Revision of 1993 SNARevision of 1993 SNA2008 SNA- Changes from 1993 2008 SNA- Changes from 1993

SNA SNA

Workshop on National Accounts Workshop on National Accounts for for Asian Member States of the Organization Asian Member States of the Organization

of Islamic Conferenceof Islamic Conference

Ankara, 1-2 December 2008Ankara, 1-2 December 2008

UN Statistics DivisionUN Statistics Division

Changes from the 1993 SNAChanges from the 1993 SNA

Outline of presentationOutline of presentation

1. 1993 SNA revision process1. 1993 SNA revision process

2. Changes from 1993 SNA2. Changes from 1993 SNA

1993 SNA Revision Process1993 SNA Revision Process

In 2003, the UNSC called for an update of the In 2003, the UNSC called for an update of the 1993 SNA to bring the accounts into line with 1993 SNA to bring the accounts into line with the new economic environment, advances in the new economic environment, advances in methodological research, and needs of users.methodological research, and needs of users.

Guidelines for the recommendations for Guidelines for the recommendations for revision revision • No fundamental or comprehensive changes to the No fundamental or comprehensive changes to the

1993 SNA that would impede its implementation,1993 SNA that would impede its implementation,• Should consider feasibility of implementationShould consider feasibility of implementation• Consistency with related statistical systemsConsistency with related statistical systems

ISWGNA to organize and coordinate the ISWGNA to organize and coordinate the update project assisted by Project Manger update project assisted by Project Manger and Editorand Editor

1993 SNA Revision Process1993 SNA Revision Process

ISWGNA identified 44 issues for reviewISWGNA identified 44 issues for review

UNSC emphasized:UNSC emphasized:• need for the broadest possible involvement of the need for the broadest possible involvement of the

global statistical community in the update projectglobal statistical community in the update project• Transparent management processTransparent management process

In line with this emphasis, the Advisory Expert In line with this emphasis, the Advisory Expert Group (AEG), comprising 20 country experts Group (AEG), comprising 20 country experts from all regions of the world, was established from all regions of the world, was established to take a key role in the revisionto take a key role in the revision

UNSD websiteUNSD website http://unstats.un.org/unsd/nationalaccount/snarev1.asphttp://unstats.un.org/unsd/nationalaccount/snarev1.asp promotes transparency and wide involvement of promotes transparency and wide involvement of national accounts expertsnational accounts experts

1993 SNA Revision Process1993 SNA Revision Process

AEG considered proposals for change and expresses its AEG considered proposals for change and expresses its views, both in meetings and in web-based written views, both in meetings and in web-based written consultations.consultations.

The AEG has so far met six times: Feb 2004, Dec 2004, The AEG has so far met six times: Feb 2004, Dec 2004, July 2005 and Jan-Feb 2006, Mar 2007 and Nov 2008.July 2005 and Jan-Feb 2006, Mar 2007 and Nov 2008.

AEG recommendations sent to NSOs/CBs for comments AEG recommendations sent to NSOs/CBs for comments – 60 days to comment. Comments considered at the – 60 days to comment. Comments considered at the next AEG meetingnext AEG meeting

Steps taken to ensure consistency with BOPM and GFSMSteps taken to ensure consistency with BOPM and GFSM Full set of consolidated AEG recommendations was Full set of consolidated AEG recommendations was

approved by the UNSC in 2007approved by the UNSC in 2007 In 2008 the UNSC endorsed draft of Vol. 1 of the revised In 2008 the UNSC endorsed draft of Vol. 1 of the revised

SNA. The revised SNA named as 2008 SNA.SNA. The revised SNA named as 2008 SNA. Vol. 2 of the 2008 SNA would be endorsed by the UNSD in Vol. 2 of the 2008 SNA would be endorsed by the UNSD in

Feb 2009Feb 2009

Specifications of statistical units and Specifications of statistical units and revisions in the sectoringrevisions in the sectoring

Producer unit undertaking ancillary activities to be Producer unit undertaking ancillary activities to be recognized as a separate establishment in certain recognized as a separate establishment in certain casescases

Unit undertaking purely ancillary to be recognised as Unit undertaking purely ancillary to be recognised as separate establishment if:separate establishment if:• Statistically observable, in that separate accounts for the Statistically observable, in that separate accounts for the

production it undertakes are readily available, or production it undertakes are readily available, or • if it is located in a geographically different location from if it is located in a geographically different location from

the establishments it serves; the establishments it serves;

The ancillary establishment classified according to its own The ancillary establishment classified according to its own principal activity.principal activity.

