1

ional Accounts of epal

CBS Occasional Paper

SUPPLY AND USE

TABLES of

NEPAL

2004/05

Government of Nepal

National Planning Commission Secretariat

Central Bureau of Statistics National Accounts Section

2

Supply and Use Tables (SUTs) of epal

Government of Nepal

National Planning Commission Secretariat

Central Bureau of Statistics Ram Shah Path, Kathmandu, Nepal

www.cbs.gov.np

3

This report is the output of Asian Development Bank (ADB) initiative-Regional Technical Assistance

(RETA) 6483: Adopting the Supply and Use Framework towards 1993 System of National Accounts

Compliance in Selected Developing Member Countries. The participating member countries were:

Bangladesh; Bhutan; Brunei Darussalam; Cambodia; the People’s Republic of China; Fiji; Hong Kong,

China; India; Indonesia; Malaysia; the Maldives; Mongolia; Nepal; Singapore; Sri Lanka; Taipei, China;

Thailand; and Viet Nam. This RETA assisted the participating economies in implementing the 1993

System of National Accounts (SNA) through the compilation of supply and use tables (SUTs). The scope of the RETA included (i) reviewing the availability of data in the economies for compilation of SUTs, (ii)

organization of regional training and data and related agencies on the compilation of SUTs, (iii) preparing concordance tables to meet international economies in SUT construction.

Government of Nepal National Planning Commission Secretariat

Central Bureau of Statistics

Thapathali, Kathmandu

ADB - RETA 6483: Adopting the Supply and Use Framework towards 1993 System of National

Accounts Compliance

Telephone : 4229406, 4245946, 4245947, 4245948

Fax : 977-1-4227720

Website : www.cbs.gov.np

Email : nationalaccounts@cbs.gov.np

Copy : 1000 Price : Rs………

4

Preface

Central Bureau of Statistics (CBS) has been preparing and publishing national accounting statistics since

nearly five decades. During the period, continuous efforts have been laid to improve the quality of

estimates of Nepalese national accounts in terms of coverage and methodologies. CBS has been following the System of National Accounts (1993SNA) recommended by the world bodies including United

Nations. Lately, CBS has attempted to follow 1993 SNA adhering to the Concepts, definitions and

classifications.

CBS, apart from its regular and periodic censuses and surveys has conducted more than 35 small scale

studies and surveys of establishments engaged in production of goods and services with a purpose to

improve national accounts estimates in the recent years. These surveys have provided reliable information

on the structures of inputs and outputs of several activities. National Planning Commission and many

other economic analysts have always been seeking information to prepare Inputs-Output table since long. In this context, this SUT which is considered to be a gateway of I-O Table would be useful for the

analysis of inter-industry and interactivities flows of transactions. I hope that the CBS has gained special

technical capacity along with improved national accounts from this exercise.

I am grateful to Mr. Suman Raj Aryal, national coordinator and country technical committee secretary

and Deputy Director General of Economic Statistics Division for his hard work in the compilation of

supply and use tables. Given the high importance of SUTs, CBS had created a technical committee to

supervise the activity, with the director general of CBS as the chair. I would like to put in records the

valuable contribution of technical committee members, the Deputy Director Generals and the Directors of Price Statistics Section, and Agriculture Statistics Division and alternate coordinator of RETA 6483,

within the CBS. Thanks to the other committee members, the directors of the Department of Customs,

Inland Revenue Department, and Real Sector Division of the Central Bank who provide valuable

suggestions and data as well.

I would like to thank Asian Development Bank (ADB) for continuous technical and financial supports.

Special thanks are also due to the head of Development Indicators and Policy Research Division (ERDI)

of the Economics and Research Department of ADB, Chellam Palanyandy, lead statistician for her overall

coordination and supervision.

I am very much grateful to Jishnu Mohan Bhattarai, Ph.D., Chief of the National Accounts Section for his

painstaking effort to compile and bring this publication in time. My sincere thank goes to the team of

National Accounts Section, Directors Mr. Ishwori Prasad Bhandari and Mr. Arun Kumar Gupta, and

Statistical Officers Ms. Saroj Bhattarai, Ms. Sahan Laxmi Tamrakar, Mr. Shiva Lal Sharma, Mr. Mahesh

Prasad Dhungana, Mr. Hari Narayan Manandhar, Mr. Prakash Poudel and Computer Officer Mr. Puspa

Raj Poudel for their sincere dedication in compiling and processing the data required for the SUTs.

Kathmandu

June 2013 Uttam Narayan Malla

Director General

5

Table of Contents

Page

Overview of System of ational Accounts

1

Approaches used in epal ational Accounts System

8

Supply and Use Tables

9

Compiling the Supply and Use Tables: epal Experience

13

1. Abridged Supply Table Sheet 21

Ab 2. Abridged Use Table Sheet

22

Ab 3. Abridged Supply and Use Table 23

Annex 1: Annual ational Accounts 2004/05

24

Annex 2: Current Account

24

Annex 3 : List of Surveys and Censuses conducted in 2004/05

25

Annex 4 : Detailed Balance Of Payments Presentation

26

Annex 5 : Determining the informal activity

28

Glossary of Terms

29

6

Overview of System of ational Accounts

Background

National accounting is an activity, which aims at providing statistical description of the size of the

economic activities taken place within an economy over a period of time. Referring to the definition,

Statistical description implies that national accounting is of a quantitative, numerical character where as

economic activities refers such activities as production, income, consumption, saving, investment,

exchange of goods and services, transfers payment etc and economy means the economic activities of an

entire country, hence the term national accounting.

The system of National Accounts (SNA) consists of a logically consistent and integrated set of

macroeconomic accounts; balance sheets, which confirm to a set of internationally, agreed concepts,

definitions, classifications and accounting rules. The system provides a comprehensive accounting

framework for the compilation and presentation of macroeconomic data in a format, which is designed for

purpose of economic analysis, policy making and decision taking. The accounts themselves present in a

condensed way a great mass of detailed information, organized according to economic principle and

perceptions, about the working of an economy. They provide a comprehensive and detailed record of the

complex economic activities taking place within an economy and of the interaction between the different

economic agents, and groups of agents, which takes place on markets or elsewhere. In practice the

accounts are compiled for a succession of times, thus providing a continuing flow of information that is

indispensable for the monitoring, analysis and evaluation of the performance of an economy over time.

The SNA provides information not only about economic activities, but also about the levels of an

economy's productive assets and wealth of its inhabitants at particular points of time. Finally, the SNA

system includes an external account that displays the links between an economy and the rest of the world.

The system is built around a sequence of interconnected flow accounts linked to different types of

economic activity taking place within a given period, together with balance sheets that record the values

of stocks of assets and liabilities held by institutional units or sectors at the beginning and end of the period. Each flow account relates to a particular kind of activity such as production, or the generation,

distribution, redistribution or use of income. Each account is balanced by introducing a balancing item

defined residually as the difference of between the total resources and uses recorded on the two sided of

the account. The balancing item from one account is carried forward as the first item in the following

account, thereby making the sequence of accounts an articulated whole. The balancing items typically

encapsulate the net result of the activities covered by the question and are therefore economic constructs

of considerable interest and analytical significance - for example, value added, disposable income and

saving. There is also a strong link between the flow accounts and balance sheet, as all the changes

occurring over time that affect the assets or liabilities held by institutional units or sectors are

systematically recorded in one or another of the flow accounts. The closing balance sheet is fully

determined by the opening balance sheet and the transactions or other flows recorded in the sequence of

accounts.

ational Accounts: theoretical roots

The contribution of the NA to economic science are well recognized, among other things through the

award of Nobel prizes to economists such as Tinbergen, Frisch, Stone and Leontief, all who, contributed

to the development of the national accounts. It can be refereed from this short list. The NA have been

influenced by two major economic approaches, viz., (i) econometric analysis, and (ii) input-

output/Supply-Use analysis.

7

Presentations

National accounts data can be presented in two ways; either in terms of levels that the variables have

reached in a particular period, or in terms of growth rates between periods. Both alternatives have

particular uses; levels are of importance for use of NA data yardstick for other data (such as the financial deficit of government, the level of government debt, and national liquidity), and growth rates are of

specific interest for the monitoring of economic development.

The picture of the economy that the national accounts present is often cast in the format of accounts, viz.,

an arrangement of figures in a T-format, with entries both on the left hand side and on the right hand side.

It should be emphasized that the format of T-accounts is not only applied to the accounts of the system

but also to the balance sheets.; the accounts and balance sheets differ fundamentally in that the accounts

reflects flow and change in stock while the balance sheets reflect levels of stocks.

Matrices is the another way of presenting NA data, such as supply and use matrices and input-output

matrices that focus on production, or the social accounting matrices that encompass the whole system and

relate to other specific statistical areas.

A presentation format that is less frequently used in statistics through mathematical formulas, such as the

formula that formalizes the commodity flow equation, viz.,

Y = C+I+X-M

In this formula, Y stands for production, C for consumption, I for investment, X for exports and M for

imports. The format of formulas as a presentational device for the NA has not found wide application; formulas are mostly used in model building and theoretical economics rather than for data presentation.

Aggregation levels and categories

Economic statistics can be compiled at various level of aggregation of the basic units; a distinction often

made in this respect is between macro, meso, and micro statistics. The accounts may focus on the macro

level of the total of the economy, or go one step beyond that and disaggregate to the meso level of sectors.

The supply and use tables from their very nature necessitate a grouping of the units to industries, and this is a very common grouping for input output tables.

Economic sectors

The most prominent grouping of units for the accounts is the classification of institutional units according

to sector. The sector classification is developed in detail in the 1993 SNA itself, and it aims at grouping

institutional units into sectors to forms groups of transactors that are homogeneous, largely regarding their

primary function in the economic process. The main sectors of the national accounts are the following:

households;

general government;

non-financial corporations;

financial corporations; and

non-profit institutions serving household

8

Illustrative allocation of units to institutional sectors

9

Households: all physical persons in the economy, with the institutional unit in the household sector

consisting of one individual or a group of individuals. According to the criteria given for defining the

institutional unit, the household of the owner of an unincorporated enterprise in general includes this

enterprise, which is not considered an institutional unit. The principle functions of households are the

supply of labor, final consumption and as entrepreneurs, the production of market goods and non-financial services.

