## _cr06115 ## Source details **Canonical URL:** [_cr06115](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr06115.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr06115.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr06115.pdf.json) --- ### I. Overall assessment — main conclusions - Japan has been subscribing to the IMF’s Special Data Dissemination Standard (SDDS) since July 3, 1996 and started posting metadata on the DSBB on November 5, 1996. - Japan met the SDDS requirements on June 9, 2000 and is currently in observance of the SDDS. - Japan meets the SDDS specifications for coverage, periodicity, and timeliness and exceeds the periodicity and/or timeliness requirements for most real and external sector data. - SDDS options used: - Timeliness option for general government operations data. - Periodicity and timeliness options for central government operations. - “As relevant” provision for analytical accounts of the banking system. - Calendar flexibility option for the international investment position. - Datasets assessed using the IMF DQAF (July 2003): National Accounts (NA), Consumer Price Index (CPI), Corporate Goods Price Index (CGPI/PPI), Government Finance Statistics (GFS), Monetary Statistics, Balance of Payments (BOP). ### II. Prerequisites of quality — institutional and resources - Decentralized statistical system with responsibilities: - ESRI (NA), MIC/SB (CPI), BOJ (CGPI, Monetary, BOP compilers on MOF’s behalf), MOF (responsible for BOP under FEFTL but entrusted compilation to BOJ). - Staffing and resources: - ESRI national accounts staff total: 45. - DNA: about 30 staff fully allocated to current compilation; remaining 15 cover capital stock, regional accounts, and other tasks. - ESRI office area: 360 square meters for 45 staff. - CPI weight surveys: FIES sample size 8,000 households; Survey of the Household Economy sample size 33,000 households; NFIE sample size about 53,000 households. - FIES sampling and outlet selection issues noted; one-person households estimated at about 28 percent of all households in 2000. - Legal/coordination instruments: - Statistics Law (1947) governs CPI, CGPI (designated/notified statistics), confidentiality, and reporting mandates. - Committee for Promotion of Economic and Social Statistics produced Structural Reform of Government Statistics (June 2005). - Identified resource concerns: - ESRI NA staffing “somewhat low” for operational and developmental purposes; staff rotation cycle about two years. - Mainframe systems date from the 1980s; migration plan to PC/open systems over about seven years. ### III. Assurances of integrity - Professionalism and impartiality: - Data-producing agencies adhere to principle of objectivity; laws and internal rules protect confidentiality. - ESRI, BOJ, and SB have explicit rules limiting internal access prior to release (exceptions: Minister of MIC for CPI; limited ministerial briefing practices at ESRI). - Ethics frameworks: - National Public Service Ethics Law (1999) and National Public Service Officials Ethics Code (2000) apply to civil servants. - BOJ: Bank of Japan Law (1995, latest amendment 2005) and internal staff rules; BOJ publishes staff ethical guidelines. ### IV. Methodological soundness — dataset-specific notes - General: most datasets follow internationally accepted concepts; specific departures and options documented and described to users. - National Accounts (NA): - Annual NA produced from production/expenditure and partly income side; quarterly accounts since 2002 compiled using supply approach as well as expenditure; quarterly dissemination limited to expenditure approach. - Consumption tax treated on a gross system; recommendation to treat consumption tax by net approach per 1993 SNA after feasibility study. - Benchmark input-output tables compiled every five years; quarterly product classification uses 90 products (from 2,200 annual products). - Chaining for volume estimates adopted late in 2004. - Consumer Price Index (CPI): - Broad conformity with CPI Manual; scope excludes one-person households (significant omission). - FIES: 8,000 households; suggested increase in FIES sample size and review of outlet selection. - Elementary aggregation: current practice uses Dutot at elementary level; recommendation to use Jevons or Lowe indexes depending on level and homogeneity. - Sales lasting seven days or less are excluded from prices—practice recommended for review. - Monthly chain-weighted CPI and reference indices compiled; monthly chain-weighted index (excluding fresh food) to be released in 2005 revision. - Corporate Goods Price Index (CGPI/PPI): - Broadly follows international concepts except valuation at primary wholesaler in some industries instead of ex-factory; BOJ treats CGPI as reflecting user needs and has introduced a producer-price priority rule. - Weight lag: excessive 15-month lag before incorporation of new weights after base-year revision every five years. - Elementary-level formula: Carli/averaged prices used; recommendation to move to geometric mean (Jevons) or ratio of averages for homogeneous items; consider Lowe index at higher aggregation. - Use of hedonic methods for PCs and digital cameras; proactive substitution and micro-level verification. - Monetary Statistics: - BOJ compiles Monetary Survey (not Depository Corporations Survey) and four monetary aggregates; Monetary Survey excludes Japan Post and cooperative financial institutions though their deposit liabilities included in broader aggregates. - Residency definition for individuals differs from MFSM/BPM5 one-year rule. - Valuation: book values used in Monetary Survey; market valuation used in flow of funds where appropriate. - Recommendation: compile Depository Corporations Survey to align with MFSM and consider inclusion of Japan Post and cooperatives. - Balance of Payments (BOP): - Compiled in broad conformity with BPM5; some residency and sectorization deviations (three-sector presentation: public sector, banks, other). - ITRS reporting threshold increases created gaps; additional surveys/supplementary sources recommended (e.g., for services and remittances). - Revision policy: monthly BOP preliminary at first release; final data disseminated about three months after the end of the reference quarter; practice of not revising final data reviewed and recommended for change and publication of revision studies. ### V. Accuracy and reliability — strengths and shortcomings - National Accounts: - 2002 supply-side incorporation improved quarterly accuracy; late 2004 introduction of chaining improved alignment with guidelines. - Source data gaps noted for service industries, construction, some short-term statistics and inventories; bench‑mark dependence on 1995 ratios. - No formal routine revision studies for quarterly preliminary estimates; revisions between first and second preliminary quarterly accounts described as “relatively modest” with bias “slightly positive.” - Recommendation: conduct and publish revision studies; enhance source data coverage for services; develop/upkeep business register. - Price Indices: - CPI and CGPI source data generally sound; need more systematic establishment/outlet selection. - CGPI elementary methods (Carli, averaged prices, unit values) raise conceptual concerns; BOJ introduced DCGPI-chain and reference indices; BOJ responses discuss tradeoffs and plans for research into Lowe index. - Quality adjustment methods used (option cost, hedonic regressions) for high-turnover items; impact of quality adjustments quantified in examples (2004: index after quality adjustment increase of 1.9 percent vs before 2.3 percent; difference 0.4 percentage points). - Monetary and BOP: - Source data and techniques generally reliable; BOJ performs validation and periodic revision studies for monetary statistics. - BOP: need to capture transactions lost after raising ITRS thresholds; reinvested earnings data timeliness and approximation need improvement. ### VI. Serviceability — periodicity, timeliness, and revisions - General: - Most datasets meet or exceed SDDS periodicity and timeliness. - Notable exceptions and SDDS options employed: - General government operations: Japan employs a timeliness flexibility option; central government operations: periodicity and timeliness flexibility options (data published every November). - Analytical accounts of banking sector: “as relevant” option used for timeliness. - Representative timing/performance entries (Table 4 excerpts preserved verbatim): - National accounts: Periodicity SDDS Q; Japan Q; Timeliness SDDS 1Q; Japan 6W — "Timeliness exceeds SDDS requirements." - Consumer price Index: Periodicity SDDS M; Japan M; Timeliness SDDS 1M; Japan M. - Producer price Index: Periodicity SDDS M; Japan M; Timeliness SDDS 1M; Japan 8 WD — "Timeliness exceeds SDDS requirements." - Central govt. operations: Periodicity SDDS M; Japan A; Timeliness SDDS 1M; Japan 8M — "Japan employs periodicity and timeliness flexibility options (data published every November)." - Balance of payments: Periodicity SDDS Q; Japan M; Timeliness SDDS 1Q; Japan 1 M and 8 WD — "Periodicity and timeliness exceed SDDS requirements." - Revision policies: - NA: revisions follow regular schedule; quarterly first preliminary at about 6W, second preliminary about 1M later; finality after about 21 months except for benchmark revisions. - CPI: preliminary Ku-area Tokyo flash estimates released end-of-month and revised next month; quinquennial weight revisions documented and backdated. - CGPI: final figures released two months after survey month; periodic retroactive revisions in April and October; archives of preliminary and revised releases available. - BOP: monthly preliminary released one month and eight working days after reference month; final data about three months after the end of the reference quarter; current practice limits routine final-data revisions — recommended review. ### VII. Accessibility, metadata, and user assistance - Data availability: Six macroeconomic datasets readily accessible; SDDS NSDP updated timely. - Metadata: Detailed metadata especially for NA and BOP; SDDS metadata posted on DSBB; BOJ SDDS metadata not hyperlinked to BOJ website. - User support: - Contact details included in publications and websites; timely responses reported. - ESRI: advance release calendar available for quarterly data (not for annual); extensive sources and methods documentation; e-mail subscription service; about 20 substantial questions per week. - SB (CPI): publication catalogs, FAQs, and assistance; phone/fax contacts in publications; email queries transferred to CPI staff quickly. - BOJ: publications, research papers, and downloadable documents; archive and preliminary/revised series available; contact points and e-mail provided for BOP and monetary queries. - Levels of dissemination detail: - CPI: unusually detailed geographic and subgroup breakdowns; long-run series back to January 1970 (2000=100) and with imputed rent excluded from August 1946. - CGPI: long series from January 1960 (2000 average =100) and reference chains; DCGPI-chain and DCGPI excluding consumption tax published. ### VIII. DQAF summary results — selected assessments and scores - Datasets covered: National Accounts; CPI; PPI (CGPI); Government Finance Statistics; Monetary Statistics; Balance of Payments Statistics. - Dimension 0. Prerequisites of quality (selected): - 0.1 Legal and institutional environment: O O O O O O - 0.2 Resources: LNO O O O O O - 0.4 Other quality management: O O O LO O O O O O - Dimension 1. Assurances of integrity: - 1.1 Professionalism: O O O O O O - 1.2 Transparency: O O O O O O - 1.3 Ethical standards: O O O O O O - Dimension 2. Methodological soundness (selected): - 2.1 Concepts and definitions: O O LO O LO O - 2.2 Scope: O LO O LNO LO O - Dimension 3. Accuracy and reliability (selected): - 3.1 Source data: LO O LO LO O LO - 3.5 Revision studies: LNO O O LO O O - Dimension 4. Serviceability: - 4.1 Periodicity and timeliness: O O O LNO O O - 4.3 Revision policy and practice: O O O O O LNO - Dimension 5. Accessibility: - 5.1 Data accessibility: O O O O O O - 5.2 Metadata accessibility: O O O O O O ### IX. Key staff observations and prioritized recommendations - Cross-cutting recommendations: - Strengthen coordination across agencies to improve NA and BOP statistics; implement aspects of the June 2005 Structural Reform of Government Statistics report. - Consider introducing legal authority to disseminate statistical information and formalize delineation between statistical and nonstatistical functions within agencies. - Review staff rotation practices to promote statistical expertise; address ESRI NA staffing limitations. - Conduct and publish routine revision studies to enhance reliability of preliminary estimates. - Systematize interagency consultation to promote data consistency across datasets. - National Accounts: - Review NA staffing (45 total; about 30 fully allocated to current compilation). - Further develop production-side quarterly accounts and disseminate them. - Enhance coverage/timeliness of service-industry and short-term statistics; develop an up-to-date business register. - Treat consumption tax on a net basis per 1993 SNA after feasibility study. - Consumer Price Index: - Expand CPI scope to include one-person households; monthly index for total households scheduled in 2005 revision as reference. - Review sample design and outlet selection; include prices on sale for seven days or less. - Review elementary formulae (move away from Carli/Dutot where inappropriate), consider Lowe at higher aggregation, and update weights more frequently. - Improve methods for temporarily missing, seasonal items, and quality adjustment procedures. - Producer Price Index (CGPI): - Use ex-factory prices where appropriate instead of wholesaler prices; adopt more systematic establishment sampling. - Replace averages of relatives with geometric mean at elementary level; consider Lowe index at higher levels; update weights more frequently. - Government Finance Statistics: - Specify responsibility for compiling GFS as a distinct output and develop data-sharing working arrangements. - Compile integrated statements for general government (operating, other flows, balance sheet) per international guidelines. - Compile monthly statement of sources and uses of cash for budgetary central government; improve timeliness for local government statistics; bring general government and central government operations in line with SDDS periodicity and timeliness. - Monetary Statistics: - Compile a Depository Corporations Survey by expanding Monetary Survey to include Japan Post and cooperative financial institutions. - Collect source data in formats meeting MFSM guidelines; disseminate monetary statistics within one month from the end of the reference month where feasible. - Balance of Payments: - Clarify compiler role by identifying BOJ as compiler while MOF maintains legal responsibility; adopt more detailed sectorization to conform further to BPM5. - Develop additional sources to capture transactions lost after the new ITRS threshold (e.g., services, remittances). - Review the revision policy that currently discourages changes to finalized data and publish revision studies. *Source: Data Quality Assessment Framework July 2003—Summary Results (ROSC data module); Detailed Assessments Using the Data Quality Assessment Framework (DQAF), March 9, 2006.* ### 1. Data Quality Assessment Framework July 2003—Summary Results...............................8 ### Data Quality Assessment Framework July 2003—Summary Results ### I. Overall assessment — main conclusions - Japan has been subscribing to the IMF’s Special Data Dissemination Standard (SDDS) since July 3, 1996 and started posting its metadata on the Dissemination Standards Bulletin Board (DSBB) on November 5, 1996. - Japan met the SDDS requirements on June 9, 2000 and is currently in observance of the SDDS. - Japan meets the SDDS specifications for coverage, periodicity, and timeliness and exceeds the periodicity and/or timeliness requirements for most real and external sector data. - Specific SDDS options used: - Timeliness option for general government operations data. - Periodicity and timeliness options for data on central government operations. - An “as relevant” provision for the analytical accounts of the banking system, owing to its extensive bank branch network. - A calendar flexibility option for the international investment position. - SDDS data categories are disseminated on Japan’s National Summary Data Page (NSDP), which is included on the DSBB website and is updated on a timely basis. - This ROSC data module assesses national accounts (NA), consumer price index (CPI), corporate goods price index (CGPI), government finance statistics, monetary statistics, and balance of payments (BOP) statistics using the IMF’s Data Quality Assessment Framework (DQAF), July 2003 version. - The report structure: - Section I: main conclusions according to the DQAF prerequisites and five dimensions of data quality. - Section II: summary assessment of the six datasets, based on a four-point scale, and overview of main dataset characteristics. - Section III: staff recommendations. - Authorities’ response and Detailed Assessments are presented separately. ### Prerequisites of quality — institutional and resource observations - Multiple data-producing agencies reflect a decentralized statistical system: - ESRI produces national accounts. - MIC produces the consumer price index. - BOJ produces the corporate goods price index and monetary statistics. - MOF is responsible for BOP statistics but has entrusted compilation to BOJ. - General government statistics are not compiled as a distinct statistical output (with revenues, expenditures, deficit, and financing); they are produced only as a sector of the national accounts. - Legal frameworks: - Compilation responsibilities are governed by legislations specific to each agency. - CPI and CGPI are subject to the Statistics Law (because they are collected from survey sources). - Coordination: - Statistics Law and the Statistical Reports Coordination Law apply only at the survey collection level. - Compilation of input-output tables involves several departments; enhanced coordination efforts are recommended, especially to improve national accounts and BOP statistics. - Committee for Promotion of Economic and Social Statistics produced in June 2005 a report entitled Structural Reform of Government Statistics to strengthen coordination. - Resources: - Resources are generally adequate for statistical production. - Staffing of the national accounts department in the ESRI is somewhat low for operational and developmental purposes, limiting coordination with other data agencies. - Staff rotation may hinder development and maintenance of statistical expertise. - User orientation: - Strong awareness of meeting users’ needs, evidenced by Advisory Committee for National Accounts (ACNA) and quarterly meeting of users of the balance of payments. ### Assurances of integrity - Data-producing agencies adhere to the principle of objectivity in collection, processing, and dissemination. - Professionalism and transparency: - Extensive documentation and dissemination of policies and practices. - Laws and guidelines for staff on ethical conduct. - Data protected by strict measures of confidentiality across agencies. - Internal delineation of statistical functions: - Formalized restrictions on internal government access to data for NA, CGPI, and monetary statistics. - Recommendation: adopt similar measures for BOP and CPI to further reflect impartiality. ### Methodological soundness — dataset-specific notes - General: - Most of the six datasets are compiled according to internationally accepted statistical concepts, definitions, scope, classification and sectorization, and bases for recording. - National accounts (NA): - Annual NA produced partly from production and expenditure side and partly from income side, conforming to international guidelines. - Quarterly accounts: since 2002 compiled using supply approach as well as expenditure; quarterly dissemination still limited to the expenditure approach. - Consumption tax treated according to the gross system; practical difficulties in removing tax from final expenditure items to obtain GDP at market prices. - Transparency: exhaustive and clear description of deviations from the 1993 SNA. - General government sector accounts generally follow national accounts guidelines through adjustments to cash transactions; no comprehensive statement of general government revenues/expenditures/deficit/financing; no single agency in charge. - Price indices: - Both CPI and CGPI broadly follow internationally accepted guidelines. - CPI: scope would be enhanced if one-person households were included in expenditure estimates for weights. - CGPI: when primary wholesalers play a critical role in setting prices, CGPI is valued at wholesale level, not ex-factory as required by international guidelines for an output PPI; CGPI assessed as a PPI for purposes of this report. - Monetary statistics: - Adoption of Monetary and Financial Statistics Manual (MFSM) guidelines would be enhanced by compiling a Depository Corporations Survey. - Monetary survey excludes Japan Post and cooperative financial institutions, though they are covered in broader monetary aggregates and flow of funds accounts. - Balance of payments: - BOP statistics are consistent with BPM5 conceptual framework, though sectoral classification differs somewhat from BPM5. ### Accuracy and reliability — strengths and shortcomings - National accounts: - 2002 inclusion of supply-side source data and other methodological changes significantly improved accuracy and reliability for quarterly data. - Late 2004 change to chaining method for volume estimates further aligned with international guidelines. - Source data limitations: coverage of service industries; coverage and timeliness of short-term statistics. - Adjustments are made to align government source data with national accounts classification requirements. - Recommendation: greater reliance on revision studies to inform statistical process, especially for the first preliminary quarterly accounts. - Price indices: - Data sources generally sound. - Need greater emphasis on systematic selection of establishments for CGPI and outlets for CPI. - Micro-level practices exemplary for CGPI data assessment and CPI item replacement. - Methodological attention needed for treating temporarily missing items, seasonal items, quality adjustment procedures, and aggregation methods (particularly CGPI). - Consider more frequent updating of weights for both indices. - Monetary and BOP statistics: - Data sources and techniques generally reliable and sound. - BOP: need to capture international transactions no longer captured following introduction of new reporting threshold for international transaction reporting system. ### Serviceability - Periodicity and timeliness: - Data for the six macroeconomic datasets generally meet and in certain cases exceed SDDS requirements. - Notable exceptions: - Government finance statistics: SDDS periodicity and timeliness are not met. - Analytical accounts of the banking system: “as relevant” option used due to bank institutional setting. - Revision policies and practices: - Generally well-established, though period open for revisions should be extended for BOP statistics. - Consistency: - Consistency within and across datasets is adequate. - Consistency between budgetary accounts and government finance data is less adequate. ### Accessibility - Data availability: - The six macroeconomic datasets are readily accessible. - Metadata: - Produced in fine detail, especially for NA and BOP statistics. - Metadata easily available in print and on the Internet. - User support: - Contact details included and timely answers provided to queries. ### II. Assessment by agency and dataset — DQAF summary results (Table 1) Key to symbols: O = Practice Observed; LO = Practice Largely Observed; LNO = Practice Largely Not Observed; NO = Practice Not Observed; NA = Not Applicable - Datasets covered: National Accounts; Consumer Price Index; Producer Price Index; Government Finance Statistics; Monetary Statistics; Balance of Payments Statistics - Dimension 0. Prerequisites of quality - 0.1 Legal and institutional environment: O O O O O O - 0.2 Resources: LNO O O O O O - 0.3 Relevance: O O O O O O - 0.4 Other quality management: O O O LO O O O O O - Dimension 1. Assurances of integrity - 1.1 Professionalism: O O O O O O - 1.2 Transparency: O O O O O O - 1.3 Ethical standards: O O O O O O - Dimension 2. Methodological soundness - 2.1 Concepts and definitions: O O LO O LO O - 2.2 Scope: O LO O LNO LO O - 2.3 Classification/sectorization: O O O O LO LO - 2.4 Basis for recording: O O O O LO O - Dimension 3. Accuracy and reliability - 3.1 Source data: LO O LO LO O LO - 3.2 Assessment of source data: LO O O O O O - 3.3 Statistical techniques: O LO LNO O O O - 3.4 Assessment and validation of intermediate data and statistical outputs: O O O O O O - 3.5 Revision studies: LNO O O LO O O - Dimension 4. Serviceability - 4.1 Periodicity and timeliness: O O O LNO O O - 4.2 Consistency: O O O LO O O - 4.3 Revision policy and practice: O O O O O LNO - Dimension 5. Accessibility - 5.1 Data accessibility: O O O O O O - 5.2 Metadata accessibility: O O O O O O ### III. Staff observations and key recommendations (summarized) - Strengthen coordination across agencies to improve NA and BOP statistics; implement aspects of the June 2005 Structural Reform of Government Statistics report. - Address staffing limitations at ESRI national accounts department to support operational and developmental needs and interagency coordination. - Consider legal or procedural arrangements to formalize protection and impartiality measures for BOP and CPI analogous to those in place for NA, CGPI, and monetary statistics. - Improve source data coverage and timeliness for service industries and short-term statistics used in NA; increase use of revision studies to guide preliminary quarterly estimates. - For price indices: - Include one-person households in CPI expenditure weights. - Ensure CGPI valuation at ex-factory level where appropriate and strengthen systematic selection of establishments/outlets. - Review methods for temporarily missing items, seasonal items, quality adjustment, aggregation, and weight update frequency. - For monetary statistics: - Compile a Depository Corporations Survey to better align with MFSM guidelines and consider inclusion of Japan Post and cooperative financial institutions in the monetary survey framework. - For BOP: - Extend the revision period and address gaps created by the new reporting threshold for the international transaction reporting system. *Source: Data Quality Assessment Framework July 2003—Summary Results (ROSC data module).* ### 5.3 Assistance to users ### _cr06115 - 5.3 Assistance to users ### Practice classification framework - Practice observed: current practices generally meet or achieve the objectives of the DQAF internationally accepted statistical practices without any significant deficiencies. - Practice largely observed: some departures, but these are not seen as sufficient to raise doubts about the authorities’ ability to observe the DQAF practices. - Practice largely not observed: significant departures and the authorities will need to take significant action to achieve observance. - Practice not observed: most DQAF practices are not met. - Not applicable: used only exceptionally when statistical practices do not apply to a country’s circumstances. ### Agencies assessed (dimensions 0 and 1) - For national accounts: Economic and Social Research Institute, Cabinet Office (ESRI). - For consumer prices: Ministry of Internal Affairs and Communication (Statistics Bureau, SB / MIC). - For government finance statistics: Ministry of Finance (MOF). - For producer price index (corporate goods price index), monetary and balance of payments statistics: Bank of Japan (BOJ). ### ESRI — National Accounts (Dimensions 0 and 1; selected findings) - Legal and institutional environment: - ESRI compiles national accounts under the Cabinet Office Establishment Law (1999). - No clear legal obligation exists regarding dissemination. - ESRI does not have access to underlying micro data unless a specific request is made pursuant to the Statistics Law (1947). - Individual data collected by the ESRI are confidential under the Statistics Law; access restricted to staff whose duties require it. - Resources and staffing: - Total number of staff working on the national accounts in the ESRI is 45. - General rotation cycle for civil servants is about two years; ESRI attempts to retain qualified staff somewhat longer with limited success. - Few staff with extensive professional experience are mainly at the level of division chief. - Relevance and user engagement: - Advisory Committee on National Accounts (ACNA) and subcommittees include independent external experts and users. - Staff participate in international seminars and request methodological feedback via the ESRI website. - Quality management and professionalism: - Management emphasizes data quality dimensions; ESRI produced a self assessment in August 2005 and published results on its website. - ESRI headed by a president usually a highly regarded academic; professionalism promoted via internal/external training and research publications. - Transparency and ethical standards: - Laws and documents relating to source data posted on government websites; specific legal conditions under which national accounts are produced not made available. - Explicit procedures on day of data release limit access prior to release. - National Public Service Ethics Law (1999) and National Public Service Officials Ethics Code (2000) apply; ESRI has rule of information control prohibiting leakage. ### SB (MIC) — Consumer Price Index (Dimensions 0 and 1; selected findings) - Legal and institutional environment: - Mandate to compile CPI set out in the Cabinet Order on the Organization of the MIC. - CPI source data (RPS and FIES) benefit as designated statistics under the Statistics Law (SL) with confidentiality and response obligations. - Resources and staffing: - Resources are sufficient for CPI compilation. - Staff rotate between MIC departments about every two years. - Relevance and user consultation: - User consultation mainly every five years at weight revision; government ministries and BOJ consulted on methodological issues. - Consideration could be given to establishing a regular user consultation forum representative of the user community. - Other quality management and professionalism: - CPI scrutinized at subcouncil meetings of the Statistics Council (SC) mainly at base-weight revisions. - CPI would benefit from more frequent monitoring of quality-related indicators. - SB has Statistical Research and Training Institute (SRTI) for statistical training. - Transparency and ethics: - SB website contains overview of CPI-related legislation. - No government officials have access to data prior to release, except the Minister for Internal Affairs and Communications. - Major methodological changes announced with advance notice. - Ethical standards embodied in civil service legislation. ### MOF — Government Finance Statistics (Dimensions 0 and 1; selected findings) - Legal and institutional environment: - No legal mandate designates the compiler of GFS for the general government; general government statistics disseminated as sectoral accounts of national accounts. - Public Finance Law designates MOF for compilation and dissemination of central government settlement accounts. - MOF Establishment Law designates MOF responsible for debt management and central government debt reporting. - Resources and data flow: - Resources commensurate with administrative needs and have increased in recent years. - Staff subject to civil servant rotation policy (about every two years). - Relevance and quality management: - Settlement accounts represent budget execution for central government; needs of main users monitored through councils and committees. - No forum exists for discussing, coordinating, and implementing new statistical developments. - Professionalism and transparency: - Central government operations and debt data compiled from administrative records; independence reinforced by accounting and recording systems; no estimations employed. - MOF disseminates detailed explanations of processes, methodologies, definitions, and classifications in several publications. - The MOF website indicates that copyrights are reserved on all information provided; some publications do not require special attribution. - Ethical standards: - All civil servants subject to National Public Service Ethics Law (1999) and National Public Service Officials Ethics Code (2000). ### BOJ — CGPI, Monetary, and BOP statistics (Dimensions 0 and 1; selected findings) - Legal and institutional environment: - BOJ compiles Corporate Goods Price Index (CGPI) as a “notified statistic” under Article 8 of the Statistics Law (1947). - Monetary statistics authority derived from BOJ’s monetary policy responsibility. - MOF is responsible for BOP under the Foreign Exchange and Foreign Trade Law (FEFTL) (1949, latest amendment in 2005) and entrusted BOJ with compilation; BOP data largely collected under FEFTL. - Legal provisions protect confidentiality of individual data primarily through the Bank of Japan Law (1995, latest amendment, 2005). - Resources and flexibility: - Resources are adequate for each of the three datasets. - FEFTL requirements for MOF approval and ministerial ordinance for changing report forms reduce flexibility for BOP data collection. - Relevance and user engagement: - Relevance sought through communication with users, methodology discussion with academics, and international participation. - Channels include CGPI weight revision consultation every five years; website monitoring and email support; quarterly BOP user meetings chaired by a BOJ policy board member. - Quality management and professional practices: - BOJ has procedures promoting data quality, including micro data verification and pre-release checks for monetary statistics (documented in Bank of Japan Quarterly Bulletin (Nov. 2002)) and planning (fiscal year 2005 action plan). - Bank of Japan Law secures professional independence; staff encouraged to prepare research papers with individual recognition. - Transparency and ethics: - BOJ website provides extensive documentation on terms and conditions for the three datasets. - No internal access for statistics prior to release. - For BOP published under double stamp of MOF and BOJ, the part attributable to each agency is not identified on the MOF website. - Advance notice is given for major methodological, source data, and statistical technique changes. - Bank of Japan Law and Guidelines to BOJ Staff provide ethical principles; statistical sections have developed confidentiality rules. ### National Accounts (Dimensions 2 to 5; key findings) - Concepts and definitions: - National accounts compiled according to the 1993 SNA framework; deviations are limited in number and exhaustively described to users. - Scope and classification: - Quarterly expenditures of GDP compiled in nominal and real terms; quarterly estimates by activity are not compiled. - Annual institutional sector accounts compiled, inclusive of financial flow accounts and balance sheets. - Benchmark input-output tables compiled every five years. - Basis for recording and valuation: - Transactions recorded on an accrual basis in principle; market output valued at producer prices. - Consumption tax (essentially VAT) treated on a gross rather than net basis due to data limitations. - Source data and assessment: - ESRI primarily relies on other government agencies and BOJ for source data and is cooperating to improve these sources. - Some source data need strengthening (coverage of service industries; coverage and timeliness of short-term statistics), affecting first preliminary quarterly accounts. - Source data are often provided in aggregate form and may not be consistent across concepts, coverage, and classification. - Statistical techniques and validation: - Annual accounts compiled using detailed commodity flow method and value added based on make and use matrices. - Since 2002, supply-side estimates used for quarterly accounts and balanced with independently determined use-side data for household consumption and private nonresidential fixed capital formation. - Compilation techniques show high dependence on ratios from benchmark year (now 1995). - Chaining method for volume estimates introduced late in 2004. - Accuracy, revisions, and consistency: - GDP estimates checked using as much available information as possible. - While differences between preliminary and revised estimates are routinely checked, no formal revision studies are carried out. - Periodicity and timeliness meet and in some instances exceed SDDS requirements. - Quarterly data are consistent with annual data and benchmarked when new annual data are available. - Annual accounts show a statistical discrepancy between GDP (P) and GDP (E) that is relatively stable over time. - National accounts data reconcilable with BOP and government data, although no reconciliation table is provided. - Revision policy and documentation: - Revisions follow a regular and transparent schedule except for benchmark revisions and major changes such as adoption of chaining. - Documentation of most important reasons for revisions included in publication of the second preliminary quarterly accounts on the ESRI website; similar procedure for annual data. - Accessibility and user assistance: - National accounts data published in clear manner with various levels of detail; summary and more detailed forms available on