their way to the general public. - Statistics are produced regularly and promptly between the 12th and the 15th of the following month. - Statistics can be released early to the Prime Minister, and then released to government departments officials via the Monthly Statistics Bulletin, prior to being available to the general public. - Data can be provided to users on request; the PPI is already published in great detail. - Metadata and documentation - Metadata have yet to be prepared for the PPI, nor has any sources and methods documentation been published. - The PPI kind of activity indexes are published in the monthly and quarterly publications; the annual prices publication contains, in addition, detailed price series by type of product. - The product price indexes are not published at this time, but are supplied directly to the National Accounts and Industrial Survey Divisions. - Assistance to users - Contact persons' names and telephone numbers are published in the annual prices publication. - The SSC publishes a catalog of statistical publications and is in the process of arranging permission to sell these rather than distributing them free of charge. ### Table 3 (Azerbaijan — Data Quality Assessment Framework: Summary Presentation of Results for Producer Price Index) — selected assessments and comments - Key to symbols: NA = Not Applicable; O = Practice Observed; LO = Practice Largely Observed; LNO = Practice Largely Not Observed; NO = Practice Not Observed; SDDS = Complies with SDDS Criteria - Select element assessments and comments (as presented) - 0.1 Legal and institutional environment: X - 0.2 Resources: X - 0.3 Quality awareness: X - 1.2 Transparency: X — Limited unpublicized pre-release access. - 2.2 Scope: X — Scope to be extended to include agriculture, transport, construction and distribution. - 4.4 Revision policy and practice: X — Preliminary data should be identified - 5.1 Data accessibility: X — Data should be provided to all users simultaneously - 5.2 Metadata accessibility: X — Metadata needs to be prepared ### Government Finance Statistics — selected findings and planned improvements - Institutional responsibilities and dissemination - Responsibility for collecting, processing, and compiling fiscal data for budget management is assigned to the MOF under the “Law on the State Budget” (dated May 18, 1999) and the annual budget laws; public dissemination responsibility is assigned to the SSC (Law on Statistics, Article 5). - The MOF has been publishing budget execution data in its periodic bulletin Finance and Accounting and started disseminating these data on its website established at the beginning of 2002. - The new law on the Budget System under discussion in Parliament in April 2002 provides for the preparation of data on the general budget (budgetary and extrabudgetary funds) according to internationally accepted statistical standards and mandates municipalities to provide data on budget execution to local statistical agencies. - The MOF compiles GFS that are reported to the IMF for publication, but there is no unit or staff fully dedicated to the compilation of GFS. - Data sharing and confidentiality - Data sharing and coordination are adequate between the MOF and the NBA, as well as between the MOF and local governments and the Nakhchivan Autonomous Republic; regular consultation exists to reconcile differences. - Insufficient data sharing within the MOF exists with regard to operations related to the SOF, and there is no data sharing with the SSC on these operations to allow compilation of GFS according to internationally accepted guidelines. - The Law on Statistics protects confidentiality of individual data and calls for use for statistical purposes only, but data on taxes paid by main public corporations are disseminated individually in Finance and Accounting. - Resources, systems, and training - Staff, financial and computing resources are broadly adequate to compile data on general government operations; actual data are compiled through the treasury information system, although compilation is not yet fully computerized. - Ongoing efforts to expand the computerized system to all treasury agencies (currently 85) are expected to achieve full computerization during 2004. - Staff/resources involved in compiling GFS are not sufficient to produce comprehensive statistics on a regular (quarterly) and timely basis. - Compilers have knowledge of GFSM 1986 and have attended IMF GFS training courses, but there is a large need for training on the Government Finance Statistics Manual 2001 (GFSM 2001). - A project to set up a new Treasury Information Management System (TIMS) is expected to be implemented on a pilot basis in 2003 and expanded to achieve full implementation, including computerization, during 2004. - Quality awareness and monitoring - Processes exist to monitor quality of collection and processing of budget execution data, with focus on strict application of treasury rules; less awareness exists on dissemination aspects and provision of comparable and accessible data and metadata. - An Accounting Chamber of Accounts was created in 1999; in early 2002 Parliament approved a revised Law giving it authorization to audit all government bodies including budgetary and extrabudgetary funds. Provisions exist for independent auditing of SOF operations. - Processes to consult a broad spectrum of users (e.g., academia, research institutes, users’ surveys) to gauge relevance and utility of fiscal statistics are not yet in place. - Methodological alignment and reporting - Until recently, the overall structure of the State Budget differed significantly from the GFSM 1986 structure, although mapping is possible. - The Law on the State Budget for 2002 includes a summary presentation of the budget following the overall structure recommended in the GFSM 1986, while detailed data follow country-specific definitions (examples provided for “revenue” and “expenditure” divergences). - There are no plans yet to migrate to the GFSM 2001 framework; authorities are keen to improve the existing framework and methodology to conform with internationally accepted practices. - Detailed classification systems in the new TIMS are expected to be broadly consistent with the classification recommended in the GFSM 2001. *Source: _cr0386 - 4.4 Revision policy and practice (IMF PDF).* ### 2.2 Scope ### 2.2 Scope ### Coverage of government operations - The treasury now compiles data that cover all general government activities, with the exception of the activities related to the collection of part of the oil-related revenues (tax and non-tax) and the deposit/investment of these revenues in the agency responsible for managing these resources, the SOF. - The collection of these SOF revenues is undertaken directly by the SOF and no procedures are yet in place to consolidate the data with those compiled by the Treasury. - SOF-financed expenditures are executed through the Treasury and therefore included in the expenditure data compiled. - The exclusion of the SOF-related revenues from fiscal statistics is described as a significant departure from the scope of GFS as recommended in the GFSM 1986, given the share of these revenues in total revenues. - In 2001, the oil revenues collected through the SOF were equivalent to about 22 percent of total revenues (budget and extrabudget). - Integration of SOF-related operations in the fiscal statistics is planned and will be required under the Budget Systems Law being discussed. ### SOF institutional arrangements and reporting - The SOF was established by Presidential Decree No. 434 dated December 29, 2000, as a nonbudget government agency responsible for managing specific oil-related government revenues. - SOF revenues (per Presidential Decree No. 434) include: government share of profit oil under the Production Sharing Agreement, pipeline transit fees, rental fees, acreage fees, oil bonus payments, and other revenues under oil agreements. - SOF expenditures finance specific programs and projects (for example, resettlement of refugees) and the SOF’s operational expenditures. - Presidential Decree No. 511, of June 19, 2001, requires expenditures to finance these programs and projects to be executed through the Treasury, and therefore reflected in the execution data (budget and extrabudgetary) it compiles. - A monthly statement of SOF-related revenues and expenditures is submitted to the Minister of Finance by the SOF. - Ernst and Young was selected as the SOF’s external auditor, and work is ongoing between the SOF and Price Waterhouse-Coopers to set up SOF’s financial statements according to international accounting standards. - A Memorandum of Understanding between the MOF and the SOF regulates coordination regarding preparation and execution of budgets and information sharing; information sharing procedures to allow consolidation are yet to be put in place. ### Coverage of nonbudget government agencies and funds - Apart from the SOF, activities carried out by nonbudget government agencies have been progressively incorporated in the execution data compiled by the Treasury and, since January 2002, are fully covered by this system. - Starting in 2002, the Treasury system covers the budgetary and extrabudgetary operations of government agencies, the social funds (Pension Fund, Disability Fund, and Unemployment Fund), and the Privatization Fund. - The annual GFS reported to the IMF for the period 1994–1999 cover the budget and extrabudgetary data compiled by the Treasury. Government operations carried outside the treasury system are not covered in these data. - The operations of two extrabudgetary funds existing during 1994–1999—the Unified Foreign Exchange Fund and the President’s Fund—are not covered. ### Classification / sectorization - Country-specific definitions and terminology have changed and been progressively aligned with internationally accepted guidelines; differences with GFSM 1986 sectorization can be broadly reconciled. - At end-2001, the national definition of “state government” was akin to the general government sector, composed of “republican government” plus “local governments”; “republican government” ≈ central government subsector; “local governments” (including the Nakhchivan Autonomous Republic) ≈ local government subsector. - The general government sector includes recently established Municipalities. Municipalities are not covered by the treasury data but are not statistically significant (less than 1 percent of budget revenues in 2001). - The draft of the new Law on the Budget System defines: budget breakdown; state extrabudgetary funds; extrabudgetary operations; consolidated budget (consolidation of the revenues and expenditures of the state budget (including extrabudgetary operations of budget organizations) and of the extrabudgetary state funds). - The draft Law’s definition of consolidated budget corresponds to coverage of the general government sector per international standards, and appears to include government revenues invested in, and expenditures financed by, the SOF. - The draft Budget System Law requires inclusion of internationally accepted functional, economic and administrative classifications in the annual budget presented to the Parliament. - The State Budget Law for 2002 presents aggregate data on total revenue, total expenditure, and the budget deficit, broadly comparable to internationally acceptable definitions, but: - The national definition of revenue includes the use of financial resources to cover the budget deficit; a distinction is not made between revenue and grants (noted as in line with GFSM 2001). - The national definition of expenditure includes the repayment of financial resources (principal and interest) used to cover the budget deficits in previous years. - Lending minus repayments are treated as extrabudgetary transactions and therefore not covered in the State Budget. - Privatization receipts are classified below the line as a financing item in the treasury system but consist of extrabudgetary operations and therefore are not included in the State Budget. - The budget functional classification has 14 main categories, is a mix of functional and