General government: institutional units, which in addition to fulfilling their political responsibilities and

their role of economic regulation, produce principally non-market services (possibly goods) for

individual; or collective consumption and redistribute income and wealth.

Non-financial corporations: institutional units, which are principally engaged in the production of, market

goods and non-financial services.

Financial Corporations: institutional units, which are principally engaged in financial intermediation or

in auxiliary financial activities.

on-profit institutions serving households: legal entities, which are principally engaged in the

production of non-market services for households and whose main resources are voluntary contributions

by households.

Industries are defined in the system in the same way as in ISIC: an industry consists of a group of

establishments engaged in the same kinds of activities. The most relevant grouping of units for supply and

use tables is the classification by economic activity. The economic activity classification recommended

by the 1993 SNA is the UN's International Standard Industrial Classification (ISIC).

Tabulation Categories Description

A Agriculture, hunting and forestry

B Fishing

C Mining and quarrying

D Manufacturing

E Electricity, gas and water supply

F Construction G Wholesale and retail trade; repair of motor vehicles, motorcycles and personal and

household goods

H Hotels and restaurants

I Transport, storage and communications

J Financial intermediation

K Real estate, renting and business activities

L Public administration and defence, compulsory social security

M Education

N Health and social work

O Other community, social; and personal services activities

P Private households with employed persons

Q Extra territorial organizations and bodies

10

System of ational Accounts: Coordinating framework

The System of National Accounts serves as a coordinating framework for economic statistics in two

different way: first as the conceptual framework for ensuring the consistency of the definitions and

classifications used in different, but related, field of statistics and second as an accounting framework for ensuring the numerical consistency of data drawn from different sources, such as industrial inquiries,

household surveys, merchandise trade statistics, value added tax returns and other administrative sources.

Integrated Framework

The central framework of the SNA pursues at least two objectives. It tries to help the development of a

given country's own system of national accounts by providing guidance to the national accountants of this

country in order to avoid their having to search out and experiment again with what has been previously

tried by others. It also aims at achieving international comparability between the national accounts of

various countries in order to facilitate economic and social analysis in a worldwide economy.

Uses of S A

The basic concepts and definitions of the system depend upon economic reasoning and principle, which

should be universally valid and invariant to the particular economic circumstances in which they are

applied. Likewise, the classifications and accounting rules are meant to be universally applicable. The

main objective of the SNA is to provide a comprehensive, conceptual and accounting framework, which

can be used to create a macroeconomic database suitable for analyzing and evaluating the performance of

an economy. Some of the more specific uses of the SNA are given below.

Macro- Economic Indicators

Performance- Macro-economic variables such as GDP and NI serve as comprehensive indicators for the functioning of an economy and the success of economic and financial policies.

Yardstick- Macroeconomic variables serve as the yardstick to measure the economic strength of countries

and their capacity to pay. The latter has incited the use of NNI as a basis for deciding on the amount of

development aid.

Denominator- Another use of the NA statistics is as a basis of a number of key figures reflecting the

performance of the government e.g., the financial deficit, revenue, and the size of the collective sector are

often expressed as a percentage of suitable macro economic variables.

Meso-Economic Data

Economic analysis and forecasting- A very important use of National Accounting Statistics relates to

economic analysis and forecasting. Because of the integrated and systematic nature of the NA are very

suitable to models forecasting economic growth and the impact of the government policies.

Marketing research- The utilization of data on production can be useful in market analysis. These dataset

constitute a very specific data set, usually in the format of supply and use table.

Economic policy-making and decision-taking

Economic strategy- Generally, economic policy is formulated in the context of a broad economic strategy.

Economic policy needs to be quantified in the form of plan. Most of the elements that make up economic

plan consist of flows within the national accounts, and it may be impossible to draw up such plans

without national accounts data.

Policy making/decision taking- Economic policy making and decision take place at all levels of

government, public corporations, private corporations etc. For example, the long-term investment

programs of major corporations cannot be formulated without some kind of macro economic forecasts.

International comparisons

The national account data are widely used internationally. They are used for international comparison. It

is used to evaluate the performance and compare structural statistics of one economy against that of other

11

similar countries. National accounting statistics are also used to determine eligibility for loans, aid or

other funds.

Additional features and requirements

The System of National Accounts is a rich and detailed economic accounting system. In addition to the sequence of accounts and balance sheets, the central framework of the system also contains detailed

supply and use tables in the form of matrices that records how supplies of different kind of goods and

services originate from domestic industries and imports and how those supplies are allocated between

various intermediate and final uses or exports.

The system has another flexible matrix approach entitled Social accounting matrix to incorporate specific

details on various economic flows. It contains not only disaggregated data on the inputs and outputs of the

productive branches of the economy, but among other things also data concerning the distribution of the

various kinds of factors incomes over institutional groups and classes, the expenditure made by these

groups on different types of commodities, and the savings and investments made by them.

The system also provides specific guidelines about the methodology to be used to compile an integrated

set of price and volume indices for flow of goods and services, gross value added and GDP that are

consistent with the concepts and accounting principle of system. This doesn't simply provide

comprehensive measures of changes in prices and volumes for the main aggregates of the system but to

carry out systematic and detailed analyses of inflation and economic growth and fluctuations.

The System of National Accounts requires a definition of population to express domestic product and

consumption aggregates in per capita terms. It also requires labour input variables in order to examine

productivity.

Harmonization

The SNA and related statistical systems need to be as consistent as possible in respect of their basic

concepts, definitions and classifications. Consistency between the different systems i.e. SNA, BOP, GFS,

money and banking statistics etc. enhances the analytical usefulness of all the statistics involved. In this

regard, 1993 SNA is a updated, simplified, clarified and more harmonized statistical system.

Extensions

National accounts are primarily compiled at the level of national economies. However, there might be

compelling reasons to also compile NA data on sub-national level. It will not be possible to elaborate on

regional accounts methodology in this context, but it should be noted that it poses a number of interesting

specific problems, such as regionalization of production of industries like transport, insurance and

construction and income flows such as income taxes. The main reason for this is the difficulty of applying

the residency principle on a regional level.

Flexibility

The SNA is prepared in such a way that individual countries can select from within it those parts of the

system which are considered to be most relevant and useful to implement in the light of their own needs

and capabilities. So, it is meant to be implemented in a flexible manner. The macro accounts and tables

classifications and sectoring presented in the SNA should not be taken as compulsory or fixed one. But it

is that the flexible use should follow the basic concepts and definitions of system. However, flexibility

may be taken a stage further by preparing satellite accounts, which are closely linked to the main system.

Even though, they are not bound to follow system. Satellite accounts are intended for special purposes

such as monitoring the social and economic status of an economy such as status of environment,

community's health, status of tourism etc.

12

Reliability

In statistics, it is good practice to provide users with an indication of the reliability of the result. For

national accounts data, no such indicators have been developed on a comprehensive basis because the

balancing process impedes mathematical calculations of reliability margins. The magnitude and nature of

revisions to NA data have been promulgated by some as indicators for the reliability of the NA, and although intuitively it seems to make sense that data are susceptible to large and consistently one-sided

revision are less reliable. Present international practice indicates that the only solution seems to rest in the

presentation of circumstantial evidence, such as the coverage of the economy through the source statistics,

the discrepancies between NA data and source data, and the documentation of the compilation process.

Revisions

Factors such as the availability of new data, revisions in the source data, and compilation errors emerging

after the release of data, render revisions an inescapable fact of life for compilers, and it is generally

accepted that in the evolution from preliminary data to final one, and from sub annual data to annual data,

revisions have to make. The inclusion of such new data confronts national accounts compilers with

dilemma. Introducing new data as they become available has an advantage that the level estimates are

repaired at the earliest opportunity. However, a disadvantage of this procedure is that the growth rates

between the revise and previous years become meaningless.

13

Approaches used in epal ational Accounts System

Current System The history of National Accounts estimates of Nepal goes back to around 50 years. In Nepal, first

estimate of National Accounts was prepared in 1960/61. After the break of three years, National accounts estimate has been regularly preparing by Central Bureau of Statistics.

The current base year is 2000/01. Current NA estimates follows the major 1993 SNA recommendations

i.e., boundaries principles, valuation principle, classification recommended etc. CBS as the main

custodian for the preparing national accounts statistics produces the Gross Value Added (GVA) at both

current and constant prices by industrial classification. Along with this, it also estimates both expenditure

components and Income components. Production approach is the predominant approach for compiling

Gross Domestic Product. However, each of the three measures of the GDP is constrained by the residual

factor. It means change in stocks in expenditure side and operating surplus/mixed income in income side

is residually estimated.

Beside these, CBS has prepared Nepal's first Supply and Use Table (SUTs) taking the 2004/05 as the

reference year. However, due to the lack of the annual SUTs, GDP approaches are not integrated with the

SUTs. Bureau has planned to disseminate the SUTs in the fiscal year 2011/12.

Production Approach

Production approach is the main approach to estimate GDP. SNA 93 describes the GDP production as

the difference of output and intermediate consumption measured in basic and purchaser's prices

respectively. Output and intermediate consumption are estimated for economic activity level.

International Standard Industrial Classification Rev 3.1 has been followed in this regards.

In addition to this, GDP at basic prices becomes GDP at Market price by adding the nets taxes on

products to GDP at basic price. There are independent estimates for taxes on products and subsidies on

products. Similarly, FISIM plays vital role between this steps. It means, according to SNA 93, FISIM

should be distributed to producers and consumers. Distribution of FISIM among the producers gives rise

in intermediate consumption and in consumers gives rise in consumption.

Expenditure/Income Approach

CBS does produce the GDP by expenditure approach also. It covers the different elements of expenditures

i.e. final consumption expenditure of households, government and NPISHs, gross fixed capital formation;

change in stock, net exports. However, change in stock is residually estimated. So, there is no any

statistical discrepancy.

Likewise CBS prepares the value added components at aggregate level. There exists some limitation on

consumption of fixed capital and mixed income. There is no the estimates of these components. So, they

are residually estimated.