the ESRI website. - Advance release calendar for quarterly data available on SNA section of ESRI website but not for annual data. - Comprehensive sources and methods documents published and updated regularly; relationship to government finance data documented in detail. - Prompt and knowledgeable service and support staff available to national accounts users; all statistical releases contain telephone and/or e-mail contact points. - Catalogs of publications (titles, prices, and others) posted on the ESRI website. *Source: _cr06115 - 5.3 Assistance to users* ### 2. Methodological soundness ### 2. Methodological soundness ### Consumer Price Index (CPI) - Concepts and definitions: CPI broadly follows internationally accepted concepts. - Scope: Exclusion of one-person households is an important scope restriction. - Classification/sectorization: Broadly follows international guidance; sufficiently clear and detailed for analytical purposes. - Basis for recording: - Market prices are used to value flows and stocks. - Exclusion of short-term sale prices should be reconsidered as it may serve to overstate price changes. - Pricing of perishable goods benefits from sampling throughout the month. - Goods and services are generally recorded on an accrual basis, as required by international guidelines. - Source data: Source data for weights and prices are commendable; attention urged to increase FIES sample size and to sample selection of outlets by type when sampling prices. - Assessment of source data: Sampling error of the FIES is determined; excessive changes in individual prices are thoroughly checked. - Statistical techniques: - At the elementary level, the Dutot formula should be confined to homogeneous items to avoid bias. - The use of the Jevons index is more generally advisable, though results will differ from the Retail Price Survey (RPS). - At the upper level, consideration should be given to the use of a Lowe index. - Methods for treating temporarily missing items, seasonal items, and quality adjustment procedures require attention. - Consider more frequent updating of weights to capture changing consumption patterns. - Japan publishes a retrospective chain-weighted CPI and uses chain-linking in national accounts, notwithstanding problems of consistency in aggregation. - Assessment and validation: RPS price data are published at a highly detailed micro level, requiring strict validity checks that benefit CPI compilation. - Revision studies: Revision studies are published on weight revisions. - Periodicity and timeliness: Monthly data are timely; publication of preliminary (and revised) flash estimates for the metropolitan area of Tokyo is commended. - Consistency and revision policy: Statistics are consistent in aggregation, although early releases after weight revisions are not consistent with final releases; revision policy is mostly clear. - Accessibility and metadata: CPI data accessibility and level of detail are exemplary; metadata are produced at various levels and easily available in print and on the website; assistance to users is well provided, notably through publication catalogs. ### Corporate Goods Price Index (CGPI) - Concepts and definitions: CGPI broadly follows internationally accepted concepts; notable exception—output is priced at the primary wholesaler when such wholesalers play an active role, which does not accord with 1993 SNA and the PPI Manual; ex-factory prices should be used for an output PPI. - Scope: Broadly consistent with international guidelines; expansion of business service industry coverage in Corporate Services Price Index is an important development. - Classification/sectorization: Sufficiently fine level for detailed analysis; attention needed to negative weights for domestic CGPI arising from misclassification between the Harmonized System and Japan Standard Industrial Classification. - Basis for recording: Broadly consistent with international guidelines except CGPI is compiled including consumption tax; a reference index excluding the tax is compiled and published. - Source data: - Generally accord with international guidelines. - Attention to inclusion of some commodities excluded on pragmatic grounds. - There is an excessive 15-month lag before incorporation of new weights following the revision of CGPI base year that occurs every five years. - Selection of respondents should be more systematic. - Assessment of source data: Accuracy of sample prices and their changes is assessed; unusual results are queried by phone with respondents. - Statistical techniques: - General use of the Carli index at the elementary aggregate level is inappropriate. - Use of unit value and averaged prices should be reconsidered. - At the upper level, consider the use of the Lowe index. - Methods for temporarily missing items, seasonal items, and quality adjustments require reconsideration. - Proactive substitution of replacements by industry specialists is commendable. - Consider more frequent updating of weights in the official CGPI. - Assessment and validation: Meticulous assessment of micro data; CGPI is compared against other price indices as applicable. - Revision studies: Revision studies are carried out to inform the statistical process, though not published. - Periodicity, timeliness, consistency: Periodicity and timeliness meet SDDS requirements; series reconcilable over a reasonable period. - Revision policy and practice: Revision cycle is regular and transparent; preliminary data clearly identified; archived releases available on website. - Accessibility and metadata: Level of detail published and ease of access are strong; metadata and technical papers are readily accessible on the website; BOJ website provides many downloadable documents and publications. ### Government Finance Statistics (general government and central government) - Concepts and definitions: General government data compiled as the sector accounts of the national accounts in accordance with 1993 SNA. - Scope: No comprehensive statement on revenues, expenditures, deficit, and finance of general government; national accounts general government coverage broadly consistent with international guidelines (central government, local government, social security funds, government-controlled nonprofit institutions engaged in nonmarket production; excludes those with market activities). - Classification/sectorization: Central government in budgetary system comprises the general account and 31 special accounts; these special accounts are adequately reclassified in the SNA. - Basis for recording: - Adjustments are made for certain accrual transactions though source data are primarily compiled on a cash basis. - Settlement accounts compiled on a cash basis; government debt reported at face value. - Source data: Comprehensive but lack timeliness; source data do not approximate the SNA and require manual reclassification of settlement account data. - Assessment of source data: Quality controls in accounting and reporting ensure accuracy; data assessed routinely. - Statistical techniques: Compilation of general government sector accounts employs sound statistical techniques; central government flow and debt data derived from comprehensive administrative records (no statistical techniques applied). - Assessment and validation: Intermediate data (consolidated central government account and local government reports) are not subject to detailed validation due to tight quality controls in source data. - Revision studies: No revisions for central government settlement accounts and debt; for general government no formal revision studies carried out. - Periodicity and timeliness: - Japan took a flexibility option on timeliness (but not periodicity) for general government sector accounts and a periodicity and timeliness flexibility option for central government operations. - Central government debt disseminated in accordance with SDDS requirements. - Consistency: General government annual data for national accounts and central government settlement account and debt data are consistent within datasets and over time; differences between central government national accounts and consolidated settlement account arise mainly due to classifications and sectorization; bridging tables disseminated once a year; consistency not monitored through reconciliation exercises. - Revision policy and practice: National accounts follow a regular and transparent schedule; no revision policy applicable to administrative data of central government settlement accounts and debt. - Data accessibility and metadata: National accounts presented to facilitate interpretation but not direct GFS analysis; main GFS aggregates require aggregation and recalculation; data released simultaneously to all users; central government accounts presented with current period, corresponding period previous fiscal year, and budget items; publications on central government debt present multiple formats; metadata on national accounts and central government debt available in several formats; specific metadata for central government accounts outside DSBB are not available though background information (e.g., “Understanding the Japanese Budget”) is readily available. - Assistance to users: Provided through contact details in publications and websites; a single MOF port of entry for general enquiries and publications. ### Monetary Statistics - Concepts and definitions: BOJ compiles a Monetary Survey instead of a Depository Corporations Survey; Monetary Survey provides input to Flow of Funds Accounts. - Scope: Monetary Survey covers BOJ and resident commercial banks, excludes Japan Post and cooperative financial institutions (significant depository corporations); BOJ compiles four monetary aggregates with the deposit liabilities of Japan Post and cooperative financial institutions included in the broadest two. - Classification/sectorization: Sectorization less detailed than required by the MFSM; definition of residence for individuals used in Monetary Survey not in line with BPM5 and MFSM one-year “rule.” - Basis for recording: Monetary Survey relies on accrual accounting and corrects grossing/netting operations per MFSM methodology but uses book values, not market prices, for valuation. - Source data: BOJ maintains a comprehensive, current register of financial sector institutions; data collected timely; source data lack sufficient detail to classify sectors in line with MFSM methodology. - Assessment of source data: Sound; staff scrutinize submissions for out-of-trend changes or high-value transactions and contact banks for verification. - Statistical techniques: Major use is seasonal adjustment via X-12 ARIMA. - Assessment and validation: BOJ occasionally uses other departments’ information to validate balance sheet data; investigates classification/sectorization errors or omissions; does not attempt to reconcile implied flows in monetary statistics with government budget and balance of payments data; published interbank positions between BOJ and commercial banks are consistent. - Revision studies: Revisions arise from finalization of monetary data; BOJ prepares revision studies periodically. - Periodicity and timeliness: Periodicity of Central Bank’s Survey and Other Depository Corporations’ Survey aligns with SDDS requirements; timeliness of Central Bank’s Survey aligns with SDDS requirements; an SDDS “as relevant” provision is taken on timeliness for Other Depository Corporations’ Survey. - Consistency and revision policy: Monetary statistics are consistent within the dataset; monetary and balance of payments use same data on banks’ foreign assets and liabilities; monetary statistics and government budget data use same data on central government bank deposits and credit; revisions follow a regular and transparent schedule; revision policy is publicized on the BOJ website; preliminary and revised data clearly identified. - Accessibility and metadata: BOJ disseminates statistics in user-suitable formats on a preannounced schedule, simultaneously to all users; metadata available via Guide to Japan’s Money Stock Statistics (June 2004) and methodological footnotes in BOJ publications; SDDS metadata posted on IMF’s DSBB are not hyperlinked to the BOJ website. - Assistance to users: Adequate; publications and website provide contact information and a catalog of BOJ publications with prices. ### Balance of Payments Statistics - Concepts and definitions: Compiled in broad conformity with BPM5 conceptual framework and classification structure. - Scope: Consistent with internationally accepted guidelines; in principle all institutional units and all transactions with nonresidents are covered. - Classification/sectorization: Generally consistent with BPM5, with minor exceptions (e.g., residency definition for individuals); three-sector sectorization (public sector, banks, and other) is less detailed than BPM5 requires. - Basis for recording: Transactions valued at market prices and recorded on an accrual basis. - Source data: Broadly adequate; need to implement additional surveys to capture data missed due to new ITRS threshold (e.g., services and remittances). - Assessment of source data: Consistency checks performed; monthly reports of result editing and verification produced to inform data collection. - Statistical techniques: Data compilation procedures are sound with sufficiently robust adjustments. - Assessment and validation: Merchandise trade data for major partners monitored by BOJ; bilateral reconciliation conducted by Customs and Tariff Bureau of MOF; BOJ uses BIS and IMF Coordinated Portfolio Investment Survey data for validation. - Revision studies: Revision studies are conducted. - Periodicity and timeliness: Exceed SDDS requirements. - Consistency: Internal consistency assured by applying same concepts across monthly, quarterly, and annual statistics; statistics not entirely reconcilable over time because retroactive revision is conducted only occasionally; reconcilable with other statistical frameworks though differences with national accounts arise from classification between income and services. - Revision policy and practice: - Monthly balance of payments data are preliminary at first release; final data disseminated about three months after the end of the reference quarter. - Final data are not revised on the view that revisions may affect credibility of the statistics. - No specific studies of routine revisions are made public. - Data accessibility and metadata: Statistics disseminated by MOF (under MOF and BOJ signature) consistent with BPM5 components; disseminated in hardcopy and on websites; BOJ provides more detailed breakdown approximately three weeks after release in Balance of Payments Monthly; data released simultaneously to all interested parties per preannounced schedule; detailed description of concepts, sources, and methods posted on BOJ website. - Assistance to users: Contact number and e-mail identified on MOF and BOJ websites; BOJ arrangements ensure queries are properly directed; published document information available on BOJ website; wide range of data downloadable free of charge. *Source: _cr06115 - 2. Methodological soundness* ### 21. Based on the review of Japan’s statistical practices, discussions with the data-producing ### _cr06115 - 21. Based on the review of Japan’s statistical practices, discussions with the data-producing ### Cross-cutting recommendations - In line with the more general findings of the Committee for Promotion of Economic and Social Statistics, take steps to improve overall coordination of macroeconomic statistics. - Consider introducing legal authority to disseminate statistical information along the lines of that used in other countries. - Further formalize the delineation between the statistical and nonstatistical functions within data-producing agencies to maintain their strong traditions of impartiality. - Further promote staff statistical expertise through the review of current rotation practices. - Conduct revision studies to enhance the reliability of preliminary estimates and publish these studies. - Promote data consistency across the datasets, by systematizing consultation with data-producing agencies on methodological and data developments, both at the source data and statistical outputs levels. ### National Accounts (findings and recommendations) - Review the current level of staffing of the national accounts data given that it is somewhat low for operational and developmental purposes. - Further develop quarterly accounts from the production side with the view to disseminate these data. - Enhance the coverage of source data for service industries, in general, and of short-term statistics for the quarterly accounts. - CAO: Conduct revision studies for the quarterly expenditure accounts and publish the outcomes. - CAO: Promote data consistency across datasets via the proposed “Control Tower” for government statistics and existing coordination frameworks (e.g., “the Study Meeting for Development of Statistics on Service Industries” and “the Expert Meeting for Development of Statistics related to National Accounts”). - Treat the consumption tax in valuation according to the net approach as recommended in the 1993 SNA—CAO will consult with relevant agencies about data availability and conduct feasibility studies. - Enhance coverage of source data for service industries and develop a reliable, up-to-date sampling frame of establishments (business register). - Provide more detail in the quarterly release for household consumption expenditures (COICOP group, durable/nondurable) and on capital investment by type; CAO plans to publish more detailed data in the near future and has begun a comprehensive study on refinement of concepts and data compilation by type of assets. ### Consumer Price Index (findings and recommendations) - Expand the scope of the CPI to include one-person households with concomitant developments in the source data for doing so; an index based on the basket of total households (including one-person households) is compiled for reference annually beginning in the 2000 revision. - A monthly index for total households is scheduled to be included in the indices for reference in the 2005 revision. - Review the sample design to validate outlet selection—however, framework for sampling should rely on more fixed constructions (e.g., regional demarcations) because outlets are established or demolished frequently in Japan. - Include the price of items “on sale” for seven days or less: current practice excludes items on sale for seven days or less because collected prices represent monthly prices and short sales may not be representative. - Review the use of the ratios of the averages as the main formula at the elementary level; consider a Lowe index as the fixed basket index at the higher level of aggregation; consider more frequent updating of weights. - Either the Dutot or the Jevons is acceptable as the formula at the elementary level because specifications are tight and products/services in each item are homogeneous or nearly so. - The chain-weighted index with annually updated weights has been in effect since (text truncated in source). ### Producer Price Index (recommendations) - Replace output priced at the primary wholesaler with ex-factory prices. - Consider the use of a more systematic approach for the sample of establishments. - Review the treatment of temporarily missing items, seasonal goods and services, and quality adjustment procedures. - Replace the average of relatives with a geometric mean at the elementary level. - Consider a Lowe index as the fixed basket index at the higher level of aggregation; consider the more frequent updating of weights. ### Government Finance Statistics (recommendations) - Specify the responsibility for collecting, processing and disseminating GFS and develop working arrangements for data sharing and coordination among the relevant data producing agencies. - Compile an integrated set of statements (operating statements, statement of other flows, and balance sheet) for the general government according to international statistical guidelines, and disseminate widely. - Compile a monthly statement of sources and uses of cash for budgetary central government, and disseminate in accordance with SDDS requirements. - Improve the timeliness of source data for local government statistics. - Bring the timeliness of general government sector accounts and the periodicity and timeliness for central government operations into line with SDDS requirements. ### Monetary Statistics (recommendations) - Develop a Depository Corporations Survey by expanding the coverage of the Monetary Survey to include Japan Post and cooperative financial institutions. - Collect source data on commercial banks and other deposit-taking institutions in a format that fully meets international statistical guidelines. - Disseminate monetary statistics within a one-month period from the end of the reference month. ### Balance of Payments Statistics (recommendations) - While the MOF is responsible for the balance of payments data, identify the BOJ as the compiler of data to avoid the impression of MOF involvement in the data compilation. - Adopt more detailed sectorization to further conform to BPM5. - Develop additional sources for the data lost with the introduction of the new ITRS threshold, for example for trade in services. - Review the revision policy that does not permit changes to the data once they are finalized; and publish revision studies. ### Periodicity, Timeliness and Coverage (selected entries from Table 4) - National accounts: Coverage Yes; Periodicity SDDS Q; Japan Q; Timeliness SDDS 1Q; Japan 6W — "Timeliness exceeds SDDS requirements." - Production Index/indices: Coverage Yes; Periodicity SDDS M; Japan M; Timeliness SDDS 6W (1M encouraged); Japan NLT 1M — "Timeliness exceeds SDDS requirements." - Employment: Coverage Yes; Periodicity SDDS Q; Japan M; Timeliness SDDS 1Q; Japan NLT 6W — "Periodicity and timeliness exceed SDDS requirements." - Consumer price Index: Coverage Yes; Periodicity SDDS M; Japan M; Timeliness SDDS 1M; Japan M. - Producer price Index: Coverage Yes; Periodicity SDDS M; Japan M; Timeliness SDDS 1M; Japan 8 WD — "Timeliness exceeds SDDS requirements." - General govt. Operations: Coverage Yes; Periodicity SDDS A; Japan A; Timeliness SDDS 2Q; Japan 8M 20D — "Japan employs a timeliness flexibility option on general government operations data." - Central govt. operations: Coverage Yes; Periodicity SDDS M; Japan A; Timeliness SDDS 1M; Japan 8M — "Japan employs periodicity and timeliness flexibility options (data published every November)." - Analytical accounts of the banking sector: Coverage Yes; Periodicity SDDS M; Japan M; Timeliness SDDS 1M; Japan 6-8 WD (money stocks); 6-8 WD (loans and deposits (total credit)); 6-7W (banks’ external assets and liabilities); 6-7W (credit to government and to the private sector). - Balance of payments: Coverage Yes; Periodicity SDDS Q; Japan M; Timeliness SDDS 1Q; Japan 1 M and 8 WD — "Periodicity and timeliness exceed SDDS requirements." - Reserves template / Official reserve assets: Coverage Yes; Periodicity SDDS M (W recommended); Japan M; Timeliness SDDS 1W for official reserve assets; Japan 1M (1W encouraged for the reserves template); NLT 5WD — "Timeliness exceeds SDDS requirements." - Merchandise trade: Coverage Yes; Periodicity SDDS M; Japan M; Timeliness SDDS 8W (4–6W encouraged); Japan 3-4W — "Timeliness exceeds SDDS requirements." - International Investment position: Coverage Yes; Periodicity SDDS A (Q recommended); Japan A 3Q (1Q encouraged); Timeliness Japan 5M — "Timeliness exceeds SDDS requirements." - External debt: Coverage Yes; Periodicity SDDS Q; Japan Q; Timeliness SDDS 1Q; Japan 10-11W — "Timeliness exceeds SDDS requirements." - Exchange rates: Coverage Yes; Periodicity SDDS D; Japan D; Timeliness SDDS 1/ D; Japan 1/ D. - Addendum: Population: Coverage Yes; Periodicity SDDS A; Japan M; Timeliness Japan 1M. *INTERNATIONAL MONETARY FUND — JAPAN — Report on the Observance of Standards and Codes (ROSC)—Data Module — Response by the Authorities — March 9, 2006* ### 1975. Changing the consumption pattern does not require much, since the difference between ### _cr06115 - 1975. Changing the consumption pattern does not require much, since the difference between ### Consumer Price Index (CPI): findings and planned releases - The difference between the official CPI and the chain-weighted index is only 0.4 in 2005 based on the 2000 bases. - Absolute values of differences between the official index and the chain-weighted index have shown to be less than 0.5 in the next base year, five years after the current base year. - Monthly chain-weighted index (in general, excluding fresh food) will be released in the 2005 revision to meet various user requests. - Chain-weighted indices have shortcomings, notably inconsistency in aggregation; for the CPI this inconsistency is serious because elements of changes must be clarified every month. - In most Western countries chain-weighted indices are regarded as official indices since the base year has been fixed for some time. In Japan the base year is revised every five years, and revised indices are released within eight months after the base year; therefore differences between fixed-weighted and updated-weighted indices are less. - Recommendation: Review the treatment of temporarily missing items, seasonal goods and services, and quality adjustment procedures. - Status: The CPI in Japan is compiled with methodologies accepted by the CPI Manual for these treatments, but quality adjustment methodologies should be improved given diversification of goods and services. ### Corporate Goods Price Index (CGPI): objectives, methodology, and responses to recommendations - Primary objective: “to investigate price developments that reflect most sensitively the supply and demand conditions of individual goods.” This objective is inherited from the Wholesale Price Index (WPI). - With the revision to the 2000 base, the BOJ set a price investigation rule giving priority to producer prices: when wholesalers’ and producers’ prices equally reflect supply and demand, producer prices are chosen in principle; if wholesalers reflect supply and demand and producer prices remain rigid, wholesalers’ prices are adopted. - Rationale: (1) Meet the CGPI primary objective; (2) meet users’ needs to utilize the CGPI as a deflator (a request received with the 2000 base revision). - Japanese trade practices: in some industries producer prices are stiff and wholesalers adjust supply/demand; if trade practices change so producer prices reflect supply/demand in all industries, CGPI concept would coincide with PPI. - Recommendations and BOJ responses: - Consider establishing a forum where users are regularly consulted. - BOJ: Listens to users’ opinions, presents revised base-year plans publicly and collects comments; has not received requests to establish a forum but will consult users about the need. - Replace output priced at the primary wholesaler with ex-factory prices. - BOJ: Adopted producer-price priority rule as above; will adopt wholesalers’ prices where appropriate. - Reduce the time lag between the survey period for weights and their adoption; consider more systematic sampling of establishments. - BOJ: Reducing the time lag is difficult due to limitations in availability of source data. BOJ has invested substantially to improve sampling and will continue, but sees little room for immediate improvement given current source-data limits. - Review treatment of temporarily missing items, seasonal goods and services, quality adjustment procedures, and composition of commodities for which averaging is used. - BOJ: Examined PPI manual imputation methods and judges expansion risks exacerbating errors due to differing revision frequencies and time periods among goods. Current method deemed most appropriate. For temporarily missing seasonal items, annual averages are used as substitute though they cause systematic change in first and last season periods; BOJ believes this preserves long-run accuracy. - Replace at the elementary level the average of relatives with a geometric mean, or for strictly homogeneous commodities, a ratio of averages; consider a Lowe index at higher aggregation and more frequent updating of weights. - BOJ: Introduced averaged prices from the 2000 base after comparison tests; averages adopted only when more accurate than other samples. BOJ does not believe geometric mean only at elementary level is best. To address bias, BOJ began releasing a chain-weighted index with the 2000 base and will research the Lowe index as a future candidate. - Methodological note: The smallest unit of the CGPI is “commodity,” designed to be identical and not further divisible in principle, maintaining some homogeneity at the elementary level. - BOJ view on PPI manual and international assessment: - BOJ requests IMF acknowledge that assessment criteria change over time and cross-country comparisons can be inappropriate; proposes the PPI manual allow flexible options to accommodate unique country customs/situations. - Corporate Service Price Index: - BOJ will include the Corporate Service Price Index in Japan’s SDDS metadata on the IMF’s DSBB and on Japan’s National Summary Data Page, along with the Corporate Goods Price Index. ### Government Finance Statistics (GFS): recommendations and agency actions - Recommendations: - Specify responsibility for collecting, processing and disseminating GFS and develop working arrangements for data sharing and coordination among relevant agencies. - Compile an integrated set of statements (operating statements, statement of other flows, and balance sheet) for the general government according to international statistical guidelines, and disseminate widely. - Compile a monthly statement of sources and uses of cash for the budgetary central government, and disseminate in accordance with SDDS requirements. - Improve timeliness of source data for local government statistics. - Bring timeliness of general government sector accounts and periodicity/timeliness for central government operations into line with SDDS requirements. - Agency responses/actions: - CAO will examine feasibility of extending general government accounts in national accounts and earlier release through consultation with data-producing agencies. - MOF has disseminated several monthly reports about central government fiscal situation; recognizes these reports basically meet SDDS requirements and will deliberate on dissemination of metadata in line with SDDS periodicity and timeliness. - MIC: outline data for local government statistics disseminated about a month after the end-August deadline for local governments to submit settlement accounts; this was a significant timeliness improvement relative to fiscal year 2001. ### Monetary Statistics: coverage, data collection, and timeliness - Recommendation: Develop a Depository Corporations Survey by expanding coverage of the Monetary Survey to include the Japan Post and cooperative financial institutions. - Current: Monetary Survey does not include Postal Savings, etc. It aims to show relationship between changes in M2 + CDs and assets/liabilities of financial institutions. - BOJ plans: Revise Money Stock statistics in accordance with on-going reforms such as privatization of the Japan Post; conduct a periodical revision of broadly defined liquidity in the summer of 2007. BOJ will consider expanding Monetary Survey coverage if necessary, taking into account statutory positions and reporting burdens. - Recommendation: Collect source data on commercial banks and other deposit-taking institutions in a format fully meeting international guidelines. - BOJ: Important to revise monetary and financial statistics such as Flow of Funds Accounts to trace economy accurately amid structural financial changes; prioritize revision works and consider survey coverage/items with consideration to reporting burdens. - Recommendation: Disseminate monetary statistics within a one-month period from the end of the reference month. - Current practice: Monetary Survey is disseminated a month and ten business days after the reference month, rather than within a month. BOJ does not plan to review this timeliness as source-data availability is limited. The "SDDS Guide" approves this timeliness as “relevant” for analytical accounts of the banking system owing to extensive bank branch network. ### Balance of Payments (BOP): compilation, sectorization, sources, and revision policy - Recommendation: While MOF is responsible for BOP data, identify BOJ as the compiler to avoid impression of MOF involvement in data compilation. - Response: MOF and BOJ will consider adding a note “aggregated/estimated by the Bank of Japan” at data release to clarify MOF is not engaged in aggregation/estimation. However, MOF is legally responsible for BOP statistics and for designing legal framework of data collection; streamlining of data collection procedures can be considered. - Recommendation: Adopt more detailed sectorization to further conform to BPM5. - Response: BOJ, with MOF cooperation, will consider reclassifying public financial institutions out of the public sector and separating monetary authorities from the public sector when implementing the next IMF BOP Manual edition (BPM). - Recommendation: Develop additional sources for data lost with the new ITRS threshold, e.g., for trade in services. - Response: BOJ and MOF will review data collection system, including expansion of survey-type data, when implementing next BPM. Data sources for workers’ remittances have been widened since January 2006. - Recommendation: Review the revision policy that does not permit changes to finalized data; publish revision studies. - Response: BOJ and MOF will review the revision policy and consider publishing further revision studies when implementing the next BPM edition. ### Document and assessment context - Document: Detailed Assessments Using the Data Quality Assessment Framework (DQAF), prepared by the Statistics Department; Approved by William E. Alexander and Wanda Tseng. - Date on cover: March 9, 2006. - The report contains detailed dataset assessments for National Accounts, CPI, PPI, GFS, Monetary Statistics, and Balance of Payments Statistics, and includes DQAF generic framework appendices. *International Monetary Fund — Detailed Assessments Using the Data Quality Assessment Framework (DQAF), March 9, 2006* ### 0. Prerequisites of quality ### 0. Prerequisites of quality ### 0.1 Legal and institutional environment - 0.1.1 The responsibility for collecting, processing, and disseminating the statistics is clearly specified - The Law Establishing the Cabinet Office (Cabinet Establishment Law of July 16, 1999) provides that the production of national accounts data is within the jurisdiction of the Cabinet Office (CAO). - The Economic and Social Research Institute (ESRI), an “extraordinary organ” in the organization chart of the CAO, conducts compilation via its Department of National Accounts (DNA). - The ESRI publishes the Preliminary Quarterly GDP Estimates and the Annual Report on National Accounts, and compiles and publishes the Diffusion Index and other business statistics. - National accounts are regarded as second-tier statistics in Japan because they use data compiled by other agencies. - Survey-collected data in Japan are subject to the Statistics Law and/or the Statistical Reports Coordination Law and are classified as “designated statistics,” “notified statistics,” or “approved statistics.” Designated statistics carry stronger legal restrictions, such as penalties for noncompliance. - Statistical preparation operates under a decentralized system where the relevant ministry or agency implements surveys within its public administrative jurisdiction. - 0.1.2 Data sharing and coordination among data-producing agencies are adequate - DNA maintains formal and informal contacts with source data-producing agencies to promote consistency with international standards and improve coverage and accuracy. - DNA uses administrative data sources only to a very limited extent because of legal and confidentiality constraints. - Regular meetings occur with the Statistics Bureau of the Ministry of Internal Affairs and Communications (MIC). - A working group with members from all involved parties meets every two weeks on a permanent basis to prepare the five-yearly input-output table; this is a joint project by ten ministries and agencies, coordinated by the Statistics Bureau of MIC. - The most recent five-yearly input-output table was published by MIC in March 2004 for 2000 (English hardcopy version in June 2005). - The June 2003 agreement “New Directions in the Development of Government Statistical Services” promotes contacts and arrangements across data-producing agencies. - In November 2004, the Cabinet Office established the Committee for Promotion of Economic and Social Statistics to follow up on the Cabinet’s June 2004 decision “Basic Policies for Economic and Fiscal Policy Management and Structural Reform 2004.” - The Committee’s report Structural Reform of Government Statistics (June 2005) identified measures for specific statistical programs, including improving national accounts and establishing closer communication and coordination among national accounts and basic statistics departments. - 0.1.3 Individual reporters’ data are to be kept confidential and used for statistical purposes only - DNA is not involved in primary data collection except for two surveys it conducts under the Statistics Law (see 0.1.4); most source data are received as aggregates from other agencies. - Confidentiality provisions are governed by the Statistics Law and related ordinances: - Article 14: all information collected through official surveys will be kept confidential. - Article 15: no person shall use individual “designated