The value of output should be derived on a sum of costs The value of output should be derived on a sum of costs basis, including the costs of the capital used by the unitbasis, including the costs of the capital used by the unit. .

The 1993 SNA treated a producer unit undertaking purely The 1993 SNA treated a producer unit undertaking purely ancillary activities always as an integral part of the ancillary activities always as an integral part of the establishment it servedestablishment it served

Artificial subsidiariesArtificial subsidiaries

Ancillary corporations of the 1993 SNA are named Ancillary corporations of the 1993 SNA are named

as artificial subsidiaries in the 2008 SNAas artificial subsidiaries in the 2008 SNA Artificial subsidiaries are subsidiary corporations Artificial subsidiaries are subsidiary corporations

wholly owned by the parent corporation and wholly owned by the parent corporation and created to provide services to the parent created to provide services to the parent corporation, or other corporations in the same corporation, or other corporations in the same group, in order to avoid taxes, to minimize group, in order to avoid taxes, to minimize liabilities in the event of bankruptcy, or to secure liabilities in the event of bankruptcy, or to secure other technical advantages under the tax or other technical advantages under the tax or corporation legislation in force in a particular corporation legislation in force in a particular country.country.

Not regarded as institutional unit unless resident in an Not regarded as institutional unit unless resident in an economy different from that of its parenteconomy different from that of its parent

Multi-territory enterprisesMulti-territory enterprises

Residence of multi-territory enterprises clarifiedResidence of multi-territory enterprises clarified

Multi-territory enterprises operate a seamless Multi-territory enterprises operate a seamless operation over more than one economic territory.operation over more than one economic territory.

Such enterprises are typically involved in cross Such enterprises are typically involved in cross border activities and include shipping lines, airlines, border activities and include shipping lines, airlines, hydroelectric schemes on border rivers, pipelines, hydroelectric schemes on border rivers, pipelines, bridges, tunnels and undersea cablesbridges, tunnels and undersea cables

In case it is not possible to identify a parent or In case it is not possible to identify a parent or separate branches, it is recommended to prorate the separate branches, it is recommended to prorate the total operations of a multi-territory enterprise by the total operations of a multi-territory enterprise by the individual economic territories in which it operatesindividual economic territories in which it operates

SPEsSPEs

2008 SNA provides guidance on the treatment of units 2008 SNA provides guidance on the treatment of units with no employees and no non-financial assets known with no employees and no non-financial assets known variously as special purpose entities (SPEs) or special variously as special purpose entities (SPEs) or special purpose vehiclespurpose vehicles

Though there is no common definition of an SPE but some of Though there is no common definition of an SPE but some of its characteristics are that its characteristics are that

it has little physical presence, it has little physical presence, is always related to another corporation, often as a is always related to another corporation, often as a

subsidiary, and subsidiary, and it is often resident in a territory other than the territory of it is often resident in a territory other than the territory of

residence of its parentresidence of its parent

Such a unit is treated as an institutional unit and allocated to Such a unit is treated as an institutional unit and allocated to sector and industry according to its principal activity with sector and industry according to its principal activity with some exceptionssome exceptions

The 1993 SNA did not give explicit guidance for The 1993 SNA did not give explicit guidance for treatment of such units.treatment of such units.

Holding companyHolding company

Holding company allocated to the financial Holding company allocated to the financial corporations sectorcorporations sector

As described in section K class 6420 of the ISIC Rev. As described in section K class 6420 of the ISIC Rev. 4, a holding company holds the assets of subsidiary 4, a holding company holds the assets of subsidiary corporations but does not undertake any corporations but does not undertake any management activities. Such a unit therefore, management activities. Such a unit therefore, produces only the financial service. produces only the financial service.