14

Basic feature: Supply = Domestic output + Imports Use= Intermediate consumption + Final consumption + Gross capital formation + Exports

Supply and Use Tables

Basic framework

Supply and Use Tables (SUTs) are the important part of the System of National Accounts. It provides the

basis for estimating GDP from both the production and

expenditure sides. The SUTs relate industries and products. It

gives the detail picture of supply and use of the goods and

services available in the economy. Mechanics of the supply are

domestic production and import. Intermediate consumption and

final use are the use components. Final use is further

classified into three major parts i.e. consumption, gross

capital formation and exports. In addition to this use table

annexes the components of value added. Value added

components are compensation of employees, other net taxes on production, consumption of fixed capital

and operating surplus/mixed income. The balanced SUTs provide consistency and accounts by industry

and sector, and Generation of Income Accounts by industry and sector. The basic philosophy behind the

SUTs is the amount of supply of the product must be used, in the same accounting period, for either or

both of intermediate consumption or final consumption of household, government or �PISH, gross capital

formation (GCF); and exports. SUTs are also the basis of for preparing symmetric input output tables. In

most developed countries, SUTs are the starting point in the compilation of national accounts as they

produce consistent and reconciled GDP estimates from the production, expenditure, and income sides.

SUTs: Integrating GDP

In principle, GDP production, expenditure, and income should be equal. However, these three methods

generate different results, particularly when each approach is implemented separately. But in SUTs, GDP

from production and expenditure approach are estimated simultaneously. On the production side, GDP

equals total output minus intermediate consumption adjusting taxes less subsidies. Expenditure side GDP is the aggregate of intermediate consumption and final use (consumption, GCF and net exports). Income

side GDP is equal to the sum of gross value added by kind of activity which can be broken down into

compensation of employees, taxes less subsidies on production and imports, and gross operating

surplus/mixed income. A balanced estimate of GDP infers that there are no statistical discrepancies

between the production and expenditure based GDP estimates. In the SUTs, only the gross value added by

kind of economic activity can be generated. The components of gross value added have to be obtained

using information outside the supply and use framework.

Description of data requirements

Output

Output consists of those goods or services that are produced within an establishment that become

available for use outside that establishment. SNS specifies three different types of domestic output.

Output should be valued at basic price.

Market output: Market output is output that is sold at prices that are economically significant or

otherwise disposed of on the market or intended for sale or disposal on the market.

Output for own final use: Output produced for own final use consists of goods or services that is retained

for their own final use by the owners of the enterprises in which they are produced. Product can be

retained for final consumption or used for own gross fixed capital formation.

Other non-market output: It covers output that is provided free or prices that are not economically

significant to other units.

15

F.O.B. Value: The f.o.b. price (free on board price) is the c.i.f. price less the costs of transportation, together with insurance charges, between the customs frontier of the exporting (importing) country and that of the importing (exporting) country.

Production excludes the production of domestic and personal services that are produced and consumed

within the same household (with the exception of employing paid domestic staff and the services of

owner-occupied dwellings). Examples are:

a) cleaning, decoration and maintenance of the dwelling as far as these activities are also common for

tenants;

b) cleaning, servicing and repair of household durables;

c) preparation and serving of meals;

d) care, training and instruction of children;

e) care of sick, infirm or old people;

f) transportation of members of the household or their goods.

However, by convention only own-account construction of dwellings is included in production boundary.

Imports of goods: Imports of goods consist of imports of

the following items from non-residents to residents,

generally with a change of ownership being involved:

general merchandise, goods for processing, repairs on

goods, goods procured in foreign ports by domestic

carriers, and non-monetary gold. Imports of goods are

measured at f.o.b. value.

Imports of services: Imports of services consist of the

following services purchased by residents from non-residents: transportation; travel; communications;

construction; insurance; financial; computer and information; royalties and licence fees; other business services; personal, cultural, and recreational services; and government services n.i.e.

Taxes on products: A tax on a product is a tax that is payable per unit of some good or service, either as

a specified amount of money per unit of quantity or as a specified percentage of the price per unit or value

of the good or service transacted.

Subsidy on products: Subsidies on products are current unrequited payments that government units, including non-resident government units make to enterprise on the basis of the quantities of the goods or

services which they produce, sell or import.

Intermediate consumption: Intermediate consumption consists of the value of the goods and services

consumed as inputs by a process of production, excluding fixed assets whose consumption is recorded as

consumption of fixed capital. The goods and services may be either transformed or used up by the

production process.

Final consumption expenditure (FCE):

FCE consists of expenditure incurred by resident institutional units on goods or services that are used for

the direct satisfaction of individual needs or wants or the collective needs of members of the community.

Final consumption expenditure may take place on the domestic territory or abroad.

16

Final consumption expenditure by households: Household final consumption expenditure consists of

the expenditure, including imputed expenditure, incurred by resident households on individual

consumption goods and services, including those sold at prices that are not economically significant.

Final consumption expenditure by government: Final consumption expenditure by government includes two categories of expenditures: 1. the value of the goods and services produced by general

government itself other than own-account capital formation and sales and 2. purchases by general

government of goods and services produced by market producers that are supplied to households, without

any transformation, as social transfers in kind. This implies that general government just pays for goods

and services that the sellers provide to households.

Final consumption expenditure of PISH: Like in Final consumption expenditure by government,

Final consumption expenditure of NPISHs includes two separate categories 1. the value of the goods and

services produced by NPISHs other than own-account capital formation and other than expenditure made

by households and other units; 2. Expenditures by NPISHs on goods or services produced by market

producers that are supplied – without any transformation – to households for their consumption as social

transfers in kind.

Corporations do not make final consumption expenditures: Their purchases of the same kind of goods

or services as used by households for final consumption are either used for intermediate consumption or

provided to employees as compensation of employees in kind, i.e. imputed household final consumption

expenditure. Even where, for example through advertising, they finance individual consumption, this

expenditure is treated as intermediate.

Individual and collective consumption expenditure: Goods and services for individual consumption are acquired by a household and used to satisfy the needs

and wants of members of that household. Individual goods and services have the following

characteristics:

a) It must be possible to observe and record the acquisition of the good or services by an individual

household or member thereof and also the time at which it took place;

b) the household must have agreed to the provision of the good or service and take whatever action is

necessary to make it possible, for example by attending a school or clinic;

c) the good or service must be such that its acquisition by one household or person, or possibly by a

small, restricted group of persons, precludes its acquisition by other households or persons.

Services for collective consumption are provided simultaneously to all members of the community or all

members of a particular section of the community, such as all households living in a particular region.

Collective services have the following characteristics:

a) they can be delivered simultaneously to every member of the community or to particular sections of the

community, such as those in a particular region or locality;

b) the use of such services is usually passive and does not require the explicit agreement or active participation of all the individuals concerned;

c) the provision of a collective service to one individual does not reduce the amount available to other in

the same community or section of the community.

17

All household final consumption expenditure is individual. By convention, all goods and services

provided by NPISHs are treated as individual.

All government final consumption expenditure under each of the following headings should be treated as

expenditures on individual consumption and the collective consumption expenditure is the remainder.

1. Medical products, appliances and equipment, outpatient services, hospital services, public

health services

2. Recreational and sporting services, cultural services

3. Pre-primary and primary education, secondary education ,post-secondary non-tertiary

education, tertiary education, education not definable by level, subsidiary services to education

4. Sickness and disability, old age, survivors, family and children, unemployment

5. Housing

6. Social exclusion n.e.c.

18

Compiling the Supply and Use Tables: epal Experience

General

Supply and Use Table is the integral and important part of the System of National Accounts. It is an

analytical framework to observe the economic process of an economy. It demonstrates the different

structures of the economy. It can support to good governance, transparency and economic reform. It

provides the major macroeconomic aggregates i.e. GDP, consumption, capital formation, imports,

exports. It is also an important tool for assessing the quality of national accounts statistics. It is also the

basis of satellite extension like social accounting matrix (SAM).

This is the first attempt to produce SUTs. Present SUTs is the output of consultative process. Country

experiences are the vital for the development of this SUTs. It is very important to understand some issues

like statistical capacity of the economy, economic and social development, development of the policy

analysis etc. These are the demand factors of new statistical frameworks.

Introduction The National Accounts of Nepal portraits the Nepalese economy by industrial as well as demand views by

presenting fundamental macroeconomic aggregates. Nepal has almost 50 years' experience of compiling

national accounts statistics. However, the statistics are limited only to GDP and demand components. CBS has not prepared the institutional sector accounts and supply and use table yet. This endeavor is the

first attempt to build supply and use matrix. The main objectives of the compiling the SUT of Nepal as

follows:

a. expanding the SNA93 accounting structure

b. evaluating the current estimates by detailed input output mechanism

c. sharing the country experiences

d. identifying the data lacks and assessing the data needs

e. developing the human resources

f. expanding the knowledge base

Supply and Use table provides an exhaustive picture of supply and use mechanics. It provides the detailed

layout of supply mechanics i.e. domestic production and imports. Similarly, it gives the analysis of the

use by means of intermediate consumption, final consumption, capital formation and exports.

The supply and use table has exceeded its role as an effective tool to measure and analyse the economy. It

is a main gate to prepare social accounting matrix. Beside this application, it is a framework for checking

the statistical consistency on flows of goods and services.

Central Bureau of Statistics (CBS) is the core statistical organization of the Government of Nepal. It is

responsible for conducting censuses, surveys and preparing various macroeconomic indicators. There are

three different divisions in this bureau namely: Economic Statistics Division, Social Statistics Division

and Planning and Human Resources Division. National Accounts Section of this bureau which is under

the Economic Statistics Division is responsible for preparing national accounts estimates. There is a

separate section for price statistics also.

Management of SUTs process

Central Bureau of Statistics is the National Implementing Agency of the RETA6483 and the responsible is given to the National Accounts Section. This section is headed by Director and supported by five

19

Statistics Officers. They are the key persons. Statistical Officers are given the responsibility to estimate

designated sectors. Beside the regular estimates, National Accounts Section sometimes does some handy

surveys and studies for its own requirement.

Central Bureau of Statistics had nominated the Section head (Director) as the National Coordinator and Statistics Officer as the alternate Coordinator for this RETA.