statistics” questionnaires for nonstatistical purposes unless approved and made public by the minister. - Unauthorized publication, communication, or use of confidential information by staff may result in imprisonment not exceeding one year or a fine not exceeding one hundred thousand yen. - Survey questionnaires state information is to be used only for statistical purposes. - Government Official Act and Act for Protection of Personal Data Held by Administrative Organs also apply. - Access to individual data is restricted to staff who require it for statistical duties; staff review dissemination outputs to prevent indirect disclosure. - 0.1.4 Statistical reporting is ensured through legal mandate and/or measures to encourage response - Two surveys conducted by DNA: - Basic statistics for nonprofit organizations (NPO) — no other statistics exist for this. - Expenditures of local governments — sample primarily of big cities; used exclusively for national accounts. - These two DNA surveys are not “designated statistics” and therefore have no legal mandatory reporting. - The majority of source data collected by other agencies fall under the Statistics Law as “designated statistics.” - Article 5: government or authorized bodies may oblige persons/juridical persons to answer survey questionnaires. - Article 19: respondents could be liable for imprisonment not exceeding six months or a fine not exceeding one hundred thousand yen for refusal, false answers, obstructing responses or field workers, or falsifying results. - The penalty mechanism exists but is rarely employed. ### 0.2 Resources - 0.2.1 Staff, facilities, computing resources, and financing are commensurate with statistical programs - Total number of staff in DNA is 45. - About 60 percent have an academic degree. - Staff rotation system: many graduate staff remain about two years; DNA attempts to retain qualified staff longer with limited success. - Approximately 30 staff are fully allocated to tasks related to the current compilation work. - The remaining 15 staff deal with capital stock calculations, regional accounts (mainly coordination and the annual publication on regional accounts), and other tasks. - None are explicitly allocated to research to improve the accounts; developments are undertaken by operational staff as side activities. - Few staff of long professional experience are mainly at the level of division chiefs. - Salary system: National Personnel Authority secures a uniform salary system; CAO tends to have relatively more high-grade positions; salary levels seen as adequate. - Office facilities: total office area for the 45 staff members is 360 square meters consisting of one single room where the whole staff work. - Present mainframe-based computing systems date from the 1980s, contain several “black boxes,” and present language-related data-processing challenges in Japan. - Migration plan: mainframe systems expected to migrate to PC network/open systems (e.g., UNIX machines) over about seven years; migration sequence: quarterly accounts, annual accounts, then other systems such as the rebasing system. - 0.2.2 Measures to ensure efficient use of resources are implemented - No current record tracks time spent compiling types of national accounts statistics or resources used and productivity developments. - Work organization follows a team approach allowing flexible staff movement; work processes are reviewed as necessary. - A comprehensive review of the legacy system (including computing resources and work processes) is taking place across government agencies; CAO participates. - ESRI’s Division for Information Systems and Public Affairs (Department of Information and Research Cooperation) develops and manages hardware resources of ESRI. ### 0.3 Relevance - 0.3.1 The relevance and practical utility of existing statistics in meeting users’ needs are monitored - Advisory Committee for the National Accounts (ACNA) provides information on user needs and relevance; up to 22 independent external experts as members. - The full ACNA is supposed to meet about once a year but met three times in 2004; main activity occurs in four subcommittees: - (1) benchmark revisions (transition from 1995 to 2000 as benchmark year) - (2) FISIM - (3) fixed capital formation and capital stock - (4) system of statistics (mainly dealing with data providers) - Two subcommittees usually meet each month; policy department staff may attend as observers. - In March 2005, ESRI hosted a conference “Next Steps for Japanese SNA: Towards More Accurate Measurement and More Comprehensive Accounts.” - DNA staff regularly participate in meetings and seminars by the United Nations, OECD, and others; DNA usually participates in Canberra II Group meetings but participation in the ongoing SNA updating process has been limited due to resource restrictions. - An “Estimation Review” process was initiated in April 2005 to solicit methodological comments via the website; only a few comments have been received so far. ### 0.4 Other quality management - 0.4.1 Processes are in place to focus on quality - Annual objectives list that DNA will produce high-quality data objectively; management emphasizes dimensions of data quality at staff meetings and through on-the-job training. - Under policy evaluation, each government agency must: (1) specify objectives/targets, (2) produce a policy evaluation implementation plan, and (3) assess achievements and publish self-assessment results. - DNA’s target is to improve the quality of the national accounts; DNA conducted self-evaluation in August 2005 and published results on the CAO website. - 0.4.2 Processes are in place to monitor the quality of the statistical program - DNA conducts systematic review of the quality of statistics from April to September each year to prepare annual results. - Complete reviews are conducted during benchmark revisions every fifth year. - 0.4.3 Processes are in place to deal with quality considerations in planning the statistical program - Planning process occurs from January to August for the next year; planning is based on review meetings where ESRI outlines a “task list” and requests resources during budgeting. - ESRI started strengthening collaboration between its research section and DNA to improve quality of national accounts. - During budgeting, DNA explains program contents and necessity to financing authorities; budgets are drawn up annually but DNA can conduct statistical projects beyond one year. ### 1. Assurances of integrity ### 1.1 Professionalism - 1.1.1 Statistics are produced on an impartial basis - CAO recognizes tradition and culture of professionalism as essential to credibility. - ESRI listed under “extraordinary organs” to indicate distance from policy-oriented agencies; professional independence is argued as long tradition though the Law Establishing the Cabinet Office contains no formal provision guaranteeing ESRI/DNA professional independence. - ESRI president is usually a highly regarded academic in economic or social sciences; appointment is for a two-year renewable term; the incumbent is the third since ESRI’s creation in 2001. The president has final decision on statistical matters under ESRI competence and may see and formally approve statistical data before release. - Independence reinforced by ESRI’s strict information control; prior ministerial access to data is only minutes before scheduled release in connection with a press briefing of the quarterly accounts. - Professionalism promoted via training courses, on-the-job training, participation in seminars/workshops, and access to professional literature. - ESRI publication channels include the Discussion Paper series and the National Accounts Quarterly; Discussion Paper series is subject to internal review. - ACNA established in 1974; members are independent external experts nominated by ESRI president and appointed by the Prime Minister. ACNA contributes to objectivity via frequent subcommittee meetings and close contact with national accounts work. All discussion papers and minutes related to these committees are made public on the ESRI website. - Limited staff resources constrain Japanese participation in international national accounts cooperation; international cooperation provides incentives important for staff retention and professionalism. - 1.1.2 Choices of sources and statistical techniques as well as decisions about dissemination are informed solely by statistical considerations - Choice of source data and techniques is based on measurement objectives and data requirements; involvement of ACNA and subcommittees safeguards decisions. - Specific release dates of quarterly preliminary estimates are announced in a release calendar on ESRI website and determined by timing of relevant source data. - Timeliness of preliminary quarterly estimates releases (6 weeks after the reference quarter) reflects a balance between timeliness and reliability. - 1.1.3 The appropriate statistical entity is entitled to comment on erroneous interpretation and misuse of statistics - DNA provides explanatory materials to the public and briefs the media on quarterly data releases. - DNA monitors media coverage in cooperation with the Public Relations Office; in case of misinterpretation or misuse, ESRI may formally request a refutation; the ESRI president decides whether to request a refutation. - Examples of public explanations published on the ESRI website include: “The recent opinions on Japan’s GDP figures and our approach” and “For promoting understanding of Japan’s GDP figures–some comments on recent opinions on Japan’s GDP figures” (published in 2000). *Source: _cr06115 - 0. Prerequisites of quality* ### 1.2 Transparency ### 1.2 Transparency ### 1.2.1 Terms and conditions for statistics collection, processing, and dissemination - The particular legal conditions under which the national accounts are produced (compiled and disseminated) are not made available—neither with the release of national accounts data nor on the ESRI website. - Laws and documents relating to source data for compiling national accounts statistics are posted on the relevant government department websites and/or included in published collections of laws and regulations. - Copies of the relevant laws are available from the Government Publications Service Center. - Several documents in various degrees of detail are available to explain the System of National Accounts in Japan; documentation on compilation methods, release schedule, and other material are posted—often in great detail—on the ESRI website. - The ESRI website and the DNA statistical publications indicate where users can find more information; contact points are clearly shown on the ESRI website and in each publication. ### 1.2.2 Internal governmental access to statistics prior to release - The schedule announced on the day of the data release (from August 1999) specifies who has access to data prior to the release; this schedule is well-known and available in print to the press and other interested parties but is not posted on the ESRI website. - On the day of the release: - A briefing is held for members of the Press Club at 8:30–8:50 a.m.; reporters are not allowed to leave the room or engage in any form of external communication until the official release of the data at 8:50 a.m. - A briefing is given to representatives of the ministers who also receive the data minutes before the scheduled release. - This prior access is only given for the first version of the preliminary quarterly accounts. - For the second preliminary version, a press briefing starts at 9:00 a.m. - An economics minister or a deputy will comment on the data at a press meeting usually held at 10:00 a.m., only in connection with the release of the first preliminary version. - Usually a staff member from the DNA will be available in the press room most of the morning to respond to questions from reporters. ### 1.2.3 Identification of statistical products - ESRI statistical products are usually marked with only the logo of ESRI or the logos of both ESRI and CAO. - The text version of national account releases is always indicated as coming from the Department of National Accounts, Economic and Social Research Institute, Cabinet Office. - The major Annual Report on National Accounts has both the logos of ESRI and CAO on the front cover, whereas a print from the ESRI website of a quarterly release has only the ESRI logo. - Documentation and prints of individual tables from the ESRI website will often have a more limited identification. - There are no cases where DNA has been involved in joint publications that also contain policy interpretations. - DNA requests attribution when its statistics are used or reproduced. ### 1.2.4 Advance notice of major methodological and source-data changes - Advance notice is given to the public usually on the ESRI website. - More comprehensive changes (example: the introduction of the System of National Accounts 1993 (1993 SNA)) in Japan national accounts are also announced in articles and news releases. - Example: the change to chaining methods in the volume data in December 2004 was announced two months in advance. - In such cases, the ACNA is often consulted; discussions that precede the changes are open to the public, so users will often be aware of pending changes long before implementation. ### 1.3 Ethical standards ### 1.3.1 Guidelines for staff behavior - All civil servants are subject to the National Public Service Ethics Law (Law No. 129 of 1999). - The law provides for the establishment of the National Public Service Officials Ethics Code (April 2000), creating a standard for ethical behavior for all national public officials; the rules are general for government employees, not specific to statistical staff. - Purpose of the law: ensure trust of public servants, deter activities that could create suspicion or distrust about the fairness of duties, and recognize that public servants are servants of the whole nation. - The ethics code requires employees to: - always make sure not to give unfair treatment to the public; - distinguish between private and public affairs; - not take action that may create public suspicion or distrust; and - work in the public interest. - The code mandates that government employees never use their positions for individual gain for themselves or any organization they belong to. - Heads of ministries and government agencies can develop agency-specific ethics instructions. - According to the Public Service Code, each agency must submit a quarterly report to the National Public Service Ethics Board about any incidents that may come under the code. - For national accounts statistics, ESRI has established the rule of information control (see 1.1.1.), which also deals with internal access to data during the compilation process. - Management acknowledges its status as a role model and is vigilant in following the standards; staff are reminded periodically of the National Public Service Ethics Law and the National Public Service Officials Ethics Code. *Source: _cr06115 - 1.2 Transparency* ### 3. Accuracy and reliability ### 3. Accuracy and reliability ### Overview - The accuracy and reliability dimension is applied to annual and quarterly gross domestic product estimates by activity and expenditure categories, evaluating both current price estimates and volume measures. - Quarterly accounts face greater source data weaknesses, especially for the first preliminary version released about six weeks after the reference quarter. ### 3.1 Source data #### 3.1.1 Source data are collected from comprehensive data collection programs that take into account country-specific conditions - Japan’s decentralized data collection program is comprehensive with good coverage in many fields but has weaknesses for quarterly and annual national accounts compilation. - Short-term and structural statistics are well developed for traditional areas (e.g., agriculture, manufacturing), but gaps remain, especially for many service industries. - Insufficient timely short-term statistics undermine the first preliminary quarterly accounts (released about six weeks after the reference quarter). - The Structural Reform of Government Statistics (June 2005) identifies problems; measures include a broad review of data sources to improve the national accounts database. - Annual enterprise/establishment statistics: - Business register: “Statistical Frame of Establishments and Enterprises” located in MIC; updated every five years, most recently in 2004, based on an “establishments and enterprises census” where enumerators physically identify workplaces and register addresses, activity code, legal organization, and employment. - The register is not ongoingly updated between censuses. - Local government agencies may maintain their own registers updated for specific needs without broader access. - MOF has direct access to tax records when conducting the “quarterly financial statement statistics of corporations by industry.” - Efforts underway to enhance effectiveness of the business register. - Data for compiling annual accounts: - Current annual data collection is generally sufficient for annual national accounts aggregates (output, intermediate consumption, fixed capital formation, changes in inventories). - Manufacturing: detailed data available from the “Census of Manufacturers” (METI). - Service industries: source data from METI’s “Survey of Selected Service Industries” are generally insufficient. - Price statistics: - Price indices are adequate and timely for volume estimates. - Available indices include CPI, corporate goods price index (CGPI), corporate service price index (CSPI), and price indices for exports and imports. - Hedonic indices for mainframe and personal computers are compiled and comparable to other countries. - Individual price indices allow volume estimates at an approximately 400 product level in both quarterly and annual accounts. - Government finance statistics: - Good coverage statistics for government are available only with a lag; various sources used for quarterly and preliminary annual data. - Total government estimates derived as the sum of separate cost components: intermediate consumption, compensation of employees, consumption of fixed capital, and taxes on production less sales of products. - DNA carries out a special (non-published) survey on local government used mainly for cost composition; totals obtained from budget data and trend extrapolations. - Central government estimates use number of government employees (surveyed informally) and wage information; major parts estimated from monthly records of payments for medical care, nursing care, etc. - Ratios of cost components often based on constant proportions or trend extrapolations. - For final data at the end of the second year after the reference year, comprehensive data for central and local government and social security institutions are available, providing a good basis for annual benchmarking. - Administrative data usage: - Administrative data from the Financial Services Agency are used. - Exploitation of other administrative data is very limited due to strict confidentiality rules for agencies (e.g., tax authorities). - Periodic surveys/censuses: - Comprehensive large-scale surveys: Population Census and Establishment and Enterprise Census every three to five years (Establishment and Enterprise Census last conducted for 2004). - About 50 special surveys conducted in connection with five-yearly input-output tables. - Some service industry surveys every three years; National Survey of Family Income and Expenditures every five years. #### Household budget surveys - System consists of three related surveys: - Family Income and Expenditure Survey (FIES): monthly, sample size 8,000 households. - Survey of the Household Economy: monthly, sample size 33,000 households. - National Survey of Family Income and Expenditures (NFIE): five-yearly (years ending on 4 and 9), sample size about 53,000 households; benchmark survey. - FIES is timely enough for use in the first preliminary quarterly accounts. - Survey of the Household Economy introduced to better cover infrequently bought goods and services; questionnaire asks for 64 items of this kind (including rent and repair of dwellings). - For national accounts, Survey of the Household Economy replaces 41 corresponding FIES items to improve coverage and reliability. - Adjustments made for insufficient coverage of single person households (estimated to account for about 28 percent of all households in Japan in 2000). - Data are benchmarked using correction factors: ratio of expenditure per household from FIES to expenditure per household from NFIE is determined per item; current quarterly FIES amounts multiplied by this ratio to obtain “benchmarked” amounts. - Household survey details referenced to the DQAF on the Consumer` Price Index (CPI). #### Main sources and adequacy for annual and quarterly accounts (selected highlights) - Annual accounts (production and expenditure approaches): many industries classified as “Good,” some as “Satisfactory,” and several service categories as “Not satisfactory” (see detailed listing in source). - Quarterly accounts: - Production approach compiled by a 90 product classification (only market-products). - Quarterly adequacy varies widely across industries; examples: - Agriculture: Good. - Manufacturing: Good. - Construction: Not satisfactory. - Electricity: Good. - Wholesale and retail trade: Reasonable/good. - Finance (commission only): Reasonable. - Insurance: Not satisfactory. - Business services: Not satisfactory. - Hotels and other accommodations: Not satisfactory. - Expenditure approach: - Household final consumption expenditure: Family income and expenditure survey, Survey of the Household Economy, Monthly report on current population, and supply side estimates—“Reasonably good.” - Final consumption expenditure by government: Budget data, number of government employees (DNA estimate), payroll payments report, payments of care and social insurance, DNA special survey—“Not satisfactory.” - Private gross fixed capital formation in residential buildings: Statistics on building construction starts and estimates of average construction time—“Reasonable.” - Changes in inventories: Hearings of public inventory holders, extrapolation of annual data, inventories of rice, financial statement statistics, current survey of commerce—“Less than satisfactory, especially for the 1st preliminary estimate.” - Exports and imports: Foreign trade statistics and balance of payments statistics—“Good.” #### 3.1.2 Source data reasonably approximate required standards - Some source data are inconsistent with national accounts definitions, classifications, and requirements and are adjusted before use. - Coverage of total economic activities (in terms of value added) by all data sources is higher for final than for preliminary accounts. - In the final accounts, at least 80 percent of economic activities are covered. - Coverage is good for activities within the most important industrial groups (e.g., ISIC one-digit level), except for some service industries. #### 3.1.3 Source data are timely - Timeliness is broadly sufficient, especially for final annual accounts. - Timeliness lags for short-term data needed for the first preliminary estimate of the quarterly accounts and the first estimate of annual data. - When direct source data are missing, estimates are based on approximations, related indicators, and trend extrapolations. *Source: _cr06115 - 3. Accuracy and reliability* ### 3.2 Assessment of source data ### 3.2 Assessment of source data ### 3.2 Assessment of source data — key findings - Source data—including censuses, sample surveys, and administrative records—are routinely assessed for coverage, sample error, response error, and nonsampling error; results of assessments are monitored and made available to guide statistical processes. - DNA checks information received from data providers before use and refers to source agencies when necessary, usually on an informal basis. - Assessment possibilities are largely limited because data are received as aggregates; consistency over time and broad relationships to other data sources are the primary checks carried out. - Information on potential sources of errors, including response rates, is uneven. - Key limitations identified: - Absence of an updated data sampling frame (business register). - Potential gaps/duplication in data sources. - Differences in concepts and classification across data services. - These limitations make it difficult to assess the accuracy of several types of source data. ### 3.3 Statistical techniques — compilation and adjustments - 3.3.1: Data compilation employs sound statistical techniques to deal with data sources. - Repeated use of the same source data gives national accounts compilers insight into potential problems; data are sometimes adjusted by compilers. - Institutional distance from source producers limits adjustments; grossing-up procedures already applied by data producers are usually accepted. - 3.3.2: Other statistical procedures (adjustments, transformations, analysis) employ sound statistical techniques. - Data adjustments to balance supply and use employ sound statistical techniques. - For missing preliminary account source data, DNA uses estimation techniques such as trend extrapolation. - Decision not to include explicit estimates of informal, hidden, or illegal activities in the accounts. - Estimation methods for certain activities not covered by statistical source data (e.g., construction) may automatically include some informal activity. - Absence of tips limits the importance of the informal economy in Japan. ### Annual compilation system — integrated commodity flow and value-added approach - Structure and main features: - Annual system consists of a commodity flow system (determines final expenditures) and a value added system (determines value added by economic activities). - Commodity flow: - Total supply for domestic market of about 2,200 products calculated from output (no breakdown by economic activity), imports less exports, and trade and transport margins. - Allocation ratios from the latest benchmark input-output table distribute supply to intermediate consumption (no breakdown by economic activity), private household consumption, gross fixed capital formation, and changes in inventories. - Final uses are completely determined from the production side; result is GDP from the expenditure side with no residuals or balancing problem. - Use of detail and benchmarking: - High level of detail is essential; about half the products have only a single use in horizontal distribution. - Estimates from commodity flow method used as control totals to estimate output of each of 83 economic activities from the output matrix by economic activities (V Matrix). - Input matrix (U Matrix) separately estimated to obtain intermediate input by economic activities. - Value added by economic activities = output minus intermediate input. - Constituent items of value added estimated for each activity: compensation of employees, consumption of fixed capital, taxes on production and imports, subsidies, operating surplus, and mixed income. - Nonmarket services: - Commodity flow method and value-added method cover total market production; output of nonmarket services by government and NPISHs and their allocation to demand are separately estimated. - GDP balancing and discrepancies: - Sum of value added of industries, producers of government services, producers of private nonprofit services to households, and taxes and duties on imports, deducting consumption taxes for gross capital formation and imputed bank service charge, determine GDP from the production side. - Small statistical discrepancy usually exists between GDP from the production side and GDP from the expenditure side; the latter is assumed most accurate, and the difference is entered on the production side. ### Constant price calculations and deflation methods - Products aggregated from 2,200 to a 400 grouping for constant price calculations. - Volume estimate from production side based on double deflation. - Chaining approach used with the preceding year as base year and 2000 as a reference year (implying a Laspeyres chain for the volume estimates and a Paasche chain for the implicit price indices). - Reference series with a fixed base year (1995) are also compiled. - Proper methods used for volume estimates of trade margins and taxes on products. - Nonmarket activities of government and NPISHs deflated from the cost side. - Implicit deflator for household consumption largely consistent with the CPI, though different weight structures. - Procedures used for deflation are in line with international standards. - Both commodity flow and value-added methods rely to a relatively high degree on ratios from a benchmark year more than five years old; influence alleviated by detailed product classification and annual modification of input ratios based on current information. ### Specific compilation techniques and valuation rules - Owner-occupied dwellings valued as estimated rentals tenants would pay for similar accommodation. - Growing crops, standing timber, and livestock reared for food treated as work-in-progress. - Large construction projects made to order treated as fixed capital formation. - Consumption of fixed capital: - Private sector: estimated based on depreciation data from corporate surveys and other sources; capital stock not estimated by activity but only for institutional sectors, requiring an adjustment via a special revaluation account “others.” - Government: consumption of fixed capital for social infrastructure and software based on perpetual inventory method; for buildings, capital consumption calculated directly from building values. - Gross fixed capital formation compiled by type of assets and by institutional sectors (annual accounts only); quarterly accounts break down into private residential, private nonresidential, and public investments. - Changes in inventories compiled by type and institutional sector but not by activity. ### Specific issues of GDP compilation — treatments conforming to good practices - Government final expenditure excludes incidental sales. - Expenses of residents abroad included in household final consumption expenditure and in imports. - Expenses of nonresidents in the economy excluded from household final consumption expenditure and included in exports. - When items considered stores of wealth are produced or sold, they are covered in the commodity flow system; no special final expenditure category exists for this item, deviating from 1993 SNA. ### Quarterly compilation techniques — recent improvements and methods - Recent improvements: - 2002: supply side approach introduced to supplement exclusive reliance on final expenditure approach; other methodological and data source changes introduced though dissemination still limited to final expenditure data. - Latter part of 2004: chaining method for the volume estimates introduced. - Overall process: - Supply and use sides determined independently and brought to balance; quarterly techniques broadly mirror annual system in simplified form to reduce benchmarking adjustments. - Balancing in a commodity flow system containing 90 products (aggregates of 2,200 annual products). - Supply side quarterly estimation: - An indicator for quarter-to-quarter development of sales from domestic producers identified for each of the 90 products. - Benchmarking on annual data (aggregated from 2,200 to 90 groups) produces benchmark-to-indicator ratios (BI) to transform indicators into current-quarter estimates using a pro rata benchmarking where the BI factor for the most recent annually benchmarked quarter is applied. - Total supply for domestic market = domestic sales + imports − exports; revalued into purchasers’ prices using a simplified annual trade and transport margin system. - Changes in inventories of intermediate products and in trade deducted to obtain total available for domestic use. - Use side quarterly estimation: - Three categories: intermediate consumption, household consumption, and fixed capital formation. - Intermediate consumption ignored for final uses; horizontal allocation ratios from latest annual estimates used to estimate household consumption and fixed capital formation at the 90 group level. - Transformation matrices from latest annual estimates convert product-classified quarterly supply side estimates into: - 87-purpose classification for household consumption (COICOP). - Institutional classification for nonresidential investment (private nonfinancial corporations, financial institutions and households). - Independent use-side estimates: - Made for the 87-purpose household consumption groups and for the three nonresidential investments groups using identified indicators and the same benchmark method used for supply-side. - Integration of supply and use: - Supply and use estimates weighted together using weights reflecting relative variance. - Sampling errors calculable for use side (sample surveys); supply side variance harder to estimate. - Weights are in the interval 0.5 - 0.6 for the use estimates, implying almost equal weights. - Integration carried out according to the formula without regard to difference between two indicators; considerable differences may exist for nonresidential investments. - Categories excluded from general compilation process: - Activities where supply and use are two sides of the same estimate, e.g., rent, residential investments, medical and nursing care services, consumption and investment expenditures of general government and NPISHs. ### Quarterly volume estimates, deflation, benchmarking, and seasonal adjustment - Chain-linking method applied for volume estimates: previous year is base year for quarters of the following year. - Chain volume measures are Laspeyres type; chain deflator is Paasche type. - Year 2000 chosen as the reference year. - “Fourth quarter overlapping approach” used to ensure continuity when a new base year is introduced in estimates for the first quarter. - Volume estimates made at a more detailed level than released aggregates. - Price indices: - Price indices for the 87 COICOP groups and nonresidential investments obtained by applying product weights from latest annual data (400-group aggregation of 2,200 products). - Construction deflators estimated from price development in intermediate consumption and wages. - Government final consumption expenditures deflated from cost side using: - Intermediate consumption deflated using weights from 400 grouping in annual accounts. - Compensation of employees deflated with change of average public employees’ wage. - Consumption of fixed capital deflated with fixed capital formation deflator for general government sector. - Exports and imports deflated at same level of detail using IPI and EPI where relevant or unit values for goods. - Foreign trade in services deflated with CSPI or specially designed indices where applicable. - Benchmarking: - Both current price and volume estimates benchmarked on annual data whenever new annual data become available. - Benchmarking method: proportional Denton method for chain-linked series (as explained in the IMF Quarterly National Accounts Manual for chain-linked series) and pro rata method for others. - Seasonal adjustment: - Both current price and volume estimates seasonally adjusted using X-12-ARIMA. - ARIMA model selected is the same for nominal and real values to avoid effects on implicit deflators. - Period for seasonal adjustment: from the first quarter of 1994 to the most recent quarter. - Seasonal factors adjusted each quarter, causing seasonally adjusted values to be modified retroactively to 1994. - To retain bookkeeping identities, all seasonally adjusted aggregates are obtained as the sum of their underlying seasonally adjusted series (at the release level). - Preliminary quarterly estimates: - First and second preliminary estimates compiled using above method, but first version limited by data availability. - First version contains no fixed capital estimates from the demand side; changes in certain inventory categories based on trend extrapolations. - Where monthly data sources used, data for the third month sometimes missing and imputed by extrapolation or assumed unchanged. ### 3.4 Assessment and validation of intermediate data and statistical outputs - 3.4.1: Intermediate results validated against other information where applicable. - Intermediate data (before balancing) checked for temporal consistency and compared to developments in other data. - Such checks have led to changes in data, e.g., after detecting discontinuities in financial statement statistics for corporations by industry. - 3.4.2: Statistical discrepancies in intermediate data are assessed and investigated. - Commodity flow system and supply and use framework used to investigate discrepancies and adjust statistical output. - During annual estimation, a systemic procedure exists to routinely assess potential discrepancies in intermediate data. - 3.4.3: Statistical discrepancies and other potential indicators of problems in statistical outputs are investigated. - After compilation, a control procedure checks results. - Staff from five divisions of DNA involved in compilation explain results to the director of DNA and relate overall picture to various short-term statistics and macroeconomic data. - A statistical discrepancy between GDP by production activities and GDP by expenditure components is shown explicitly on the production side in the published tables. *Source: _cr06115 - 3.2 Assessment of source data (IMF PDF).