In the 1993 SNA the holding companies were In the 1993 SNA the holding companies were recommended to be assigned to the institutional recommended to be assigned to the institutional sector in which the main activity of the group of sector in which the main activity of the group of subsidiaries is concentrated.  subsidiaries is concentrated.  

Head officeHead office

Head office to be allocated to the institutional Head office to be allocated to the institutional sector preponderant to activity of its subsidiariessector preponderant to activity of its subsidiaries

The activities of a head office, as defined in section M class The activities of a head office, as defined in section M class 7010 of the ISIC Rev. 4, includes 7010 of the ISIC Rev. 4, includes • Overseeing and managing of other units of enterprise; Overseeing and managing of other units of enterprise; • Undertaking the strategic or organizational planning and decision Undertaking the strategic or organizational planning and decision

making role of the enterprise; making role of the enterprise; • Exercising operational control and manage the day-to-day Exercising operational control and manage the day-to-day

operations of their related units. operations of their related units. • Such a unit therefore, produces the non-financial or financial Such a unit therefore, produces the non-financial or financial

services depending upon the nature of production of its services depending upon the nature of production of its subsidiaries.subsidiaries.

The 2008 SNA therefore, recommends that the head office The 2008 SNA therefore, recommends that the head office should be allocated to the should be allocated to the • non-financial corporations sector unless non-financial corporations sector unless • all or most of its subsidiaries are financial corporations, in which all or most of its subsidiaries are financial corporations, in which

case it is treated by convention as a financial auxiliary in the case it is treated by convention as a financial auxiliary in the financial corporations sector.financial corporations sector.

1993 SNA did not give explicit guidance for treatment of head 1993 SNA did not give explicit guidance for treatment of head officesoffices

Financial servicesFinancial services

Definition of financial services enlargedDefinition of financial services enlarged to give due to give due weight to the increase in financial services other than the weight to the increase in financial services other than the financial intermediation, specifically financial risk financial intermediation, specifically financial risk management and liquidity transformation. management and liquidity transformation.

Sub-sectoringSub-sectoring of the financial corporation sector of the financial corporation sector revised to revised to reflect new developments in financial services, markets and reflect new developments in financial services, markets and instrumentinstrument

((i) Central Banki) Central Bank (ii) Deposit-taking corporations except the central bank, (ii) Deposit-taking corporations except the central bank,

(iii) Money market funds (MMFs), (iii) Money market funds (MMFs), (iv) Non-MMF investment funds, (iv) Non-MMF investment funds, (v) Other financial intermediaries except insurance (v) Other financial intermediaries except insurance corporations and pension funds (ICPFs), corporations and pension funds (ICPFs), (vi) Financial auxiliaries, (vi) Financial auxiliaries, (vii) Captive financial institutions and money lenders, (vii) Captive financial institutions and money lenders, (viii) Insurance corporations (ICs) and (viii) Insurance corporations (ICs) and (ix) Pension funds (PFs).(ix) Pension funds (PFs).

2. 2. Specifications of the scope of transactions Specifications of the scope of transactions

including the production boundaryincluding the production boundary

Research and DevelopmentResearch and Development Output of Research and development is not treated Output of Research and development is not treated

as intermediate consumptionas intermediate consumption

A separate establishment should be distinguished A separate establishment should be distinguished for it when possiblefor it when possible

The 2008 SNA recommends that the output of the The 2008 SNA recommends that the output of the R&D should be valued atR&D should be valued at

market price if purchased (outsourced) or market price if purchased (outsourced) or sum of total production costs plus an appropriate mark-sum of total production costs plus an appropriate mark-

up if undertaken on own accountup if undertaken on own account

The 1993 SNA byThe 1993 SNA byconvention treated the output of convention treated the output of R&D as intermediate consumptionR&D as intermediate consumption

FISIMFISIM

Method for calculating financial intermediation Method for calculating financial intermediation services indirectly measured (FISIM) is refinedservices indirectly measured (FISIM) is refined

By convention the 2008 SNA recommends that By convention the 2008 SNA recommends that • FISIM applies only to loans and deposits and FISIM applies only to loans and deposits and • only when those loans and deposits are provided by, or only when those loans and deposits are provided by, or

deposited with, financial institutions. deposited with, financial institutions.