It is the first time of Nepal preparing the Supply and Use Table. Giving the high importance and smooth

functioning of this RETA, CBS had created a technical committee. The composition of the committee

was as follows:

Chairperson: Director General, CBS

Members: Deputy Director General, CBS

Director, National Accounts Section, CBS

Director, Price Statistics Section, CBS

Director, Agriculture Statistics Division, CBS

Director, Department of Customs

Director, Inland Revenue Department

Director, Real Sector Division, Central Bank

Member Secretary Statistics Officer (Alternative Coordinator)

I. The Supply and Use Framework: Basic Concepts

Nepal has taken base year 2004/05 in the ground of data availability. Around 40 economic surveys and studies were conducted in aforesaid year. Apart from this, manufacturing census was

conducted in fiscal year 2005/06. Nepal Living Standard Survey was conducted in 2003/04.

CBS had started the preparing Supply and Use Table with 215 by 53 matrix size for gross output,

169 by 53 for intermediate consumption, 346 by 11 for final demand. As, Nepal didn't have IO or SUTs,

CBS had started the SUTs exercise taking the published aggregated as control total. International

Standard Industrial Classification (ISIC) 3.1 for industry classification, Central Product Classification

(CPC) 1.1 for product classification and HS scheme for international trade classification has been followed. Now, the SUTs is limited to 51 by 32 size matrix.

Change in stocks is independently estimated. However, in annual estimate, this is residually

estimated.

Figures are in millions Rs.

Description Published SUT Difference (%)

Output 914,088

914,090

0.00

Imports of goods 145,718

156,908

7.68

Imports of services 28,036

28,742

2.52

Intermediate Consumption 347,509

347,507

0.00

Household Consumption 459,530

513,213

11.68

20

Government Consumption 52,453

52,453

0.00

NPISH Consumption 9,319

9,319

0.00

GFCF 117,539

117540

0.00

Change in Stocks 38,368

11,266

-70.64

Exports of Goods 59,956

59,956

0.00

Exports of Services 26,002

18,211

-29.96

Output is measured in basic prices and intermediate consumption in purchaser price. CIF/FOB

adjustment has been performed. Please refer the annex 2 for information provided by Central Bank of

�epal to perform CIF/FOB adjustment.

II. Sources and Methods

i) Supply side

Domestic Production:

Data sources vary from administrative records to enterprise financial statements. Beside these

secondary sources, results of the Bench Mark Surveys have been used. In 2004/05, CBS had conducted

around 35 surveys/studies (please refer to annex 3 for list of surveys and censuses conducted in 2004 and

2005). These surveys have played significant contribution in preparing SUTs. Censuses of Manufacturing

Establishment 2001/02 and 2006/07 are the major source of manufacturing sector. Nepal's first Distributive Trade Survey (DTS) 2007/08 has played an important role in trade sector. Attempt has also

been made to incorporate informal sector activity (Please refer to annex 5 for determining the informal

activity. However, recommendations of Delhi Group on informal sector has not been followed).

Imports Matrix:

Imports matrix has been established for both imports of good and imports of services.

Department of Customs is the basic data source for the imports of goods. This department maintains the international trade statistics in HS classification scheme. HS scheme has been transformed

to CPC using the correspondence mechanism. Matrix of Imports of Services is based on BOP statistics.

Data source for the BOP is Central Bank of Nepal. Attempt has been done for CIF/FOB adjustment.

Information on the insurance and freight services incurred by non-resident from BOP statement has been

taken to adjust CIF/FOB. Freight and insurance services have been proportionally apportioned to imports.

Adjustment has been done separately for imports from India and other countries. Please refer to annex 4

for detail BOP statement produced by Central bank of �epal

21

Valuation adjustments

Transport cost and trade margin:

The transport cost and trade margins are based on the Distributive Trade Survey. This survey

gives the detail layout of the trade margin in dealer, wholesale and retail level for domestic production

and imported goods. Intermediate cost associated to the freight is apportioned by the total transport cost

and the share of the margin originated from commodities traded.

Taxes less subsidies on products:

This matrix consists of the Value Added Tax on domestic production, Excise Duty on some

selected commodities and Value Added Tax on imports. Information on taxes is based on the information provided by the Department of Inland Revenue and Department of Customs. However, due to low level of

disaggregation of VAT on domestic production, it is apportioned by total domestic production taking care

of VAT exempted commodities. In Nepal, the VAT rate is 13% and there are some commodities, where

VAT has been exempted.

Information on subsidies is based on the government finance statistics.

ii. Use side

Intermediate consumption:

Data sources vary from administrative records to enterprise financial statements. Beside these

secondary sources, we have used the results of the Bench Mark Surveys. In 2004/05, CBS had conducted

around 35 surveys/studies. Cost of production of agricultural commodities from Ministry of Agriculture is

the major source for the agriculture sector. Censuses of Manufacturing Establishment 2001/02 and

2006/07 are the major source of manufacturing sector. Nepal's first Distributive Trade Survey (DTS)

2007/08 has played an important role in trade sector. Industries are reported in column and products in

row. Intermediate consumption is measured in purchasers' price. Published intermediate consumption is

taken as the control total.

Final demand

Private consumption expenditure:

Private consumption vector is based on the Nepal Living standards Survey (NLSS) 2003/04.

However, the purchase made directly by resident abroad is based on Balance of Payment Statistics. The

classification used in the NLSS doesn't follow the COICOP. So, an attempt has been done to make

correspondence between the CPC scheme and the NLSS product detail. Beside these, food balance sheet

has also been analyzed for agriculture sector.

General government consumption expenditure: Individual and Collective:

Separate vectors for individual and collective government expenditure have been established.

These vectors are based on the government finance statistics. Nepal's Government Finance Statistics had

not been maintained in COFOG scheme for SUT base year. So, separate correspondence between existing government classification and CPC has been made. Published consumption expenditure is taken as

control total.

on-profit Institution serving households:

Separate vector has been established for the non-profit institution serving households. This vector

is based on the information provided by Survey on NGOs and INGOs conducted in 2001. Published

consumption expenditure is taken as control total.

22

Gross fixed capital formation:

GFCF has been estimated by commodity flow method. The two basic mechanisms of supply i.e.

domestic supply (adjusted for exports) and imports have been analyzed. Output of the construction has also been adjusted.

Changes in inventories:

For the first time CBS has prepared the changes in inventories independently. In annual estimate,

it is residually estimated. It means inventories and the other errors are included in this item.

The new independent estimate is based on the information provided by government owned

trading corporations, other corporations, NLSS, DTS, Food Balance sheet and Benchmark Surveys.

Acquisition less disposal of valuables:

CBS has tried to make this vector. Information from the NLSS and international trade statistics

has been used.

Export of goods and services:

Export matrix has been prepared for both exports of good and exports of services.

Department of Customs is the basic data source for the imports of goods. This department

maintains the international trade statistics in HS classification scheme. HS scheme has been transformed

to CPC using the correspondence mechanism. Matrix of Exports of Services is based on BOP statistics.

Data source for the BOP is Central Bank of Nepal.

iii. Uses of Value added

Compensation:

Compensation has been estimated for all the SUTs required industries. Data sources vary from

government finance to administrative records to enterprise financial statements. Beside these secondary sources, CBS has used the results of the Bench Mark Surveys. Censuses of Manufacturing Establishment

2001/02 and 2006/07 are the major source of manufacturing sector. In the subsectors of manufacturing,

trade and business, the compensation is apportioned by the output.

Taxes less subsidies:

It includes the taxes less subsidies on production. Government finance statistics is the major data

source.

Depreciation:

No attempt has been made for depreciation.

Operating Surplus:

It is residually estimated by deducting the compensation and taxes less subsidies from value

added.

A. Balancing Process

SUT has been manually balanced. Output, intermediate consumption, government final expenditure, gross

fixed capital formation are concomitant to the published ones. However, the great discrepancy between

the published and residually estimated changes in inventories leads to rethink the level of published

household consumption.

23

III. The Supply and Use Tables : Analysis and Results

Tables on Supply Side

Supply side component of SUTs shows the supply of goods and services by two supply mechanism i.e. domestic production and imports. As the production is valued at basic price, it is

desirable to change this value into purchasers' price. For this, supply components contain some

valuation matrices i.e. taxes and margin. Further, it is important to change the CIF imports to

FOB imports. It is recommended that it would be better if we can have the output disaggregated

by market output, output for own final use and other non-market output. But in this attempt we

don't have such type of disaggregation.

Important elements of the Supply side:

There are three important elements in the supply side.

1. Output matrix.

It is established according to two parameters: rows-Product and columns-

Industry.

2. Imports matrix.

It is built up of two segments namely imports of goods and imports of services.

Transformation of CIF to FOB is most.

3. Valuation matrices.

It consists of trade and transport margins and taxes less subsidies on products.

Aggregation of Supply Table:

The supply table contains the information by product on total domestic output at basic prices,

imports at FOB, total supply at basic prices and total supply at purchasers' prices.

Tables on Use Side

The use table of SUTs has basically two main objectives: to understand the input structure of each

industry and use of available products and primary inputs. It consists of matrices and vectors of

intermediate consumption, household consumption, government consumption, GFCF, change in stocks, exports of goods and services. Further, the information on the components of value added

is also annexed in this side. In use table, all the transactions of products are reported at

purchasers' prices.

Tables of Value Added

The annexed component in the use side is the table of value added. It shows the costs of each

industry for primary inputs i.e. labor and capital, taxes on production, consumption of fixed assets

etc.

Analysis of the Supply side

The output matrix reflects main and secondary production activities of industries. Further, it also

shows the structure of the economy. The total gross domestic output is 914 billion Rs. at basic

prices. The major industry is agriculture which constitutes 29% of total domestic output

producing 27% agriculture commodities followed by trade.

24

Structure of the output

Industry

Composition (%)

Agriculture, Fishing, Forestry

29

Manufacturing, Mining 18

Electricity 2

Construction 8

Other Services 43

Main productions are reported on the diagonal while the secondary activities are on off diagonal.

If we look at the production vector of agriculture industry (abridged SUTs), it is seen that

production of cereals to live animals are main product and other business services is secondary

production. Manufacturing industries seems to be major producers secondary activities followed

by transport and hotels industries.

Imports constitute the 16% of total supply. Major imports are manufacturing goods, basic

chemicals, food and transport services.