* ### 3.5 Revision studies ### _cr06115 - 3.5 Revision studies ### Revision studies and practice (Section 3.5 and 4.3) - Differences between preliminary and revised data are routinely checked and used to review estimation methods or specific use of data sources. - No regular studies are conducted to investigate systematic biases in preliminary releases, but: - Revisions between the first and the second preliminary quarterly accounts since 2000 are described as "relatively modest," with the bias "slightly positive." - When the second preliminary quarterly estimates are disseminated: - A table shows the revisions compared to the first preliminary release. - Major reasons for the revisions are given as a one-page text attached to the published data. - For annual estimates, major factors of revisions are explained in the "Notice on Usage." - No analysis of differences between the revised and preliminary data is published. - Recommendation implied by the text: - It would be important to conduct revision studies routinely, as done in countries comparable to Japan. ### Timeliness and periodicity (Section 4.1) - Periodicity: - Quarterly (and annual) national accounts follow SDDS requirements. - Timeliness: - The first preliminary version of the quarterly GDP estimate is released about 6 weeks after the reference quarter. - The second preliminary version is released about one month later. - Both releases are within the SDDS timeliness requirement of three months. - The first annual estimates for the calendar year are disseminated about twelve months after the end of the reference year. - Data for the fiscal year (April-March) are disseminated simultaneously. - Revised (final) annual data are disseminated one year later, together with the next set of preliminary annual data. ### Internal consistency and reconciliation (Section 4.2) - National accounts internal consistency: - A statistical discrepancy between GDP from the production side and GDP from the expenditure side exists; in Japan’s annual national accounts it varies between -1 and +1 percent of GDP. - The discrepancy is entered on the production side; the official growth rate is derived from GDP(E). - Quarterly accounts are disseminated only as expenditure data, so the production–expenditure discrepancy does not arise for quarterly releases. - Sectoral consistency: - At the level of institutional sectors, net lending/borrowing in the capital accounts differs from the financial flows accounts, notably for nonfinancial corporations and households, with differences also for general government. - The BOJ compiles the flow of funds using 1993 SNA sector definitions, but sectoring may deviate from the DNA’s institutional accounts. - Value = volume × price framework: - GDP at current prices, volume measures, and deflators are consistent within the framework for both fixed base year volume data and chained volume data. - Quarterly data are consistent with annual data; concepts, definitions, and classifications are the same and quarterly data are benchmarked to annual data when new annual data become available. - Time series and methodological notes: - Consistent annual time series on a 1993 SNA basis are available from 1980 onwards in current prices and in constant prices with 1995 as the base year. - Chain linking introduction in 2004 for quarterly data was carried back only to 1994. - Comparable time series for 1955–80 are available on a 1968 SNA basis. - Detailed methodological notes and "Notice on Usage" on the ESRI website identify breaks, discontinuities, and adjustments. - Examples of explained unusual changes include the transfer of debt related to privatization of the national railways. - Reconciliation with other frameworks: - National accounts are reconcilable with Balance of Payments data and government finance data compiled by MOF. - Differences between the rest of the world account and the BOP are documented in System of National Accounts 1993 in Japan (Definitions and Concepts). - Some nonfinancial public corporations are classified differently in national accounts than in MOF data to follow 1993 SNA definitions; these differences are explained but tables of reconciliation are not provided. ### Revision schedule, identification, and documentation (Section 4.3) - Revision timing and finality: - Except for benchmark revisions and major methodological changes, annual data are final with the second release after about 21 months. - In principle, quarterly data become final with the same delay. - Seasonal factors are recalculated every quarter, so seasonally adjusted quarterly data (back to 1994) show minor changes with each new release. - Transparency: - Reasons underlying the revision cycle (availability of source data, timing with related datasets, timing for policy documents) are well explained. - Documentation of major revision reasons is included in the ESRI website publication of the second preliminary quarterly accounts; a similar procedure applies for annual data. - Major past revisions (e.g., introduction of the 1993 SNA) were carefully explained in System of National Accounts 1993 in Japan (Sources and Methods). - Identification of preliminary/revised status: - Preliminary quarterly estimates are clearly stated as preliminary at release (not marked with (*)). - The System of National Accounts 1993 in Japan (Sources and Methods) provides an overview of data revised with each release. - At release, it is clearly stated whether data are first preliminary, second preliminary, or revised annual estimates. - Revisions outside the regular cycle are explained in published materials and on the ESRI website "Notice on Usage." ### Accessibility, dissemination, and user support (Section 5) - Presentation and formats: - National accounts data are published in summary and more detailed forms on the ESRI website, with datasets at various levels of detail. - The Annual Report on National Accounts contains sections of varying detail and an introductory chapter summarizing development from 1980 to the most recent final year, shown in graphs; the report notes that a greater use of graphs could be made. - Annual hardcopy publications on input-output tables (24 and 87 industry tables) and regional accounts are released, including explanatory text; the latest annual input-output publication includes a CD with time series for 1995–2002. - Five-yearly input-output tables are published as a comprehensive 600-page hardcover publication with 240 pages of explanatory text and analytical applications; data are also electronically available from MIC. - Quarterly national accounts series are disseminated in seasonally adjusted form; adjustment factors are updated each quarter, based on the period since 1994, and new time series for this period are released each quarter. - Practically all annual national accounts data are compiled and disseminated for both the calendar year and the fiscal year. - Reference series for volume estimates with fixed base year (1995) are still compiled and disseminated after introduction of chaining methods. - Dissemination media and schedule: - Comprehensive/detailed statistics are disseminated in paper and electronic formats; current statistics and longer time series can be accessed through an electronic database on the ESRI website; access is free of charge. - An e-mail subscription service on the ESRI SNA section can e-mail requested data as released; this service is free. - Press meetings are held at quarterly release times; releases are not specifically tailored for press redissemination. - An advance release calendar for quarterly data is available on the ESRI website covering a six-month period and shows precise timing (8:50 a.m.); no published release calendar exists for annual data. - The advance release calendar footnotes that the schedule may change due to changes in source statistics release dates; postponement has occurred once by one day. - In connection with releases, earlier published data may be revised back for any period between one and ten years, depending on circumstances. - Equal access and pre-release briefing: - Data are made available to all interested users simultaneously in principle. - For the first preliminary quarterly release, the press is briefed during the 20 minutes immediately prior to the release under lock-up conditions where external communication is prohibited. - Availability on request: - More detailed data or related statistics not routinely disseminated are available upon request; DNA seeks to meet requests within available resources free of charge. - For external experts requesting more detailed information, DNA checks research purpose and data characteristics and decides on a case-by-case basis. - Documentation and user guidance: - Comprehensive sources and methods documents are published and updated regularly. - Quarterly documentation: Estimation Methods of Preliminary Quarterly GDP (QE), fourth edition, revised January 2005, with a summary version available. - Annual documentation: System of National Accounts 1993 in Japan (Definitions and Concepts) and (Sources and Methods), released in 2001 after transition to the 1993 SNA in 2000; changes from the 1968 SNA and departures from the 1993 SNA are explained. - Comprehensive documentation of chaining method introduction in volume estimates is available on the ESRI website. - Current information on method changes or corrections is available as "Notice on Usage" or "Correction to the Figures on National Accounts" on the ESRI website. - SDDS metadata and SDDS summary methodologies are reviewed and updated quarterly based on reminders distributed by MIC. - Levels of detail for audiences: - For general users: appendices in the Annual Report on National Accounts explain definitions and terminology; a 22-page illustrative booklet on the Japanese national accounts is available in hard copy and on the ESRI website. - For specialized users: detailed documentation is available on the ESRI website and in hard copy; summaries provide quick overviews. - User assistance: - The SNA section of the ESRI website provides an e-mail address for questions; all releases contain telephone and/or e-mail contact points. - All inquiries are monitored with detailed records of time, substance, and response. - In total, about 20 substantial questions arrive per week (not counting simpler inquiries). * _cr06115 - 3.5 Revision studies* ### 0.3 Relevance ### 0.3 Relevance ### National Accounts — Key recommendations - Promote data consistency across the datasets, by systematizing consultation with data-producing agencies. (0.1.2) - Review the current level of staffing of the national accounts data given that it is somewhat low for operational and developmental purposes. (0.2.1) - Further develop quarterly accounts from the production side with the view to disseminate these data. (2.2.1) and (3.3.2) - Treat the consumption tax in valuation according to the net approach as recommended in the 1993 SNA. (2.4.1) - Enhance the coverage of source data for service industries, in general, and of short-term statistics for the quarterly accounts and consider the further development of a reliable, up-to-date, sampling frame of establishments (business register). (3.1.1) - Undertake revision studies for the quarterly expenditure account releases and publish the outcomes. (3.5.1) - Provide more detail in the quarterly release for household consumption expenditures (COICOP group, durable/nondurable) and on capital investment by type. (5.1.1) ### Price Statistics (Consumer Price Index) — Relevance and practical utility (0.3) - Opinions are sought from related ministries and agencies and at international meetings and conferences on an ad hoc basis. - The Statistics Council (SC) acts as a formal advisory body to the MIC. - Methodological issues are discussed in internal workshops held about three times a year, to which academic experts are invited. - Users’ opinions are mainly sought during the base period revision every five years. - Consideration could be given to establishing a regular user consultation forum that is representative of the user community. - The PSO’s decision not to ratify the ILO Labor Convention 160 is because it tries to compile the CPI impartially without being influenced by political pressures. ### Other quality management (0.4) - The CPI is the subject of some scrutiny, particularly at subcouncil meetings of the SC, at the time of base-weight revisions. - Government ministries and agencies, including the Bank of Japan (BOJ), are consulted on methodological issues at the time of the base-period revision. - Operational manuals provide practical guidelines for CPI data collection, validation, and processing (manuals regarded as confidential and not provided to mission members). - No system of formal monthly reports monitors efficiency-related or quality-related indicators (budgets, expenditure, permanent and temporary missing values). - Processes address quality issues at the micro data level and at the macro level at the time weights are revised; consideration should be given to more regular processes for monitoring quality indicators and adopting quality-related innovations. ### Assurances of integrity — Professionalism and transparency (1.1–1.2) - The SL states a purpose “..to secure the veracity of statistics....” - PSO staff have presented papers at international conferences (International Working Group on Price Indices (Ottawa Group), OECD inflation measurement seminars, the ECE/ILO Joint Meeting on Consumer Price Indices, IMF PPI Manual review meeting). - The SB has a Statistical Research and Training Institute (SRTI) offering 17 courses each year. - Once a month after the release of the CPI, the Minister of the MIC presents the new figures at a cabinet meeting of all ministers; ministers can comment and the Minister of the MIC would normally respond publicly to any issues raised. - Choices of sources and statistical techniques are decided by statistical criteria, subject to resource constraints. - The PSO monitors newspapers and releases information sheets and a “Frequently Asked Questions (FAQs) on the CPI” to counter misreporting. - SB posts a précis of legislation relating to the CPI on its website; full versions should be provided. - Japan subscribes to the IMF’s Special Data Dissemination Standard (SDDS); DSBB includes legislative terms and conditions under “Integrity.” - No government officials have access to the data prior to release except for the Minister of the MIC. - The SB has no logo; publications have the SB’s name; designated statistics have numbers included on questionnaires. - Advance notice is given of major changes at base-year revisions (every five years); for 2005 a draft of principles was released in May 2004 and answers to opinions were released in November 2004. - Staff receive civil service ethical training and copies of the Law for Public Servant Ethics (1999) and the Outline of the National Public Service Ethics Law (1999). ### Resources and operational notes (0.2) - There are about ten core staff responsible for the production, analysis, and dissemination of the CPI and a further ten core staff who plan and conduct the monthly RPS. - When particularly busy, the CSD can employ an additional two staff. - About 50 percent of the core staff have undergraduate degrees. - Fewer than 50 percent of core staff have been in the PSO for more than two years. - A further 30 staff select item specifications for pricing. - About 50 staff, in the “tabulation” section of the National Statistics Center, review adequacy of price data each month. - About 130 supervisors and 750 enumerators (temporary government employees) conduct the RPS. - Each enumerator uses a personal digital assistant (PDA) for RPS data retrieval and electronic transfer to the mainframe. - The annual budget for the CPI has remained relatively stable with only some increases at the time of the weight revisions; budgetary constraints limit innovations. - Budgets are revised every five years at the time of the base-period revision; provision exists in annual budget plans to request funding for special projects expected to lead to efficiency savings. - The PSO considers there would be no efficiency gains from compiling the CPI in the same agency as the corporate good price index (CGPI) because of differences in data collection and statistical operations. ### Methodological soundness — Concepts and definitions (2.1) - Concepts and definitions of the source data broadly follow the principles outlined in the CPI Manual (2004) and the 1993 SNA. - The SB website includes, under “FAQs for the CPI,” that the ILO “establishes the international standards on the CPI.” - The Seventeenth International Conference of Labor Statisticians in Geneva in December 2003 reviewed international standards on the CPI and adopted new standards (Resolution II). *Source: _cr06115 - 0.3 Relevance* ### 2.2 Scope ### 2.2 Scope ### Consistency with international standards - The scope is described as "broadly consistent with internationally accepted standards, guidelines, or good practices." - The metadata for the CPI "appropriately outline the goods and services included and excluded from the scope of the index." - Valuation of expenditure used for weights is "at purchaser’s prices" and "is in accord with 1993 SNA." ### Exclusions and scope details - Relatively minor exclusions from the FIES (for CPI purposes) are institutionalized residents (old people’s homes, prisons, hospitals, etc.), students living alone, households with four-or-more living-in employees, and foreigner households. - Also excluded are households that manage restaurants, hotels, boarding houses (or dormitories) using their dwellings, and households that serve meals to boarders even though not managing boarding houses as business. - Other exclusions: illegal goods and services and own-account final consumption (noted as required by the 1993 SNA and the CPI Manual), fees to neighborhood associations, alumni, and labor unions (excluded unless an identifiable service flow can be identified), remittances used to provide accommodation for students (treated as "income transfer" and excluded), and money gifts, donations, religious contributions (excluded as transfers or containing not easily identifiable service flows). ### One-person households and reference index - The fixed expenditure basket used for Japan’s CPI is for two-or-more-person households only, excluding one-person households. - The PSO calculates a reference all-household CPI and publishes it (Japanese language version of the SB’s website and Annual Report on the Consumer Price Index). - About 28 percent of all households in 2000 were estimated to be one-person households—an increase of 14.9 percent since 1995. - CPI versus all-household CPI comparisons: - CPI (2003 and 2004, with 2000=100.0): 98.0 and 98.0 respectively. - Corresponding all-household CPIs (2003 and 2004, with 2000=100.0): 98.1 and 98.1 respectively. - Concerns noted: - The exclusion of one-person households is described as "a significant omission." - The all-household reference index "suffers from deficiencies in sample size and response rates regarding one-person households." - The PSO's caution: incorporation of one-person households would be gradual and preceded by user consultation; they note they calculate a reference all-household CPI which "may be sufficient to meet user needs." ### Classification / sectorization - Japan’s classification "broadly follows the Classification of Individual Consumption by Purpose (COICOP)" with correspondences for exceptions. - Classification is determined by the Minister of the MIC in collaboration with "learned/experienced persons" and is publicly available. - "Items of the major groups, subgroups, and minor groups are well defined in the metadata (SB, 2001: 23)." ### Basis for recording: market prices, timing, and treatment of sales - Discounts applicable to only limited groupings of households are excluded. - Sales reductions (sales continuing more than seven days) and seasonal price reductions are included. - Sale prices continuing for seven days or less are excluded—practice noted as one that "should be reconsidered" because it may understate price declines and "does not accord with that of the CPI Manual." - PSO justification: prices on sales for seven days or less "may not be prices with the largest sale of the month" and inclusion could make RPS and CPI inconsistent; PSO argues RPS exclusion implies CPI should also exclude those prices to avoid confusion. - List prices are collected from outlets and centralized administrative sources along with "tight product specifications" to enable comparisons of like with like. ### Recording period and special treatment of perishables and services - Prices are recorded in the period they are purchased; prices are surveyed "on the Wednesday, Thursday, and Friday of the week that includes the 12th of each month." - Rationale for the 12th: SB notes use of the 12th "provides time for an earlier release date," though "a justification for the 12th instead of the 15th is not immediately apparent." - Perishable items (fresh fruit, vegetables, and fish) are surveyed over three successive days, three times a month—during the week including the 5th, 12th, or 22nd of each month, each time on Wednesday, Thursday, and Friday. - Method: the median price is taken of the item in the three days at each of the start, middle, and end of the month, and the arithmetic mean price of the three medians is used to represent the month’s item price. - For some services (airplane flights and package holidays), prices at time of consumption are recorded (not accrual), acknowledged as not fully consistent with 1993 SNA accrual valuation but argued to be appropriate for consumption-based CPI. In the FIES, household expenditure is recorded in the period of purchase. ### Grossing/netting procedures - Exclusion of prices of secondhand durable goods (such as cars) is justified on the grounds that "the net expenditure (that is, purchases less sales, on such goods) that is required, and sales and purchases by households may more or less cancel on aggregate." ### Source data for weights and prices: coverage and sample design - Weights: - Primary source: FIES; for the 2000=100 CPI, FIES was based on responses from about 8,000 households. - Sampling: random multistage: - First stage: selection of 168 municipalities (120 cities and 48 towns and villages) from 3,219 municipalities. - Cities stratified into four groups: - 49 major cities (cities with prefectural government or populations of 1 million or more). - 22 middle-sized cities (150,000 to 1 million). - 28 small cities A (50,000 to 150, 0000). - 21 small cities B (50,000 or less). - From each sampled municipality, survey areas selected: - 16 (or more) areas from major cities. - 6 areas from middle-sized cities. - 6 areas from small cities A. - 4 areas from small cities B. - 2 areas from towns and villages. - Selection of areas is with probability proportionate to population size. - In each selected area, six two-or-more person households are selected and surveyed for six months; respondent households rotated every six months. - In event of nonresponse, replacement households are selected randomly from other households in same survey area. - FIES sample size described as "relatively small" for infrequently purchased goods; since 2002 supplemented by the Survey of Household Economy (SHE) for 64 infrequently purchased goods. - Weights of some items (imputed rent and pocket money) are calculated based on the National Survey of Family Income and Expenditure (NSFIE); NSFIE sample size is 53,000 households and conducted every five years. - National accounts adjust FIES with benchmark adjustment for each of 86 product groups based on NSFIE; CPI weights based on FIES do not benefit from such adjustments. - Items selected only from those accounting for more than 1/10000 of household consumption expenditures—such items account for an estimated 85 to 90 percent of total household expenditure (2005 FIES, to date). - Prices: - Monthly RPS is main source of price data. - Approximately 750 price collectors visit 30,000 outlets to collect prices of reselected representative items. - In principle, 598 items and 775 item specifications are priced in each of 167 selected municipalities. - About 230,000 prices are collected each month as part of the RPS. - Selection of shopping district is with probability proportionate to population size; selection of outlets is judgmental by enumerators, choosing highest-volume seller irrespective of outlet type; no sampling frame of outlets and no stratification by outlet type. - Trend differences by outlet type noted: 2004 over 2003 shows falls of 3.2, 4.5, 0.8, and 4.2 percent in department stores, supermarkets, convenience stores, and chain stores respectively. - Use of monthly scanner data for personal computers and digital cameras in major electronic appliance shops nationwide. - House Rents Survey (part of RPS) surveys approximately 23,000 private and public rents per month and their floor space. - Imputed rent approach for owner-occupied housing: regression relates rent to dwelling characteristics; data from 1999 NSFIE used; deductions made for cost of repairs and maintenance and land rent to avoid double-counting. - Hotel Charges Survey collects approximately 1,000 prices each month from 530 (public and private) hotels. ### Survey operations, quality control, and ad hoc activity - Item specifications are detailed and reviewed about four times a year based on ad hoc surveys. - PSO conducts market research four times a year for items difficult to monitor. - PSO conducts ad hoc surveys as needed to identify new products and provide source data for weights and prices. - Price collectors use PDAs that display previous month’s price and price change; if change falls outside specified bands, price collector must give a reason; excessive changes are checked at SB and referred back to prefecture officials as needed. - If a specification is generally unavailable, it is changed to benefit the index. ### Timeliness and assessment of source data - Timeliness: - The index for 2000 was first released in August 2001, "a seven-month time lag for compilation." - Price data are collected at midmonth, except fresh goods (surveyed three times a month). - For the Ku-area of Tokyo, "flash estimates" are released towards the end of the month to which the data relate. - Assessment: - The sampling error of the FIES is "officially announced every month"; the estimate from the FAQ was 1.4 percent. - Source data are judged to "reasonably approximate the definitions, classification, valuation, time of recording, and scope required," with the main concern being exclusion of one-person households from source data for weights. *Source: _cr06115 - 2.2 Scope* ### 3.3 Statistical techniques ### 3.3 Statistical techniques ### 3.3.1 Data compilation employs sound statistical techniques to deal with data sources — Aggregation - First stage of aggregation: - 598 items in 168 municipalities, nearly 100,000 strata. - The price relative for an item in a municipality = average (arithmetic mean) price in the current month ÷ average (arithmetic mean) price in the base year 2000 (elementary aggregate = Dutot index, a ratio of averages). - CPI Manual advises Dutot index only for homogeneous items because it fails the commensurability test (equivalent to a price relative weighted by its base-period relative price). - PSO justification: - Specifications are assumed very tight and aggregation is only within municipalities for each item. - A detailed manual of specifications exists but was not examinable by the mission (not a public document). - Concerns and alternatives: - Price collectors need not monitor the same variety over time, only the same specification — tight specifications can constrain representativeness. - Geometric mean (Jevons index) is preferred for nonhomogeneous goods; with appropriate sampling, Jevons is supported for items with unitary elasticity (PSO publishes expenditure elasticity estimates at a detailed level). - RPS results are published as arithmetic averages; users can calculate changes in average prices over the previous year. PSO argues such calculations could conflict with a CPI compiled from Jevons index. - Principles of aggregation for CPI and RPS can be explained in metadata. - Higher-level aggregation: - A Laspeyres index using relative expenditure shares as weights is used at higher levels. Weights are updated every five years. - The index is a “pure” Laspeyres (not Young or Lowe), requiring backdating for the price reference period to match the survey-period weights given time needed to compile survey results. - For Japan’s CPI: - weight reference period of 2000 is same as price reference period. - Seven-month time lag between survey period and compilation of the index. - Example: 2000-base index for January 2001 uses, at January 2001, 1995 weights, but by August 2001 uses 2000 weights; the index for January 2001 is, at August 2001, backdated to January 2001 with revised 2000 weights. - CPI Manual–preferred approach: use weights whose survey period ended seven months prior to 2000 so revised index for 2000 could be introduced in real time in January 2001 (weights would not relate to 2000 but may be price updated to January 2000). - Reference indices published by SB: - “midyear basket” and “chain-weighted” indices as reference indices, and “all-household” reference indices. - Midyear basket indices approximate a superlative index in real time. - Givens and considerations for Japan: - (1) Existence of a continuous monthly FIES as basis for regular weights. - (2) Compilation of a “reference” chained index. - (3) Need for regular updating of weights for a dynamic economy. - (4) Theoretical and practical advantages of more frequent updating of weights and, at least in principle, chaining (CPI Manual). - (5) Use of chain-linking in Japan’s national accounts volume estimates, as recommended by the 1993 SNA. - Recommendation and empirical finding: - Consideration should be given to more frequent updating of weights (with revised back series). - Results from the chained index for Japan (2000–2004): - Chained index fell over the period 2000 to 2004 by 1.7 percent compared with 2 percent for the official index. - The official index overestimated the price decline by 0.3 percentage points, or a 0.3/2 ×100=15 percent difference. - This difference can have substantial effects for compensation and fiscal planning. - Note: estimates in text were provided by PSO during the mission and differ from published data though magnitude is the same. ### 3.3.2 Other statistical procedures (data adjustments, transformations, analysis) - Treatment of temporarily unavailable, seasonal, perishable items (e.g., fresh fruit and fish): - Overall weight held fixed at the annual level. - Missing prices are excluded from long-run comparisons between the 2000 mean reference price and current period price; implied imputation based on long-run price change of existing items. - CPI Manual advocates short-run price imputations for temporary missing values (contrasting with PSO practice). - Treatment of nonperishable seasonal goods (e.g., apparel, air conditioning units): - Weight remains at annual average level; average-to-date for the year is carried forward into months it is unavailable. - This carry-forward may induce undue stability and undue increases during first and last periods of the season when prices are missing (as argued in CPI Manual). - PSO rationale: - PSO refers to Chapter 22 (para. 22.85) of the CPI Manual regarding seasonality; PSO views the argument against carry-forward and for short-run imputations as based on Chapter 7 (temporary missing prices and quality adjustments). - Mission notes Chapters 7 and 22 do not advise carry-forward for temporarily missing and strongly seasonal goods; short-run imputations are advisable (Chapter 7 and Chapter 22, para. 22.85). - Permanently missing (“old”) items: - Replacement “new” item found matching specification (usually same outlet; exceptionally another outlet at same level of specifications, except services). - If new item price in previous period is similar to old item, replacement considered comparable and direct comparison made. - If not similar, overlap method used: outlet manager asked for new item price in previous overlap period; price change of new item linked to old item price in overlap period. - Implicit assumption: price difference between old and new items in previous period approximates quality difference. - In practice, replacement decision and action take place several months before disappearance to allow researcher visits — this supports the overlap assumption. - Working rules for similarity: - Rules vary by product group. - Overlap method not used for fresh foods (price fluctuation) and products with discounts. - Similarity bands: if price difference in overlap period between old and new item is <50 percent when prices are increasing, or <33 percent when decreasing, direct comparison used. - These bands are considered exceptionally large, especially given Japan’s rate of deflation. - Role of researcher: - Researcher visits outlets to decide replacements and judge specification differences; tight specifications necessitate more frequent item rotation. - Explicit quality adjustments: - Option cost method for automobiles. - Quantity adjustments as applicable. - Hedonic indices for digital cameras and personal computers. - Lack of summary reporting: - No summary data compiled (overall or by product group) on number of temporary or permanent missing values each month or extent of methods used. ### 3.4 Assessment and validation of intermediate data and statistical outputs - 3.4.1 Validation against other information: - CPI compared to domestic corporate goods price index, export price index, and import price index. - 3.4.2 Assessment and investigation of statistical discrepancies: - Specified ranges set for “acceptable” prices, differing by product group. - Prices outside ranges are investigated; reasons given by price collectors and can be reviewed by prefecture government officials if PSO deems necessary. - PSO staff are product-area specialists who check trade magazines, telephone associations, and manufacturers for contextual information. - 3.4.3 Investigation of discrepancies and indicators of problems: - RPS price data are published at a highly detailed level (unusual practice) — this disclosure requires micro-level data verification checks and benefits CPI compilation. ### 3.5 Revision studies - 3.5.1 Routine studies and use internally: - Effects of base revision are analyzed via the release in January–July 2001 of indices on a 1995 base and the subsequent backwards revision on a 2000 base (see 3.3.1). - Effects of revision are formally considered in metadata and commentary. For this short period, CPI is revisable after release. - Release of reference indices provides analytical insights on effects of methodological revisions, including chained Laspeyres (weights revised every year), all-households, and midyear basket indices. - CPI for Ku-area of Tokyo (preliminary) released at end of corresponding month and revised at end of subsequent month; revisions reflect availability of end-of-month prices for perishable goods rather than data defects. - PSO indicates a revision study exists for preliminary CPI for Ku-area of Tokyo. ### 4 Serviceability #### 4.1 Periodicity and timeliness - 4.1.1 Periodicity: - CPI compiled monthly in line with the SDDS. - 4.1.2 Timeliness: - CPI compiled monthly and released on the Friday of the week including the 26th of each month — within SDDS timeliness requirement of one month. - CPI for Ku-area of Tokyo (preliminary) released at end of corresponding month and satisfies SDDS requirements. #### 4.2 Consistency - 4.2.1 Internal consistency: - Upper-level indices calculated as successively higher aggregates of lower-level indices. - Fixed-base arithmetic aggregator used (as outlined in 3.3.1), so indices are consistent in aggregation. - 4.2.2 Reconciliable over time: - Annual indices using same price reference period 2000=100 are published for overall CPI, major groups, and subgroups from 2000. - Series compiled by linking indices on each updating of weights using annual averages in overlap periods. - For seven months (see 3.3.1), series published in real time are not consistent with series backdated for weight revision. - Major classification changes receive retroactive revisions to ensure consistency (example: increase from five to ten major groups in January 1981 adjusted back to January 1970). - Series available monthly back to January 1970 (2000=100) for Japan and Ku-area of Tokyo; with imputed rent excluded, from August 1946 onwards. - 4.2.3 Consistency with other frameworks: - CPI is comparable with the PPI at the final stage of production. #### 4.3 Revision policy and practice - 4.3.1 Regular and transparent schedule: - Updating of weights specified in metadata as every five years. SC requires such updating. - Prior to updates, consultation opportunity is posted on the website. - 4.3.2 Identification of preliminary and revised data: - Preliminary figures for Ku-area of Tokyo are clearly identified in heading and noted as such. - At time of release, it was not made clear that CPI figures released in first seven months from January 2001 were to be revised when new 2000 weights implemented; procedure now documented in revision plan for 2005. - Seasonally adjusted CPI series are released and revised when new seasonal factors are estimated; revised series clearly signaled on publication. - 4.3.3 Publication of revision studies: - At quinquennial base revision, back data and an analysis of effects are made available on the website and in hardcopy. - PSO published preliminary and revised CPIs for Ku-area of Tokyo and indicated users seem satisfied with the revision study. ### 5 Accessibility #### 5.1 Data accessibility - 5.1.1 Presentation facilitating interpretation and comparisons: - CPI presentation is