The 2008 SNA calculates the output of FISIM on loans (yL) The 2008 SNA calculates the output of FISIM on loans (yL) and deposits (yD) only, using a reference rate (rr). and deposits (yD) only, using a reference rate (rr).

Assuming that these loans and deposits attract interest Assuming that these loans and deposits attract interest rates of rL and rD respectively, the output of FISIM should be rates of rL and rD respectively, the output of FISIM should be calculated according to the formula (rL - rr) yL + (rr - rD) yD. calculated according to the formula (rL - rr) yL + (rr - rD) yD.

The 1993 SNA calculated FISIM as the difference between The 1993 SNA calculated FISIM as the difference between property income receivable and interest payableproperty income receivable and interest payable

Output of central bankOutput of central bank

Output of central bank clarifiedOutput of central bank clarified Services produced by the central bank are identified in Services produced by the central bank are identified in

three broad groups, three broad groups, • financial intermediation, financial intermediation, • monetary policy services and monetary policy services and • supervisory services overseeing financial corporations.supervisory services overseeing financial corporations.

Separate establishments should be identified for units Separate establishments should be identified for units of the CB undertaking production of these services of the CB undertaking production of these services

Financial intermediation services represent market Financial intermediation services represent market production,production,

Monetary policy services represent non-market Monetary policy services represent non-market production andproduction and

Borderline cases, such as supervisory services may be Borderline cases, such as supervisory services may be treated as market or non-market services depending on treated as market or non-market services depending on whether explicit fees are charged that are sufficient to whether explicit fees are charged that are sufficient to cover the costs of providing such services.cover the costs of providing such services.

Non-life insurance servicesNon-life insurance services

Catastrophic events generate massive claims on Catastrophic events generate massive claims on non-life insurance companiesnon-life insurance companies

In such cases the output of the insurance activity In such cases the output of the insurance activity estimated using the basic algorithm of the 1993 estimated using the basic algorithm of the 1993 SNA anchored on the SNA anchored on the balance of premiums and balance of premiums and claimsclaims could be extremely volatile (even could be extremely volatile (even negative).negative).

The 2008 SNA, therefore recommends that the The 2008 SNA, therefore recommends that the output of the non-life insurance activity should be output of the non-life insurance activity should be calculated using the calculated using the adjusted claimsadjusted claims and and adjusted adjusted premiums supplementspremiums supplements. .

• Output = Actual premiums earned + Output = Actual premiums earned + AdjustedAdjusted premium premium supplements - supplements - AdjustedAdjusted claims incurred. claims incurred.

Valuation of output for own final use by Valuation of output for own final use by households and corporationshouseholds and corporations

Return to capital to be included as part Return to capital to be included as part of the sum of costs for valuation of the of the sum of costs for valuation of the output of goods and services produced output of goods and services produced for own final use by households and for own final use by households and corporations.corporations.

The 1993 SNA was not explicit in The 1993 SNA was not explicit in including the return to capital in including the return to capital in estimating the output of goods and estimating the output of goods and services produced for own final use by services produced for own final use by households and corporationshouseholds and corporations

Asset boundary extended to include R&DAsset boundary extended to include R&D The output of the R&D is capitalized as The output of the R&D is capitalized as

“intellectual property products” “intellectual property products” • except in cases where it is clear that the activity except in cases where it is clear that the activity

does not entail any economic benefit to its does not entail any economic benefit to its producer (and hence owner) in which case it is producer (and hence owner) in which case it is treated as intermediate consumption. treated as intermediate consumption.

patented entities, of the 1993 SNA asset category is patented entities, of the 1993 SNA asset category is no longer separately identified and is subsumed no longer separately identified and is subsumed into R&D assetsinto R&D assets

Treatment of R&D giving rise to produced assets Treatment of R&D giving rise to produced assets has removed the 1993 SNA inconsistency of has removed the 1993 SNA inconsistency of treating the patented entities as non-produced treating the patented entities as non-produced asset giving rise to property incomeasset giving rise to property income

Asset boundaryAsset boundary

Extension of the assets boundary and government GCF Extension of the assets boundary and government GCF to include expenditure on weapon systemsto include expenditure on weapon systems

Military weapon systems are seen to be used continuously Military weapon systems are seen to be used continuously in the production of defence services, even if their in the production of defence services, even if their peacetime use is simply to provide deterrence. peacetime use is simply to provide deterrence.