Estimates of trade margins earned by the traders and the freight margin by freight service

provider have been estimated for each product. Traders have got significant margins from

agricultural products. Almost 50% of margins are originated from agricultural products.

Taxes on products are derived separately from imports, VAT and excise. Manufacturing

commodities play the significant role on tax. As the VAT is exempted for domestic agriculture

output, the shown tax figure in agricultural commodity is from the imports.

Analysis of the Use Side

This side of the SUTs is important for analysis of input structure. Like in supply table, there is no

economic sense of main and secondary product in use side. Agriculture industry shares the high

proportion of intermediate cost. It accounts almost 19% of total intermediate cost. Agriculture,

construction, hotel industries seem to be major industries using variety of commodities as

intermediate consumption. However, it is more desirable to analysis the cost structure by

commodities. Manufacturing, agriculture product and real estate services are the major

commodities used in the form of intermediate consumption.

It is seen that the lowest IC output ratio is realized in agriculture and trade sectors, whereas the

highest ratio are observed in manufacturing and hotel sectors. Manufacturing of basic metal and

fabricated metal accounts almost 90% of intermediate cost in their total output.

Structure of intermediate Input by Products

Sectors Weight(%)

Agriculture 15.2

Manufacturing 51.7

Services 33.2

25

Likewise fishing, agriculture, and service sectors account the highest gross value added ratio.

Majority of manufacture subsectors have lowest GVA ratio. Service sector accounts the main

source of income of households. About 53% of compensation of employees is generated from service sector.

Household consumption holds leading position on GVA. It accounts 91% of GVA. GCF accounts

22% of GVA. Trade deficit is about 96 billion Rs.

Supply and Use Tables

(Matrix Size 51 X 32)

26

Abridged Supply and Use Tables

Annex 1: Annual ational Accounts 2004/05 In Millions Rs.

Particular 2061/62

2004/05

Gross Output 914,088

Intermediate Consumption 347,509

Consumption 521,301

Government 52,453

Private 459,530

NPISH 9,319

Gross Fixed Capital Formation 117,539

Government 17,213

Private 100,326

Change in Stocks 38,368

Imports 173,754

Exports 85,958

Compensation of Employee 248,892

Tax on Products 41266

Operation Surplus/Mixed Income 299,477

Annex 2

Current Account

A. Goods and services

a. Goods

Exports f.o.b

Exports fob (India) /Cif Calcutta (Others)

Coverage adjustment

Border trade

Exports of Oil

Other

Less: freight and insurance (3+1%)

Imports f.o.b.

Imports fob (India) /Cif Calcutta (Others)

Coverage adjustment

Border trade

Imports of Oil

Other

Less freight and insurance

Freigh t - Up to Calcutta (7.5%)

Calcutta to border (3 %)

Insurance - Up to Calcutta (1 %)

Calcutta to border (1%)

27

It is depicted from BOP presentation. We have used the above mentioned percentages to get the imports at FOB

separately for imports from India and from other countries.

Annex 3

List of Surveys and Censuses conducted in 2004/05

Survey in Nursery 2004/05

Survey on Community Forestry 2004/05

Survey on Fisheries 2007/08

Study on Cost Components of Quarrying 2004/05

Survey on Micro Hydro 2004/05

Survey on Bio Gas 2001/02

Study on Cost Components of Major Construction 2004/05

Survey on Hotels 2003/04

Survey on Restaurant 2004/05

Survey on Non-Mechanised Land Transport 2002/03

Survey on Mechanised Land Transport 2004/05

Survey on Travel Agencies 2004/05

Survey on Trekking Agencies 2004/05

Survey on Cable Television 2004/05

Survey on Internet Service Provider 2004/05

Survey on Public Call Offices 2004/05

Survey on Cargo and Courier 2004/05

Survey on Road Courier 2004/05

Survey on warehouse and storage 2004/05

Survey on Real Estate 2004/05

Survey on Rental and Catering Services 2004/05

Survey on Auditing 2004/05

Survey on Legal Services 2004/05

Survey on Private Education 2004/05

Survey on Film Projection 2004/05

Survey on Advertisement 2004/05

Survey on Rafting 2004/05

Survey on Dry Cleaners 2004/05

28

Annex 4

Balance of Payment Statistics (BoP) In Millions

2004/2005

Total India Others Total

1 Current Account 14598.0 -41946.0 53490.6 11544.6

A. Goods and services -68606.7 -58665.2 -29131.1 -87796.3

a. Goods -77681.6 -50467.4 -35294.7 -85762.1

Exports f.o.b 55228.3 39666.2 20289.9 59956.1

Exports fob (India) /Cif Calcutta (Others) 53910.7 38916.9 19788.8 58705.7

Coverage adjustment 1814.4 749.3 909.4 1658.7

Border trade 20.6 15.3 0.0 15.3

Exports of Oil 0.0 0.0 0.0 0.0

Other 1793.8 734.0 909.4 1643.4

Less: freight and insurance (3+1%) -496.8 0.0 -408.3 -408.3

Imports f.o.b. -132909.9 -90133.6 -55584.6 -145718.2

Imports fob (India) /Cif Calcutta (Others) -116109.8 -62021.9 -60798.1 -122820.0

Coverage adjustment -22245.4 -28111.7 -838.0 -28949.7

Border trade -186.9 -335.0 0.0 -335.0

Imports of Oil -20167.3 -26653.6 0.0 -26653.6

Other -1891.2 -1123.1 -838.0 -1961.1

Less freight and insurance 5445.3 0.0 6051.5 6051.5

Freigh t - Up to Calcutta (7.5%) 3267.2 0.0 3631.1 3631.1

Calcutta to border (3 %) 1306.9 0.0 1452.4 1452.4

Insurance - Up to Calcutta (1 %) 435.6 0.0 484.0 484.0

Calcutta to border (1%) 435.6 0.0 484.0 484.0

b. Services 9074.9 -8197.8 6163.6 -2034.2

Services : Credit 34315.9 4875.1 21126.8 26001.9

Services : Debit -25241.0 -13072.9 -14963.2 -28036.1

Transportation: credit 2652.7 280.2 1954.6 2234.8

Passenger services 2466.1 263.5 1775.0 2038.5

Freight 0.0 0.0 0.0 0.0

Other 186.6 16.7 179.6 196.3

Transportation: debit -9382.1 -3118.2 -7484.0 -10602.2

Passenger services -3323.0 -392.7 -3289.4 -3682.1

Freight -4711.5 -1452.4 -3766.9 -5219.3

Other -1347.6 -1273.1 -427.7 -1700.8

Travel: credit 18147.4 2021.6 8442.2 10463.8

Travel: debit -10021.5 -5886.1 -3805.8 -9691.9

Communication services: credit 2024.3 343.9 1799.6 2143.5

Communication services: debit -463.0 -23.8 -413.6 -437.4

29

2004/2005

Total India Others Total

Insurance services: credit 11.6 66.4 80.3 146.7

Insurance services: debit (2% +other) -1216.5 -840.2 -905.7 -1745.9

Government services: credit 7143.9 390.2 6414.7 6804.9

Government services: debit -616.8 -36.6 -706.5 -743.1

Other services: credit 4336.0 1772.8 2435.4 4208.2

Other services: debit -3541.1 -3168.0 -1647.6 -4815.6

B. Income -1683.9 283.2 1353.3 1636.5

Income : Credit 3841.5 614.2 7137.4 7751.6

Income : Debit -5525.4 -331.0 -5784.1 -6115.1

Compensation of employees: credit 1984.1 439.9 3933.1 4373.0

Investment income: credit 1857.4 174.3 3204.3 3378.6

Direct investment: (n.a) 0.0 0.0 0.0 0.0

Portfolio investment: (n.a.) 0.0 0.0 0.0 0.0

Other 1857.4 174.3 3204.3 3378.6

Compensation of employees: debit -34.1 -276.2 -6.9 -283.1

Investment income: debit -5491.3 -54.8 -5777.2 -5832.0

Direct investment: -3248.5 -54.8 -3630.5 -3685.3

Income on equity -3248.5 -54.8 -3630.5 -3685.3

Dividends and undistributed profits -3248.5 -54.8 -3630.5 -3685.3

Reinvested earnings 0.0 0.0 0.0 0.0

Income on debt (interest) 0.0 0.0 0.0 0.0

Portfolio investment: (n.a.) 0.0 0.0 0.0 0.0

Other -2242.8 0.0 -2146.7 -2146.7

C. Current transfers 84888.6 16436.0 81268.4 97704.4

General government: credit 10379.4 2327.7 10707.3 13035.0

Grants 7269.2 132.9 10707.3 10840.2

Cash 3502.8 104.0 7534.4 7638.4

In kind 2183.8 28.9 901.0 929.9

Other 1582.6 0.0 2271.9 2271.9

Indian Excise Refund 3110.2 2194.8 0.0 2194.8

General government: debit 0.0 0.0 0.0 0.0

Other sectors: credit 78782.4 17503.8 70771.3 88275.1

Workers’ remittances 58587.6 10181.3 55359.9 65541.2

Institutional 28079.3 2959.7 40812.4 43772.1

Other 30508.3 7221.6 14547.5 21769.1

Other transfers 20194.8 7322.5 15411.4 22733.9

Pensions 7906.2 7240.0 5262.2 12502.2

Other 12288.6 82.5 10149.2 10231.7

Other sectors: debit -4273.2 -3395.5 -210.2 -3605.7

*Valuation of Gain and Loss adjusted, Source: Central Bank of Nepal

30

Annex 5

Determining the informal activity

Determining the

informal activity

Hired Status

YES O

Reg

istra

tion

Sta

tus

YES Formal Formal

O Formal Informal

Informal accounts are based on Nepal Living Standards Survey and Labor Force Survey. From these surveys, fourth

quadrant have been taken as informal activity status. However, there may be the informal activity in quadrant one

and third also. But due to the data lack, we have assumed that these activities lie under the formal status.

31

Glossary of Terms

Accrual accounting Accrual accounting records flows at the time economic value is created,

transformed, exchanged, transferred or extinguished, so flows which imply a change

of ownership are entered when ownership passes, services are recorded when

provided, output at the time products are created and intermediate consumption when

materials and supplies are being used.