administrative classifications, and is not easily reconcilable with GFSM 1986 functional classification. The budget economic classification is broadly in line with GFSM 1986. - The annual GFS reported by the MOF for IMF publication follow the GFSM 1986 analytic framework and cover general government and extrabudgetary operations of some funds existing during 1994–1999. ### Basis for recording - Market prices: Transactions are recorded at actual prices. Amounts denominated in foreign currency are converted to Azerbaijan Manat using the exchange rate prevailing at the date of the transaction. - Debt valuation: Debt liabilities are recorded at face value (i.e., the amount to be repaid at the end of the contract, rather than market value), in accordance with the GFSM 1986. - Recording basis: Revenues and expenditures are recorded on a cash basis. Selected treasury agencies have started operating on a commitment basis. Financing data are recorded on a cash basis. All transactions in the budget execution data and in the GFS are presented on a cash basis, as recommended in the GFSM 1986. - Grossing/netting: Generally, government finance transactions are recorded and presented on a gross basis, as recommended in GFSM 1986. Until the end of 2001, subsidies provided to the utility companies were being netted out against tax liabilities from SOCAR; this practice is being phased out during 2002–2003. Tax refunds are classified as (negative) revenue transactions. *Content unit: _cr0386 - 2.2 Scope* ### 4.4 Revision policy and practice ### 4.4 Revision policy and practice ### Revisions: policy and practice — findings - Minor revisions to data are incorporated in the cumulative data disseminated for the following month(s). - Annual data are considered final after having been approved by the Parliament. - GFS are final when compiled. - Preliminary data are not always clearly identified. - No revision studies are undertaken. However, preliminary figures are usually close to final figures, and can be relied upon. --- ### 5. Accessibility ### 5.1 Data accessibility — presentation and dissemination - State Budget execution data disseminated fall short of the coverage and detail set out in the GFSM 1986 tables. - Annual statistics disseminated on the MOF website follow the classification of the Budget Law: - Revenue presented by sources of revenue/main groups of taxpayers. - Expenditure presented mostly by function with some expenditures by economic activity. - This presentation has limited analytical usefulness for fiscal analysis. - Monthly cumulative statistics (revenue, expenditure, and government debt) published in the MOF bulletin Finance and Accounting were presented following the classification of the Budget Law; starting in January 2002 expenditures are also presented by economic classification. - GFS are not available in national publications. ### 5.1.2 Dissemination media and formats - There is no publication dedicated to providing complete government finance statistics. - The MOF bulletin has a limited circulation of 850 copies, and has now started to be translated in English (Table of contents only). - Data published by the SSC are available in both Azeri and English. ### 5.1.3–5.1.5 Timeliness, equality of access, and subaggregates - There is no preannounced release schedule for budget execution data. - Statistics are not made available to all users simultaneously. - Nonconfidential subaggregates approved by the MOF Analytical Information Service can be made available upon request. --- ### 5.2 Metadata accessibility — documentation and detail - Detailed documentation of concepts, scope, classifications, basis of recording, data sources, and statistical techniques does not exist domestically. - Information in this regard is only available—in summary format—on the IMF’s DSBB. - Breaks in the GFS time series for 1994–99 have not been identified. - The only information available is that on the DSBB. --- ### 5.3 Assistance to users — contact and catalogs - The contact person for GFS is publicized, including telephone and facsimile numbers and email addresses, on Azerbaijan’s GDDS metadata website in the DSBB. - The Finance and Accounts include a general telephone number and the name of the chief editor. - Catalogs of publications containing government finance statistics are not available. - Assistance to users is limited; no comprehensive catalogs. --- ### Data Quality Assessment Framework: summary findings (Ministry of Finance — GFS) - Prerequisites of quality - 0.1 Legal and institutional environment: No data sharing on SOF within MOF. No mandatory reporting on all oil revenues until 2001. Plan: Put in place procedures of the Memorandum of Understanding between the MOF and SOF. - 0.2 Resources: No dedicated staff to compile GFS. - 0.3 Quality awareness: Process focuses on a limited segment of overall quality. - Integrity - 1.1 Professionalism: Choices of sources are not informed solely by statistical considerations. - 1.2 Transparency: Government access to data prior to release not fully identified. - 1.3 Ethical standards: flagged (assessment symbol present). - Methodological soundness - 2.1 Concepts and definitions: Different definitions for the same concept and differences from international standard. Plan: Approve new budget classification system in line with international guidelines by end 2002. - 2.2 Scope: Data do not cover part of oil-related revenue. Plan: Include all extrabudgetary funds in the budget law for 2003. - 2.3 Classification/Sectorization: Functional classification is mix of functional, economic and administrative. (see above on new classification system) - 2.4 Basis for recording: Some taxes are in practice net of substantial subsidies. Plan: Include all subsidies explicitly in the 2003 state budget. - Accuracy and reliability - 3.1 Source data: Compilation program not comprehensive. (see above on SOF-related operations). Plan: Implement the new TIMS. - 3.2 Statistical techniques: No estimation of missing data. Some problems in consolidation of government subsectors. Plan: Put in place a fully automated data processing system, as part of the TIMS. - 3.3 Assessment and validation of source data: flagged as needing improvement. - 3.4 Assessment and validation of intermediate data and statistical outputs: flagged as needing improvement. - 3.5 Revision studies: Limited studies undertaken. - Serviceability - 4.1 Relevance: Statistics are mainly produced for government use. Processes to monitor users’ needs not in place. Plan: Align budget classification with international guidelines. - 4.2 Timeliness and periodicity: flagged. - 4.3 Consistency: Statistics are not reconcilable over a period of time. - 4.4 Revision policy and practice: Revisions on a cumulative basis not informed to the public. - Accessibility - 5.1 Data accessibility: Country-specific budget classifications used in tables. No dedicated publication with time series. Data available to users not at same time. Plan: Continue improvements on recently established website of the MOF. - 5.2 Metadata accessibility: No metadata disseminated in the country. Summary metadata on DSBB do not indicate clearly deviations from standards. - 5.3 Assistance to users: Limited assistance to users. No catalogs. --- ### V. Monetary statistics — Prerequisites of quality (selected findings) ### 0.1 Legal and institutional environment — responsibilities and legal provisions - Responsibility for collecting, processing, and disseminating monetary statistics is assigned to the NBA within the Law on Statistics. - Article 48 of the Law on the National Bank entitles the NBA to get necessary information from executive authorities, to publish generalized statistical data on the banking system, create an information network for the banking system, and ensure its functioning. - Article 31 of the Law on the National Bank gives the NBA authority to determine rules on bookkeeping, preparation, and submission of statistical reports, making these rules obligatory to credit organizations. - Article 49 of the Law on Banks and Banking Activity also states the obligation by credit organizations. - In case of noncompliance or unreliable reports, the NBA can establish penalties, such as a fine of one percent of the paid-in capital of the institution, or demand replacement of managers (Article 35 of the Law on the National Bank). ### 0.1.2 Data sharing and coordination - NBA implementing automation to centralize collection and processing of monetary data; after an experimental period of three months, it is expected that by the fourth quarter of 2002 the SD will be the only unit compiling accounting, statistics, and supervisory data. - Commercial banks will submit only one set of information to the NBA (to the SD) instead of two sets to the DSLIA and the SD. - Adequate communication exists between the NBA, SSC, and MOF, via formal letters and direct telephone contact; revisions in forms for reporting to the SSC have occurred recently. ### 0.1.3 Confidentiality and legal protections - Law on Statistics (Articles 1, 6, 11) provides for confidentiality of primary data; article 11 allows law enforcement access following procedures established by legislation. - Article 13 of the Law on the National Bank prohibits disclosure of professional information obtained in duty execution without Board permission; information from credit organizations cannot be disclosed without consent. - Penalties for violation of confidentiality: - Administrative Code, Article 223: a fine of 40–55 times the minimum wage for public employees, and 150–200 times the minimum wage for juridical persons. - Criminal Code, Article 202: a fine of 500–1,000 times the minimum wage, or imprisonment, or corrective labor for up to two years. - Data of commercial banks are presented in consolidated form; no known confidentiality breaches. ### 0.1.4 Statistical reporting mandate and respondent support - Law on Statistics (Articles 6 and 7), Law on the National Bank (Article 31), and Law on Banks and Banking Activities (Article 49) give authority to request information; penalties foreseen (Article 35). - Commercial banks must submit monthly balance sheets and accompanying forms by the 10th day after the end of the reporting month. - Credit unions must submit balance sheets on a quarterly basis. - NBA provides seminars and training; each BSD staff assigned as counterpart to individual commercial banks. --- ### 0.2 Resources — staff, computing, and management - Two divisions of the SD handle monetary statistics: BSD and EID. - Staffing: - Eight professionals in the BSD. - Five professionals in the EID. - Additionally, 22 professional staff in the DSLIA spend an average of one week a month on compilation of monetary statistics. - All persons working on monetary statistics hold a university degree; over one third have worked between 15 and 20 years in government statistics agencies. - Three staff have attended the IMF’s Monetary and Financial Statistics Course. - Incentives include monthly performance bonuses and yearly awards for length of uninterrupted work. - Workload concerns: people working on monetary statistics seem to have an excessive workload; expanded SD responsibilities after full automation could jeopardize quality if staff numbers remain unchanged. - Computer resources: - Every employee of the EID and the BSD has a personal computer with standard software. - Information from banks is received in electronic format and consolidated using bridge tables developed in Excel. - With the new automated system, all information will be processed electronically and reports automatically generated by the system. ### 0.2.2 Management of resources - Long term strategic plan introduced in 2001; Board annually approves a tactical plan for every department. - SD tactical plan contains objectives in macroeconomic, monetary, and balance of payments statistics, and specific activities. - Work is regularly assessed and broken down at Board meetings; SD reports monthly to the Board on tactical plan progress. - Methods to detect processing and reporting errors need improvement: few processes are automated and most rely on manual controls. *Source: _cr0386 - 4.4 