at an unusually highly detailed level with many breakdowns. - SB provides five data tables for CPI in monthly website release; tables accessible under “Statistics” → “Consumer Price Index/Latest Monthly Results” and also under “Latest Indicators.” - Tables are Excel documents including breakdowns by 10 major product groups and about 60 subgroups of monthly price changes (month-on-previous-month) and annual price changes (month-on-corresponding-month in the previous year) from 1989 (annual basis) and for last two years (monthly basis). - Geographical analysis: for ten major groups, 70 areas included (city groups (8), districts (10), large cities (4), cities with 3 prefecture governments (excluding Ku-area of Tokyo), Kawasaki-shi, and Kitakyushu-shi (48)). Detailed breakdowns also available for Ku-area of Tokyo. - Seasonally adjusted indices published for multiple variants: “overall index,” “overall index excluding fresh food,” “overall index excluding imputed rent,” “overall index excluding fresh food and imputed rent,” “goods,” “goods excluding fresh food,” and “semidurable goods.” - Long-run series for CPI, groups, and subgroups available monthly back to January 1970 (and with imputed rent excluded from August 1946) under “Consumer Price Index/Time series.” - “Consumer Price Index /2004 Yearly Average Results for Japan” provides data and text analysis up to 2004, with graphs and contribution analysis; data updated in December and March for fiscal and calendar year analysis. - Japanese-language website contains CPIs for specific household groups (by yearly income quintile, groups of workers, age groups of household head, occupation of household head, type of tenure of dwelling, all-persons households, by elasticity of expenditure, annual purchase frequency). Reference “chain-weighted,” “seasonally adjusted,” and “midyear basket” indices also published. - Average prices from RPS published as statistical series at a highly detailed level. - Annual Report on the Consumer Price Index is over 500 pages with detailed breakdowns. - Accessibility and level of detail considered exemplary. - 5.1.2 Dissemination media and format: - SB website is easily accessible with “Consumer Price Index” clearly designated. - Data provided in Excel format with archive files of back releases. - Excellent hardcopy Annual Report on the Consumer Price Index and monthly hardcopy releases. - Data selectively released by fax and presentations to media; made available to public libraries. - 5.1.3 Preannounced schedule: - SB homepage provides link “Consumer Price Index/Schedule of Release” with release dates (as of September 2005: February 2005 to March 2006) including release time of 8:30 a.m. - Outline of the 2000-Base CPI, Annual Report, and website FAQs note release at 8:30 a.m. on the Friday of the week including the 26th of each month. - 5.1.4 Simultaneous availability: - According to announced schedule, CPI data are available at the same time to all users. - 5.1.5 Non-routinely disseminated statistics upon request: - No real need for custom-made tables given detailed breakdowns; SB considers further breakdowns case-by-case. - RPS and FIES data can be released only for statistical purposes (as noted in 0.1.3). *Source: _cr06115 - 3.3 Statistical techniques* ### 5.2 Metadata accessibility ### 5.2 Metadata accessibility ### Documentation on concepts, scope, classifications, basis of recording, data sources, and statistical techniques - The SB’s website contains easily accessible short and full versions of the detailed Outline of the CPI on sources and methods used to compile the CPI. - The short form is also included in The Annual Report on the Consumer Price Index. Highly detailed appendices are provided in both cases. - At every base-year revision, a comprehensive account of the changes is released and readily found on SB’s website. - Information on the sample designs of the FIES and RPS is provided. ### Levels of detail adapted to audience needs - CPI metadata are available at three levels of detail: - Explanation of the CPI (for experts). - Outline of the CPI (full and summary form) (for ordinary users). - Mechanism and View of the CPI (easy-to-read, for the lay person). - The full version of the outline of the CPI is highly comprehensive with detailed appendices. ### Assistance to users (Section 5.3) - Contact points and user support: - The Annual Report on the Consumer Price Index contains near its end a list of useful telephone numbers but no email address. - Monthly reports and the website provide a telephone contact number and fax number of the person responsible for the data release. - The website has a useful “frequently asked questions” (FAQs) to accommodate usual inquiries. - Email queries are transferred directly to CPI staff and dealt with quickly. - Catalogs and publication access: - The website has a “Statistical Portal” that, under “Dissemination,” includes release dates of, ministry responsible for, and a hyperlink to, all official statistical series released in Japan in the last two months. - The SB publishes a hardcopy 940-page Index of Statistical Data Sources: Annual 2005, which includes all official statistical publications and provides information on title, agency, release date, contents, classifications, breakdowns, a URL if applicable, and more. - The portal and the hardcopy index together are described as most impressive in terms of transparency and detail. ### DQAF (July 2003) — Summary of Results for Price Statistics (Consumer Price Index) - Compiling Agency: Ministry of Internal Affairs and Communications. - Key assessment elements and observations (selection): - 0.1 Legal and institutional environment: O - 0.2 Resources: O - 0.3 Relevance: O - 0.4 Other quality management: O - 1.1 Professionalism: O - 1.2 Transparency: O - 1.3 Ethical standards: O - 2.1 Concepts and definitions: O - 2.2 Scope: O (The scope of the CPI excludes one-person households.) - 3.3 Statistical techniques: LO (The methods of calculation at both the elementary and aggregate levels require attention as do methods for treating temporarily missing items, seasonal items, and quality adjustment procedures.) - 5.1 Data accessibility: O - 5.2 Metadata accessibility: X - 5.3 Assistance to users: X ### Recommendations (as listed) - Consider establishing a regular user consultation forum that is representative of the user community. (0.3.1) - Develop and publicize procedures to formalize the delineation between the statistical and nonstatistical functions within data-producing agencies. (1.2.2) - Expand the scope of the CPI to include one-person households with concomitant developments in the source data for doing so. (2.2.1) - Include the price of items “on sale” for seven days or less. (2.4.1) - Consider increasing the sample size of the FIES, and reviewing the sample design to validate the outlet selection. (3.1.1) - Review the use of the ratios of the averages as the main formula at the elementary level. Consider a Lowe index as the fixed basket index at the higher level of aggregation; also consider the more frequent updating of weights. (3.3.1) - Review the treatment of temporarily missing items, seasonal goods and services, and quality adjustment procedures. More particularly, consider the introduction of short-run imputations instead of long-run ones and abolishing the carry-forward method, and review the criteria for adopting direct comparisons. (3.3.2) *Source: _cr06115 - 5.2 Metadata accessibility (IMF staff report content provided).* ### 0.4 Other quality management ### 0.4 Other quality management ### Processes are in place to focus on quality - Legal and policy framing: - Article 1 of the SL states the primary purpose of the Act is “veracity.” - The BOJ’s stated objectives include providing “reliable statistics” and “constantly seeking for ways to improve the quality of statistics it publishes” (BOJ, 1999 and BOJ, 2002). - The Bank of Japan's Medium-Term Strategic Framework for Fiscal 2005-2009 and Action Plans for Fiscal 2005 emphasize examining ways to “improve the quality of statistics it publishes with a view to further strengthening its policy planning capabilities.” - Organizational arrangements and staff expertise: - The PSS has a team of 15 industry specialists responsible for, and with built-up knowledge of, their industries to facilitate selection of surveyed prices. - The PSS holds three data quality-related meetings each month—the General Affairs Meeting, Progress Report Meeting, and Price Analysis Meeting. - At Price Analysis meetings, industry specialists report on overall price changes and handling of unusual changes. - Individual staff members receive project assignments (e.g., examine the quality of the “averaging of prices”) and must report progress at bilateral Progress Report meetings. - There are no measures of quality summarized on a monthly basis. - Quality monitoring and training: - Monitoring processes for micro data verification are described as excellent. - PSS staff benefit from on-the-job training (OJT) and attend general training courses on statistical issues given by MIC. ### Processes are in place to monitor and plan the statistical program - Monitoring: - While there does not appear to be a systematic program, quality issues are considered in metadata and internal discussions. - Planning and budgeting: - Internal general meetings address specific ongoing issues to enhance CGPI quality. - Annual monitoring is budget-related; major innovations are mainly realized at five-yearly weight revisions. ### Assurances of integrity - Professionalism and independence: - BOJ Law mandates professional independence: Article 5.1 states “In light of the public nature of its business and property, the Bank of Japan shall endeavor to conduct its business in a proper and efficient manner”; Article 5.2 states “In implementing this Law, due consideration shall be given to the autonomy of the Bank's business operations.” - Articles 23 and 24 define "appointment of executives" and "executives' term of office"; Article 25 stipulates executives are protected from dismissal against their will during their term of office. - Article 2 of the BOJ’s Internal Rule of Staff states staff must recognize the public mission and perform duties fairly and smoothly. - Technical impartiality: - PSS staff development is through OJT, MIC training, and methodological research relating to the CGPI. - The 2000-base CGPI revision was motivated by reducing response burden, “an appreciation of the increased diversity and sophistication of user needs,” partial review of survey methods, increased IT coverage, release of a DCGPI-chain, and conceptual/scope changes from WPI to CGPI (BOJ, 2002 and 2003). - BOJ established Basic Principles on Methods of Release and the Provision of Information about Statistics and its Revisions (Appendix 2 of BOJ (2002)), including compiling statistics speedily and releasing promptly. - Handling misuse and media: - PSS holds a press conference on the day of release and issues a press release. - The person in charge reviews media; if misuses occur, the PSS corrects them through the Secretariat of the Policy Board. - Transparency and access: - A complete set of documents presenting terms and conditions for PSS statistical activities is available on the BOJ website; however, the Statistics Law is an important omission. - Internal government access to statistics prior to release is prohibited; access is strictly restricted to PSS staff. - All statistical products are identified as produced by the BOJ’s Research and Statistics Department; there is no logo denoting official statistics. - BOJ’s “Basic Principle” is to release information on survey questionnaires and compilation methods for major statistics. - Details of the 2000-base revisions were published on Monday, December 9, 2002 for the index to be released in January 2003. - Ethical standards: - Rules and guidance: Bank of Japan Law, Rules of Ethical Conduct for Executives and Staff of the BOJ, Code of Conduct for Staff of the BOJ, and Price Section Rule. - Ethical training: new employees are taught ethical standards and given the Price Section Rule; periodic reminders occur at General Affairs meetings. ### Methodological soundness - Concepts and definitions: - The CGPI broadly follows internationally accepted standards, except that prices at the primary wholesaling stage are collected at the primary wholesaler level when the primary wholesaler is considered critical in adjusting supply and demand. - The CGPI’s measurement confounds wholesale and industrial price change at the primary level of wholesaling; it does not meet the 1993 SNA and PPI Manual principle that output should be valued at producers’ prices. - Scope: - CGPI covers “manufacturing industry products,” “agriculture, forestry and fishery products,” “minerals,” “electric power, gas and water,” and “scrap and waste.” - CGPI does not cover business services; BOJ compiles the Corporate Service Price Index (CSPI) for services traded among corporations. - Recommendation noted: CSPI could be included in Japan’s SDDS metadata on the IMF’s Dissemination Standards Bulletin Board and on Japan’s National Summary Data Page, along with the CGPI. - Markets like free zones and bonded warehouses are included in scope, but goods surveyed are effectively excluded; PSS should monitor such activities periodically. - Classification/sectorization: - DCGPI classified by five major groups: “manufacturing,” “agriculture, forestry, and fishery products,” “minerals,” “electric power, gas and water,” and “scrap and waste.” - Manufacturing subdivided into 16 groups, secondary classification by 20 groups, 88 industry subgroups, and up to 235 commodity classes. - Major group and group classifications follow the Japan Standard Industrial Classification (JSIC), which broadly corresponds to ISIC; JSIC had an extensive revision in 2002. - Commodity classification follows JSIC at the four-digit level and the commodity classification in the CM, published by METI. - The DCGPI has its weights derived by subtracting export values (HS-based trade statistics) from output values (Census of Manufacturers statistics using JSIC); occasional non-correspondence can produce negative weight estimates, requiring recourse to other data sources. - Basis for recording: - Respondents supply market prices; weights are valued at producer prices; output for own-use at equivalent market prices. - CGPI is compiled including consumption tax; BOJ also compiles a reference index excluding consumption tax (DCGPI excluding Consumption Tax). - For the XPI, goods are valued free-on-board (f.o.b.) at the Japanese port of exportation in accord with the 1993 SNA, paragraph 14.36. - Recording practices: provisional (“ex-post pricing”) prices used for contracts extending several months, with final actual shipment price used in periodic revision—this enables quick reflection of price fluctuations and reduces retroactive revision differentials. - Six commodities utilized provisional prices for the 2000-DCGPI—“parts of internal combustion engines for motor vehicles,” “ethylene,” “propylene,” “toluene,” “xylene,” “para-xylene,” and “fuel oil C”—and one commodity used provisional prices for the XPI, “para-xylene.” - When XPI prices are recorded in a foreign currency, they are converted to yen using the monthly average spot exchange rate (middle rate—midpoint between the selling and buying rate) as quoted by banks; this method has been adopted since January 2005. - Weights of the CGPI are the gross value of shipments from producers, consistent with international practice. ### Accuracy and reliability - Source data and weights: - Primary source for weights is the annual CM, which covers “manufacturing industries” as defined by JSIC; includes all establishments for years ending with 0, 3, 5, and 8 and establishments with four or more employees in intervening years. - DCGPI weights are derived by subtracting value of exports (Japan Exports and Imports) from total producers’ shipments (2000 Census of Manufacturers). - For nonmanufacturing industries not covered by CM (“agriculture, forestry and fishery products,” “minerals,” “electric power, gas and water,” and “scrap and waste”), BOJ uses statistics from other government agencies or industrial associations. - For “minerals,” “electric power, gas and water,” and “scrap and waste,” only physical quantity data are available; BOJ estimates value weights by multiplying price data by volume measures. - Exclusions from weights/DCGPI: - (1) Commodities impossible to calculate weights for (e.g., office buildings). - (2) Commodities with prices difficult to survey continuously and without a “similar” group to impute weight (e.g., ships, ammunition, arms). - (3) Products with excessive seasonality precluding continuous series (e.g., fresh foods). - Exclusion of category (2) estimated to amount to about 6.4 percent and 7.9 percent of the DCGPI and XPI, respectively. - CM has a fifteen-month publication lag; this causes a two-year publication lag in the revision of CGPI base-year every five years. At worst, the fixed-base CGPI uses weights seven years out of date. - The PPI Manual advises regular updating of weights at least every five years. - Price selection, coverage, and sampling: - Selection stages: commodity selection (cut-off selection), enterprise/establishment selection, and interviews to determine major price items. - Cut-off thresholds: for the DCGPI (XPI), commodities with transaction values no less than 1/10,000 (5/10,000) are used, with some exceptions. - For the 2000=100 DCGPI, 910 commodities were selected (and 222 for the XPI); these selected commodities covered, for the DCGPI, 78.6 (66.1) percent of all commodities. - Coverage for “metal products” and “general machinery and equipment” was 50.6 and 48.3 percent, respectively. - Enterprises/establishments were selected nonrandomly by industry specialists from trade reports and newspapers, targeting “major players”; there is no stratification by geographical region or size of enterprise. - Source data quality and valuation: - Source data for manufacturing output weights are largely the CM and largely satisfy PPI requirements. - Major price-determining characteristics (brand, size, contract conditions) are collected with prices. - DCGPI is compiled including indirect taxes such as consumption taxes; BOJ publishes a “reference” index excluding consumption tax (a fixed base index). - Consumption taxes in Japan changed irregularly in 1989 and 1997 and affect the index only during periods of change. - Timeliness: - BOJ collects prices by mail from reporting enterprises by the first business day of the month after the surveyed month. - Data received after the reporting deadline, or before but requiring further validation, are used in revised figures. *Source: _cr06115 - 0.4 Other quality management* ### 3.2 Assessment of source data ### 3.2 Assessment of source data ### 3.2.1 Routine assessment of source data (coverage, sample error, response error, nonsampling error) - BOJ staff assess the accuracy of all sample prices and their changes. - Fifteen staff are responsible for checking sample prices, each with specialist knowledge of an allocated industry. - PSS staff receive a briefing document on changes in the economy to provide context for appraising price changes. - Staff procedures: - Examine whether sample prices are appropriately selected to match initial specifications. - Query unusual results by phone with respondents. - Double-check data prior to compilation. - A senior staff member reviews unusual price changes each month at bilateral “price analysis meetings” with industry-responsible staff. - Any price change above or below 10 percent is automatically reviewed with the respondent. - The selection of prices is nonrandom; therefore a reliable estimate of sampling error cannot be derived. - Industry specialists record outcomes of the collection process (queries, missing values, temporary or otherwise), but no summary reports are compiled regularly. *Source: IMF staff summary of BOJ practices as presented in the document.* ### 3.3 Statistical techniques — treatment of missing data, replacements, and quality adjustment - Missing prices: - Respondents are contacted when a price is not reported and asked whether the item is still “major.” - If still major and temporarily missing, price is carried forward from last contracted price for a maximum of three months. - Exceptionally, carry-forward may be extended to four or five months (e.g., industrial machinery with custom specifications). - PSS views imputations as inappropriate due to possible staggered pricing; targeted short-run imputations are suggested as preferable when appropriate. - Seasonal missing items: - Annual averages are substituted for missing seasonal prices; this can induce undue stability and inappropriate first/last period changes. - PSS is considering alternatives, recognizing difficulty. - Permanent missing items: - A replacement is found; if noncomparable, specification changes are recorded so an adjustment can be made for quality change. - Quality adjustment context: - Japan’s economy has rapid turnover in commodities and quality differences even over short periods (illustration: nearly 20,000 new snacks are released annually, of which only about 100 survive a year later (BOJ 2001a: 6)). - PSS proactively replaces sample prices when products cease to be representative, discussing ascendancy/decline with respondents and following trade press (aligned with PPI Manual best practice). - Replacements and methods (year 2004): - For the DCGPI there were 1384 replacements; for the XPI there were 354 replacements. - Breakdown for DCGPI (XPI) replacements: - Direct comparisons: 22 percent (14 percent) - Production cost method: 18 percent (15 percent) - Hedonic regressions: 5 percent (4 percent) - Overlap method: 4 percent (2 percent) - Unit price comparison (homogeneous items): 4 percent (0 percent) - “Unable to compare”: 46 percent (62 percent) - The carry-forward method was generally used when comparisons were “unable to compare”; carries risk of undue stability and targeted short-term imputation may be more appropriate case-by-case. - Effects of quality adjustments (2004 changes): - Index after quality adjustment (including production cost, hedonic, and overlap): increase of 1.9 percent. - Index before quality adjustment: increase of 2.3 percent. - Difference: 0.4 percentage points. - Sector specifics: - “Electrical machinery and equipment”: fall of 4.3 percent after adjustment, fall of 3.0 percent before adjustment. - “Transportation equipment”: fall of 1.1 percent after adjustment, increase of 0.6 percent before adjustment. - Hedonic regressions: - Employed for high-turnover, rapidly changing-quality commodities (as of February 2004: PC and UNIX servers, personal computers, printers, digital and video cameras). - New data sources (e.g., point-of-sale scanner data) are used; PSS follows leading-edge methods in line with the PPI Manual. - New product handling at rebasing to the 2000 base year: - For the domestic DCGPI (XPI): - Newly introduced commodities: 58 (36) including semiconductor manufacturing equipment, dishwashers and dish dryers, portable computers. - Abolished commodities: 85 (17) including word processors and truck cranes. - Divided: 24 (2) (e.g., video cameras to video cameras and digital cameras). - Combined: 58 (8) (e.g., “cellular phones” and “personal handy-phone system” to “cellular phones and personal handy-phone system”). - Expanded: 85 (17) (e.g., “video tape recorders” to “video recording and/or reproducing apparatus” to include DVD players). - Evidence indicates proactive commodity substitution and serious appraisal at weight-revision and ongoing adjustment. ### 3.3.2 Other statistical procedures — elementary and upper-level aggregation issues - Elementary aggregation problems: - First problem: Use of unweighted arithmetic mean of price relatives (Carli index) at elementary stage: - Carli index fails the time reversal test and is biased upwards. - PSS favors Carli for statistical continuity and ease of handling; DCGPI chained reference index uses the Jevons index. - Second problem: Use of averaged prices (unit values) at the basic level: - At 2000 revision, unit values introduced alongside sampled prices. - Of 5,508 prices sampled each month for DCGPI, 651 (12 percent) were averaged prices (figures as of October 25, 2002). - For XPI, 28 of 1,151 prices sampled or 2.4 percent were averaged prices. - Unit values incidence highest for “processed foodstuffs” for DCGPI—297 averaged prices out of 591 sampled (about 50 percent). - Unit value indices should be applied only to homogeneous products (PPI Manual paragraphs 9.70 and 9.71); risk that price relatives reflect changes in quantity or quality mix. - Third problem: Use of Dutot elementary aggregate index (ratio of arithmetic averages): - Dutot fails the units of measurement (commensurability) test and is conceptually unacceptable for different types of products (PPI Manual paragraphs 9.27 to 9.29). - Dutot assigns more weight to more expensive commodities by relative price, potentially unjustified relative to revenue share. - PSS exercises care to ensure averaged commodities are similar, but some averaged descriptions include custom-made machine types, suggesting method restrictions require consideration. - DCGPI-chain reference index: - Compiled using geometric mean (Jevons) at elementary level; appropriate when sampling is probability proportionate to revenue and when volume responses to price changes are expected. - Jevons passes commensurability test; Carli does not. - Upper-level aggregation issues: - Higher-level formula is a “pure” Laspeyres index (price reference period same as weight reference period); unusual given Japan’s long weight compilation lag (over a year). - Weight-timing example: - Weight reference period of 2000 is same as price reference period, yet 2000 weights introduced only in December 2002. - January 2001 index initially used 1995 weights; when 2000 weights became available in December 2002, January 2001 index was retroactively revised to use 2000 weights. - This retroactive revision practice is unusual; recommendation is to consider a Lowe index (weights from a period preceding the price reference period, price-updated to the price reference period). - Chained vs fixed-base results: - DCGPI-chain compiled as reference; chain-weighting and frequent weight updates have advantages over fixed-base Laspeyres. - Differences observed: - Over period 2004 compared with 2000: DCGPI fell by 3.9 percent; DCGPI-chain fell by 5.4 percent. - For 2005:06 compared with 2000: DCGPI fell by 2.7 percent; DCGPI-chain fell by 5.1 percent. - Methodological differences materially affect outcomes. - Publication lag implications: - Weights are nearly two years out of date before retroactive incorporation (BOJ (2000: 15 ff.22) — results of the CM for 2001 only available in October 2003). - The CGPI chain, due to retroactive incorporation, takes on a chained nature, but real-time claims of “using weights updated each year” need careful explanation to users. - PSS research found some evidence of chained drift, attributed to price bouncing of commodities like rice and beef. - Consideration suggested for more frequent updating of weights for the official index. ### 3.4 Validation of intermediate data and statistical outputs - 3.4.1 Validation against other information: - Indices of final goods of the CGPI are compared with other price indices where applicable (e.g., CPI). - Some categories validated against market spot prices (e.g., crude oil and metal prices). - 3.4.2 Assessment/investigation of statistical discrepancies in intermediate data: - PSS double-checks data, refers back to respondents for unusual changes, and consults industry and contextual economic information. - 3.4.3 Assessment/investigation of discrepancies and other indicators in outputs: - If unusual movements arise from large changes in particular sectors, causes are investigated and explained in commentary as far as confidentiality allows. ### 3.5 Revision studies and practices - 3.5.1 Routine studies and internal use of revision analyses: - Effects of weight revisions considered by revising series backwards over time with new weights (arising naturally from upper-level aggregation procedures). - Studies on effects of quality adjustments are undertaken (see examples in 3.3.1). - DCGPI-chain compiled to analyze effects of weight changes; DCGPI excluding consumption tax compiled to identify effects of consumption tax changes. - Preliminary figures and revision timing: - Commercial practice of “provisional settlement” prices leads to preliminary figures that are revised when final shipment prices are fixed. - Revisions also arise from late receipt of data requiring further checking; preliminary figures are revised the next month. - Almost all prices, 95.03 percent, are on time and used in the provisional index (response rates are those of August 2005). - Worst-case example: “pulp, paper, and related products” has 82 percent of prices on time. - Periodic retroactive revisions of published indices implemented twice a year in April and October when March and September preliminary figures are released; data are final after a year. - A price change may be revised on three occasions: after a month, after a further five months, and after a further six months. - CGPI is revised immediately if a large error affecting “all commodities” is found. - Availability of revision studies: - BOJ undertakes ad hoc studies of revision effects (e.g., for textiles) but no public studies of the effects of revisions are available. - Prior releases on BOJ website permit reconstruction of revision effects. - Example of revision magnitudes (June 2005): - Revisions to DCGPI had no effect on the 2000=100 index at aggregate level, but subgroup changes occurred among 20 major groups (eight had subsequent month changes). Examples (preliminary : revised): - “textiles products”: 98.2 : 98.0 - “lumber and wood products”: 97.9 : 98.0 - “pulp, paper and related products”: 99.8 : 99.7 - “chemicals and related products”: 106.2 : 106.0 - “petroleum and coal”: 148.6 : 148.5 - “general machinery and equipment”: 95.0 : 95.2 - “agriculture, forestry and fishery products”: 99.6 : 99.5 - “scrap and waste”: 160.4 : 161.2 - Example where preliminary did not fully cancel on aggregation (April 2005): - Preliminary DCGPI: 97.4 - Revised figure for April released in May: 97.5 *Italic: IMF staff summary of chapter section "3.2 Assessment of source data" from the provided PDF.* ### 4. Serviceability ### 4. Serviceability ### 4.1 Periodicity and timeliness - The CGPI is compiled monthly in line with SDDS requirements. - Monthly indices (preliminary figures) are disseminated on the 8th (April and October the 9th) business day of the month following the survey month. - Monthly indices (final figures) are disseminated at the time of publication of the next month's “preliminary figures” indices. - The timing of dissemination is within the SDDS timeliness requirements. ### 4.2 Consistency - Aggregation and internal consistency - Products are classified into component commodity groups that are aggregated up into “nested” higher-level groups. - Aggregate figures are compiled as the weighted average of each component. - The aggregate and components of CGPIs are consistent in aggregation as a result of the use of the fixed-base arithmetic aggregator formula (see 3.3.2 above). - Time-series consistency - On revision of the base year, the index of the old base year is linked to that of the new base year to create a long-run time series. - The 2000-base CGPI, DCGPI, XPI, and IPI go back as far as a price reference period of January 1960 (2000 average =100). - Such series exist for the 16 major manufacturing industry groups along with “agriculture, forestry and fishery products,” “minerals,” “electric power, gas and water,” and “scrap and waste.” - The BOJ’s website provides series for two “reference” price indices: - “DCGPI excluding consumption tax,” introduced in January 2003, price reference period 2000=100, backdated on a monthly basis to January 1985, progressively linking in runs of series with 1985, 1990, 1995, and 2000 weights. - DCGPI-chain (2000=100) introduced in 2000 with back series compiled from January 1995. - Both indices have back series for the 20 groups noted above. - Reconciliation with other statistics - The CGPI is generally consistent with other price statistics, including the IPI, the Average Index for Domestic Corporate Goods Exports and Imports (AIDEI), and Index by Stage of Demand and Use (ISDU). - However, the CGPI’s definition is not fully consistent with its needs as a deflator in the 1993 SNA when pricing is at the primary wholesaler (see 2.1.1). ### 4.3 Revision policy and practice - Schedule and transparency - The release schedule for the preliminary and the final CGPI, along with the revision policy, are provided on the BOJ’s website. - There is a predetermined revision cycle: the final figures are released two months after the index is compiled based on revisions to the preliminary figures. - Periodic retroactive revisions of the published indices take place in April and October each year, when the March and September preliminary figures are released. - The published figures are, in principle, revised over a one year period (BOJ, 2005). - The PSS issues immediate (unscheduled) revisions where large discrepancies arise; such unscheduled revisions take place about twice a year. - There is no information on the “release schedule” page as to the revision policy, though the revision policy is included in the metadata (BOJ, 2002: 17). - Separate archive data are available to compare the preliminary and revised figures. - Identification of preliminary and revised data - Preliminary data are published on the 8th (April and October the 9th) business day of the month following the survey month. - Final data are published two months after the survey month; revised data are marked with the symbol “r.” - The website includes files for all monthly releases of the CGPI for the year in question and clearly identifies the provisional nature of data released. - Archived files for individual monthly releases for 2003 and 2004 on a preliminary and revised basis are included on the website. - Revision studies and metadata on weight revisions - Occasional studies on the extent and direction of revisions to preliminary estimates are conducted by the PSS, but are not made public; the PSS recognizes the importance of publishing these and may do so in the future in “Research Papers on Prices.” - Information on, and studies as to the effect of, base weight revisions are provided in the metadata on the weight revision (for instance, the 2000 weight revision published in December 2002). ### Accessibility (summary elements relevant to serviceability) - Data accessibility and presentation - The Monthly Report on the CGPI provides indices for 16 basic manufacturing groups and four other groups, with aggregate totals for “manufacturing” and “all commodities” for the DCGPI, Index by Stage of Demand and Use, and the DCGPI-chain. - Reports include the provisional index level, the weights, monthly, annual, and quarterly price changes, and the previous month’s index (and whether it was revised or otherwise). - A graph of the major indices since rebasing in 2000=100 is provided. - Long-term time-series data from January 1960 on a monthly basis are available for the 16 major manufacturing groups and four sectors, along with annual averages. - Detailed breakdowns for constituent categories are available (example: for “processed foodstuffs,” monthly data from January 2000 for about 120 constituent categories) in Excel format. - Dissemination media, schedule, and equal access - Data are released on the BOJ website and in a hardcopy press release. - A release schedule is posted on the BOJ website in multiple formats, including a detailed six-month “kohyos.pdf” schedule containing dates and times for CGPI releases. - As of September 6, 2005, the release schedule for each of the next 6 months was the 12th, 10th, 12th, 14th, 11th, and 12th days of the month after the index is compiled. - No user has prior access to the CGPI; there is no advance press briefing. - Metadata and user assistance - BOJ (2002) details changes to the 1995 WPI implemented in the switchover to the 2000 CGPI; the Japanese-language documentation is more detailed. - Metadata are available on the IMF SDDS website and are updated in a timely manner. - The BOJ website contains an “Explanation” of methodology and a link to a 2001 research paper on quality adjustment for the CGPI. - Contact arrangements: the Monthly Report identifies the RSD as the issuing department, but the contact phone number is that of the Public Relations Department; public inquiries are channeled to the responsible department. Responses to inquiries are within a week (internal rule). Email addresses are not included in the Monthly Reports. - The BOJ website provides extensive listings of statistics, research papers (.pdf), and publications and services (including charges and subscription information). Much is available free for download. - The Statistical Bureau publishes a hard copy Index of Statistical Data Sources: Annual 2005 (940 pages) listing official statistical publications and related details. ### Key assessments and observed practices (from Table 3 DQAF summary) - Methodological/quality observations: - Output is priced at the primary wholesaler, when such wholesalers play an active role, as opposed to ex-factory. (2.1) - The selection of respondent establishments should be more systematic. (3.1) - Methods of calculation at both the elementary and aggregate levels require attention as do methods for treating temporarily missing items, seasonal items, and quality adjustment