The 2008 SNA, therefore, recommends that military weapon The 2008 SNA, therefore, recommends that military weapon systems should be classified as fixed assets systems should be classified as fixed assets

Single-use items, such as ammunition, missiles, rockets, bombs, Single-use items, such as ammunition, missiles, rockets, bombs, etc., delivered by weapons or weapons systems are treated as etc., delivered by weapons or weapons systems are treated as military inventoriesmilitary inventories

The 1993 SNA treated as gross fixed capital formation all The 1993 SNA treated as gross fixed capital formation all expenditures by the military on fixed assets of a kind that expenditures by the military on fixed assets of a kind that could be used for civilian purposes of production.  could be used for civilian purposes of production.  

On the other hand, military weapons, and vehicles and equipment On the other hand, military weapons, and vehicles and equipment whose sole purpose was to launch or deliver such weapons, were whose sole purpose was to launch or deliver such weapons, were not treated as gross fixed capital formation but as intermediate not treated as gross fixed capital formation but as intermediate consumption.  consumption.  

Assets classificationAssets classification

Produced assetsProduced assets Within buildings and structures, a category has been added for land Within buildings and structures, a category has been added for land

improvements. This replaces the 1993 SNA term "major improvements improvements. This replaces the 1993 SNA term "major improvements to non-produced non-financial assets". The costs of ownership transfer to non-produced non-financial assets". The costs of ownership transfer on all land are to be included with land improvements.on all land are to be included with land improvements.

The information, computer and telecommunications (ICT) equipment The information, computer and telecommunications (ICT) equipment has been included as a new category under machinery and equipment,has been included as a new category under machinery and equipment,

Weapon systems are recognized as produced assts and classified Weapon systems are recognized as produced assts and classified separately,separately,

The term "intangible fixed assets" has been renamed as "intellectual The term "intangible fixed assets" has been renamed as "intellectual property products". The word "products" is included to make clear that property products". The word "products" is included to make clear that it does not include third party rights which are non-produced assets in it does not include third party rights which are non-produced assets in the SNA,the SNA,

R&D products are included within intellectual property products. R&D products are included within intellectual property products. The item "mineral exploration" has been modified to "mineral The item "mineral exploration" has been modified to "mineral

exploration and evaluation" to emphasis that the coverage conforms exploration and evaluation" to emphasis that the coverage conforms to the international accounting standards,to the international accounting standards,

Computer software has been modified to include databasesComputer software has been modified to include databases The term "other intellectual property products" replaces "other The term "other intellectual property products" replaces "other

intangible fixed assets"intangible fixed assets"

Assets classificationAssets classification

Non-Produced assetsNon-Produced assets The "tangible non-produced assets" of the 1993 The "tangible non-produced assets" of the 1993

SNA are renamed as "natural resources", SNA are renamed as "natural resources", Other natural resources such as the radio Other natural resources such as the radio

spectrum has been added, andspectrum has been added, and The "intangible non-produced assets" has been The "intangible non-produced assets" has been

split into two sub-categories, namely, "contracts, split into two sub-categories, namely, "contracts, leases and licences" and "goodwill and marketing leases and licences" and "goodwill and marketing assets",assets",

Contracts, leases and licences has been split into Contracts, leases and licences has been split into four sub-categories; marketable operating leases, four sub-categories; marketable operating leases, permissions to use natural resources, permissions permissions to use natural resources, permissions to undertake specific activities, and entitlement to to undertake specific activities, and entitlement to future goods and services on an exclusive basis.future goods and services on an exclusive basis.

Treatment of cost of ownership transfer elaboratedTreatment of cost of ownership transfer elaborated

Like the 1993 SNA, the 2008 SNA continues to treat Like the 1993 SNA, the 2008 SNA continues to treat the costs of ownership transfer (COT) as fixed the costs of ownership transfer (COT) as fixed capital formation.capital formation.