Revision policy and practice* ### 0.3 Quality awareness ### _cr0386 - 0.3 Quality awareness ### 0.3 Quality awareness — processes and practices - 0.3.1 Processes to focus on quality - Staff working on monetary statistics have long experience and are sensitive to data quality dimensions. - Annual tactical plans emphasize producing monetary statistics in line with international standards and methodological improvements. - In 2001 the NBA established an internal auditing mechanism; it has not yet reached the SD but will do so in the future. - Following recommendations of an IMF on-site safeguards assessment conducted in January 2002, the balance sheet of the NBA is now reviewed by the Internal Audit Department prior to reporting to the IMF for program monitoring. - 0.3.2 Processes to monitor quality of collection, processing, and dissemination - The strategic plan and annual tactical plans provide the framework for assessing quality. - Apart from informal consultations with the SSC, there is no outside body the NBA regularly consults to improve data collection. - Regular contacts with central banks of other countries have led to improvements in report form design and collection. - Revisions of statistical procedures occur following user inquiries to the SD; the NBA does not follow a proactive policy (e.g., surveys or periodic meetings) to obtain external user feedback. - 0.3.3 Processes to deal with quality tradeoffs and planning - Monetary statistics are based on accounting records; accuracy is not affected by timeliness of dissemination. - The SD generally publishes final data which only occasionally have been revised. - The SD does not actively seek users’ views on timeliness, accuracy, and comprehensiveness. ### 1 Integrity - 1.1 Professionalism - 1.1.1 Impartial compilation - The Law on Statistics mandates reliability and objectivity of statistical information (Articles 1 and 5). - Internal regulations foster independence of statistical compilation. - EID staff feel compilation quality is not negatively affected by pressures from upper management or other government agencies. - New staff selected through testing and personal interviews; professional development fostered via international seminars, courses, and conferences. - 1.1.2 Sources and techniques guided by statistical considerations - Compilation is based on balance sheets of reporting institutions. - Monetary survey includes the NBA and all commercial banks operating in the country; common chart of accounts conforms to international accounting standards. - Other financial statistics (e.g., interest rates, sectoral distribution of credits) are based on responses by all institutions or a representative sample. - 1.1.3 Right to comment on erroneous interpretation/misuse - NBA contacts responsible parties to clarify press misinterpretations; in serious cases sends letters to the editor. - 1.2 Transparency - 1.2.1 Terms and conditions publicly available - Azerbaijan participates in the GDDS; metadata on monetary statistics are accessible on the DSBB. - Laws (including National Bank, Banks and Banking Activities) are disseminated by mass media and accessible on the NBA website (www.nba.az) but do not focus on monetary statistics terms and conditions. - NBA’s website lacks a section with the terms and conditions under which monetary statistics are compiled. - Commercial banks are aware of intended uses and confidentiality of information they provide. - 1.2.2 Internal governmental pre-release access publicly identified - Monetary statistics are disseminated in Azeri and English via the monthly Bulletin (also posted on the NBA’s website) and Annual Report. - There is an internal deadline for the Bulletin, but it is not publicly known. - Prior to public release, members of the board of the NBA and the SSC have access to monetary data. - DSBB metadata warn that monetary data may be prereleased to authorized persons for official use only, but NBA publications do not inform the general public of this early access. - The EID produces a Quarterly Economic Survey with more detailed statistics than the monthly Bulletin; it is distributed only to the Board and upper management and is not accessible to the general public. - 1.2.3 Products clearly identified - The Bulletin is identified as a product of the NBA; tables generally do not identify departmental sources (implicit source = NBA). - 1.2.4 Advance notice of major methodological changes - Advance notice is not given of major changes in methodology. - The Bulletin lacks a section on revisions in historical series, breaks, discontinuities, or changes in methodology; methodological footnotes are very scarce. - 1.3 Ethical standards - 1.3.1 Staff guidelines and awareness - The Statistical Law holds staff legally responsible for violations of statistical confidentiality (Article 17). - New staff must sign labor contracts whose Article 7.3 requires protection of Bank secrets and information related to duties; penalties are foreseen for noncompliance. - Staff are very conscious of expected high ethical standards. ### 2 Methodological Soundness - 2.1 Concepts and definitions - 2.1.1 Overall structure follows international standards - EID’s framework for analytical accounts and the monetary survey follows the Fund’s Monetary and Financial Statistics Manual (MFSM). - Prior to the 4-digit chart of accounts introduction in January 2002, NBA accounts had deviations from international standards (e.g., cash instead of accrual basis). - Monetary survey consolidates central bank accounts with aggregated commercial bank balance sheets. - Main aggregates: broad money (includes all means of payments, in national and in foreign currency), net foreign assets, net domestic assets, credit to the nongovernmental sector, M2 (defined as national currency outside banks plus deposits only in national currency), and the money multiplier. - 2.2 Scope - 2.2.1 Scope consistency - As at end March 2002, the depository corporation sector comprised the NBA and 53 commercial banks. - There were 63 credit unions; since August 2000 they have been restricted from taking deposits and their participation in total volume of loans is less than one percent. - NBA receives balance sheets of all commercial banks plus 24 additional report forms for statistical and supervisory purposes. - Data cover headquarters and branches of credit institutions. - 2.3 Classification / sectorization - 2.3.1 Consistency with international standards - Classification principles consistent with Fund’s MFSM. - Residents and nonresidents grouped by “center of economic interest”; units grouped into financial corporations, general government, nonfinancial public corporations, nonfinancial private corporations, and individuals (households). - For 2001, unclassified assets and liabilities constituted less than two percent of their totals at the NBA and commercial banks. - Financial instruments classified by maturity (short and long term) and currency denomination. - In November 2001 the NBA engaged in repurchase agreements (Repos) of treasury bills with commercial banks and treats these as collateralized loans; banks instructed to follow same criterion. - 2.4 Basis for recording - 2.4.1 Market prices for valuation - Financial assets valued at market prices. - Foreign currency transactions converted into manats using the official exchange rate (fixed on the basis of market auctions) and adjusted daily. - Gold and precious metals valued per official regulations. - Loans valued on gross outstanding claims; provisions presented as a negative asset (“valuation adjustment”); loans in arrears presented in separate accounts. - 2.4.2 Accrual basis recording - With the full introduction of the new chart of accounts in January 2002, the NBA moved from cash to accrual basis for interest income and expenses. - Commercial banks were already recording interest on an accrual basis. - Accrued interest is not presented together with the underlying instrument but classified in special groups according to maturity and sectoral classification; at aggregate level interest and instrument can be brought together. - 2.4.3 Grossing/netting procedures - Assets and liabilities presented on a gross basis with no netting of claims and liabilities to the same transactor. - Current chart contains special groups to record current accounts in overdrafts as short term loans. - For the monetary survey, the NBA uses a program developed and coordinated with the IMF which cancels out inter-depository financial flows and outstanding claims/liabilities; assets and liabilities in the monetary survey are aggregated by resident and nonresident positions. ### 3 Accuracy and Reliability - 3.1 Source data - 3.1.1 Comprehensive collection programs - Commercial banks transmit electronically monthly balance sheets and additional report forms with statistical and supervisory information. - Common chart of accounts enables easy aggregation into an Excel spreadsheet for consolidated sectoral balance sheets and the monetary survey. - Since early 1997, NBA has been revising the chart of accounts: until 1997 a 1000-line Gosbank chart was used; in the second half of 1997 a new 3-digit chart was adopted; a 4-digit chart for commercial banks was introduced in mid-2000; the latest revision in the last quarter of 2001 produced a common chart for the NBA and commercial banks. - 3.1.2 Source data approximate required definitions and classifications - Monetary survey based on actual accounting records of the NBA and all commercial banks; no sampling or estimations are employed. - Chart structure permits adequate sectorization and resident/nonresident identification. - Recent classification errors by commercial banks were detected, investigated, and corrected; some classification issues remain outstanding. - There is room for improvement in checking the reliability of commercial banks’ figures. - 3.1.3 Timeliness of source data - Commercial banks must submit electronic balance sheets within 10 days after the end of the reference month. - Information is checked and summarized by the BSD and transmitted to the EID, which consolidates it with the NBA balance sheet to produce the monetary survey within 20 days after month-end. - 3.2 Statistical techniques - 3.2.1 Sound compilation techniques - Electronic transmission and automated processing minimize processing errors. - Current programs contain internal checks that reject inconsistent data. - Introduction of a new automated banking statistics system at the end of 2002 will reinforce controls. - Report forms are standard and facilitate electronic processing. - 3.2.2 Other procedures (adjustments, transformations) - If interest rate data are not provided (very seldom) and cannot be obtained by direct contact, the latest available data are repeated. - The EID does not have programs for seasonal adjustment of money supply. - 3.3 Assessment and validation of source data - 3.3.1 Routine assessment of source data - Balance sheets of depository corporations were revised and improved three times during the last five years to align with international accounting standards. - Report forms are routinely reviewed drawing on other central banks’ experience. - NBA issues written instructions to commercial banks and holds regular meetings to explain methodology. - Accuracy of source data is not systematically controlled by the EID. - 3.4 Assessment and validation of intermediate data and outputs - 3.4.1 Cross checks of intermediate data - Commercial bank balance sheets are cross checked at aggregate level with report forms (e.g., sectoral distribution of loans and deposits). - Money measures (M1, M2) are compared with report form information. - Deposits of, and credit to, the central government are compared with governmental statistics. - Relevant monetary data regularly compared with balance of payments information. - EID does not receive information permitting cross checking of individual interbank positions. - Due to lack of computerized programs, most controls are performed manually. - 3.4.2 Investigation of statistical discrepancies in intermediate data - Discrepancies are investigated and corrected. - 3.4.3 Investigation of discrepancies and indicators of problems in outputs - To prevent recurrence of errors, NBA contacts in writing the management of banks where errors were detected, explaining the problem and asking for corrections. *Source: _cr0386 - 0.3 Quality awareness (PDF).