procedures. (3.3) - DQAF element assessments: Practices observed or largely observed across serviceability dimensions (4.1 Periodicity and timeliness; 4.2 Consistency; 4.3 Revision policy and practice; 5 Accessibility). ### Recommendations (extracted from the report) - Consider establishing a forum where users are regularly consulted (0.3.1). - Replace output priced at the primary wholesaler with ex-factory prices. (2.1.1) - Reduce the time lag between the survey period for the weights and their adoption in the index and consider the use of a more systematic approach for the sampling of establishments. (3.1.1) - Review the treatment of temporarily missing items, seasonal goods and services, and quality adjustment procedures and the composition of commodities for which the averaging of prices is used. (3.3.1) - Replace at the elementary level the average of relatives with a geometric mean, or for strictly homogeneous commodities, a ratio of averages. Consider a Lowe index as the fixed basket index at the higher level of aggregation; also consider the more frequent updating of weights. (3.3.2) - To give the Corporate Services Price Index further prominence, consider identifying it in Japan’s SDDS metadata on the IMF’s Dissemination Standards Bulleting Board and on Japan’s National Summary Data Page, along with the Corporate Goods Prince Index. (2.2.1) *Source: _cr06115 - 4. Serviceability* ### 0.1 Legal and institutional environment ### 0.1 Legal and institutional environment ### Responsibility for collecting, processing, and disseminating government finance statistics - GFS for general government operations (GGO) are not specified as a distinct statistical output; general government statistics are derived from the sectoral accounts of the national accounts compiled and disseminated by the Economic and Social Research Institute (ESRI) of the Cabinet Office (CAO). - Responsibility to compile central and local government accounts is clearly assigned and used for fiscal analysis: - Constitution of Japan (Article 90): final individual accounts of the expenditure and revenues of the State are audited annually by a Board of Audit and submitted by the Cabinet to the Diet with the statement of audit. - Constitution of Japan (Article 91): the Cabinet shall report to the Diet and the people on the state of national finances at regular intervals, but at least annually. - Public Finance Law (Article 46): assigns dissemination responsibility on the status of the budget of central government to the Ministry of Finance (MOF) and requires annual reporting on budget, revenue, expenditure accounts of the previous year, outstanding borrowings, and at least quarterly reporting on the status of the budget and use of national treasury funds. - Heads of ministries/agencies must annually compile statements of revenue and expenditure and liabilities after final settlement and submit them to the MOF; final settlement accounts are prepared and submitted to the Board of Audit by November 30 following the end of the fiscal year. - A MOF governance ordinance assigns reporting of settlement accounts of central government to the Budget Bureau of the MOF, which prepares a monthly consolidated statement of all receipts and payments of the treasury accounts (general account plus 31 special accounts). - Local government financial reporting governed by the Local Government Law and the Local Public Finance Law; Ministry of Internal Affairs and Communication (MIC) conducts an annual survey of local governments. - Central government debt management responsibility is clearly assigned to the MOF: - Ministry of Finance Establishment Law (Article 4.32) assigns management of Japanese government bonds and other borrowings to the MOF; Article 4.33 assigns responsibility for contracts related to government guarantees. - Government ordinance assigns the Financial Bureau of the MOF responsibility to manage central government debt; data on central government debt are produced from administrative records of the Financial Bureau. - Law Concerning Government Bonds: MOF decides terms and amounts of issuance/redemptions and matters related to principal, interest payments, certificates, and registration of transactions. - Bank of Japan (BOJ) entrusted with administrative tasks related to Japanese government bonds (JGBs); working arrangements established to facilitate responsibilities. ### Data sharing and coordination among data-producing agencies - Flow of administrative budget data to the MOF from ministries/agencies is well established and vested in Public Finance Law and related ordinances. - Data sharing between MOF and BOJ (as administrator of central government debt transactions) is vested in working arrangements and primarily conducted via personal contacts at the technical level. - Gaps and opportunities: - Limited regular contact and no structured venue for coordination between MOF and agencies that use MOF data as major sources for SNA, BOP, and monetary statistics (ESRI’s Department of National Accounts (DNA) can request ad hoc information but lacks regular structured discussions). - Availability of local government data limited to budget-related flows and MIC’s comprehensive survey at the end of the fiscal year; MIC compiles and disseminates results in the White Paper on Local Public Finances. - Electronic systems facilitating data sharing and reporting include: Government Accounting Affairs Data Communications Management System (ADAMS-system) and BOJ Financial Network System (BOJ-NET). ### Confidentiality, legal protections, and statistical reporting mandates - ESRI’s survey of a sample of local governments conducted under the Statistics Law (SL), which states individual data confidentiality and restricts use to statistical purposes (see national accounts DQAF for details). - Administrative data of ministries and agencies are published taking confidentiality into account; MOF employs physical and electronic protections: - Security guards restrict access to MOF premises; electronic systems are password protected; hardcopy access is restricted; electronic records are regularly backed-up and stored off-site. - Staff review dissemination outputs to prevent indirect disclosure; tables and outputs designed to prevent disclosure. - Legal mandate for reporting: - Statistics Law provides mandate for ESRI national accounts activities (see national accounts DQAF). - Public Finance Law requires ministries/agencies to report budget execution status to MOF; no specific penalties for noncompliance specified—compliance is primarily obtained through MOF’s statutory mandate. - Government debt data compiled from MOF debt database and BOJ-NET; monthly report on debt guarantees relies on monthly reports from agencies that issued guaranteed debt. - Reporting of guaranteed debt: agencies obliged to report monthly outstanding guarantees to MOF; Financial Bureau requests minimum essential data and uses director-level letters to request reports; reporting includes seals (signs) of approval by responsible persons. ### Resources: staff, facilities, computing resources, and financing - Staffing: - Department of National Accounts (DNA) of ESRI produces the general government sector as part of national accounts; 45 staff involved in national accounts (see national accounts DQAF for full description). - MOF staffing levels: - Budget Bureau: approximately 400 staff, of which 19 staff members are directly involved with the compilation and dissemination of central government settlement accounts. - Financial Bureau: 360 staff, of which 12 are directly involved with recording and dissemination of central government debt data. - MOF staff rotation cycle: about a two-year cycle; on-the-job training is primary method for maintaining working standards; succession planning supported by documentation and oversight by experienced section chiefs. - Staff turnover outside rotations is low; recent increases in staff in both bureaus due to added responsibilities; salary levels same as other central government employees. - Physical facilities and computing resources: - Working facilities and PCs are adequate; computing facilities updated regularly. - Electronic systems include ADAMS-system, debt database, and BOJ-NET; annual system developments conducted. - Electronic network connection with all local governments allows MIC to survey electronically and facilitate electronic processing of local government data. - Funding: - Funding allocated through normal annual budget procedure; special project funding (e.g., system developments) secured via budget submissions; funding horizon is annual and coincides with budget-planning horizon. ### Measures to ensure efficient use of resources - No formal periodic civil service performance reviews; staff are aware of efficiency expectations. - Occasional reviews of efficiency, serviceability, and reliability of compilation systems, computing resources, work processes, and software appropriateness are conducted; hardware composition and distribution under ongoing review. ### Relevance and user engagement - National accounts relevance assessed via Advisory Committee for National Accounts (see national accounts DQAF). - Primary users of MOF data: the Diet, investors, and the public; budget and execution reports compiled to comply with Public Finance Law reporting requirements. - Advisory and consultative bodies: - Fiscal System Council researches and discusses topics related to budget, settlement accounts, and accounting systems. - Council on Economic and Fiscal Policy (CEFP), established after the 2001 reorganization, deliberates key fiscal policy issues and budget guidelines. - User consultation gaps: - MOF lacks a structured periodic consultation process with the public and other users to assess data usefulness; feedback is not actively sought though a contact point on MOF website exists. - Debt management outreach: - Advisory Council on Government Debt Management (private sector experts) meets four times a year to discuss medium- to long-term debt management and policies. - Since 2004 introduction of a “primary dealer system,” Financial Bureau holds quarterly JGB Market Special Participants meetings. - Since April 2002, MOF hosts about four times a year the Meeting of JGB Investors to exchange views with banks, life insurance companies, and academics. - MOF seminars on the Japanese Economy and JGB began in January 2005 to enhance understanding among large investors and market participants; seminars held in January 2005 in London and New York and in May 2005 in Hong Kong and Singapore, with intention to continue regularly. ### Quality management and statistical program monitoring - ESRI processes to focus on national accounts quality are documented in the national accounts DQAF. - MOF quality control: - Primarily vested in administrative responsibility and accountability under the Public Finance Law; heads of ministries/agencies are responsible for preparing budgets and settlement accounts according to guidelines and are held accountable for quality. - MOF compiles and submits individual and consolidated accounts to the Board of Audit; audit reports are rarely qualified by the Board of Audit, indicating recognized quality. - Monitoring and control processes: - MOF has no separate statistical program; fiscal data compiled from administrative records with automated procedures designed to ensure accuracy. - ADAMS-system allows only transactions approved in the budget to be recorded; transactions are subject to multiple layers of internal controls within spending agencies and secondary review by MOF when settlement accounts are compiled. - Board of Audit has authority to constantly audit and supervise government accounting, review monthly statements, audit tax files, investigate deviations from budget, and require corrective measures when procedures are not followed or mistakes discovered. - Planning and quality considerations: - DNA (ESRI) has processes to handle quality considerations (see national accounts DQAF). - MOF incorporates quality improvements into administrative systems; trade-offs between timeliness and accuracy are considered (monthly settlement account data published with less detail than annual final settlement account), but accuracy is ensured through reliance on online accounting systems. *Source: _cr06115 - 0.1 Legal and institutional environment* ### 1. Assurances of integrity ### 1. Assurances of integrity ### Professionalism - Independence and impartiality of national accounts statisticians are described in the DQAF of national accounts. - Central government data are compiled from actual administrative data; no estimations are employed. - Senior posts (directors and deputy directors) are staffed by members with extensive professional experience. - Staffing and expertise: - Staff are subject to civil servant rotation policies; succession planning and extensive working guidelines are used to maintain professionalism. - The rotation policy has an adverse impact on the depth of expertise, which generally takes time to acquire. - On-the-job training and mentoring cultivate expertise; staff are encouraged to participate in national and international activities (OECD meetings, international seminars). - Choices of sources and statistical techniques: - ESRI’s choices are determined by availability of basic statistics and administrative records; accuracy is the primary basis. - Dissemination decisions (timing, media, formats) are based solely on statistical considerations and evolving user needs (example: Guide to Japanese Government Bonds, 2005). - Commenting on misuse: - ESRI provides explanatory materials and briefs the media on new data releases. - MOF Public Relations Office monitors media use of fiscal information; data releases are usually accompanied by a press release. - A regular biweekly meeting with the press and pre-publication interactions help minimize misuse. - MOF website invites comments and queries and includes a frequently asked questions section. ### Transparency - Terms and conditions for compilation and dissemination: - For general government sector, see the DQAF on national accounts. - For central government, terms are prescribed in the MOF Establishment Law and the Public Finance Law. - Article 28 of the Public Finance Law: introduction before the Diet of total amounts of government bonds and government borrowings when the budget is under consideration. - Article 46 of the Public Finance Law: annual publication of data on central government debt in printed and other formats after budget approval. - Copies of laws are available at the government publications service center. - Detailed explanations published in Understanding the Japanese Budget; MOF also disseminates Guide to Japanese Government Bonds, a Quarterly Newsletter, and a Debt Management Report. - Internal governmental access prior to release: - For central government operations, no officials outside MOF staff have access prior to public release. - No ministerial commentary is attached to data releases. - Names of individuals with pre-release access are documented for review when necessary. - Identification of statistical products: - ESRI publications clearly identify agency name and logo and require attribution. - MOF publications clearly indicate the ministry and contact details; MOF website indicates copyrights are reserved and that material may be quoted if MOF is credited. - Some publications (e.g., Guide to Japanese Government Bonds 2005) do not specifically require attribution. - Advance notice of major changes: - ESRI consults the Advisory Committee on National Accounts and publishes revised compilation manuals or “Notice on Usage” in advance; advance notice is given on the ESRI website. - Changes in methodology for central government settlement accounts or debt depend on revision of the Public Finance Law or related regulations; changes are disseminated via the Japanese Government Gazette and budget approvals for the following fiscal year. ### Ethical standards - All civil servants are subject to the National Public Service Ethics Law and the National Public Service Officials Ethics Code. - Purpose: ensure trust in civil servants, deter activities creating suspicion about fairness, require distinction between public and private affairs. - Heads of ministries may develop agency-specific ethics instructions. - MOF staff: - Join training sessions on civil servants’ ethics when recruited. - Are subject to the same ethics laws and several ordinances regulating duties and responsibilities. - No additional specific ethical standard beyond general civil servant provisions is applied, but staff are fully aware of duties. ### 2. Methodological soundness ### Concepts and definitions - Overall framework: - General government data are compiled as sector accounts of the national accounts and broadly follow the System of National Accounts, 1993 (1993 SNA). - General government statistics are not produced according to GFSM 1986 or GFSM 2001 methodologies. - ESRI derives general government statistics for SDDS requirements and posts them on the NSDP by aggregating and recalculating balancing items from Income and Outlay, Capital, and Financial Accounts. - Definitions used to derive main aggregates: - Revenue = Total receipts minus current transfers within general government; plus capital transfers received; plus net savings. - Expenditure = Total payments minus current transfers within general government; minus net savings; plus gross fixed capital formation less compensation of fixed capital; plus net purchases of land; plus change in inventories. - Deficit (-)/Surplus (+) = Balance of saving and investment. - Discrepancy = Difference between the calculated deficit/surplus and the financing as calculated from the financial account. - Financing breakdown (from national accounts data): - A. Bonds, Long-term (net) = securities other than shares (except financing bills), net. - B. Bills and Bonds. Short-term (net) = financing bills, net. - C. Loans by the public sector = Loans by the public sector, net. - D. Net other financing = sum of net changes in (1) loans by the private sector, (2) monetary gold and SDR, net, (3) currency and deposits, (4) shares and other equities, (5) financial derivatives, (6) insurance and pension reserves, and (7) other financial assets and liabilities. - Central government monthly settlement accounts follow the national budget framework: - Budget framework differs from GFS: revenue includes funds raised from issuing debt; expenditure includes repayment of debt principal; total budgeted revenue equals total budgeted expenditure (no budget deficit concept in that framework). - Debt presentation: - Analytical framework for central government debt is similar to GFSM 1986. - JGBs presented at face value by remaining maturity to redemption and by original maturity at issuance. - Ownership distribution of JGBs distinguishes resident and nonresident ownership and domestic breakdown by institutional holders. - Accrual accounting and GFSM 2001: - Pilot studies on accrual accounting have been conducted; no decision or migration plan to GFSM 2001 has been adopted. ### Scope - No comprehensive GFS-style statement presenting all operations by categories of revenue, expenditure, deficit, and financing is compiled and disseminated. - A summary table of major GFS components is derived from national accounts and presented on the NSDP for SDDS purposes; presentation lacks sufficient detail for comprehensive overview of general government financial position. - National accounts coverage: - General government sector accounts cover all general government activities per 1993 SNA, with subsectors: central government, local government, and social security funds. - Government-controlled nonprofit institutions engaged in nonmarket production are included; market activities are excluded. - Central government composition: - Central government in budgetary system comprises the general account and 31 special accounts. - Special accounts are established by legislation for specific purposes and may have designated revenue sources and limited borrowing powers. - Special accounts are reclassified in national accounts under 1993 SNA principles, leading to differences in coverage between national accounts and budgetary accounts (e.g., some social security funds included in special accounts are reclassified in national accounts as a separate subsector). - Local government: - Covers all prefectures and municipalities; includes ordinary accounts and business accounts (nonmarket-priced activities such as water supply, transport, electricity, sewerage) and social services (health, elderly medical care, nursing insurance); reclassified in national accounts per 1993 SNA. - Central government debt coverage: - Includes all debt of central government as defined in budgetary accounts: general bonds, bonds under the Fiscal Investment and Loan Program, other borrowing of special accounts, and short-term financing bills. - Supplementary data on outstanding government-guaranteed debt (yen and foreign-denominated) are provided. ### Classification / Sectorization - Institutional units in the general government sector are sectorized according to 1993 SNA guidelines; data disseminated for general government and subsectors (central, local, social security funds). - Annual settlement accounts are manually reclassified to 1993 SNA classifications. - Revenue classifications include: (1) taxes on production and imports; (2) property income received; (3) current taxes on income, wealth; etc.; (4) social contributions; (5) other current transfers received. - Outlays classifications include: (1) property income paid; (2) social benefits other than social transfers in kind; (3) other current transfers paid; etc. - Capital account transactions classified as: (1) gross fixed capital formation; (2) consumption of fixed capital; (3) changes in inventories; (4) net purchase of land; (5) capital transfers; etc. - Data are also classified by purpose according to COFOG. - Balance sheet: - Annual national accounts include a balance sheet for general government with asset and liability categories per 1993 SNA; net worth presented as a balancing item. - Central government dissemination: - MOF publishes annual data on revenue, expenditure, deficit/surplus, and financing by debt instrument on its website and the NSDP. - Financing data disaggregated into bank and nonbank financing. - All central government debt instruments are domestically issued in local currency; no foreign-issued debt exists. - Ownership of JGBs by nonresidents recorded under a special tax exemption scheme: 4.3 percent of JGBs were held by nonresidents as of March 2005. - Maturity classification: - Marketable government bonds classified by original and remaining maturities into short-term (less than one year), medium-term (from two to six years), and long-term (more than 10 years). - Fiscal Loan Fund Special Account bonds classified by original and remaining maturity into medium term (from two to five years) and long term (10 years and more). - Financing bills are short-term instruments with, usually, a maturity of 13 weeks. - Three bond types not included in maturity classification—subsidy bonds (redeemable on an installment plan), subscription bonds, and contribution bonds (redeemable on demand)—are nonmarketable and together account for only about 1 percent of all outstanding central government bonds. *Source: _cr06115 - 1. Assurances of integrity* ### 2.4 Basis for recording ### _cr06115 - 2.4 Basis for recording ### Basis for recording flows and stocks - Prices used to value flows reflect the value of the actual cash flows. - Stock of debt of government is reported at face value (i.e., the amount that the government is obligated to pay when the debt matures). - Government-guaranteed foreign-currency debt is converted to yen using the average exchange rate that prevailed on the reporting date — in line with international statistical standards. - Transactions in the settlement accounts of central government are recorded at the time of issuing the payment order or receiving deposits in the bank account of government, and are therefore on a cash basis. - ESRI uses cash settlement data to compile the national accounts but makes adjustments for some noncash transactions such as consumption of fixed capital. - The majority of transactions of the general government sector are currently presented on a cash basis; moving to an accrual basis for the settlement accounts of government is not being considered at this time. - All transactions of government are generally recorded on a gross basis in the settlement accounts; however, when deriving general government accounts from national accounts data, some transactions are recorded on a net basis (example: net acquisition of land). - Settlement accounts record acquisition and disposal of financial assets and liabilities on a gross basis owing to the flow of funds approach; necessary netting is done when presenting flows in general government statistics. ### Accuracy and reliability — source data - Central government and social security funds data are derived from actual accounting records of these entities. - Local government data are obtained from a survey conducted by MIC; the comprehensive annual survey is based on the settlement accounts of local governments and published in the Statistical Annual Report on Local Public Finance, the Yearbook of Local Public Enterprises, and the White Paper on Local Public Finance. - Annual central government subsector data sources are comprehensive, eliminating need for estimations in compilation. - Annual local government data are not timely for first estimate of annual national accounts; ESRI relies on a quarterly sample survey of local governments in the first round. - ESRI derives government debt data from administrative records held by the Financial Bureau of MOF and BOJ; this source is complete and eliminates need for other data collection techniques. - Individual central government settlement accounts require reclassifications before use in national accounts; MOF identifies each accounting item by an 11-digit code, with two digits identifying its SNA category. - MOF disseminates monthly central government data according to the budgetary framework; revenue in that framework includes all inflows (including debt issued) and expenditure includes all outflows (including debt repayments), which differs from international public sector standards and complicates comprehensive overview of central government position. - Central government debt data compiled from the Financial Bureau of MOF reasonably approximate GFSM 1986 good practices and contain sufficient detail for analysis. - Final central government settlement accounts data are released after final settlement and audit, which could be 6–8 months after the end of a reference period; manual reclassification to the 1993 SNA framework allows annual general government sector data to be released only after eight months. - Local governments must complete final settlement before end of May following fiscal year end in March; accounts are audited and submitted to local assembly by August; approval time varies and could take two to four months. - Preliminary estimates of local government data for fiscal 2003/04 were first disseminated by October 2004; the White Paper was disseminated by MIC in March 2005. - ESRI and MOF sources are treated as accurate administrative records; regular consultation and cross-checking of government debt data occur between BOJ and MOF. ### Assessment, statistical techniques, and validation - Source data are mainly administrative records subject to internal quality controls; assessments are routinely conducted to ensure accuracy of accounting records though primarily aimed at improving administrative systems rather than statistical processes. - MOF annually reviews classification codes used in settlement accounts to ensure correct linkage to SNA classification. - Statistical techniques are limited because general government data are primarily from administrative records; quarterly sample surveys of local governments are used appropriately by ESRI for estimates. - Compilation procedures are well documented and periodically updated. - Data adjustments and transformations are not applicable to government data. - Intermediate data (consolidated central government accounts and local government reports) are not subject to detailed assessment and validation beyond their administrative quality controls. - MOF does not investigate statistical discrepancies and inconsistencies with other datasets because administrative records are deemed final; no routine bilateral reconciliations beyond BOJ–MOF debt cross-checks. - Revision studies of national accounts are not routinely performed; no revisions are made to administrative data of central government. ### Serviceability — periodicity, timeliness, and consistency - SDDS specifications: - General government data: annual periodicity — Japan adheres. - Central government operations: SDDS specifies monthly periodicity; Japan employs a flexibility option and disseminates with annual periodicity, though a consolidated central government settlement account is disseminated monthly on a budget framework basis. - Central government debt: SDDS requires quarterly periodicity — Japan fully adheres and compiles debt monthly, exceeding requirement. - Timeliness: - SDDS timeliness for annual general government data is two quarters; Japan disseminates general government data with timeliness of eight to nine months as part of national accounts and employs a flexibility option. - SDDS timeliness for monthly central government operations is one month; Japan employs a timeliness flexibility for this data category though monthly settlement accounts are disseminated with timeliness of approximately one month. - Central government debt timeliness requirement is one quarter; Japan disseminates earlier than one quarter after the reference period. - Consistency within dataset: - Annual general government data for national accounts (as on NSDP and IMF DSBB) are consistent within the dataset though some discrepancies exist between deficit/surplus and financing which are balanced with a discrepancy line. - Central government debt data are fully consistent within the dataset; debt recorded at face value may not be consistent with financing data reported on a cash basis and reconciliation is not routinely done. - Time series availability: - Monthly settlement accounts are available from 1999 on MOF website. - Quarterly debt reports are available from June 1996. - Zaisei toukei contains time-series of central government settlement total revenue and expenditure since 1867. - Guide to Japanese Government Bonds 2005 presents annual changes in issues and outstanding balance of government bonds since 1965. - Consistency with other sources: - Central government data as disseminated in national accounts are not consistent with consolidated settlement account data because of differences in classification and sectorization; bridge tables are disseminated but consistency is not monitored or reconciled. - Central government debt data are fully consistent with BOJ’s Financial and Economic Statistics Monthly. ### Revision policy and practice - Preliminary and revised annual national accounts data are published in the Annual Report on National Accounts; preliminary data are revised when next-year data sources are revised and revisions are noted in official publications. - Central government settlement accounts and central government debt are based on administrative records and are final when first released; corrections are made through journal entries in subsequent periods but are rare. - Preliminary and revised data are clearly identified in national accounts; central government operations and debt are regarded as final when disseminated and are not indicated as preliminary or revised. - No formal revision studies are conducted on national accounts data; revisions studies do not apply to central government settlement accounts or debt since those data are not revised. ### Accessibility and dissemination - General government prescribed components are not disseminated directly; they are derived from national accounts income and outlay, capital, and finance accounts for SDDS purposes, requiring aggregation and recalculation to obtain main GFS aggregates. - GFS metadata on the DSBB describe formulas to derive aggregates and balancing items, but presentation hampers analysis of general government financial position. - Central government data are presented as individual settlement account reports for specific periods; tables show current period, corresponding period of previous fiscal year, and budget items for current full fiscal year; no commentaries are included though biweekly press meetings provide verbal comments. - Central government debt publications provide multiple formats, tables, commentary on recent trends, and graphical/schematic explanations. - Dissemination media: - National accounts data disseminated in hard copy and electronically on ESRI website. - MOF releases central government operations and debt in hard copy and on its website; publications available from Government Publications Service Center and Public Relations Office at MOF; SDDS-compliant data disseminated on Japan’s NSDP and IMF DSBB. - Release schedule and simultaneity: - General government data released as part of annual national accounts according to a two-quarter-ahead calendar; ESRI publishes advance release calendar and weekly exact release schedule one week prior. - MOF provides quarter-ahead advance release calendar and weekly timing; subscribers can be notified by e-mail of new data. - Monthly settlement accounts of central government and central government debt data are released by MOF and made available to all users simultaneously via press release and MOF website; hard copies available through Public Relations Office or Government Publications Service Center. - Non-routinely disseminated statistics may be made available upon request, evaluated case by case. *Source: _cr06115 - 2.4 Basis for recording* ### 5.2 Metadata accessibility ### 5.2 Metadata accessibility ### 5.2.1 Documentation on concepts, scope, classifications, basis of recording, data sources, and statistical techniques - The compilation of the general government sector account is described as part of the details provided on the methodology used to compile the national accounts. - The concepts, definitions, and methodology are primarily described in: - System of National Accounts 1993 in Japan – Definitions and Concepts - System of National Accounts 1993 in Japan—Sources and Methods - A summary of metadata is presented on the DSBB and updated regularly. - For a more comprehensive description on the availability of metadata on the national accounts, refer to the DQAF for national accounts. - Metadata for the compilation of the central government data, presented in accordance with the SDDS requirements, are primarily available from the summary methodology described on the DSBB. - For central government accounts, definitions and some concepts are prescribed in: - the Public Finance Law - the Budget, Settlement of Accounts, and Accounting Regulations - Copies of these laws, available in Japanese, are available from the Government Publications Service Center. - Detailed data on settlement procedures are published in: - guidelines on Settlement of Revenue and Expenditures - the Explanation of the Settlement - The document Understanding the Japanese Budget describes the concepts, definition, and operations of the central government in Japan. - Metadata on the debt of the central government are presented on the IMF’s DSBB and in several other publications, including: - The Guide to the Japanese Budget - Guide to Japanese Government Bonds - the Quarterly Newsletter of MOF ### 5.2.2 Levels of detail are adapted to the needs of the intended audience - The level of detail in various sources of metadata varies according to the intended audience. - Summary methodologies are available for users needing an overview of compilation practices. - Detailed information is provided for investors. - Detailed information on administration is provided for users who review policy execution processes. ### 5.3 Assistance to users #### 5.3.1 Contact points for each subject field are publicized - Contact persons are provided by MOF and ESRI in all publications. - For English publications, MOF gives only a general contact point in the Public Relations Office because not all staff are fluent in English and would not be able to service non-Japanese inquiries. - MOF staff use inquiries to inform them of user needs, although these requests are not formally monitored. #### 5.3.2 Catalogs of publications, documents, and other services, including information on any charges, are widely available - The Public Relations Office has a list of all publications of the MOF. - Most of these publications are provided free of charge as a service to the public. ### Table 4. DQAF (July 2003): Summary of Results for Government Finance Statistics — Selected findings - Compiling Agency: Ministry of Finance and Economic and Social Research Institute, Cabinet Office - 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 - Selected assessment comments: - 0.1 Legal and institutional environment: Although government accounting responsibilities are clearly defined, the responsibility for compiling GFS as a distinct statistical output is not assigned. - 2.2 Scope: No comprehensive statement of general government with regards to revenues, expenditures, deficit, and financing. - 3.1 Source data: For general government, source data do not approximate the 1993 SNA and lack timeliness. - 3.5 Revision studies: There are no revision studies for general government data. - 4.1 Periodicity and timeliness: Japan uses SDDS flexibility options on general government and central government operations. - 4.2 Consistency: The consistency of the central government data disseminated in the budgetary accounts and in the national accounts is not monitored/reconciled. ### Recommendations (as listed) - Specify the responsibility for collecting, processing and disseminating GFS and develop working arrangements for data sharing and coordination among the relevant data producing agencies. (0.1.1 and 0.1.2) - Compile an integrated set of statements (operating statements, statement of other flows, and balance sheet) for the general government according to international statistical guidelines, and disseminate widely. (2.2.1) - Compile a monthly statement of sources and uses of cash for budgetary central government, and disseminate in accordance with SDDS requirements. (2.2.1) - Develop source data to reasonably approximate the statistical output of the 1993 SNA and GFSM 2001. (3.1.2) - Improve the timeliness of source data for local government statistics. (3.1.3) - Bring the timeliness of general government sector accounts and the periodicity and timeliness for central government operations into line with SDDS requirements. (4.1.1 and 4.1.2) - Improve the consistency of data by ensuring consistent sectorization of budgetary accounts, and reconcile with national accounts where differences are unavoidable. (4.2.3) *Source: _cr06115 - 5.2 Metadata accessibility* ### 0.4 Other quality management ### 0.4 Other quality management ### 0.4.1 Processes are in place to focus on quality - BOJ considers it essential to provide reliable monetary statistics and seeks ways to improve the quality of its monetary statistics. - On-the-job training (OJT) program for staff to enhance understanding of quality and how it can be achieved. - Budgetary allocation for statistical programs provides infrastructure for quality by recognizing trade-offs, economies of scale, and interrelations between datasets (see 0.2.1). - BOJ follows a set of rules for revising statistics: - Data on broadly defined liquidity revised when list of potential improvements becomes sufficiently long to justify additional work. - Need for data revision is examined every three years. - Other revisions take place when new source data become available (see 4.3.1). - Reference to BOJ paper: “Toward Further Improvement of Financial and Economic Statistics: The Bank’s Basic Principles and its Recent Actions,” Bank of Japan Quarterly Bulletin (November 2002) for description of recent improvements in accuracy. ### 0.4.2 Processes are in place to monitor the quality of the statistical program - BOJ management conducts a prerelease data check. - BOJ releases records of past revisions of data to the public. - Financial Statistics Section has access to expert guidance on quality and strategies for improving data production. - When necessary, outside consultants are used for revisions. ### 0.4.3 Processes are in place to deal with quality considerations in planning the statistical program - BOJ considers quality issues, including implicit and explicit trade-offs among quality dimensions, in planning the statistical program. - Prior to major methodology revisions, BOJ considers opinions from the public and experts and explicitly explains the revision policy in publications. - Reference repeated to BOJ paper in Bank of Japan Quarterly Bulletin (November 2002). ### 1. Assurances of integrity — 1.1 Professionalism - Bank of Japan Law mandates professional independence: - Article 5, clause 1: “In light of the public nature of its business and property, the Bank of Japan shall endeavor to conduct its business in a proper and efficient manner” - Article 5, clause 2: “In implementing this Law, due consideration shall be given to the autonomy of the Bank's business operations” - Articles 23 and 24 define “appointment of executives” and “executives’ term of office” - Article 25 stipulates BOJ executives shall be protected from dismissal against their will during term of office - Article 2 of the Bank of Japan Internal Rule of Staff: BOJ staff must recognize the public mission and perform duties fairly. - Professionalism promoted via: - Recruitment and promotion based in part on expertise (economics, information technology, statistics). - OJT training and participation in IMF training seminars. - Opportunities to participate in expert meetings (IMF and OECD working groups). - Encouragement of research, publication of selected research papers on BOJ website, and acknowledgement of individual authorship. ### 1.1.2 Sources, techniques, and dissemination decisions - BOJ chooses data sources and statistical techniques solely on statistical considerations. - Decisions on timing, media, and other dissemination aspects are based solely on statistical considerations. - BOJ published policies in “Toward Further Improvement of Financial and Economic Statistics: The Bank’s Basic Principles and its Recent Actions,” Bank of Japan Quarterly Bulletin (November 2002). - One policy: to disseminate statistics as soon as possible. ### 1.1.3 Commenting on erroneous interpretation and misuse - Financial Statistics Section holds a press conference on the day of release and issues a press release to explain monetary statistics. - It monitors media coverage and seeks correction of misuse through the Secretariat of the Policy Board (media liaison). - There have been numerous instances of such corrections. ### 1.2 Transparency - BOJ website (http://www.boj.or.jp) provides documents presenting terms and conditions under which Financial Statistics Section compiles monetary statistics. - Staff deliver lectures to enhance public understanding (most recent noted: 2004 at the University of Saitama). - BOJ’s statistical publications identify where users can find more information. ### 1.2.2 Internal governmental access prior to release - Internal government access to monetary statistics prior to release is strictly prohibited and does not exist. - BOJ published a list of staff positions (all from Financial Statistics Section) who have access prior to release. - Even highest management are not allowed access prior to release. ### 1.2.3 Identification of products - Financial statistics are identified as produced by the BOJ’s Financial Statistics Section. - BOJ is exclusive disseminator and requests attribution when statistics are reproduced. - BOJ copyright notice on website: “When (information included in this Site is) copied or reproduced, the source, the BOJ, should explicitly be cited”; and “When creating a link, provide explicit credit that the link is connected to the Bank of Japan Website.” ### 1.2.4 Advance notice of major changes - BOJ gives advance notice via website of major planned changes to methodology, source data, and statistical techniques. - Example: notice on March 8, 2004 that changes to broadly defined liquidity data were scheduled for release on June 8, 2004. ### 1.3 Ethical standards - BOJ guidelines: Bank of Japan Law, Rule of Ethical Conduct for Executives and Staff of the BOJ, Code of Conduct for Staff of the BOJ. - Guidelines disseminated on internal site; easily available and well-known to staff. - Management acts as role model and reminds staff of standards (e.g., at General Affairs Meeting). - Financial Statistics Section has a section-specific Financial Statistics Section Rule to strengthen ethical standards and discourage political interference. - New staff are made familiar with BOJ guidelines and Financial Statistics Section Rule during training programs. ### 2. Methodological soundness — 2.1 Concepts and definitions - MFSM methodology requires compilation of monetary statistics within a Depository Corporations Survey (analytical presentation of consolidated accounts of resident financial corporations and financial quasi-corporations). - BOJ does not compile the Depository Corporations Survey as recommended; instead compiles a Monetary Survey with consolidated and adjusted balance sheets of: - Central bank (issues cash in circulation) - Deposit money banks (issue deposit money and quasimoney) - BOJ’s Monetary Survey provides input to Japan’s Flow of Funds Accounts (also compiled by BOJ). - BOJ compiles additional monetary aggregates with broader institutional coverage. - Financial Statistics Section is aware of deviations from MFSM concepts and definitions (see 2.2.1, 2.3.1 and 2.4.1) and keeps them under review, taking into account users’ needs and reporting burden. ### 2.2 Scope — 2.2.1 Coverage assessment and monetary aggregates - Categories of depository corporations in Japan: 1. BOJ—the central bank; 2. Various types of commercial banks—domestically-licensed banks, foreign banks in Japan, Shinkin Banks, Shinkin Central Bank, Norinchukin Bank, and Shoko Chukin Bank; 3. Cooperative financial institutions like agricultural and fisheries cooperatives; 4. Japan Post—the world’s largest deposit-taker, which collects about one-fifth of Japan’s total deposits. - Depository Corporations Survey in MFSM should cover all categories, but BOJ’s Monetary Survey covers only some categories; Flow of Funds Accounts cover them all. - Monetary aggregates (Guide to Japan’s Money Stock Statistics, June 2004): - M1 = Cash currency in circulation + Deposit Money - M2+ CDs = M1 + Quasimoney + CDs - M3 + CDs = M2+ CDs + Deposits of Post Offices + Other savings and deposits with financial institutions + Money Trusts - Broadly-defined Liquidity = M3 + CDs + Pecuniary Trusts other than Money Trusts + Investment Trusts + Bank Debentures + Commercial Paper issued by financial institutions + Repurchase agreements and securities lending with cash collateral + Government bonds + Foreign bonds - Cash currency in circulation = Bank notes and coins in circulation - Deposit money = Demand deposits (Current deposits, Ordinary deposits, Saving deposits, Deposits at notice, Special deposits and deposits for tax payments) less Checks and notes held by the surveyed financial institutions - Quasimoney = Time deposits + Deferred savings + Installment savings + Nonresident Yen deposits + Foreign currency deposits - Compilation practices: - M1 and M2 + CDs are derived from Monetary Survey, covering BOJ and commercial banks (categories (1) and (2)). - M3 + CDs compiled outside Monetary Survey by adding deposit liabilities of cooperative financial institutions and Japan Post (categories (3) and (4)). - Broadly Defined Liquidity compiled outside Monetary Survey by adding other liabilities to M3 + CDs. - Result: four monetary aggregates of progressively wider coverage; two compiled within Monetary Survey and two outside — a practice not conforming to MFSM. - Balance sheets in Monetary Survey cover domestic branches and domestic headquarters appropriately. - Three identified problems: 1. Lack of completeness in institutional coverage of Monetary Survey: excludes Japan Post and cooperative financial institutions. BOJ’s rationale: perceived lack of demand and Japan Post’s unique status (historical deposit requirement to FILP eliminated in April 2001; Japan Post switched to discretionary investment; loans account for only one or two percent of investment methods; Postal Savings investment methods released monthly). Assets and liabilities of cooperative financial institutions compiled by central agency available on BOJ website. BOJ notes these institutions are taken into account in broad-money aggregates and flow of funds accounts. 2. Inclusion of nonresident yen deposits in quasimoney and monetary aggregates despite unresolved residency status; BOJ has not undertaken research due to small balances outstanding. MFSM recommends classification based on residency: if center of economic interest is abroad, describe as nonresident and reclassify from quasimoney to foreign liabilities; if domestic, describe as resident and include in quasimoney. Current practice (describing as nonresident and including in quasimoney) is contrary to MFSM. 3. Foreign currency deposits included in quasimoney comprise residents’ and nonresidents’ deposits; MFSM requires inclusion of residents’ foreign currency deposits in monetary aggregates but reclassification of nonresidents’ deposits to foreign liabilities. - BOJ’s Monetary Survey appropriately excludes foreign assets and liabilities of the central government; MFSM does not require routing central government foreign assets and liabilities to Monetary Survey but suggests consideration of compiling a monetary authorities account with those items. ### 2.3 Classification/sectorization — 2.3.1 Assessment - MFSM sectorization: residents vs nonresidents, then sectors: Financial corporations (central bank, other depository corporations, other financial corporations); Nonfinancial corporations (public nonfinancial corporations, other nonfinancial corporations); General government (central government, state government, local government, social security funds); Households; Nonprofit institutions serving households. - BOJ Monetary Survey sectorization: - Distinguishes resident and nonresident sectors. - Subdivides resident sector into four subsectors: 1. Central government 2. Local government 3. Public nonfinancial corporations 4. Private sector (other private nonfinancial corporations, households, nonprofit institutions serving households) - Two problems with BOJ scheme: 1. Residency definition deviates from BPM5-MFSM for individuals: - Japanese natural persons residing abroad are considered nonresident two years (instead of one year) after departure. - Non-Japanese natural persons residing in Japan are considered resident only six months (not one year) after arrival. - Residency status of corporations correctly based on center of economic interest. 2. Resident subsectoring is less detailed than MFSM: - BOJ scheme cannot distinguish banks’ claims on other banks from claims on other (nonbank) financial corporations; these are included in unclassified assets. - Banks’ claims on other private nonfinancial corporations, households, and nonprofit institutions serving households are indistinguishably included in claims on private sector. - Banks’ deposit liabilities to other banks are separately identified and included in unclassified liabilities; deposit liabilities to other (nonbank) financial corporations are included in money supply. - To align with MFSM, BOJ needs: 1. Change household residency criterion to one-year rule. 2. Separately identify claims on other banks from claims on other (nonbank) financial corporations. 3. Separately identify claims on other private nonfinancial corporations, claims on households, and claims on nonprofit institutions serving households. - Note: The more detailed MFSM sectorization is used for BOJ’s flow of funds accounts (Guide to Japan’s Flow of Funds Accounts, October 2002). ### Financial instrument classification - MFSM recommends classification: Monetary gold and SDRs; Currency and deposits; Securities other than shares; Loans; Shares and other equity; Insurance technical reserves; Financial derivatives; Other accounts receivable/payable. - BOJ’s Monetary Survey broadly follows MFSM classification. - Consistent with international guidelines, repurchase agreements (repos) are treated as collateralized loans rather than outright sales of securities (see Guide to Japan’s Flow of Funds Accounts, October 2002). *Source: _cr06115 - 0.4 Other quality management* ### Chapter 2. The Financial Statistics Section keeps the deviations from the above MFSM ### Chapter 2. The Financial Statistics Section keeps the deviations from the above MFSM classification under review, taking into account the users’ needs in the area of financial statistics and the reporting burden on the financial institutions. ### Basis for recording - Market valuation and departures from MFSM: - MFSM recommends market-based valuation of assets and liabilities for monetary statistics. - The Financial Statistics Section of the BOJ does not follow market-based valuation for various positions used in the Monetary Survey; it uses values as recorded in BOJ and commercial banks’ accounts (examples: governments bonds, corporate bonds, and stocks). - BOJ uses a fixed historic price for valuation of its monetary gold. - Divergences from MFSM methodology are not adequately described in the explanatory notes. - Most positions valued at book values in the Monetary Survey are estimated at market prices when deriving the flow of funds accounts (see BOJ’s Guide to Japan’s Flow of Funds Accounts (October 2002)). - Foreign currency conversion: - BOJ uses the market exchange rate prevailing on the reference date of the balance sheet for converting its foreign currency positions (foreign deposits, and foreign securities). - Commercial banks do the same for converting foreign currency positions (loans and deposits) into domestic currency. - This practice conforms to the MFSM methodology. - Recording basis and grossing/netting: - Accounting data used for monetary statistics are based on accrual accounting; interest on financial assets or liabilities is treated as accruing continuously during the accounting period. - Accounting data are collected on a gross basis; claims on a particular transactor are not netted against liabilities to that transactor or group. - In the BOJ’s Monetary Survey certain analytical aggregates are presented on a net basis: Net Foreign Assets, Net Claims on Central Government, and Other Items (Net). - Underlying data are shown on a gross basis; provisions against bad and doubtful debt are not netted against credit, conforming to MFSM methodology. ### Accuracy and reliability — Source data and compilation - Institutional coverage and registers: - BOJ maintains a comprehensive and current register of financial sector institutions, including depository corporations and other financial intermediaries; the register is updated for entry, liquidation, and merger of units; institutional coverage is complete. - Primary source data sets used for the Monetary Survey: - (1) BOJ balance sheet data provided by the Administration Department. - (2) Data on deposits and loans reported by commercial banks to the BOJ’s Research and Statistics Department on the form Deposits, Vault Cash and Loans (Tables 1-1,1-2, and 1-3). - (3) Complete balance sheet data reported by commercial banks to the BOJ’s Financial Systems and Bank Examination Department. - (4) Consolidated data on external assets and liabilities of commercial banks provided by the International Department. - (5) Data on the Japan Off-shore Market (JOM) account provided by the International Department (records banks’ nonresident sector transactions). - Integration and treatment of source data: - Central Bank’s Survey is compiled from BOJ balance sheet data provided by the Administration Department. - No rerouting of foreign assets and liabilities held by the central government; Central Bank’s Survey covers only foreign assets and liabilities held by the BOJ—this conforms to MFSM methodology. - Commercial Banks’ Survey integrates three source data sets: Research and Statistics Department deposits/cash/loans data; International Department consolidated external positions; Financial Systems and Bank Examination Department total assets and liabilities data. JOM account data are subtracted from total assets and liabilities. - Small discrepancies arising when integrating different data sets are included in Other Items (Net). - When BOJ modifies reporting forms it consults reporting financial institutions beforehand. - Japan Post and various credit cooperatives use different report forms (e.g., The Money Stock Preliminary Data Inquiry Table) to report to the Research and Statistics Department. - Source data system is kept under continuous review; new banks are promptly added. - Limitations relative to MFSM requirements: - BOJ’s reporting format does not deliver all source data needed to compile a Depository Corporations Survey as recommended by MFSM. - Specific shortcomings: - No sectoral breakdown of credit extended by Japan Post and cooperative financial institutions. - Resident sector subdivision in source data is less detailed than MFSM requires. - Definition of residency for claims and liabilities to individuals does not correspond to the BPM5-MFSM definition. - Source data on BOJ and commercial banks use book values rather than market prices. - Consequences: - Absence of sectoral breakdown from Japan Post and cooperatives is a serious limitation; these institutions invest in a variety of bonds and provide loans to other financial corporations and to individuals and households. - Deposits, Vault Cash and Loans (Table 1-3) collects total credit and credit to (1) financial corporations, (2) local government, (3) individuals, and (4) nonresidents; credit to nonfinancial corporations and nonprofit institutions serving households is derived as a residual, preventing separate identification of public nonfinancial corporations vs. private nonfinancial corporations vs. nonprofit institutions serving households. - Financial Statistics Section uses balance sheet data from Financial Systems and Bank Examination Department to identify credit to public nonfinancial corporations but cannot distinguish other subcategories (e.g., private nonfinancial corporations vs. nonprofit institutions; other banks vs. other nonbank financial corporations). - Given these limitations, the Monetary Survey cannot show the full range of sectors required by MFSM methodology. - BOJ does not perform adjustments to align source data fully with MFSM nor routinely use supplementary data to fill gaps; supplementary data collected from ministries or financial institutions are not sufficiently detailed or comprehensive to support core Monetary Survey sources. ### Accuracy and reliability — Timeliness, assessment, and statistical techniques - Timeliness of source data collection: - BOJ balance sheet data are compiled after every 10 days with a lag of only 2-5 business days. - Commercial banks report source data to the BOJ online by the 19th and paper-based by the 20th of the month after the reference date. - BOJ maintains follow-up procedures and regular contact with banks to minimize reporting delays; reporting delays have not been significant. - Assessment and validation of source data: - BOJ routinely assesses accuracy of commercial banks’ source data using procedures for source data inquiries. - Reported data are entered into an automated spreadsheet for cross-checking; out-of-trend movements or high-value transactions prompt prompt confirmation from reporting banks. - BOJ checks differences between preliminary and revised data for each bank; large gaps trigger inquiries. - Use of statistical techniques: - BOJ does not use statistical techniques to deal with source data of the Monetary Survey and does not use estimated data to supplement source data. - BOJ derives seasonally adjusted monetary aggregates using X-12 ARIMA since 1996 (an internationally accepted technique). - X-12 ARIMA applies “ex ante adjustments” to estimate and exclude outlier and calendar factors prior to seasonal adjustments. - BOJ conducts an “ex post diagnosis” to check residual seasonal factors. - A series seasonally adjusted by X-12 ARIMA is more stable than one adjusted by X-11 ARIMA (see BOJ, Enhancement of Statistics Provided by the Research and Statistics Department, July 28, 1999, p.4). - Validation and discrepancy treatment: - BOJ uses other information, although not regularly, to validate balance sheet data (example: financial market data) and holds meetings with relevant departments (Financial Systems and Bank Examination, International, Financial Markets) as needed. - Discrepancies exist between BOJ’s data and commercial banks’ data on interbank positions (BOJ credit to banks vs. banks’ borrowing from BOJ; BOJ data on banks’ deposits with BOJ vs. banks’ data on their deposits with BOJ), but these discrepancies are less than one percent and judged too small to require further investigation. - No financial transactions data are reported, so no reconciliation is attempted with flows implied by stock changes. - BOJ investigates classification/sectorization errors or omissions by contacting reporting banks for explanation. - Revision studies: - BOJ prepares periodic studies on revisions to its monetary statistics assessing initial estimates against revised/final estimates; studies cover scale, frequency, direction, magnitude, sources of errors, and methods of revising. - Example: BOJ’s Guide to Japan’s Money Stock Estimates (June 2004), Chapter 3. - Findings inform the optimal revision cycle and BOJ maintains records of new data sources, updated techniques, and methodological improvements. ### Serviceability — Periodicity, timeliness, and consistency - Periodicity and timeliness of dissemination: - Central Bank’s Survey data are disseminated three times per month (exceeding monthly periodicity required under the SDDS). - Other Depository Corporations Survey data are disseminated every month (conforming with monthly periodicity required under the SDDS). - Central Bank’s Survey is disseminated on the second business day after the reference period of ten days, and every six months on the fifth business day after the reference period (meeting the two-weeks lag allowed under the SDDS). - Other Depository Corporations Survey is disseminated six weeks after the reference month (exceeding the one-month lag allowed under the SDDS); this delay is attributable to the domestic banking system’s extensive branch network and Japan uses the “as relevant” provision of the SDDS. - Internal and cross-dataset consistency: - Small discrepancies between BOJ and commercial banks on interbank positions exist in source data; BOJ substitutes its data on BOJ credit to banks and banks’ deposits with the BOJ for commercial banks’ data in the Monetary Survey, eliminating discrepancies in the published statistics. - Monetary Survey data are compiled from accounting data collected only in stock terms; no independent flow data exist for stock-flow reconciliation. - BOJ disseminates more than five years of time-series monetary and related data. Data series availability: - Monetary Survey (old base: from January 1970, new base: from April 1998) - Monetary Base (from January 1970) - Bank of Japan Accounts (old base: from January 1945, new base: from April 1998) - Money Stock (old base: from January 1955, new base: from April 1998) - Principal Figures of Financial Institutions (preliminary figures, from July 1991) - Most old base data series are available only paper-based; all new base data series are available on the Internet. - When changes in source data, methodology, or techniques are introduced, BOJ reconstructs historical series as far back as reasonably possible; in case of discontinuities BOJ identifies and explains main breaks, causes, and adjustments and provides adjusted data on its website (example: BOJ’s Guide to Japan’s Money Stock Statistics (June 2004), Appendix). - Consistency with other frameworks: - Financial Statistics Section and Balance of Payments Section use International Department data on foreign assets and liabilities of commercial banks for compiling financial and balance of payments statistics, respectively. - Foreign assets and liabilities held by the central government are not reflected in monetary statistics, so monetary statistics are not comparable with balance of payments statistics on changes in total reserve assets. - Consistency exists between monetary statistics and government budget data because the Ministry of Finance uses BOJ data on government deposits with—and government borrowing from—the depository corporations. *Source: _cr06115 - Chapter 2. The Financial Statistics Section keeps the deviations from the above MFSM classification under review, taking into account the users’ needs in the area of financial statistics and the reporting burden on the financial institutions.* ### 4.3 Revision policy and practice ### 4.3 Revision policy and practice ### 4.3.1 Revisions follow a regular and transparent schedule - The BOJ undertakes revisions to monetary statistics on a predetermined and reasonably stable cycle—normally, once every three years, in June—the last revisions were undertaken to the broadly-defined liquidity data in June 2004. - The BOJ publicizes the revision cycle and revision rules on its website and explains the reasons underlying the cycle (e.g., the availability of source data, as well as the timing of revisions on related datasets and of preparation of key policy documents). - The BOJ also performs revisions outside the regular cycle (owing, for example, to the discovery of new source data). ### 4.3.2 Preliminary and/or revised data are clearly identified - At the time of data dissemination, users are informed of the preliminary nature, as well as of the revised nature, of the monetary data. - Revised data are indicated by the symbol “r.” ### 4.3.3 Studies and analyses of revisions are made public (see also 3.5.1) - The BOJ informs users of the results and studies of the revisions to the monetary statistics. - It measures, assesses, and explains the revisions in the monetary statistics publication and in the database accessible by users—for example, BOJ’s Guide to Japan’s Money Stock Estimates (June 2004), Chapter 3 and Appendix, and Introduction of Periodical Revision of Broadly Defined Liquidity. - The BOJ publishes analysis of differences between the revised and preliminary data for major aggregates to allow an assessment of the reliability of the preliminary data. *Source: _cr06115 - 4.3 Revision policy and practice* ### 0.2 Resources ### 0.2 Resources ### Staff, facilities, computing resources, and financing - Within the BOJ, the BOPS of the International Department is responsible for compiling the balance of payments statistics. - Overall staffing for balance of payments statistics is adequate. - In the BOJ’s headquarters: - approximately 50 staff are in charge of the balance of payments statistics, - of which 30 BOPS staff perform compilation (including collection of data and primary check with reporters), methodological, and analytical work. - Two other sections participate in compilation: - the Foreign Exchange Reporting Section of approximately 10 staff is responsible for the administrative notifications or reports; and - the BOP System Section of approximately 10 staff is assigned the preparation and implementation of the Internet reporting system and is responsible for maintaining the computerized compilation system. - Staff of the 32 BOJ branches participate in collecting and confirming data obtained from the ITRS and administrative notifications or reports, using the manual for the foreign exchange transactions and reports. - The average years of experience within the BOPS is seven. - In the MOF, approximately 10 staff are assigned to matters concerning balance of payments data. - The BOJ has allocated resources in IT to produce high-quality statistics with fewer reporting and calculation burdens. - The BOJ Open Network for Electronic Procedures (BOP System) — the first web-based online reporting system and automated processing system in Japan — was launched in January 2005. - For maintaining good performance, the BOJ conducts occasional reviews to address users’ needs (for example, considering a function to accommodate a more flexible approach to revision). - Working facilities of the BOPS are adequate. - Financing and budgetary arrangements: - As provided by the FEFTL (Article 69(3)), the MOF can enjoin the BOJ to assume the expenses of collecting and compiling balance of payments statistics, as well as those of establishing the Internet reporting system. - In fact, the BOJ assumes most of the pertinent expenses. - Resources are ensured through the BOJ’s annual budget allocation. The Budget Section of the Secretariat of the Policy Board assigns the budget along the provisional department plans that are revised every year. - Conversely, the MOF assumes the costs of dissemination for the balance of payments data. ### Measures to ensure efficient use of resources - The BOJ implements measures to ensure efficient use of resources in applying legal prescriptions (BOJL, Article 5). - BOJ strategic planning and implementation: - The BOJ Medium-Term Strategic Framework for Fiscal 2005-2009 calls for: (1) reengineering business processes; (2) utilizing IT; (3) promoting information sharing and outsourcing; (4) strengthening planning capabilities; (5) enhancing human capital through career development programs; and (6) examining thoroughly all possible reduction and streamlining of overall expenses. - A BOJ Action Plan for each fiscal year is prepared, comprising concrete actions to achieve the goals of the strategic framework. - Implementation of the action plans is reviewed and results disseminated in the BOJ Annual Review at the end of the fiscal year. - Staff management and monitoring: - The BOJ reviews and evaluates staff performance periodically during the year. - BOPS staff receive advice and instructions in daily morning meetings and weekly meetings, enhancing efficient compilation. - Constraints on flexibility: - To make changes in compilation system (e.g., to introduce new or revised report forms), the BOJ must seek approval from the MOF, and for some forms there is a need to amend ministerial ordinance (Ministerial Ordinance Concerning Reports on Foreign Exchange Transactions, MOF, No. 29, of 1998, final amendment of 2005 (MOCRFET)). - This reduces flexibility of the compilation system in accommodating emerging data requirements and changes in methodology and in efficiently managing resources. ### Relevance and user engagement - User consultations: - Several groups of statistics users are consulted: academic groups, private research institutes, government agencies (MOF, METI, and CAO), financial corporations, and other market participants, such as the Japan Foreign Trade Council. - One compiler of national accounts participates in the users’ quarterly meeting. - A member of the BOJ Policy Board attends users’ quarterly meetings; handouts for the meetings are posted on the BOJ website. - Other comments are encouraged on the occasion of the balance of payments and IIP annual releases; views expressed are integrated in planning. - International engagement: - The BOJ and/or MOF are represented at international fora including the IMF Committee on Balance of Payments Statistics (BOPCOM), the IMF Balance of Payments Technical Expert Group, the IMF/OECD Direct Investment Technical Expert Group, the OECD Workshop on International Investment Statistics, and the UN Interagency Task Force on Statistics of International Trade in Services. - New and emerging data requirements from these international meetings form the backbone of regular methodological work. ### Other quality management: processes and monitoring - Quality principles and initiatives: - The BOJ Basic Principles and Its Recent Actions Toward Further Improvement of Financial and Economic Statistics (published on the BOJ website) set principles: (1) enhance transparency of the BOJ statistical data; (2) provide accurate statistics; (3) respond in greater measure to users’ needs; and (4) reduce burden on the reporters by streamlining the process of compiling statistics. - These development tasks are reflected in the BOJ Medium-Term Strategic Framework for Fiscal 2005-2009, where improvement of statistics and research are core strategic goals. - The introduction of the new IT application to enable electronic reporting and the extensive training of in-house experts for its maintenance demonstrate BOJ’s commitment to high quality. - In January 2005, the BOPS adopted revised forms and instructions to allow for more detailed balance of payments data. - The BOJ Action Plan for Fiscal 2005 states that BOJ staff will take part in international initiatives to revise the BOP methodology. - Monitoring processes: - The BOJ communicates the results of verifications to BOPS management every month. - At the end of each fiscal year, the BOJ evaluates its progress toward strategic goals by reviewing results of planned actions. - Planning and trade-offs: - Trade-offs are discussed during the budget process; the BOJ consults with data suppliers, main statistics users, and the international community (e.g., BOPCOM). - Feedback from users on quality standards and on new and emerging data requirements is taken into account in work program planning. - A recent increase of the ITRS threshold is cited as a result of consultation on the trade-off between resource availability and accuracy. - In cases of delay of source data or other problems, management is consulted on the trade-off between accuracy and timeliness. ### Assurances of integrity: professionalism, transparency, ethics - Professionalism: - BOJ staff are encouraged to enhance professionalism by participating in international meetings (UN, IMF, OECD, International Statistical Institute). - BOPS provides technical assistance to compilers from foreign central banks, hosts study visits, and conducts technical meetings. - The BOJ participates in regional and national meetings such as SEACEN and EMEAP (the next Balance of Payments Statistics Seminar is scheduled for February 2006). - Staff produce papers and research (including working papers) published in BOJ publications and on its website. - The BOJ Action Plan for Fiscal 2005 emphasizes building staff skills through strategic job rotation and personnel exchange with other organizations, including overseas. - Source and technique choices: - Under the BOJ Policy on Author Credit, individuals are acknowledged who contribute to working papers that may guide data planning and review compilation practices. - Within BOPS, internal compilation guides are prepared and updated as necessary for each component. - Handling erroneous interpretation and misuse: - The MOF and the BOJ are entitled to interpret and comment on balance of payments statistics. - The BOJ has