Assets Assets are entities that must be owned by some unit, or units, and from which

economic benefits are derived by their owner(s) by holding or using them over a

period of time.

Balance of payments The balance of payments is a statistical statement that systematically summarises, for

a specific time period, the economic transactions of an economy with the rest of the

world.

Balance of primary

incomes

The balance of primary incomes is the total value of the primary incomes receivable

by an institutional unit or sector less the total of the primary incomes payable.

Balance sheet A balance sheet is a statement, drawn up at a particular point in time, of the values of

assets owned by an institutional unit or sector and of the financial claims - liabilities -

against the owner of those assets.

Balancing item A balancing item is an accounting construct obtained by subtracting the total value of

the entries on the left-hand side of an account from the total value for the right-hand

side (i.e. resources less uses, or liabilities less assets).

Barter transactions Barter transactions involve two parties, with one party providing a good, service or

asset other than cash to the other in return for a good, service or asset other than cash.

Base period The period that provides the weights for an index is described as the base period.

Basic price The basic price is the amount receivable by the producer from the purchaser for a

unit of a good or service produced as output minus any tax payable, and plus any

subsidy receivable, on that unit as a consequence of its production or sale; it excludes

any transport charges invoiced separately by the producer.

Capital stock - gross Gross capital stock is the value of all fixed assets still in use when a balance sheet is

drawn up, at the actual or estimated current purchasers’ prices for new assets of the

same type, irrespective of the age of the assets.

Central bank A central bank is the public financial corporation which is a monetary authority: that

is, which issues banknotes and sometimes coins and may hold all or part of the

international reserves of the country.

Central government Central government is the body whose political authority extends over the entire

territory of the country and which has the authority to impose taxes on all resident

and non-resident units engaged in economic activities within the country.

Central Product

Classification (CPC)

The Central Product Classification (CPC) is a classification based on the physical

characteristics of goods or on the nature of the services rendered.

32

Centre of economic

interest

An institutional unit is said to have a centre of economic interest within a country

when there exists some location within the economic territory of the country on, or

from, which it engages, and intends to continue to engage, in economic activities and

transactions on a significant scale, either indefinitely or over a finite but long period

of time.

Change in real national

net worth

The change in real national net worth is the sum of changes in net worth of all

resident institutional sectors less the neutral holding gains/losses (that is, in

proportion to the general price level); it is also equal to the sum of saving and capital

transfers, other changes in volume of assets and real holding gains or losses.

Changes in inventories

(including work-in-

progress)

Changes in inventories (including work-in-progress) are measured by the value of the

entries into inventories less the value of withdrawals and the value of any recurrent

losses of goods held in inventories.

C.i.f. price The c.i.f. (i.e. cost, insurance and freight price) is the price of a good delivered at

the frontier of the importing country, or the price of a service delivered to a resident,

before the payment of any import duties or other taxes on imports or trade and

transport margins within the country.

Classification of

individual consumption

by purpose (COICOP)

The classification of individual consumption by purpose (COICOP) is a classification

used to identify the objectives of both individual consumption expenditure and actual

individual consumption.

Classification of outlays

of producers by purpose

(COPP)

The classification of outlays of producers by purpose (COPP) is a classification used

to identify the purposes of expenditures by producers (i.e. intermediate consumption,

compensation of employees, other taxes less subsidies on production, consumption of

fixed capital and gross fixed capital formation).

Classification of the

functions of government

(COFOG)

The classification of the functions of government (COFOG) is a classification used to

identify the socio-economic objectives of current transactions, capital outlays and

acquisition of financial assets by general government and its sub-sectors.

Classification of the

purposes of non-profit

institutions (COPNI)

The classification of the purposes of non-profit institutions (COP�I) is a

classification used to identify the socio-economic objectives of current transactions,

capital outlays and acquisition of financial assets by non-profit institutions serving

households.

Consumer durables Consumer durables are durable goods acquired by households for final consumption

(i.e. those that are not used by households as stores of value or by unincorporated

enterprises owned by households for purposes of production); they may be used for

purposes of consumption repeatedly or continuously over a period of a year or more.

Consumption Consumption is an activity in which institutional units use up goods or services;

consumption can be either intermediate or final.

Consumption good or

service

A consumption good or service is one that is used (without further transformation in

production) by households, NPISHs or government units for the direct satisfaction of

individual needs or wants or the collective needs of members of the community.

Consumption of fixed

capital

Consumption of fixed capital represents the reduction in the value of the fixed assets

used in production during the accounting period resulting from physical deterioration,

normal obsolescence or normal accidental damage.

COPNI (classification

of the purposes of non-

profit institutions)

COP�I (classification of the purposes of non-profit institutions) is a classification

used to identify the socio-economic objectives of current transactions, capital outlays

and acquisition of financial assets by non-profit institutions serving households.

33

COPP (classification of

outlays of producers by

purpose)

COPP (classification of outlays of producers by purpose) is a classification used to

identify the purposes of expenditures by producers (i.e. intermediate consumption,

compensation of employees, other taxes less subsidies on production, consumption of

fixed capital and gross fixed capital formation).

Corporation A corporation is a legal entity, created for the purpose of producing goods or services

for the market, that may be a source of profit or other financial gain to its owner(s); it

is collectively owned by shareholders who have the authority to appoint directors

responsible for its general management.

CPC (Central Product

Classification)

The CPC (Central Product Classification) is a classification based on the physical

characteristics of goods or on the nature of the services rendered.

Current accounts Current accounts record the production of goods and services, the generation of

incomes by production, the subsequent distribution and redistribution of incomes

among institutional units, and the use of incomes for purposes of consumption or

saving.

Current transfers Current transfers consist of all transfers that are not transfers of capital; they directly

affect the level of disposable income and should influence the consumption of goods

or services.

Disposable income Disposable income is derived by adding to the balance of primary incomes all current

transfers, except social transfers in kind, receivable by a unit or sector and subtracting

all current transfers, except social transfers in kind, payable by that unit or sector.

Dividends Dividends are a form of property income to which shareholders become entitled as a

result of placing funds at the disposal of corporations.

Domestic output Domestic output is output produced by resident enterprises.

Double deflation Double deflation is a method whereby gross value added is measured at constant

prices by subtracting intermediate consumption at constant prices from output at

constant prices.

Economic interest -

centre of

An institutional unit is said to have a centre of economic interest within a country

when there exists some location within the economic territory of the country on, or

from, which it engages, and intends to continue to engage, in economic activities and

transactions on a significant scale, either indefinitely or over a finite but long period

of time.

Economic production Economic production is an activity carried out under the control and responsibility of

an institutional unit that uses inputs of labour, capital, and goods and services to

produce outputs of goods or services.

Economic territory (of a

country)

The economic territory of a country consists of the geographic territory administered

by a government within which persons, goods, and capital circulate freely.

Economic territory (of

an international

organisation)

The economic territory of an international organisation consists of the territorial

enclave, or enclaves, over which it has jurisdiction; these consist of clearly

demarcated areas of land or structures which the international organisation owns or

rents and which it uses for the purposes for which the organisation was created by

formal agreement with the country, or countries, in which the enclave or enclaves are

physically located.

Economically active

persons

Economically active persons are persons engaged in production included within the

boundary of production of the SNA.

34

Economically

significant prices

Prices are said to be economically significant when they have a significant influence

on the amounts the producers are willing to supply and on the amounts purchasers

wish to buy.

Employee An employee is a person who enters an agreement, which may be formal or informal,

with an enterprise to work for the enterprise in return for remuneration in cash or in

kind.

Exports of goods Exports of goods consist of exports of the following items from residents to non-

residents, generally with a change of ownership being involved: general merchandise,

goods for processing, repairs on goods, goods procured in foreign ports by domestic

carriers, and non-monetary gold.

Final consumption Final consumption consists of goods and services used by individual households or

the community to satisfy their individual or collective needs or wants.

Final consumption

expenditure of

government

Government final consumption expenditure consists of expenditure, including

imputed expenditure, incurred by general government on both individual

consumption goods and services and collective consumption services.

Final consumption

expenditure of

households

Household final consumption expenditure consists of the expenditure, including

imputed expenditure, incurred by resident households on individual consumption

goods and services, including those sold at prices that are not economically

significant.

Final consumption

expenditure of NPISHs

Final consumption expenditure of �PISHs consists of the expenditure, including

imputed expenditure, incurred by resident NPISHs on individual consumption goods

and services.

Financial account The financial account records the net acquisition of financial assets and net

incurrence of liabilities for all institutional sectors by type of financial asset.

Financial assets Financial assets are assets in the form of financial claims, monetary gold, Special

Drawing Rights (SDRs) allocated by the International Monetary

Fund (IMF), shares in corporations, and certain of the instruments called derivatives.

Financial corporations The financial corporations sector consists of all resident corporations or quasi-

corporations principally engaged in financial intermediation or in auxiliary financial

activities which are closely related to financial intermediation.

Financial derivatives Financial derivatives are financial instruments which are linked to a specific

financial instrument or indicator (foreign currencies, government bonds, share price

indices, interest rates, etc.) or to a particular commodity (gold, coffee, sugar, etc.).

Financial enterprises Financial enterprises are enterprises that are principally engaged in financial

intermediation or in auxiliary financial activities which are closely related to financial

intermediation.

Financial intermediaries Financial intermediaries are units which incur liabilities on their own account on

financial markets by borrowing funds which they lend on different terms and

conditions to other institutional units.

Financial intermediation Financial intermediation is a productive activity in which an institutional unit incurs

liabilities on its own account for the purpose of acquiring financial assets by

engaging in financial transactions on the market.

35

Financial intermediation

services indirectly

measured (FISIM)

Financial intermediation services indirectly measured (FISIM) is an indirect measure

of the value of financial intermediation services provided but for which financial

institutions do not charge explicitly.

Financial lease A financial lease is a contract between lessor and lessee whereby the lessor purchases

a good that is put at the disposal of the lessee and the lessee pays rentals that enable

the lessor, over the period of the contract, to cover all, or virtually all, costs, including

interest.

Financial transactions Financial transactions between institutional units and between institutional units and

the rest of the world cover all transactions involving change of ownership of financial

assets, including the creation and liquidation of financial claims.