* ### 3.5 Revision studies ### 3.5 Revision studies ### 3.5.1 Main finding - Monetary data processed by the EID tend to be of a final nature, so revisions are seldom carried out. - When data are revised due to mistakes or misinterpretations by the credit institutions, the proposed solutions are incorporated into the compilation process. ### Implication - Revision studies are seldom carried out. ### Related assessment note (from Data Quality Assessment Framework) - 3.5 Revision studies: Practice Largely Not Observed (LNO). - Comment: Revision studies are seldom carried out. --- ### 4 Serviceability ### 4.1 Relevance - The NBA does not have a proactive policy of periodically consulting users to get their feedback on the quality and the relevance of its monetary statistics. - Concerns addressed by users to the NBA are taken into consideration for future improvements. - Regular visits that the staff of the EID pay to other central banks help them to assess the relevance of NBA’s monetary statistics. - Assessment: 4.1 Relevance marked as Practice Largely Not Observed (LNO) with comment: Lack of a proactive policy to consult users’ needs. ### 4.2 Timeliness and periodicity - Timeliness: - The timeliness of Azerbaijan’s monetary statistics exceeds the requirements of the GDDS, which foresees up to three months for their dissemination (two months for reserve money). - The EID produces the monetary survey by the 20th of the following month and publishes it in the NBA’s Bulletin with a lag of 35 days. - This information is available on the NBA’s website 25 days after the end of the reference month. - This timeliness also meets the prescriptions of the SDDS. - Periodicity: - As recommended by the GDDS, the broad money survey and other monetary data (sectoral distribution of loans, interest rates) are published on a monthly basis in the Bulletin and made available on the NBA’s website. - Although also available on a monthly basis, information on reserve money is not included in the Bulletin. - Assessment: 4.2 Timeliness and periodicity marked as Complies with GDDS/SDDS (O). ### 4.3 Consistency - Internal consistency: - Monetary statistics are internally consistent. - Time-series consistency: - Time series published in the monthly Bulletin are consistent over time except for some occasional breaks. - Some breaks in series were identified in the corresponding tables, but detailed explanations were not provided, either in the corresponding table or in a methodological annex. - Recent changes in the chart of accounts produced breaks in monetary series, which were not marked. - Cross-framework consistency: - Monetary statistics are consistent with government data on net credit to government and government deposits. - They are also consistent with the relevant figures from balance of payments statistics. - Assessment: 4.3 Consistency marked as Practice Observed (O). ### 4.4 Revision policy and practice - Revisions schedule and transparency: - Because published monetary data are in principle final, revisions occur only occasionally, when errors are detected. - The public does not have access to documentation on revisions. - Assessment: 4.4 Revision policy and practice marked as Practice Not Observed (NO) with comment: Public not informed about revisions. No clear indication of preliminary data. - Preliminary data identification: - The tables in the Bulletin do not contain any indication whether their data are preliminary or final, although the EID publishes only final monetary data. - Revised data are not highlighted in the tables. - Availability of revision studies: - Studies containing methodological revisions are not available to the public. --- ### 5 Accessibility ### 5.1 Data accessibility - Presentation: - The tables of the monthly Bulletin present the information in a clear form, although a greater level of disaggregation would be desirable. - Dissemination media and formats: - The NBA disseminates monetary statistics through its monthly Bulletin, which is published in Azeri and English and posted on the NBA’s website, and its Annual Report. - The hard copy of the Bulletin is distributed free of charge to a list of subscribers and is also available upon request. - The Quarterly Economic Survey, produced only in Azeri and intended for internal use, is not available to the public, allegedly due to lack of resources. - Release schedule: - According to an internal schedule, the EID must prepare the monetary statistics by the 20th of the following month. - The processed data are sent for editing and printing. - The date when the Bulletin is available for distribution can vary, although it is normally 35 days after the end of the reference month. - The EID posts the edited version on the NBA’s website by the 25th of the following month. - The general public is not aware of these release schedules. - Other dissemination: - The NBA’s website contains daily information on exchange rates, regular information on Treasury bill and Repos auction rates, and the NBA’s press releases. - Access equality: - Except for the early access by the SD, monetary statistics are made available to all users at the same time. - Nonpublished subaggregates: - Upon request, the SD provides nonpublished (but nonconfidential) information at a major level of disaggregation. - Assessment: 5.1 Data accessibility marked as Practice Largely Observed (LO) with comment: Earlier access by the SSC. Deadline for publication not known by the public. ### 5.2 Metadata accessibility - Documentation: - The Bulletin contains a final section with some methodological notes and definitions, which should be regularly reviewed to facilitate the understanding of monetary statistics by the public. - Missing in the Bulletin is an introductory section with an analysis of recent economic developments and an explanation of the most relevant changes in the published data. - Levels of detail: - At present, no different levels of detail are available to meet the different needs of users. - Assessment: 5.2 Metadata accessibility marked as Practice Not Observed (NO) with comment: Scarce documentation on metadata. Data published only at an aggregate level. ### 5.3 Assistance to users - Contact information: - The Bulletin does not contain any indication regarding the department or the division of the NBA that is responsible for its publication, nor the name of a contact person. - It lists as a contact the central telephone number of the Bank and an extension. - Catalogs and charges: - The NBA does not produce a catalog with its publications, and this information is not available in the Bulletin. - Assessment: 5.3 Assistance to users marked as Practice Largely Not Observed (LNO) with comment: Contact persons available on the SDBB, but not through the NBA. --- ### Data Quality Assessment Framework: Selected summary points (Monetary Statistics) - 0.2 Resources: Plans - Introduction of a fully automated statistical system and concentration of all activities related to compilation and dissemination of monetary statistics in the Statistics Department. (Fourth quarter of 2002). - 1.2 Transparency: Need to improve transparency on (i) the specific terms and conditions under which monetary statistics are collected, (ii) earlier access by the SSC, (iii) changes in methodology, and (iv) sources of the tables published in the monthly Bulletin. - 3.5 Revision studies: Revision studies are seldom carried out. - 4.1 Relevance: Lack of a proactive policy to consult users’ needs. - 4.4 Revision policy and practice: Public not informed about revisions. No clear indication of preliminary data. - 5.2 Metadata accessibility: Scarce documentation on metadata. Data published only at an aggregate level. - 5.3 Assistance to users: Contact persons available on the SDBB, but not through the NBA. *Source: _cr0386 - 3.5 Revision studies* ### 0.3 Quality awareness ### 0.3 Quality awareness ### 0.3.1 Processes are in place to focus on quality - Article 1 of the Law on Statistics states that the main goal of the state statistical policy is to provide objective and reliable statistical information that would satisfy the needs of all users including government authorities. - NBA management conducts a strategic planning meeting once a year to make decisions on the reallocation of resources and future developments. - The BPD prepares strategic planning documents to be discussed with the management of the NBA during these meetings. - Managers are sensitive to the accuracy, reliability, and timeliness of statistics and there is an understanding of the importance of high quality statistics. - The director of the SD advises the government on a broad range of issues relating to the balance of payments statistics to ensure they meet the needs of economic analysis and policy implementation. ### 0.3.2 Processes are in place to monitor the quality of the collection, processing, and dissemination of statistics - Article 4 of the Law on Statistics requires state statistical agencies to coordinate with law-enforcement, financial, banking and tax services and other supervisory agencies, allowing balance of payments data to be validated against administrative data sources. - Informal feedback from users, mainly from the Government, is incorporated into improvements to the data collection system. - The focus on the quality of the statistical product is driven by the need to be in compliance with the BPM5. ### 0.3.3 Processes are in place to deal with quality considerations, including tradeoffs within quality, and to guide planning for existing and emerging needs - Article 4 of the Law on Statistics states that statistical agencies are responsible for the quality and timeliness of statistics. - Trade-offs between quality and other considerations are not explicitly acknowledged, but there is strong emphasis on timeliness of the balance of payments data. - The BPD closely monitors economic developments in Azerbaijan to identify emerging data requirements. - Data quality improvements are considered in developing the forward work program. - A contact telephone number is included in the NBA’s Monthly Bulletin to facilitate user feedback on balance of payments statistics. ### 1. Integrity #### 1.1 Professionalism - Article 5 of the Law on the National Bank stipulates that the NBA is an independent institution and reports only to the President of Azerbaijan; the chairman may report to the President on any attempted interference into NBA’s activities. Members of the Board cannot join political parties or hold a position in public associations (Article 9). - Under Article 47 (1) the NBA determines acts, rules, instructions, and regulations independently and is not required to submit balance of payments statistics to any government authorities for approval prior to publication; the decision to publish is made entirely within the NBA. - Article 5 of the Law on Statistics outlines the responsibility of statistical agencies to conduct research and analysis; the Director of the NBA’s SD conducts lectures in the President’s Academy of State Management and staff are encouraged to produce analytical papers publicly (e.g., in the newspaper Banks and Business). - Professionalism is promoted through participation in lectures, conferences, seminars, and training courses, including those organized by the IMF; management regularly informs the IMF of emerging training needs. #### 1.1.2 Sources and techniques - Article 1 of the Law on Statistics states the main objective is to compile impartial and reliable data. - Decisions about methodology and data sources for balance of payments statistics are made entirely within the SD of the NBA. #### 1.1.3 Commenting on misuse - The NBA has appointed a coordinator with the mass media who is entitled to comment on erroneous interpretation and misuse of statistics. #### 1.2 Transparency - Article 1 of the Law on Statistics states that state statistical policy should ensure transparency of statistics