policy to deal with erroneous statements and misuse; when BOPS finds such issues it takes appropriate action, consulting with the Secretariat of the Policy Board, which contacts the media. - Transparency of terms and conditions: - Explanations of terms and conditions, methodologies, and major data sources are disseminated on the BOJ website and on the IMF’s Dissemination Statistics Bulletin Board (DSBB); and in the Bank of Japan (International Department) Balance of Payments Monthly, and the Bank of Japan (Research and Statistics Department) Financial and Economic Statistics Monthly. - Internal governmental access prior to release: - The BOJ provides the data to the MOF for the release. - The IMF’s DSBB states that there is no internal governmental access to statistics prior to their release. - The MOF and BOJ may consider procedures to further formalize delineation between statistical and non-statistical functions to maintain impartiality. - Identification of statistical products: - The press release of the MOF is published under the double stamp of the MOF and the BOJ, but the part attributable to each data-producing agency is not identified. - The BOJ is effectively the compiler and the MOF disseminates results without changing them; clarifying these roles to the public is suggested. - Guidance on reproducing data is not identified on the MOF and BOJ websites; statistics are treated as public goods and no specific copyright is claimed on the statistics themselves, though text, graphics, and other website elements are protected by copyright. - Advance notice of major changes: - Major methodological changes were introduced in January 1996 with implementation of the fifth edition of the IMF’s Balance of Payments Manual (BPM5); these changes were announced 17 months prior to the revision. - When methodological changes may affect reporting burden, the BOJ alerts reporters collectively in meetings or individually by mail sufficiently in advance. - Programmed methodological changes are discussed with users during quarterly meetings and described in public notices on MOF and BOJ websites and in forms and instructions on the BOJ website (in Japanese only). - In 2004, the MOF and the BOJ announced forthcoming major revisions mainly of the direct investment and portfolio investment components that would take effect in transactions starting from January 2005; efforts are made to announce methodological changes before they occur, and success has been achieved since January 2005. - Ethical standards: - Based on Article 32 of the BOJL, the Rules of Ethical Conduct for Executives and Staff of the BOJ, and the Code of Conduct for Staff of the BOJ establish rules regarding ethical discipline; these took effect in 1998. - New staff are made aware of the standards when they join; BOPS has developed rules on data confidentiality. ### Methodological soundness: concepts, definitions, and classifications - Conformance with international standards: - The balance of payments statistics are compiled in broad conformity with BPM5 guidelines, implemented in 1996 in Japan’s BOP statistics. - Current, capital, and financial transactions are separately identified, with the financial account distinguishing assets and liabilities. - National presentation sequence deviates from BPM5: current account, financial account, capital account, and reserve assets. - Economic territory and residence: - Definition of economic territory conforms with BPM5 and is supported by Article 6 (1) of the FEFTL, covering Honshu, Hokkaido, Shikoku, Kyushu, and dependent islands designated by Ordinance of the MOF or the METI. - Criteria for resident institutional units are based on FEFTL definitions (Article 6 (5)); branches/agencies in Japan of nonresidents are deemed residents even if main office is abroad, conforming with BPM5. - For natural persons, the one year BPM5 residence concept is not strictly applied: - Japanese persons overseas are considered nonresidents after two years of departure. - Foreigners in Japan are considered residents after six months of arrival (Article 6-1 (5) and (6) of the FEFTL, and MOF Directive No.4672 of 1980). - Foreign students in Japan are considered residents six months after arrival. - All personnel working in offices located in Japan are considered residents; consequently, no entry for compensation of employees is made in the BOP statistics for such personnel. Crew members and employees at embassies in Japan are treated as nonresidents. - International organizations (e.g., International Bank for Reconstruction and Development) are defined as nonresidents and categorized under other regions. - Direct investment and other classifications: - Foreign direct investment (FDI) is defined with the 10 percent criterion ownership in reporting requirements stipulated by Article 12 (4) of the FEO for outward direct investments and Article 26(2) of the FEFTL for inward direct investments. - The 10 percent includes ordinary shares or voting power, as well as preferred shares or nonparticipating shares. - Investments in corporate-type investment trusts are recorded as direct investment when the equity ratio is 10 percent or more. - The consolidated system of recording FDI transactions is yet to be applied. - Securities and residency attribution: - Report forms permit attributing residency of the issuer of securities in conformity with BPM5. - Source data reported on a currency basis (Article 6 (12) of the FEFTL) are adjusted to residency basis. - Corporate-type investment trust securities and close-ended contract-type investment trust securities are included under equities; open-ended contract-type investment trust securities are included under bonds and notes. - Investment in foreign bonds and notes by residents (assets) is defined as the sum of sales and purchases by residents, with additional breakdown for bonds and notes issued in Japan by nonresidents. - Inward investment in bonds and notes (liabilities) is defined as the sum of sales and purchases by nonresidents, with additional breakdown for bonds and notes issued overseas by residents. - Insurance and gold treatments: - Credit in insurance services is calculated by deducting insurance claims paid to nonresidents from insurance premiums received from nonresidents; reinsurance claims paid to nonresidents are recorded as negative figures in credit in insurance services; commissions paid to insurance agents are included. - Transactions in nonmonetary gold associated with gold investment/savings accounts are recorded in the financial account under other investment (not in the current account as goods) because they earn a fixed rate of interest and do not involve physical movement across customs. - Transactions related to trading in gold where the gold is purchased and sold abroad within a short period and does not cross the Japanese customs frontier are recorded, on a net basis, under services (merchanting and other trade-related services), conforming to BPM5 recommendations. - Areas recommended for review: - Definitions used in borderline cases should be reviewed, including: - borderline cases between direct investment and portfolio investment (e.g., mutual funds and (limited) partnerships); - borderline cases between services and direct investment (e.g., construction work and exploration of natural resources). - For instance, long-term construction activities are not defined as direct investment under current treatment. *Source: _cr06115 - 0.2 Resources* ### 2.2 Scope ### 2.2 Scope ### Geographic, unit, and transaction coverage - Geographic coverage: balance of payments data cover the whole territory of Japan, as defined by the FEFTL, and the embassies and consulates abroad. - Unit coverage: all resident institutional units engaged in transactions with nonresidents that are above the threshold defined by the FEFTL are covered. - Transaction coverage: - In principle, all transactions with nonresidents are covered. - FDI transactions include outward (inward) investment by Japanese (foreign) companies in their foreign (Japanese) subsidiaries (with a paid-in capital ratio of 10 percent or more), such as initial capitalization, capital increase, loan capital (excluding loans between financial companies), and reinvested earnings. - Outward portfolio investment includes equity securities, bonds and notes, and money market instruments. A new issuer category of “sovereign bonds” has been recently added; this category is an aggregate of foreign government bonds, government agency bonds, and local government bonds and is broken down into 12 countries/regions and others. - Dissemination of business and personal travel subcomponents, abolished after eliminating embarkation cards for travelers in 2001, was resumed (public notice of the MOF and the BOJ of April 12, 2004 and explanatory paper of the BOJ of July 27, 2004). ### 2.3 Classification/sectorization ### Sector definitions and deviations from BPM5 - Three sectors defined: public sector, banks, and other sectors. - Public sector includes general government, monetary authorities (excluding reserves that are separately classified), and government financial institutions (including Japan Post, up to March 2003). - Bank sector includes banks and other depository corporations (cooperative-type financial institutions, financial institutions for small businesses, financial institutions for agriculture, forestry, and fisheries), and bank accounts of trust banks. From April 2003 onward, postal savings accounts of Japan Post are included in this sector. - Other sectors include trust accounts of banks and trust banks, life and nonlife insurance companies, securities companies, nonfinancial corporations, and households. Postal life insurance accounts of Japan Post are included in this sector. Banks’ trust accounts record the majority of outward portfolio investment by public pension funds (funds entrusted to investment management companies and banks’ trust accounts). Some corporate pension funds are entrusted to life insurance companies. - Financial account maturity classification: short- and long-term transactions are registered on the basis of original maturity (assets and liabilities with original maturities of more than 12 months are classified as long-term). - Cross-border real estate transactions of individuals are included in FDI. Loans include repurchase agreements transactions and securities lending transactions. - Noted deviations from BPM5 (mostly minor in value): - Operational and financial lease transactions sometimes not classified appropriately (e.g., lease data from customs not obtained). - Certain goods imported under construction service contracts are classified in goods instead of construction services. - Goods purchased by credit cards (above the reporting threshold) are included in travel with no attribution for one use and for resale (to be classified in goods). - Direct subscriptions to newspapers and periodicals paid by credit cards are included in travel instead of computer and information services. - Investment income transactions are geographically allocated according to the nationality of the settlement partner. - When nationality differs from residence, outward portfolio investment is allocated according to the nationality (and not residence) of the issuer of securities, except in some cases. - Intercompany trade credits between direct investors and direct investment enterprises are recorded under trade credits in other investment and not under FDI. - Recent classification change: financial derivatives reclassified to a separate item in the financial account (per BPM5 Supplement on Financial Derivatives). Data on interest rate swaps and forward rate agreements (FRAs) have been reclassified to the financial account from portfolio investment income. ### 2.4 Basis for recording ### Valuation (market prices) - Transactions are valued at market prices. - FDI and portfolio investment transactions valued at market price. - Other investment transactions valued at nominal value. - January 2001 adjustment: valuation of loans between residents and nonresidents adjusted to record market price of loans sold at discount. - Compilation currency and exchange rate treatment: - Balance of payments compiled in Japanese yen. Transactions in foreign currencies converted to yen using the average market exchange rate applicable to the period when the transaction was conducted. - Some transactions converted using the exchange rate specified in the MOCRFET (Article 35(1)). - Merchandise trade data converted using the exchange rate officially announced by the Directors General of Customs: weekly average of the most traded interbank rate on the Tokyo Foreign Exchange Market two weeks prior to the reporting date. ### Recording basis (accrual) - Compiled on an accrual basis with application of change of ownership criteria per BPM5. Goods valued at the border of the exporting economy at transaction value, including transportation costs to the border. Adjustments made to customs-clearance basis data to reflect transfer of ownership. - Most current account transactions recorded at time of settlement (e.g., dividends and interest on bonds and notes recorded as of settlement date based on ITRS and financial institution reporting). Interest on holdings of zero-coupon bonds recorded on an accrual basis. Reinvested earnings calculated based on annual stocks of retained earnings of direct investment enterprises. - January 2005 change: compilation of portfolio investment transactions brought in line with BPM5 recommendations with contract-based transactions; receivable and payable amounts from timing differences in contract and settlement recorded under other investment assets/liabilities in the financial account. ### Grossing/netting procedures - Current and capital account transactions recorded gross; financial account transactions recorded net, separately for individual asset and liability components (in conformity with BPM5). - Dividends recorded gross of taxes withheld in balance of payments statement. Direct investment recorded on a directional basis. Transactions in financial derivatives recorded separately for assets and liabilities. ### 3. Accuracy and reliability — Source data ### Source data programs and ITRS - Source data obtained from comprehensive programs based on an open ITRS, augmented by direct reporting, surveys, and administrative data. - ITRS: - Consists of daily or monthly reports from financial institutions on their transactions and those conducted on behalf of customers. Aggregated monthly ITRS forms provided to banks for coding checks and submission to the BOJ. When payments bypass domestic banking system, enterprises report directly to the BOJ. - Reporting requirements per MOCRFET: - reporting threshold of 30,000,000 yen for payments made by a resident from Japan to a foreign country or receipt of payment from a foreign country to Japan (Article 1); - 100,000,000 yen for receipts and payments for the cost of construction work (Article 1); and - reporting threshold of 100 million yen for most financial account transactions, excluding FDI transactions, for which a reporting threshold is 1,000 million yen (Article 5). - For portfolio investment, large investors whose gross trading exceeds 1 trillion yen per year are requested by FEFTL to report their daily portfolio trading; major players provide daily reports to the BOPS. ITRS report forms are designed for ease and computer processing. - Reporting threshold history: threshold raised four times since 1980; in April 2003 the ITRS reporting threshold reached 30 million yen. No comprehensive supplementary sources implemented to collect missing information, except for workers’ remittances where a supplementary report was introduced. ### Surveys, direct reporting, and administrative sources - Surveys/direct reporting used (non-exhaustive list highlights): - Direct reports from airline and shipping companies for c.i.f. breakdown; transportation services; wages/salaries for crews; goods procured in ports. Data verified with ITRS. - Monthly reports from insurance companies for c.i.f. breakdown. - Surveys on travel services on international travelers from/to Japan conducted in 2002 and 2005. - MLIT statistics on tourists for estimating travel after dismissal of disembarkation cards. - Reports on international payments/transactions related to communications satellites. - Reports on salaries for staff working for U.S. military bases. - Monthly reports from banks providing transactions on workers’ remittances (above 2 million yen, but below 30 million yen); report introduced to receive missing data because of raising the ITRS reporting threshold. Reports submitted by major financial institutions. - Reports on international aid operations; reports on overseas properties of Japanese government. - Annual reports on retained earnings submitted by direct investment investors (introduced January 1996). - Reports on derivatives transactions submitted by securities companies, banks, and major institutional investors. - Quarterly reports of trade credits to adjust settlement-basis data to accrual basis (covers major trading and manufacturing companies). - Reports from individuals and corporations providing deposit account data abroad. - Administrative data sources: - Customs data: general merchandise compiled largely from Customs data; compiled and published by the Customs and Tariff Bureau of the MOF based on Article 102 of the Customs Law (No.61 of 1954, final amendment of 2005) and MOF Directive No. 10485 of 1984 (final amendment of 2005). Directive stipulates goods with values of 200,000 yen or less are excluded from trade statistics. Customs data include goods for processing. - Reports/administrative data from government ministries and agencies (e.g., Ministry of Foreign Affairs and Japan International Cooperation Agency expenditures with nonresidents). - Data from the International Bureau of the MOF on reserve assets. - Balance sheets data from banks for loans and deposits. - Data collection program is open and flexible; sources under constant improvement, including revisions of estimation methods and data adjustments. ### Adequacy, approximation, and timeliness of source data - Source data largely consistent with BPM5 concepts, scope, and classification. ITRS forms and coding enable sufficient breakdown; merchandise trade statistics adjusted for transfer-of-ownership differences. - Banking sector stock-derived transactions (including reserves) adjusted to remove valuation changes from exchange rate fluctuations, price changes, and other changes; adjustments applied by instrument and currency. Price changes derived from yield analysis for each instrument type. - Reinvested earnings: existing source data are not a satisfactory approximation. Reinvested earnings compiled based on annual reports submitted by corporations; due to insufficient timeliness and periodicity and revision practice, transactions reported for the previous year are used as a proxy for the current year and included in the balance of payments statement for the reference year. Monthly data derived by spreading annual results evenly across months. - Timeliness: - ITRS reporting deadlines per MOCRFET: - Relevant banks, securities companies, insurance companies, securities investment trust consignment corporations, financial futures trading corporations, etc. should submit reports by the 15th of the following month (Article 14). - ITRS reports should be submitted to the BOJ by the 20th of the following month (Articles 2–3). Specific daily reports from main financial institutions submitted within two working days. Data on noncash transactions submitted to the BOJ on the 20th day following the reference month. Most direct reporting by corporations submitted to the BOJ the 20th day following the reference month. - Authorized foreign exchange banks provide a report under the Annexed Form No. 44 concerning purchase of foreign currencies and travelers’ checks during one business day on the 10th of every January, April, July, and October (Article 25). - BOJ applies structured follow-up procedures in case of delays. Reports may be sent by mail and electronically. - Customs data available within three to four weeks after the reference month; December data final for exports and provisional for imports. - Aviation and shipping companies and non-life insurance companies must submit reports by the 20th of the following month (Articles 26–28). - Annual reports on foreign direct investment (above reporting threshold) used for reinvested earnings to be submitted within four months (outward investments) and three months (inward investments) after commencement of the following financial year of each reporter; actual time lag for reinvested earnings can be as long as 18 months. - Surveys on travel services were conducted in 2002 and 2005; these remain ad hoc and introduction of annual surveys recommended to improve travel data accuracy. ### 3.2 Assessment of source data ### Ongoing assessment and validation procedures - Source data are assessed and merged in the balance of payments statistics application database as received. ITRS electronic data verification and processing are being developed. Source data are automatically checked by the IT system for consistency, compared to formerly submitted data, and cross-checked between reporters with identical activities. BOPS staff interact with reporters to gain operational knowledge and encourage frequent consultation. - Monthly aggregates are checked; procedures to identify outliers and atypical differences are developed. Extreme values are confirmed with respondents; large value transactions are verified. BOPS produces monthly reports on editing and checking results and communicates them to managers at monthly meetings. - Cross-source checks: data are checked against other sources where applicable (e.g., comparison between transportation services and trade in goods led to correction of the c.i.f/f.o.b correction). - For FDI data, temporal consistency sought by checking reports over corresponding periods for transactions via domestic banks and accounts abroad. Verification of FDI flows may involve comparison with notification forms related to FDI, register of loans reported to the MOF via the BOJ, and other sources such as Bloomberg and specialized media on mergers and acquisitions. Stock data on Japanese direct investment abroad are reconciled by matching beginning-of-period stocks and transactions data. *Source: _cr06115 - 2.2 Scope (IMF staff report content provided)* ### 3.3 Statistical techniques ### _cr06115 - 3.3 Statistical techniques ### 3.3 Statistical techniques — data compilation and processing - A comprehensive electronic reporting system has been implemented since January 2005; major respondents submit daily electronic reports. - New reporting software allows for electronic reporting and automated computerized checks that reduce processing errors. - BOPS staff possess good data processing ability, adequate knowledge, and experience. - Editing procedures include manual or computerized checks of: - logical consistency, including consistency with data from the previous month; - completeness of reports; - exchange rate conversion; and - completeness in recording entries. - Source data analysis is performed at various levels of data categorization; respondent-confirmed corrections are applied to individual reports. - Data undergo consistency checks before merging into the database. ### 3.3.2 Adjustments, transformations, and statistical analysis - Adjustments to merchandise trade statistics compiled on a customs clearance basis employ sound statistical techniques. - Key adjustments: - Recording import data f.o.b. - Timing adjustments for changes in ownership (notably aircraft imports) using monthly reports of transport companies and insurance companies, other customs statistics, and payments reports. - Methodological revision: estimation of imports of sea freight changed from a computation based on the share of freight in c.i.f. value of import to calculations based on: - freight fares received by Japanese shipping companies (from the report on revenue and expenditure), and - volume of imported goods transported by Japanese shipping companies (based on data published in the Maritime Affairs Report by the MLIT). - Adjustments to freight insurance have been changed based on reports submitted by non-life insurance companies. ### 3.4 Assessment and validation of intermediate data and statistical outputs - Revenue investment income flows are reviewed by type of revenue; staff cross-check against anticipated revenue based on estimated positions for main securities (e.g., anticipated interest falling due on Japanese government bonds). - FDI operations are followed through financial and specialized press; a log of main FDI operations is maintained and updated. - Japan’s freight ratios (from monthly reports) are compared to freight ratios computed using U.S. data provided by the U.S. Department of Commerce Bureau of Economic Analysis; the comparison showed Japan’s current freight ratio overestimates freight fares, prompting a revision of the estimation method. - Routine reconciliations and verifications: - Discrepancies between merchandise trade and associated ITRS financial flows are routinely reviewed. - Reported financial flow data are routinely reconciled with changes in corresponding stock data for components of the international investment position. - Reserve position data are verified through published IMF accounting data. - BOJ monitors merchandise trade for major partners and investigates fluctuations; bilateral reconciliation is conducted by the Customs and Tariff Bureau. - BOP data are checked against BIS banking statistics and results of the Coordinated Portfolio Investment Survey. ### 3.5 Revision studies - New software allows staff to maintain preliminary and final data in a time-series format usable for revision studies. - Fuller-scale revision studies are constrained by the short revision cycle; extension of the open revision period would allow more comprehensive studies. - Causes of nonroutine revisions (e.g., methodological changes) are identified by BOJ staff and communicated to BOPS management and the MOF. ### 4 Serviceability — periodicity, timeliness, and consistency - Periodicity: - Balance of payments data are compiled and disseminated monthly, exceeding the quarterly SDDS prescription. - Quarterly data are also published. - Timeliness: - Quarterly balance of payments data are disseminated in two months and one week following the reference period. - Preliminary monthly balance of payments data are disseminated by the MOF basically one month and eight working days after the end of the reference month. - Final monthly data are disseminated three months and eight working days after the end of the reference quarter. - Internal consistency: - Same concepts, definitions, and classifications are applied across monthly, quarterly, and annual statistics. - Quarterly data are derived by summing monthly information; annual data are derived by summing four quarters. - In the recent two years, the quarterly errors and omissions item has been large and has shown a negative bias; this prompted research and strengthened verification, though comprehensive research is yet to be performed. - Transactions data are consistent with stock data; subitems are consistent with aggregates. - Time series consistency and historical revisions: - Monthly and annual data compiled in accordance with the BPM5 are available from 1991 for the full scope of standard components and from 1985 for main items. - Historical reconstructions were conducted when major methodological changes were introduced (e.g., backward revision for 1991–96 to BPM5 format; retroactive revision in 2002 for BPM5 Supplement on financial derivatives). - Short revision policy may hamper time series consistency; efforts made where feasible to construct historical series outside the interlocking program (example: recent backward revision of transportation component given in the BOJ explanatory note of August 12, 2005). - Methodology change for workers’ remittances in April 2003 was not applied retroactively; there is no continuity of time series between data for 2003 and 2004. ### 4.2 Reconciliation with other datasets - Balance of payments statistics are reconcilable with national accounts compiled by the Economic and Social Research Institute of the Cabinet Office and with monetary and financial statistics compiled by the Research and Statistics Department of the BOJ. - Financial transactions reconcile with changes in external debt and IIP statistics. - Reconciliation tables (annual) of changes in outstanding stocks are published in: - MOF publication Report on External Assets and Liabilities as of Year-End 2004 (in Japanese) on the MOF website; and - BOJ annual IIP publications (in aggregated form). - Some BOP components (loan and deposits) are derived from banks’ balance sheets; corresponding transactions data are generally consistent with stock data. - Major differences with customs data are explained to users (Japan’s Balance of Payments for 2004, Reference to Chart 6). ### 4.3 Revision policy and practice - Monthly BOP data are provisional when first released; final data are disseminated about three months after the end of the reference quarter. - Current MOF and BOJ practice: final data are not revised routinely, although major methodological changes may govern retroactive revisions. - Revisions policy is not clearly indicated on BOJ and/or MOF websites; a paper discussing the revision policy for Japan’s BOP statistics is posted on the IMF website. - Some documentation on revisions is included in publications, but no documentation exists on regular revisions and no database series containing preliminary and revised data are accessible to users. - Occasional out-of-cycle revisions (e.g., discovery of new source data or errors) are publicized; example given where an aggregation mistake for OECD countries led to revisions announced on BOJ and MOF websites. - Preliminary data are clearly identified with symbols in publications; a footnote in the annual publication states data are preliminary unless otherwise specified. Revised data are disseminated with the same level of detail as preliminary data. - No specific studies or analyses of routine revisions are made public; publications do not include detailed information on causes and magnitudes of routine revisions. ### 5 Accessibility — dissemination, user access, and metadata - Presentation and dissemination: - BOP statistics are disseminated according to BPM5 standard components by the MOF under BOJ and MOF signatures via press release and on respective websites. - MOF monthly press release contains a table with major aggregates and a short commentary. - BOJ provides a more detailed breakdown approximately three weeks after release in: - Bank of Japan (International Department) Balance of Payments Monthly; and - Bank of Japan (Research and Statistics Department) Financial and Economic Statistics Monthly. - BOJ annual report Japan’s Balance of Payments for__Year provides charts, graphics, explanatory notes, and commentaries. - Time series and breakdowns: - MOF began disseminating longer time series from the beginning of 2005 in response to user requests. - A regional breakdown is prepared and released quarterly to the press: country and regional breakdowns for 32 major countries and 10 regions. - Geographic breakdown of merchandise trade is provided based on MOF-prepared data. - Recent additional details: - monthly regional breakdown for FDI; - quarterly regional and industrial breakdown for FDI; and - monthly regional, sectoral (debtor and creditor), and currency breakdown for portfolio investment data. - Seasonal adjustment: - BOJ runs seasonal adjustments with Bureau of Census ARIMA X-12 software. - Seasonally adjusted data are disseminated in monthly and annual publications with explanatory notes and on the website. - Seasonally adjusted data are not disseminated on the NSDP; the SDDS metadata should indicate which publications contain seasonally adjusted data. - Dissemination media, schedule, and simultaneity: - Data are disseminated in hard copy and on MOF and BOJ websites with cross-links; time-series data and regional tables available on BOJ website. - BOJ internet time series descriptions are provided in Japanese and English and can be downloaded. - Japan announces release dates in advance on the IMF’s DSBB; advance release dates are also provided on MOF and BOJ websites. - MOF and BOJ release a quarterly dissemination schedule during the last month of each quarter for the following six months; data are released as scheduled. - Data are released to all users simultaneously via MOF press release and BOJ distribution; MOF holds a press conference at 8:50 a.m. on release day. - Access to non-routine data and confidentiality: - Requests for non-routine data are considered by the MOF case-by-case, subject to confidentiality. - The Law Concerning Access to Information Held by Administrative Organs and related laws permit requests for disclosure of administrative documents, including non-routinely disseminated statistics. - A wide range of detailed data is available beyond standard components (examples: distribution of affiliated DI enterprises by years in business; contribution to overall export growth by regions; other services encouraged items). - BOJ publications refer to BOPS contacts for additional information, but procedures for obtaining specific tabulations are not indicated. - Metadata accessibility and documentation: - Documentation on concepts, scope, classifications, basis of recording, data sources, and statistical techniques is available in: - BOJ website methodological note (Japanese and English); - Bank of Japan (International Department) Balance of Payments Monthly and Bank of Japan (Research and Statistics Department) Financial and Economic Statistics Monthly (Japanese and English); - Bank of Japan Quarterly Bulletin (Japanese and English); - BOJ annual publication Japan’s Balance of Payments for__Year (comprehensive methodological notes); - BOJ Working Papers and other explanatory documents (describing new compilation systems and specific revisions); - Participation in IMF initiatives (Coordinated Portfolio Investment Survey; Survey of Implementation of Methodological Standards for Direct Investment) with methodological information on the IMF website; and - Additional methodological compilation document in the IMF’s Balance of Payments Yearbook–Part III. - Levels of detail in documentation are adapted to intended audiences; BOJ has published a popularized book explaining BOP compilation for the general public and BOJ Working Papers for specialized audiences. *Source: _cr06115 - 3.3 Statistical techniques* ### 5.3 Assistance to users ### 5.3 Assistance to users ### 5.3.1 Contact points for each subject field are publicized - Statistics users are informed about the contact number and e-mail address mentioned on the MOF and the BOJ websites. - On the BOJ website, the Public Relations Department and the BOPS are introduced as the points of inquiry. - In the BOJ’s balance of payments publications, users are advised to contact directly the BOPS, using a phone number and the e-mail address. - Arrangements (including follow-up procedures for the questions received via e-mail) have been established within the BOJ to ensure that any queries received by that contact are directed to the relevant person in the BOPS. ### 5.3.2 Catalogs of publications, documents, and other services, including information on any charges, are widely available - The BOJ provides a catalog of publications to users, which includes the International Department’s Balance of Payments Monthly and the Bank of Japan Research and Statistics Department’s Financial and Economic Statistics Monthly, posted on the BOJ website (http://www.boj.or.jp/en/service/service.htm). - Hardcopy publications are sent to subscribers and publicly released data are sent to other statistics users upon request. - A wide range of data can be downloaded from the BOJ website free of charge. ### DQAF (July 2003) — Summary of Results (selected elements relevant to assistance and accessibility) - Compiling Agency: Bank of Japan - 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 - Assessment element 5.3 Assistance to users: marked as O (Practice Observed). - Assessment element 5.1 Data accessibility: marked as LO (Practice Largely Observed). - Assessment element 5.2 Metadata accessibility: marked as LO (Practice Largely Observed). ### Recommendations (selected from Balance of Payments Statistics section) - While the MOF is responsible for the balance of payments data, identify the BOJ as the compiler of data to avoid the impression of MOF involvement in data compilation. (0.1.1) - Promote data consistency across the datasets, by systematizing consultation with data-producing agencies. (0.1.2) - Promote measures to streamline the procedures related to data collection including implementation of new or revised report forms. (0.2.2) - To further conform to BPM5, adopt more detailed sectorization, and review the residency definition for individuals. (2.3.1) - Develop additional sources for the data lost with the introduction of the new ITRS threshold, for example for trade in services. (3.1.1) - Improve data sources and estimations for reinvested earnings component. (3.1.2) - Develop documentation on the verification procedures, disaggregated by type of problem, and followed by relevant modifications in the statistical processes. (3.4.1) - Review the revision policy that currently does not permit changes to the data once they are finalized; and publish revision studies. (4.3.1) *Source: 5.3 Assistance to users — _cr06115 - 5.3 Assistance to users_* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr06115.pdf_