First-in-first-out (FIFO) First-in-first-out (FIFO) is an inventory valuation method based on the assumption

that goods are withdrawn from inventories in the same order as they entered.

Fisher’s Ideal Index

(price)

Fisher’s Ideal price index is the geometric mean of the Laspeyres and Paasche price

indices.

Fisher’s Ideal Index

(volume)

Fisher’s Ideal volume index is the geometric mean of the Laspeyres and Paasche

volume indices.

FISIM (financial

intermediation services

indirectly measured)

FISIM (financial intermediation services indirectly measured) is an indirect measure

of the value of financial intermediation services provided but for which financial

institutions do not charge explicitly.

Fixed assets Fixed assets are tangible or intangible assets produced as outputs from processes of

production that are themselves used repeatedly or continuously in other processes of

production for more than one year.

F.o.b. price The f.o.b. price (free on board price) is the c.i.f. price less the costs of transportation,

together with insurance charges, between the customs frontier of the exporting

(importing) country and that of the importing (exporting) country.

Foreign direct

investment

Foreign direct investment is the category of international investment that reflects the

objective of obtaining a lasting interest by a resident entity in one economy in an

enterprise resident in another economy; foreign direct investment is defined as

ownership of 10 per cent or more of the ordinary shares or voting power (for an

incorporated enterprise) or the equivalent (for an unincorporated enterprise).

Full-time equivalent

employment

Full-time equivalent employment is the number of full-time equivalent jobs, defined

as total hours worked divided by average annual hours worked in full-time jobs.

Functional

classifications

Functional classifications provide a means of classifying, by purpose or socio-

economic objective, certain transactions of producers and of three institutional

sectors - namely households, general government and non-profit institutions serving

households (NPISH)s.

GDP - expenditure

based

Expenditure-based GDP is total final expenditures at purchasers’ prices, less the

f.o.b. value of imports of goods and services.

GDP - income based Income-based GDP is compensation of employees, plus taxes less subsidies on

production and imports, plus gross mixed income, plus gross operating surplus.

GDP - output based Output-based GDP is the sum of the gross values added of all resident producers at

producers’ prices, plus taxes less subsides on imports, plus all non-deductible VAT

(or similar taxes).

36

GDP at market prices GDP at market prices is the sum of the gross values added of all resident producers at

producers’ prices, plus taxes less subsides on imports, plus all non-deductible VAT

(or similar taxes).

General government The general government sector consists of the totality of institutional units which, in

addition to fulfilling their political responsibilities and their role of economic

regulation, produce principally non-market services (possibly goods) for individual or

collective consumption and redistribute income and wealth.

GNI (gross national

income)

G�I (gross national income) is the aggregate value of the balances of gross primary

incomes for all sectors; (GNI is identical to gross national product (GNP) as hitherto

understood in national accounts generally).

Goods Goods are physical objects for which a demand exists, over which ownership rights

can be established and whose ownership can be transferred from one institutional unit

to another by engaging in transactions on markets.

Government final

consumption

expenditure

Government final consumption expenditure consists of expenditure, including

imputed expenditure, incurred by general government on both individual

consumption goods and services and collective consumption services.

Gross capital formation Gross capital formation is measured by the total value of the gross fixed capital

formation, changes in inventories and acquisitions less disposals of valuables for a

unit or sector.

Gross capital stock Gross capital stock is the value of all fixed assets still in use when a balance sheet is

drawn up, at the actual or estimated current purchasers’ prices for new assets of the

same type, irrespective of the age of the assets.

Gross domestic product

- expenditure based

Expenditure-based gross domestic product is total final expenditures at purchasers’

prices, less the f.o.b. value of imports of goods and services.

Gross domestic product

- income based

Income-based gross domestic product is compensation of employees, plus taxes less

subsidies on production and imports, plus gross mixed income, plus gross operating

surplus.

Gross domestic product

- output based

Output-based gross domestic product is the sum of the gross values added of all

resident producers at producers’ prices, plus taxes less subsides on imports, plus all

non-deductible VAT (or similar taxes).

Gross domestic product

at market prices

Gross domestic product at market prices is the sum of the gross values added of all

resident producers at producers’ prices, plus taxes less subsides on imports, plus all

non-deductible VAT (or similar taxes).

Gross fixed capital

formation

Gross fixed capital formation is measured by the total value of a producer’s

acquisitions, less disposals, of fixed assets during the accounting period plus certain

additions to the value of non-produced assets (such as land or subsoil assets) realised

by the productive activity of institutional units.

Gross national

disposable income

Gross national disposable income may be derived from gross national income by

adding all current transfers in cash or in kind receivable by resident institutional units

from non-resident units and subtracting all current transfers in cash or in kind payable

by resident institutional units to non-resident units.

Gross national income

(GNI)

Gross national income (G�I) is the aggregate value of the balances of gross primary

incomes for all sectors; (gross national income is identical to gross national product

(GNP) as hitherto understood in national accounts generally).

37

Gross saving Gross saving is gross disposable income less final consumption expenditure.

Gross value added Gross value added is the value of output less the value of intermediate consumption;

it is a measure of the contribution to GDP made by an individual producer, industry

or sector.

Gross value added at

basic prices

Gross value added at basic prices is output valued at basic prices less intermediate

consumption valued at purchasers’ prices.

Gross value added at

producers’ prices

Gross value added at producers’ prices is output valued at producers’ prices less

intermediate consumption valued at purchasers’ prices.

Holding gains Positive or negative holding gains may accrue during the accounting period to the

owners of financial and non-financial assets and liabilities as a result of a change in

their prices (holding gains are sometimes referred to as “capital gains”).

Homogeneous

production unit

A unit of homogeneous production is a producer unit in which only a single (non-

ancillary) productive activity is carried out.

Household A household is a small group of persons who share the same living accommodation,

who pool some, or all, of their income and wealth and who consume certain types of

goods and services collectively, mainly housing and food.

Household actual final

consumption

Household actual final consumption consists of the consumption goods or services

acquired by individual households by expenditures or through social transfers in kind

received from government units or non-profit institutions serving households

(NPISHs).

Household final

consumption

expenditure

Household final consumption expenditure consists of the expenditure, including

imputed expenditure, incurred by resident households on individual consumption

goods and services, including those sold at prices that are not economically

significant.

Illegal production Illegal production is the production of goods or services whose sale, distribution or

possession is forbidden by law; and production activities which are usually legal but

which become illegal when carried out by unauthorised producers.

Import duties Import duties consist of customs duties, or other import charges, which are payable

on goods of a particular type when they enter the economic territory.

Imports of general

merchandise

Imports of general merchandise consist of most movable goods imported by residents

from non-residents and that, with a few specified exceptions, undergo changes in

ownership (actual or imputed).

Imports of goods Imports of goods consist of imports of the following items from non-residents to

residents, generally with a change of ownership being involved: general merchandise,

goods for processing, repairs on goods, goods procured in foreign ports by domestic

carriers, and non-monetary gold.

Imports of services Imports of services consist of the following services purchased by residents from

non-residents: transportation; travel; communications; construction; insurance;

financial; computer and information; royalties and licence fees; other business

services; personal, cultural, and recreational services; and government services n.i.e.

38

Indirect taxes As traditionally understood, indirect taxes are taxes that supposedly can be passed

on, in whole or in part, to other institutional units by increasing the prices of the

goods or services sold but the term “indirect taxes” is not used in SNA93; rather

taxes are specifically identified by their purpose (e.g. taxes on products).

Institutional sectors Institutional units are grouped together to form institutional sectors, on the basis of

their principal functions, behaviour, and objectives.

Institutional unit An institutional unit is an economic entity that is capable, in its own right, of owning

assets, incurring liabilities and engaging in economic activities and in transactions

with other entities.

Insurance The activity of insurance is intended to provide individual institutional units exposed

to certain risks with financial protection against the consequences of the occurrence

of specified events; it is also a form of financial intermediation in which funds are

collected from policyholders and invested in financial or other assets which are held

as technical reserves to meet future claims arising from the occurrence of the events

specified in the insurance policies.

Intermediate

consumption

Intermediate consumption consists of the value of the goods and services consumed

as inputs by a process of production, excluding fixed assets whose consumption is

recorded as consumption of fixed capital.

ISIC ISIC is the United Nations International Standard Industrial Classification of All

Economic Activities; the third revision of ISIC is used in the 1993 SNA.

Local government Local government units are institutional units whose fiscal, legislative and executive

authority extends over the smallest geographical areas distinguished for

administrative and political purposes.

Machinery and

equipment

Machinery and equipment consists of transport equipment and other machinery and

equipment other than that acquired by households for final consumption.

Margin (trade) A trade margin is the difference between the actual or imputed price realised on a

good purchased for resale (either wholesale or retail) and the price that would have to

be paid by the distributor to replace the good at the time it is sold or otherwise

disposed of.

Market establishments Market establishments produce mostly goods and services for sale at prices which

are economically significant.

Market non-profit

institutions serving

businesses

Market non-profit institutions serving businesses are created by associations of the

businesses whose interests they are designed to promote and usually financed by

contributions or subscriptions from the group of businesses concerned; the

subscriptions are treated not as transfers but as payments for services rendered.

Market output Market output is output that is sold at prices that are economically significant or

otherwise disposed of on the market, or intended for sale or disposal on the market.

Market prices Market prices for transactions are the amounts of money willing buyers pay to

acquire something from willing sellers.

Market price

equivalents

Market price equivalents are proxies, or substitute measures, for market prices in

those cases for which no actual market prices have been set; a customary approach is

to construct such prices by analogy with known market prices established under

conditions that are considered essentially the same.

39

Market producers Market producers are producers that sell most or all of their output at prices that are

economically significant.

Mixed income Mixed income is the surplus or deficit accruing from production by unincorporated

enterprises owned by households.

Monetary gold Monetary gold is gold owned by the monetary authorities or others subject to their

effective control that is held as a financial asset and as a component of foreign

reserves.

National income At the level of the total economy, national income is the total value of the primary

incomes receivable within the economy less the total of the primary incomes payable

by resident units.

Non-financial assets �on- financial assets are entities, over which ownership rights are enforced by

institutional units, individually or collectively, and from which economic benefits

may be derived by their owners by holding them, or using them over a period of time,

that consist of tangible assets, both produced and non-produced, and most intangible

assets for which no corresponding liabilities are recorded.