as public goods. - Article 47 (2) of The Law on the National Bank stipulates that decisions of the NBA should be immediately announced and disseminated to all interested parties; decisions are posted on the NBA website at http://www.nba.as. - Terms and conditions under which balance of payments statistics are compiled are shown in the GDDS metadata on the DSBB. - Under Article 4 and Article 5 of the Law on Statistics, statistical agencies provide corresponding government agencies with statistical information on an on-going basis and in accordance with the “Regulation on Statistical Work” adopted by the Cabinet of Ministers of Azerbaijan. - There is no internal governmental or other public access to the balance of payments statistics prior to their release in the NBA Bulletin; however, this policy is not widely disseminated. - The NBA Monthly Bulletin and the NBA Annual Report are clearly identified as products of the NBA by name and by logo. Balance of payments data published in the SSC’s Statistical Bulletin are attributed to the NBA. - In other NBA statistical publications that use or reproduce NBA-compiled statistics, no source reference is usually given. - The NBA publishes some information on major changes in methodology and source data in official publications. #### 1.3 Ethical standards - Article 17 of the Law on Statistics states that staff and officials of state statistical agencies who violate statistical confidentiality, or who without good reason refuse to perform duties or perform them untimely or inaccurately, shall be liable in accordance with specified regulation. - Internal NBA guidelines instruct staff to observe the code of conduct covering potential conflict of interest situations, secrecy, and confidentiality. - New staff are made aware of these guidelines when they join the NBA; all new staff are hired only after a probation period. ### 2. Methodological Soundness #### 2.1 Concepts and definitions - The overall structure of balance of payments statistics is in broad conformity with the Balance of Payments Manual, fifth edition (BPM5), but several areas do not currently follow BPM5: - Residency: - In the SSC survey, institutional units engaged in services transactions are required to include transactions of their foreign affiliates. - Article 5 of the Law on Currency Regulation defines branches and representative offices of legal entities located outside Azerbaijan and established in accordance with the laws of Azerbaijan as residents. - Article 49 (2) of the Law on Banks and Banking Activity requires banks to report transactions of their foreign branches. - Two banks—the Azerbaijan International Bank and the Bank of Caucasian Development—have reported FDI abroad to the BPD. - These inconsistencies reduce the comprehensiveness and accuracy of balance of payments statistics. - Services: - Data on expenditures for construction activity include projects completed within one year and projects that require more than one year to complete; the latter should be reclassified under foreign direct investment. - Direct investment: - Direct investment enterprises are defined as enterprises with foreign equity participation of more than 10 percent (mainly the International Oil Consortium (IOC) and joint ventures). - The NBA does not fully apply a definition of foreign direct investment, as no distinction is made in the ITRS between foreign direct investment enterprises and other enterprises with nonresident participation. - As a result, portfolio investment is not separately identified in the financial account. - Reserve assets: - Reserve assets comprise the NBA’s holdings of reserves and SOF assets in line with Article 24 “Management of International Reserves” of The Law on the National Bank. - Rules on preparation of the Program and Management of the annual revenues and expenditures of the SOF of the Azerbaijan are approved by the Decree of the President of Azerbaijan of September 12, 2001 N579. - Article 6 of The Memorandum of Understanding on Coordination of the Preparation and Execution of the Consolidated State Budget Between MOF and the SOF states that the State Treasury shall provide quarterly reports to the SOF on expenditures related to projects financed by the SOF. - As SOF assets are not at the effective disposal of monetary authorities, namely the NBA, they should not be included in reserve assets. - Net errors and omissions: - This component is included in the goods component because compilers consider their estimation procedure for unlicensed shuttle trade to result in underreporting and because they believe there are no other major omissions of balance of payments transactions. - The main deviations from BPM5 concepts and definitions are not identified in publications. #### 2.2 Scope - Geographic Coverage: - The economic territory is defined as consisting of the Republic of Azerbaijan; balance of payments data cover the whole territory of Azerbaijan and its embassies abroad. - Unit Coverage: - Basically, all resident institutional units engaged in transactions with nonresidents are covered. - There are 11 international consortia operating in the oil sector. - Starting from 2001, consortia engaged in exploration of oil report data directly to the NBA. - Transaction Coverage: - In principle, all transactions with nonresidents are covered. - Some transactions are not covered: repairs on goods and migrants’ transfers (that are not included in custom statistics), and reinvested earnings; these are believed to be not materially significant. - Some transactions are not identified separately: goods for processing, non-monetary gold, transportation services by modes of transport, insurance services, portfolio investment, and subcomponents of reserve assets. - Azerbaijan does not hold monetary gold. - Other reserve assets are included without a breakdown to identify SDRs, Reserve Position in the Fund, and foreign exchange. - Deviations from BPM5 regarding coverage are not identified in publications. #### 2.3 Classification/sectorization - Under current ITRS arrangements, banks are to classify transactions in accordance with instructions modeled along the BPM5 classification framework. - Current account records: goods, services (transportation, travel, construction, other business services), income (direct and other investment income, compensation of employees), and current transfers (with breakdown by general government and private sector). - Capital account records mainly general government transfers. - Financial account is compiled with a breakdown by direct investment and other investment; other investment is disaggregated by trade credits, loans of the monetary authorities, general government, and private sector, currency and deposits. - Transfers between individuals include direct investment capital by small direct investment enterprises, transfers abroad for unrecorded imports, and capital transfers into and out of foreign accounts; such transactions are not classified as FDI or capital transfers despite banks being aware of underlying reasons. - Amounts transferred to international institutions are classified under current transfers and not identified as current contributions and subscription payments, which should be classified in the capital account. - Loans guaranteed by the government should be reclassified to other sectors. - Other assets and liabilities: - Data on other assets cover amounts transferred by resident enterprises to their representative offices abroad to finance expenditures there. - Data on other liabilities cover amounts received from enterprises abroad to their representative offices in Azerbaijan; these flows are identified in the ITRS as funds to finance operational costs and should be reclassified from the financial account to the current account per underlying purpose. - These inflows classified as foreign liabilities are substantial. - Sectorization is consistent with BPM5: monetary authorities, general government, banks, and other sectors; the oil sector (IOC) is shown separately from 1996. #### 2.4 Basis for recording - 2.4.1 Market prices: - Balance of payments data are compiled in thousands of U.S. dollars. - Transactions denominated in national and other currencies are converted into U.S. dollars using the average exchange rate for the month, calculated from the current official exchange rate quotations. - Reserves at the close of the period are converted into U.S. dollars using the corresponding exchange rates of the end of the period. - Exports and imports of goods are valued on an f.o.b. basis. - Data on oil exports are calculated on the basis of prices reported by the AIOC, notably the prices actually applied/reported to a specific exchange, which could give rise to discrepancies with market prices. - Time of recording of oil exports does not strictly follow the principle of change of ownership: oil on consignment is included in goods at the time it crosses the frontier, and no timing adjustments are made when oil is not actually sold within the reference period because this information is not available to the NBA. - The SCC is in the process of setting up a database to facilitate valuation at market prices. - 2.4.2 Recording basis: - In general, balance of payments data are recorded on an accruals basis. - All interest and dividend receipts and payments are recorded on a cash basis, although accrual data are available from accounting records. - 2.4.3 Grossing/netting procedures: - Current and capital account transactions are recorded on a gross basis while financial account transactions are recorded on a net basis separately for individual asset and liability components, following BPM5 recommendations. - Non-oil sector income distributions subject to withholding taxes at source are recorded net (rather than gross) of taxes withheld, as reported data are based on settlements. ### 3. Accuracy and Reliability - (Section header present; no additional content in the supplied excerpt.) *Source: _cr0386 - 0.3 Quality awareness* ### 3.1 Source data ### 3.1 Source data ### 3.1.1 Source data are collected from comprehensive data collection programs that take into account country-specific conditions - Primary data collection program: ITRS and a survey of the oil sector enterprises (NBA). - Supplementary sources: SCC (international merchandise trade statistics), SSC (10 surveys for international services trade; FDI in non-oil sector), MOF (external loan liabilities), Ministry of Foreign Affairs (government’s external transactions). - Coverage assessment: Source data are broadly sufficient to compile the balance of payments statistics. - ITRS characteristics: - Existing “open ITRS” established in 1994; contribution to overall value of balance of payments transactions is around 40 percent, but fluctuates up to 70–100 percent for some components (services, income receipts, current transfers). - Monthly report Form 1-TB “On financial transactions with non-residents” is received from 53 reporting banks, including the NBA. - Open–type ITRS report form lacks requirement for banks to reconcile beginning and end foreign currency positions with reported transactions (no check of completeness). - Three enterprises with NBA license to open accounts abroad submit quarterly “On foreign exchange flows on the accounts abroad” — enterprise report form is built on the closed ITRS principle (self-balancing; transactions reconciled with net changes in accounts held abroad). - Article 30 (2) of the Law on Banks and Banking Activity requires all banks to inform monthly the NBA of newly opened correspondent accounts domestic and abroad. - ITRS structure consistent with banks’ accounting practices; ITRS has full coverage (no reporting threshold). - Survey framework: - Article 9 of the Law on Statistics governs State Register of reporting units; reporting units not in State Register are not allowed to open bank accounts or undertake financial transactions. - SSC survey forms well designed; FDI survey includes reinvestment earnings components sufficient for BOP compilation. - SSC FDI survey excludes FDI in oil sector; augmented by NBA survey of IOCs. - Same SSC survey frame used for services reporting — inadequate for services debits (longer frame appropriate) → substantial undercoverage of services imports; NBA supplements with ITRS service trade data. - Source data by balance of payments component (selected highlights): - Goods: - Customs declarations processed by SCC; aggregated to SSC. Each declaration contains 54 cells (currency and exchange rate on crossing date, financial terms, mode/terms of transport, c.i.f. and f.o.b. valuations). - Customs data include migrants’ transfers in kind (should be capital transfer in BOP). - Oil exports: monthly reports submitted by AIOC to NBA (oil exports for two most recent months). - Goods procured in ports (fuel only) recorded in Azal Bank accounts; exports procured in ports excluded but could be derived from SSC Form 3-TB. - No adjustments made for repair of goods component (not in customs data). - Services: - Major sources: ITRS and SSC surveys. - Transportation: - Exports estimated from (1) SSC quarterly summaries from transporters (rail Form 2-TB, sea and air Form 1-TB), enterprises managing seaports/airports; and (2) banks. - Road transport data not collected by SSC. - Other transport services derived from ITRS; could be validated against line 05 of SSC Forms 1-TB and 2-TB. - Travel: - Estimated using SCC data on numbers of foreign visitors and residents traveling abroad, and bank data on average per capita expenditures. - NBA should consider more use of SSC Form 9-TB “Report of Travel Agencies” and Form 7-TB “Report of Hotels”; SSC should improve coverage. - Communication services: Derived from ITRS (mainly Rabita Bank) and SSC Form 10-TB (Ministry of Communications aggregated info). - Construction services: Collected by SSC from construction companies and by NBA from IOCs. Oil-sector construction (debit entries only) includes pipeline, buildings; some payments made from accounts abroad may not enter ITRS. - Other business services: Mainly from ITRS, supplemented by direct reporting entities including IOCs. - Government services: From ITRS and Ministry of Foreign Affairs; NBA may consider SSC Form 5-TB “Expenditure of foreign embassies in Azerbaijan” (coverage unsatisfactory). - Financial services: Obtained from ITRS. - SSC Form 4-TB aggregated “other business services” cannot be used (includes total services by enterprise type); SSC Form 8-TB may be considered for education services. - Compensation of employees: - Collected by SSC from enterprises with foreign workers and provided to NBA. - Main source for oil sector payments: monthly IOC reports compiled by NBA. - Wages/salaries of nonresidents in Azerbaijan estimated from AIOC, Azerbaijan State Caspian Marine Shipping Company, State concern AZAL. - Payments in other sectors cover staff in offices maintained abroad by Azerbaijani enterprises (only debit entries). - Direct investment income: - Oil sector: reports from AIOC — covers only AIOC direct investment income transactions. - Non-oil sector: ITRS; SSC Form 1-INVEST could improve coverage (provides reinvestment of earnings and other direct investment income). - SSC could improve Form 1-INVEST by reconciling with merchandise trade statistics on investment goods. - Other investment income: Quarterly from ITRS, quarterly NBA reports, MOF, enterprises. - Current transfers: - Debit side: Azerbaijan’s subscriptions to international organizations from ITRS; MOF provides membership dues. - Humanitarian aid in kind: SCC. - Cash remittances through banking system and workers’ remittances: ITRS. - Technical assistance and private current transfers: estimated from ITRS. - Capital transfers: Migrants’ transfers not covered in capital account; customs data include migrants’ transfers in kind over a threshold without separate identification. - Direct investment: - Oil sector direct investment data from IOCs (11 consortia including AIOC). Share of oil sector in the FDI in 2001 is 87.6 percent. - IOC-provided data items: (i) production (in tonnes); (ii) exports (estimated tonnes and values); (iii) transportation; (iv) operating costs; (v) capital costs; (vi) payments to local and foreign companies; (vii) salaries; plus distribution of holders of equity capital. - Capital repatriation treated by NBA as disinvestments in oil sector. - Non-oil direct investment from SSC (Form 1-INVEST): survey includes 2,500 enterprises with foreign capital participation, but only 50–60 enterprises report quarterly. - Form 1-INVEST reports cumulative flow from beginning of year on foreign liabilities, details on equity participation, inflows broken down into cash, loans, credits; requests portfolio inflows and trade credits; no information on foreign assets of these enterprises. - SSC-reported inflows are reported to NBA. - Direct investment abroad estimates based on ITRS. - Other investment: - Trade credits estimated from trade statistics and ITRS. - Public sector loans: loans to government and government-guaranteed loans from MOF reports; compiled by Government Debt and Asset Department of MOF; cumulative external government guaranteed debt compiled in U.S. dollars quarterly with breakdown by instruments, maturities (original), creditors, debt holders, and purpose. - Loans received by banks: drawings and repayments in ITRS. - Currency and deposits: changes compiled by converting monthly stock data in manat into U.S. dollars at end of period exchange rates; changes calculated as differences in outstanding amounts (includes valuation effects). Around 95 percent of foreign assets and liabilities of commercial banks denominated in U.S. dollars. - Other assets/liabilities: derived from ITRS and NBA reports; some misclassifications (see section 2.3.1). - Reserve assets and IMF credits: monthly from NBA internal sources (Settlement Department); reserve transactions derived from stock data; no adjustment to remove exchange rate fluctuation effects. - No agency designated to compile nonguaranteed external debt of banks, enterprises, individuals; some indications from ITRS. ### 3.1.2 Source data reasonably approximate the definitions, scope, classifications, valuation, and time of recording required - General: Source data reasonably approximate BPM5 definitions and recommendations for scope and classification. - NBA adjustments and procedures (selected): - Goods: - Merchandise trade data supplemented by NBA adjustments to improve coverage, classification, valuation and to conform to BPM5. - SSC exports valued f.o.b.; imports c.i.f. — NBA converts imports to f.o.b. by deducting estimated transportation and insurance costs (estimates derived from two SCC valuations). - Other adjustments: shuttle trade by unlicensed traders, bunker fuel provision, goods procured in ports, record crude oil exports at change of ownership (customs report AIOC exports in Black Sea ports 2–3 months after crossing Azerbaijan border). - NBA adjusts using monthly AIOC reports (volume in tonnes and estimated value); no data on actual export values or revisions for prior months. - Shuttle trade estimate by NBA described as conservative and gives rise to significant entries under errors and omissions. - Direct investment income (oil sector): - Calculations based on AIOC-provided exports, operating and capital expenditures, and contractual agreement conditions — differ considerably from internationally recognized income calculation methods. - Under agreement: shareholders allowed to recover all expenditures made in development and exploitation; operating expenditures fully recoverable; capital expenditures recoverable only when sales exceed operating expenditures within limit of 50 percent of revenues after operating expenditures; remainder shared as profits. - Major weakness: lack of detail on operating and capital expenditures during exploration and development phases (will be recovered over production periods). - Services: NBA estimates based on additional SSC survey information. - Current transfers: NBA estimates based on ITRS cash remittances and SCC humanitarian aid data. - Direct investment capital outflows of AIOC: estimated in accordance with contractual agreements. ### 3.1.3 Source data are timely - ITRS reporting requirement: within 10 days after end of reference month (very timely). - Merchandise trade data: monthly, within 30–35 days after reference month. - Monthly reports from IOCs to NBA: within 15 days after reference month. - SSC survey data: quarterly, within 40–45 days after reference quarter. - External debt data from MOF: quarterly, approximately one month after reference period. - International reserves data: monthly, 10 days following reference month. - Compilers follow up with late respondents via telephone. ### 3.2 Statistical techniques #### 3.2.1 Data compilation employs sound statistical techniques - Legal framework: Article 5 of the Law on Statistics assigns responsibility to statistical agency to ensure optimal scope and design of statistical reports. - ITRS data management: - Procedures set up to minimize processing errors. - ITRS bank report forms not designed for computer validation checks; data received in hardcopy and entered manually into detailed compilation spreadsheet. - ITRS enterprise form checked for internal consistency of opening stock levels and transactions against closing stock levels. - NBA developing computerized data management procedures. - Customs data management: - Electronic data transmission from each customs point to main office. - Computerized edit checks developed to identify coding and other errors and to minimize processing errors in editing and coding. #### 3.2.2 Other statistical procedures (data adjustments, transformations, analysis) employ sound statistical techniques - Goods: - Imports under consignment recorded when goods sold in Azerbaijan; imports financed through trade credits matched with financial account trade credit liabilities. - Shuttle trade estimates based on number of individuals crossing customs frontier and average value per crossing — amounts may be unreliable (no surveys to estimate average value). - Procedure to estimate imports f.o.b. improved using customs documents: around 60 percent of current import declarations show both c.i.f. and f.o.b. values; NBA uses these to calculate overall figure. Current c.i.f./f.o.b. ratio amounts to approximately 110 percent. - Services: - Freight payments to nonresidents estimated at approximately 80 percent of amounts deducted for freight and insurance from imports valued on a c.i.f. basis. - Travel receipts estimated by combining SCC visitor/traveler counts with ITRS average per capita expenditure data. - Travelers leaving Azerbaijan include organized tourists, personal trips, and nationals permitted to leave to Iran and Turkey under simplified procedures (latter mostly shuttle traders). - Travel receipts might be significantly overstated due to arbitrary per capita expenditure estimates and inclusion of persons entering Azerbaijan to take up employment. - Investment income: - Direct investment income in oil sector estimation procedure: - Step 1: Operating expenditures of AIOC deducted from AIOC export revenues. - One half classified in the financial account as investment repatriations; capital expenditures also classified in financial account as investment repatriations. - Remaining half used to calculate direct investment income: NBA deducts 30 percent (royalty payments to government — contribution to SOF). - The remaining 90 percent of the 70 percent of profit for distribution represents foreign equity capital holders’ share of AIOC; 10 percent belongs to SOCAR. - Foreign equity holders’ share entered in BOP as direct investment income. - Existing methodology does not adequately capture income flows associated with large foreign investments in oil sector; AIOC data insufficient for appropriate estimation (lack of detail on operating and capital expenditures during exploration and development). - Other investment: - Trade credits extended by other sectors estimated as difference between exports in trade statistics and receipts of foreign exchange in ITRS (receipts adjusted to exclude advance receipts; customs data adjusted to exclude barter trade). - Credit entries on trade credit liabilities estimated by comparing customs goods data with payments of foreign exchange from ITRS. - Goods imports adjusted to exclude imports not requiring settlements through banking system (direct investment contributions, barter trade, humanitarian aid in kind). - Major deficiency: export proceeds may not be fully reflected in ITRS because some export proceeds are held abroad. *Source: _cr0386 - 3.1 Source data* ### 3.3 Assessment and validation of source data ### _cr0386 - 3.3 Assessment and validation of source data ### 3.3 Assessment and validation of source data - Source data (censuses, sample surveys, administrative records) are routinely assessed for coverage, sample error, response error, and nonsampling error; assessment results are monitored and made available to guide planning. - Errors, inconsistencies, and large or unusual transactions are identified by the NBA and followed up with respondents or the responsible agency. - In the ITRS there is no requirement for reporting banks to reconcile changes in their foreign currency positions with recorded transactions. - A valuation unit in the SCC checks and verifies declared export and import values using available information on average internal prices for traded items; declared values are revised where needed. - Recommended actions noted: - Develop a procedure for validation of customs trade data using average world prices. - Employ more validation procedures for the SSC surveys on foreign trade in services. ### 3.4 Assessment and validation of intermediate data and statistical outputs - 3.4.1 Main intermediate data validation - Financial press information is used to verify oil sector transactions and other high-value transactions. - Oil export data are validated against data on revenues of the SOF. - No data on withholding taxes on income payments from the Tax Ministry are used to assess accuracy of reported income transactions. - 3.4.2 Assessment and investigation of statistical discrepancies in intermediate data - In the ITRS, discrepancies between merchandise trade and associated financial flows are reviewed. - Reserve transactions are reconciled with stock data from money and banking statistics. - 3.4.3 Investigation of statistical discrepancies and other indicators of problems in outputs - NBA monitors merchandise trade data for major trade partners. - Bilateral data reconciliation has been conducted: - With Russia (travel and foreign direct investment components) - With Turkey (construction service component) - With Kazakhstan (oil sector investment component) - By the SSC with Georgia within the TACIS project (merchandise trade) - To date no comparisons are made with: - Joint BIS-IMF-OECD-World Bank Statistics on External Debt - BIS locational international banking statistics - OECD Development Assistance Committee data on foreign assistance are not used to cross-check foreign aid data for Azerbaijan. ### 3.5 Revision studies - 3.5.1 Routine studies and analyses of revisions - All revisions to quarterly data made by the SCC or NBA are hidden in data compiled on a cumulative basis (e.g., declarations for goods crossing the frontier but not processed in the reported quarter are incorporated into semi-annual trade data). - No revisions are made for the previous quarter. - No record is kept of revisions to published quarterly data. - No systematic study of quarterly revisions has been carried out. ### 4 Serviceability — Relevance, timeliness, consistency, revision practice - 4.1 Relevance (4.1.1) - NBA closely monitors government needs in statistics; a wide consultation process with government agencies and Parliament exists. - No established process of consultation with users other than government; balance of payments compilers encourage informal feedback from other groups, including mass media. - BPD staff participate in regional and international meetings with balance of payments compilers when opportunities arise. - 4.2 Timeliness and periodicity - 4.2.1 Timeliness: - Balance of payments data are disseminated within 75 days following the reference period. - Annual data are disseminated within three months after the end of the reporting period, which exceeds the GDDS recommendation of six to nine month timeliness. - 4.2.2 Periodicity: - Balance of payments data are disseminated on a quarterly basis, which exceeds the annual periodicity recommended by the GDDS and meets the SDDS requirements. - 4.3 Consistency - 4.3.1 Consistency within dataset: - Quarterly and annual balance of payments statistics are generally consistent. - Net errors and omissions, an important indicator of consistency, is not disseminated. - 4.3.2 Consistency over time: - Annual balance of payments statistics dating from 1995 and quarterly data for 2001 are available in time series format. - Time series utilize BPM5 classifications. No breaks or discontinuities in the balance of payments component time series were identified by the mission. - 4.3.3 Consistency with other datasets/frameworks: - BPD is working towards consistency of balance of payments and international investment position data. - Consistency exists with monetary and financial statistics, merchandise trade statistics, and government external debt data (used as a source). - Current account statistics are consistent with external sector data in the national accounts. - 4.4 Revision policy and practice - 4.4.1 Revisions schedule: - There is no written policy on revisions. - 4.4.2 Identification of preliminary data: - All disseminated data are considered to be final. - 4.4.3 Publication of revision studies: - Users are not informed that new balance of payments information will be incorporated into data for the subsequent period. ### 5 Accessibility — Data and metadata accessibility; user assistance - 5.1 Data accessibility - 5.1.1 Presentation and detail: - Article 5 of the Law on Statistics ensures accessibility of statistics commensurate with broad user needs. - Annual Report of the NBA includes analysis of balance of payments data; charts and tables accompany data with current period compared to the relevant period of previous year. - Various levels of detail available. Publication Foreign Trade presents merchandise trade data on a cumulative basis from the beginning of the year; data compiled by main economic groups (CIS and the rest of the world), selected countries, and by commodity groups (following the Harmonized System). - Foreign Trade data also published in "Socio-Economic Development" (Azeri), "Foreign Trade of Azerbaijan" (Azeri and English), http://www.statcom.baku-az.com/ and reproduced in the Annual Report of the NBA, and NBA’s Monthly Bulletin. - External debt data are disseminated through Azerbaijan Economic Trends by the MOF in the context of the TACIS project; government and government guaranteed foreign debt data reproduced in the NBA Annual Report and include external debt repayments by principal and interest. A forward schedule of projected repayments is not published. - Gross official international reserves are published in millions of U.S. dollars and in terms of months of imports of goods and services in the NBA Monthly Bulletin of Banking Statistics. Analysis of changes in reserves and reserve structure is published annually in the NBA Annual Report. - 5.1.2 Dissemination media and formats: - Dissemination media are adequate. Quarterly balance of payments data are published in the NBA’s Monthly Bulletin, the Annual Report of the NBA, and in periodical press. - Starting from data for 2001, balance of payments data are also available at the NBA’s website (http://www.nba.az). - Balance of payments data published in the SSC’s Statistical Bulletin are attributed to the NBA. - Suggested improvements: - Post detailed data on standard components of BPM5 presentation on the NBA website. - Add a footnote to hardcopy balance of payments publication indicating where to find detailed data. - Disseminate time series data on quarterly balance of payments statistics via the same means. - 5.1.3 Preannounced schedule: - There is no formal preannounced schedule of release dates, but internal NBA policy requires release by a specified date. - 5.1.4 Simultaneous release: - Data are released simultaneously to all interested parties through the website and hardcopy edition. The policy on data release is not made public. - 5.1.5 Nonpublished subaggregates: - Occasionally, on request, special tabulations of nonpublished, nonconfidential data are provided mainly to government users. The general public are not informed of terms and conditions of such service. - 5.2 Metadata accessibility - 5.2.1 Documentation: - Documentation of methods for compiling balance of payments statistics is published in the IMF Balance of Payments Statistics Yearbook and in the GDDS metadata posted on the DSBB. - 5.2.2 Levels of detail: - The needs of users for a comprehensive document on sources and methods are not being met at present. - 5.3 Assistance to users - 5.3.1 Contact persons: - A contact person is identified on the DSBB. Arrangements ensure queries received by that contact are directed to the relevant person in the SD. - 5.3.2 Catalogs of publications and services: - Hard copy catalogs are not produced by the NBA, but information on published documents is available on the NBA website. ### Accuracy and reliability — Table 6 (summary observations from the Data Quality Assessment Framework) - Prerequisites of quality - 0.2 Resources: Staff and computer resources are not entirely adequate to perform existing tasks. - Methodological soundness - 2.1 Concepts and definitions: Some definitions (residency, FDI, reserves, treatment of net errors and omissions) are not strictly following BPM5. - Plan: International reserves will be reviewed for consistency with the international standard and revised where necessary. - 2.2 Scope: Coverage and scope of selected transactions (private sector liabilities, migrants’ transfers, reinvested earnings, some goods components, insurance services, reserve component) are not strictly following BPM5. - Plan: Medium-term plans to prepare preliminary estimates of capital transfers of migrants using SSC information on number of migrants and average apartment prices. - 2.3 Classification/Sectorization: Classification of portfolio investments, external debt, transfer components not entirely consistent with BPM5. - 2.4 Basis for recording: Valuation is a mixture of market price and book value; recording is a mixture of cash and accrual bases. All interest and dividend receipts and payments are recorded on a cash basis. Non-oil sector income distributions subject to withholding taxes are recorded net. - Accuracy and reliability - 3.2 Statistical techniques: More validation procedures should be developed for SSC surveys on foreign trade in services and FDI. - An open–type ITRS report form does not provide a check of completeness and is not appropriate for applying computer validation checks. - No surveys conducted to estimate average value of goods for shuttle trade. - Medium-term plan: implement advanced computing technology for data processing to achieve resource savings. - 3.3 Assessment and validation of source data: Data from the AIOC are insufficient to permit appropriate estimation of direct investment income flows. Redesign of the ITRS is required to ensure proper validation. - 3.5 Revision studies: No record is kept on revisions. - Serviceability and Accessibility (from Table 6) - 4.1 Relevance: No established process of consultation with users other than government. - 4.2 Timeliness and periodicity: Assessment indicates compliance with timeliness and periodicity standards. - 4.3 Consistency: Quality of merchandise trade data will be further improved by undertaking comparisons with trade data of neighboring countries (mirror statistics). - 4.4 Revision policy and practice: No written policy on revisions; all disseminated data are considered final; users are not informed that new information is incorporated into data for the subsequent period. - 5.2 Metadata: Needs of users for more comprehensive documents on sources and methods are not being met. - 5.3 Assistance to users: Hard copy catalogs of publications and other services are not produced by the NBA; information