Non-financial

corporations

�on-financial corporations are corporations whose principal activity is the

production of market goods or non-financial services.

Non-monetary gold �on-monetary gold covers exports and imports of all gold not held as reserve assets

(monetary gold) by the authorities.

Non-monetary

transactions

�on-monetary transactions are transactions that are not initially stated in units of

currency; barter is an obvious example.

Non-produced assets �on-produced assets are non-financial assets that come into existence other than

through processes of production.

Non-profit institutions

(NPIs)

�on-profit institutions (�PIs) are legal or social entities created for the purpose of

producing goods and services whose status does not permit them to be a source of

income, profit or other financial gain for the units that establish, control or finance

them.

Non-profit institutions

controlled and mainly

financed by government

�on-profit institutions controlled and mainly financed by government must be

properly constituted legal entities which exist separately from government but over

which government exercises control.

Non-profit institutions

engaged in market

production

�on-profit institutions engaged in market production consist of those NPIs which

charge fees determined by their costs of production and which are sufficiently high to

have a significant influence on the demand for their services, but any surpluses such

institutions make must be retained within those institutions as their status as “Non-

profit institutions (NPIs)” prevents them from distributing them to others

Non-profit institutions

engaged in non-market

production

�on-profit institutions engaged in non-market production are NPIs that are incapable

of providing financial gain to the units which control or manage them, and which

must rely principally on funds other than receipts from sales to cover their costs of

production or other activities.

Non-profit institutions

serving households

(NPISHs)

�on-profit institutions serving households (�PISHs) consist of NPIs which are not

financed and controlled by government and which provide goods or services to

households free or at prices that are not economically significant.

40

Operating surplus The operating surplus measures the surplus or deficit accruing from production

before taking account of any interest, rent or similar charges payable on financial or

tangible non-produced assets borrowed or rented by the enterprise, or any interest,

rent or similar receipts receivable on financial or tangible non-produced assets owned

by the enterprise; (note: for unincorporated enterprises owned by households, this

component is called “mixed income”).

Output Output consists of those goods or services that are produced within an establishment

that become available for use outside that establishment.

Output produced for

own final use

Output produced for own final use consists of goods or services that are retained for

their own final use by the owners of the enterprises in which they are produced.

Outworker An outworker is a person who agrees to work for a particular enterprise or to supply a

certain quantity of goods or services to a particular enterprise, by prior arrangement

or contract with that enterprise, but whose place of work is not within any of the

establishments which make up that enterprise; the enterprise does not control the time

spent at work by an outworker and does not assume responsibility for the conditions

in which that work is carried out.

Own-account producers Own-account producers consist of establishments engaged in gross fixed capital

formation for the enterprises of which they form part or unincorporated enterprises

owned by households all or most of whose output is intended for final consumption

or gross fixed capital formation by those households.

Own-account workers Own-account workers are self-employed persons without paid employees.

PPP (purchasing power

parity)

A PPP (purchasing power parity) is a price relative which measures the number of

units of country B’s currency that are needed in country B to purchase the same

quantity of an individual good or service as 1 unit of country A’s currency will

purchase in A.

Price The price of a good or service is the value of one unit of a particular good or service.

Principal activity The principal activity of a producer unit is the activity whose value added exceeds

that of any other activity carried out within the same unit (the output of the principal

activity must consist of goods or services that are capable of being delivered to other

units even though they may be used for own consumption or own capital formation).

Produced assets Produced assets are non-financial assets that have come into existence as outputs

from processes that fall within the production boundary.

Producer’s price A producer’s price is the amount receivable by the producer from the purchaser for a

unit of a good or service produced as output minus any VAT, or similar deductible

tax, invoiced to the purchaser; it excludes any transport charges invoiced separately

by the producer.

Producers for own final

use

Producers for own final use produce mostly goods and services for final consumption

or fixed capital formation by the owners of the enterprises in which they are

produced.

Production Production is a physical process, carried out under the responsibility, control and

management of an institutional unit, in which labour and assets are used to transform

inputs of goods and services into outputs of other goods and services.

Production account The production account records the activity of producing goods and services as

defined within the SNA.

41

Production boundary The production boundary includes all production actually destined for the market,

whether for sale or barter, all goods or services provided free to individual

households or collectively to the community by government units or NPISHs, all

goods produced for own use, own-account production of housing services and

services produced by employing paid domestic staff.

Public corporations

(non-financial and

financial)

Public corporations are resident corporations and quasi-corporations that are subject

to control by government units, with control over a corporation being defined as the

ability to determine general corporate policy by choosing appropriate directors, if

necessary.

Purchaser’s price The purchaser’s price is the amount paid by the purchaser, excluding any deductible

VAT or similar deductible tax, in order to take delivery of a unit of a good or service

at the time and place required by the purchaser; the purchaser’s price of a good

includes any transport charges paid separately by the purchaser to take delivery at the

required time and place.

Purchasing power parity

(PPP)

A purchasing power parity (PPP) is a price relative which measures the number of

units of country B’s currency that are needed in country B to purchase the same

quantity of an individual good or service as 1 unit of country A’s currency will

purchase in A.

Quasi-corporations Quasi-corporations are unincorporated enterprises that function as if they were

corporations, and which have complete sets of accounts, including balance sheets.

Real gross domestic

income (real GDI)

Real gross domestic income (real GDI) measures the purchasing power of the total

incomes generated by domestic production (including the impact on those incomes of

changes in the terms of trade).

Reference rate (of

interest)

The reference rate (of interest) is the pure cost of borrowing funds (i.e. a rate from

which the risk premium has been eliminated to the greatest extent possible and which

does not include any intermediation services).

Rest of the world The rest of the world consists of all non-resident institutional units that enter into

transactions with resident units, or have other economic links with resident units.

Rest of the world

account

The rest of the world account comprises those categories of accounts necessary to

capture the full range of transactions that take place between the total economy and

the rest of the world.

SAM (social accounting

matrix)

A SAM (social accounting matrix) is a means of presenting the SNA accounts in a

matrix which elaborates the linkages between a supply and use table and institutional

sector accounts.

Satellite accounts Satellite accounts provide a framework to accommodate elements which are included

in the central accounts, explicitly or implicitly, plus complementary elements (either

monetary or in physical quantities) and possibly alternative concepts and

presentations.

Saving Saving is disposable income less final consumption expenditure (or adjusted

disposable income less actual final consumption).

SDRs (Special Drawing

Rights)

SDRs (Special Drawing Rights) are international reserve assets created by the

International Monetary Fund and allocated to its members to supplement existing

reserve assets.

42

Social accounting

matrix (SAM)

A social accounting matrix (SAM) is a means of presenting the SNA accounts in a

matrix which elaborates the linkages between a supply and use table and institutional

sector accounts.

Special drawing rights

(SDRs)

Special drawing rights (SDRs) are international reserve assets created by the

International Monetary Fund and allocated to its members to supplement existing

reserve assets.

Tangible fixed assets Tangible fixed assets are non-financial produced assets that consist of dwellings;

other buildings and structures; machinery and equipment and cultivated assets.

Tangible non-produced

assets

Tangible non-produced assets are natural assets - land, subsoil assets, non-cultivated

biological resources and water resources - over which ownership may be established

and transferred

Tax on a product A tax on a product is a tax that is payable per unit of some good or service, either as

a specified amount of money per unit of quantity or as a specified percentage of the

price per unit or value of the good or service transacted.

Total final consumption Total final consumption is the total value of all expenditures on individual and

collective consumption goods and services incurred by resident households, resident

NPISHs serving households and general government units.

Total hours worked Total hours worked consist of the aggregate number of hours actually worked during

the period in employee and self-employment jobs.

Trade credits and

advances

Trade credits and advances are trade credit for goods and services extended directly

to corporations, to government, to non-profit institutions, to households and to the

rest of the world and also advances for work that is in progress (if classified as such

under inventories) or is to be undertaken.

Trade margin A trade margin is the difference between the actual or imputed price realised on a

good purchased for resale (either wholesale or retail) and the price that would have to

be paid by the distributor to replace the good at the time it is sold or otherwise

disposed of.

Trading gains and losses Trading gains and losses arise from changes in a country’s terms of trade; for

example, if the prices of a country’s exports rise faster (or fall more slowly) than the

prices of its imports (i.e. if terms of trade improve) then an increased volume of

imports of goods and services can be purchased by residents out of the receipts

generated by a given level of exports.

Transaction A transaction is an economic flow that is an interaction between institutional units by

mutual agreement or an action within an institutional unit that it is analytically useful

to treat like a transaction, often because the unit is operating in two different

capacities.

Transfer A transfer is a transaction in which one institutional unit provides a good, service or

asset to another unit without receiving from the latter any good, service or asset in

return as counterpart.

Uses The term uses refers to transactions that reduce the amount of economic value of a

unit or sector (for example, wages and salaries are a use for the unit or sector that

must pay them); by convention, uses are put on the left side of the account.

43

Valuables Valuables are produced assets that are not used primarily for production or

consumption, that are expected to appreciate or at least not to decline in real value,

that do not deteriorate over time under normal conditions and that are acquired and

held primarily as stores of value.

Value added - gross Gross value added is the value of output less the value of intermediate consumption;

it is a measure of the contribution to GDP made by an individual producer, industry

or sector.

Value added - net �et value added is the value of output less the values of both intermediate

consumption and consumption of fixed capital.

Value added tax (VAT) A Value added tax (VAT) is a tax on products collected in stages by enterprises.

Wages and salaries Wages and salaries consist of the sum of wages and salaries in cash and wages and

salaries in kind.

Wages and salaries in

cash

Wages and salaries in cash consist of wages or salaries payable at regular weekly,

monthly or other intervals, including payments by results and piecework payments;

plus allowances such as those for working overtime; plus amounts paid to employees

away from work for on holiday; plus ad hoc bonuses and similar payments; plus

commissions, gratuities and tips received by employees.

Wages and salaries in

kind

Wages and salaries in kind consist of remuneration in the form of goods and/or

services that are not necessary for work and can be used by employees in their own

time, and at their own discretion, for the satisfaction of their own needs or wants or

those of other members of their households.