is available on the NBA website. *Source: _cr0386 - 3.3 Assessment and validation of source data* ### 0.1 Legal and institutional ### 0.1 Legal and institutional ### Legal and institutional environment - The environment is supportive of statistics. - Indicators: - 0.1.1 The responsibility for collecting, processing, and disseminating statistics is clearly specified. - 0.1.2 Data sharing and coordination among data producing agencies are adequate. - 0.1.3 Respondents' data are to be kept confidential and used for statistical purposes only. - 0.1.4 Statistical reporting is ensured through legal mandate and/or measures to encourage response. ### Resources - Resources are commensurate with needs of statistical programs. - Indicators: - 0.2.1 Staff, financial, and computing resources are commensurate with statistical programs. - 0.2.2 Measures to ensure efficient use of resources are implemented. ### Quality awareness - Quality is a cornerstone of statistical work. - Indicators: - 0.3.1 Processes are in place to focus on quality. - 0.3.2 Processes are in place to monitor the quality of the collection, processing, and dissemination of statistics. - 0.3.3 Processes are in place to deal with quality considerations, including tradeoffs within quality, and to guide planning for existing and emerging needs. --- ### 1. Integrity ### Overview - The principle of objectivity in the collection, processing, and dissemination of statistics is firmly adhered to. ### Professionalism - 1.1 Professionalism—Statistical policies and practices are guided by professional principles. - Indicators: - 1.1.1 Statistics are compiled on an impartial basis. - 1.1.2 Choices of sources and statistical techniques are informed solely by statistical considerations. - 1.1.3 The appropriate statistical entity is entitled to comment on erroneous interpretation and misuse of statistics. ### Transparency - 1.2 Transparency—Statistical policies and practices are transparent. - Indicators: - 1.2.1 The terms and conditions under which statistics are collected, processed, and disseminated are available to the public. - 1.2.2 Internal governmental access to statistics prior to their release is publicly identified. - 1.2.3 Products of statistical agencies/units are clearly identified as such. - 1.2.4 Advance notice is given of major changes in methodology, source data, and statistical techniques. ### Ethical standards - 1.3 Ethical standards—Policies and practices are guided by ethical standards. - Indicators: - 1.3.1 Guidelines for staff behavior are in place and are well known to the staff. --- ### 2. Methodological soundness ### Principle - The methodological basis for the statistics follows internationally accepted standards, guidelines, or good practices. ### Elements and indicators - 2.1 Concepts and definitions—Concepts and definitions used are in accord with internationally accepted statistical frameworks. - 2.2 Scope—The scope is in accord with internationally accepted standards, guidelines, or good practices. - 2.3 Classification/sectorization—Classification and sectorization systems are in accord with internationally accepted standards, guidelines, or good practices. - 2.4 Basis for recording—Flows and stocks are valued and recorded according to internationally accepted standards, guidelines, or good practices. --- ### 3. Accuracy and reliability ### Principle - Source data and statistical techniques are sound and statistical outputs sufficiently portray reality. ### Source data and techniques - 3.1 Source data—Source data available provide an adequate basis to compile statistics. - 3.1.1 Source data are collected from comprehensive data collection programs that take into account country-specific conditions. - 3.1.2 Source data reasonably approximate the definitions, scope, classifications, valuation, and time of recording required. - 3.1.3 Source data are timely. - 3.2 Statistical techniques—Statistical techniques employed conform to sound statistical procedures. - 3.2.1 Data compilation employs sound statistical techniques. - 3.2.2 Other statistical procedures (e.g., data adjustments and transformations, and statistical analysis) employ sound statistical techniques. ### Assessment, validation, and revisions - 3.3 Assessment and validation of source data—Source data are regularly assessed and validated. - 3.3.1 Source data—including censuses, sample surveys and administrative records—are routinely assessed, e.g., for coverage, sample error, response error, and nonsampling error; the results of the assessments are monitored and made available to guide planning. - 3.4 Assessment and validation of intermediate data and statistical outputs—Intermediate results and statistical outputs are regularly assessed and validated. - 3.4.1 Main intermediate data are validated against other information where applicable. - 3.4.2 Statistical discrepancies in intermediate data are assessed and investigated. - 3.4.3 Statistical discrepancies and other potential indicators of problems in statistical outputs are investigated. - 3.5 Revision studies—Revisions, as a gauge of reliability, are tracked and mined for the information they may provide. - 3.5.1 Studies and analyses of revisions are carried out routinely and used to inform statistical processes. --- ### 4. Serviceability ### Principle - Statistics are relevant, timely, consistent, and follow a predictable revisions policy. ### Elements and indicators - 4.1 Relevance—Statistics cover relevant information on the subject field. - 4.1.1 The relevance and practical utility of existing statistics in meeting users’ needs are monitored. - 4.2 Timeliness and periodicity—Timeliness and periodicity follow internationally accepted dissemination standards. - 4.2.1 Timeliness follows dissemination standards. - 4.2.2 Periodicity follows dissemination standards. - 4.3 Consistency—Statistics are consistent within the dataset, over time, and with major datasets. - 4.3.1 Statistics are consistent within the dataset (e.g., accounting identities observed). - 4.3.2 Statistics are consistent or reconcilable over a reasonable period of time. - 4.3.3 Statistics are consistent or reconcilable with those obtained through other data sources and/or statistical frameworks. - 4.4 Revision policy and practice—Data revisions follow a regular and publicized procedure. - 4.4.1 Revisions follow a regular, well-established and transparent schedule. - 4.4.2 Preliminary data are clearly identified. - 4.4.3 Studies and analyses of revisions are made public. --- ### 5. Accessibility ### Principle - Data and metadata are easily available and assistance to users is adequate. ### Data accessibility - 5.1 Data accessibility—Statistics are presented in a clear and understandable manner, forms of dissemination are adequate, and statistics are made available on an impartial basis. - 5.1.1 Statistics are presented in a way that facilitates proper interpretation and meaningful comparisons (layout and clarity of text, tables, and charts). - 5.1.2 Dissemination media and formats are adequate. - 5.1.3 Statistics are released on the preannounced schedule. - 5.1.4 Statistics are made available to all users at the same time. - 5.1.5 Non-published (but nonconfidential) sub-aggregates are made available upon request. ### Metadata accessibility - 5.2 Metadata accessibility—Up-to-date and pertinent metadata are made available. - 5.2.1 Documentation on concepts, scope, classifications, basis of recording, data sources, and statistical techniques is available, and differences from internationally accepted standards, guidelines or good practices are annotated. - 5.2.2 Levels of detail are adapted to the needs of the intended audience. ### Assistance to users - 5.3 Assistance to users—Prompt and knowledgeable support service is available. - 5.3.1 Contact person for each subject field is publicized. - 5.3.2 Catalogs of publications, documents, and other services, including information on any charges, are widely available. --- ### Users’ survey (Azerbaijan) — key findings and statistics ### Survey overview - Purpose: Complement mission’s assessment of quality of Azerbaijan’s statistics. - Questionnaires sent: 32 (100) - Responses received: 35 answers reported earlier in text; tabulated results use 32 as base. - Response rate reported earlier: 77 percent. - Respondent categories: government, press, international organizations, private sector; almost two thirds corresponded to public policy organizations. - Main datasets used by respondents: national accounts, prices, balance of payments, government/public sector statistics, monetary statistics. ### Usage (Question 1 — number and percentage) - National accounts: 16 50 - Production indices: 15 48 - Prices: 19 61 - Labor market: 13 42 - Balance of payments: 20 64 - Merchandise trade: 12 38 - International reserves and foreign liquidity: 9 29 - External debt: 18 58 - International investment position: 17 54 - Government/Public sector operations and debt: 15 48 - Monetary statistics: 27 86 ### Sources of official statistics (Question 2) - Official press releases and publications: 32 100 - Private sector summaries and analyses: 8 25 - Official policy papers: 30 96 - Publications from international organizations: 25 80 ### Use of methods documentation (Question 3) - Yes: 17 54 - No: 14 45 - No opinion: (not numerically specified) ### Uses of official statistics (Question 4) - Analysis of current developments for short-term decision making: 23 74 - Analysis of trends for longer-term policy formulation: 20 64 - Econometric model building and forecasting: 11 35 - Economic research: 15 48 - Comparison with economic developments in other countries: 20 64 - General economic background: 29 93 ### Quality aspects (selected) - 5.1 Coverage satisfactory: - Yes: 20 64 - No: 10 - Don’t know: 4 - 5.2 Detail satisfactory: - Yes: 18 58 - No: 13 42 - No opinion: 3 10 - 6.1 Frequency satisfactory: - Yes: 29 93 - No: 3 10 - No opinion: 1 3 - 6.2 Timeliness satisfactory: - Yes: 22 70 - No: 7 22 - No opinion: 2 6 ### Release calendar and revisions (Question 7) - 7.1 Knowledge of publicly disseminated calendar: - Yes: 4 - No: 2 - No opinion: 13 - 7.2 If calendar exists, released on announced dates: - Yes: 2 6 - No: 13 42 - No opinion: 15 48 - 7.3 Information about revisions sufficient: - Yes: 12 38 - No: 13 48 - No opinion: 8 25 ### Accessibility and methodology clarity (Question 8) - 8.1 Are statistics easily accessible: - Yes: 27 86 - No: 6 19 - 8.2 Easy access to explanatory notes/methods: - Yes: 22 70 - No: 9 29 - No opinion: 2 6 - 8.3 Methodology clear and adequate: - Yes: 19 61 - No: 13 42 - No opinion: 2 6 - 8.4 How respondents get access: - Official releases: 20 64 - Hard copy: 32 100 - Data specifically requested: 17 54 - Official website: 14 45 - Other: 4 13 - Email requests: 7 22 ### Perceptions of methodological soundness and accuracy (Question 9) - 9.1 Underlying methodology sound and appropriate: - Yes: 16 50 - No: 6 6 - No opinion: 12 38 - 9.2 Official statistics unbiased and accurate: - Yes: 19 61 - No: 7 22 - No opinion: 7 22 - 9.3 Quality compared with other countries in region: - About the same: 1 3 - Better: 10 32 - Worse: 3 10 - Cannot make comparisons: 4 13 - 9.4 Overall quality assessment: - Excellent: 2 6 - Very good: 17 54 - Good: 14 45 - Sufficient: 1 3 - Poor: 1 3 ### Qualitative user feedback (summarized) - Users generally pleased with detail, frequency, and accessibility of many statistics; labor market statistics received lower ratings. - Users requested more data on economic well-being (e.g., use of telephones and televisions). - Dissatisfaction with institutional coverage and clarity of methodology. - Timeliness: responses approximately two-thirds positive and one-third negative. - Mixed views on frequency and magnitude of revisions. - Two-thirds of respondents unhappy about present practices of agencies regarding access to official statistics. - Private sector users reported difficulty accessing official statistics, absence of timely estimates (flash reports), and inability to subscribe to monthly publications. *Source: _cr0386 - 0.1 Legal and institutional (IMF PDF).* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2003/_cr0386.pdf_