COT on acquisition of an asset should be written off over the COT on acquisition of an asset should be written off over the period the asset is expected to be held by the purchaser period the asset is expected to be held by the purchaser • 1993 SNA recommended to write off COT over the whole life of 1993 SNA recommended to write off COT over the whole life of

the asset the asset

COT on the disposal of an asset should also be written off over COT on the disposal of an asset should also be written off over the period the asset is held but recorded when they are the period the asset is held but recorded when they are actually incurred. actually incurred.

Recognising the difficulty in implementation of this Recognising the difficulty in implementation of this recommendation for lack of adequate data, the 2008 SNA recommendation for lack of adequate data, the 2008 SNA recommends that these costs should still be recorded as gross recommends that these costs should still be recorded as gross fixed capital formation but written off as CFC in the year of fixed capital formation but written off as CFC in the year of acquisition. acquisition.

Land improvementsLand improvements

Land improvements continue to be treated as gross fixed Land improvements continue to be treated as gross fixed capital formation. capital formation.

The 2008 SNA recommends treating land improvements The 2008 SNA recommends treating land improvements as a category of fixed assets distinct from the non-as a category of fixed assets distinct from the non-produced land asset as it existed before improvement. produced land asset as it existed before improvement.

In cases where it is not possible to separate the value of In cases where it is not possible to separate the value of the land before improvement and the value of those the land before improvement and the value of those improvements, the land should be allocated to the improvements, the land should be allocated to the category that represents the greater part of the value. category that represents the greater part of the value.

The costs of ownership transfer on all land are to be The costs of ownership transfer on all land are to be included in the land improvements.included in the land improvements.

The 1993 SNA recorded improvements to land as gross The 1993 SNA recorded improvements to land as gross fixed capital formation, but in the balance sheet such fixed capital formation, but in the balance sheet such improvements were included with land itself. improvements were included with land itself.

Treatment of employees stock optionTreatment of employees stock option

Stock options (income in kind)Stock options (income in kind)• Employer giving employee an option to buy stocks (shares) Employer giving employee an option to buy stocks (shares)

at some future date at a given price (strike/exercise price) at some future date at a given price (strike/exercise price) subject to certain conditions (employee is still on the subject to certain conditions (employee is still on the enterprise pay roll).enterprise pay roll).

• Employee may not exercise the option:Employee may not exercise the option: Share price is now lower than his option priceShare price is now lower than his option price No longer in the employment of the companyNo longer in the employment of the company

• The ‘grant date’ is when the option is provided, the The ‘grant date’ is when the option is provided, the ‘vesting date’ is the earliest date when the option can be ‘vesting date’ is the earliest date when the option can be exercised (or lapses)exercised (or lapses)

• Valuation of the stock option may estimated as the Valuation of the stock option may estimated as the difference between the market price and the stock price at difference between the market price and the stock price at vesting date or using using a stock option pricing model.vesting date or using using a stock option pricing model.

Treatment of loan guarantees elaboratedTreatment of loan guarantees elaborated

The 2008 SNA recognises three classes of loan guarantees The 2008 SNA recognises three classes of loan guarantees and provides guidance for their treatment.and provides guidance for their treatment.

Guarantees provided by means of a financial derivativeGuarantees provided by means of a financial derivative, such , such as a credit default swap. These derivatives are actively traded as a credit default swap. These derivatives are actively traded on financial market and derivative presents no new features on financial market and derivative presents no new features for the SNAfor the SNA

Standardized guarantees - Standardized guarantees - that are issued in large numbers, that are issued in large numbers, usually for fairly small amounts, along identical lines such as usually for fairly small amounts, along identical lines such as export credit guarantees and student loan guaranteesexport credit guarantees and student loan guarantees • In this case, although it is not possible to establish the likelihood In this case, although it is not possible to establish the likelihood

of any one loan defaulting, it is standard practice to estimate how of any one loan defaulting, it is standard practice to estimate how many out of a batch of similar loans may default. It operates on many out of a batch of similar loans may default. It operates on the same principle as for non-life insurance and should be treated the same principle as for non-life insurance and should be treated similarlysimilarly

One-off guaranteesOne-off guarantees, consists of those where the loan or the , consists of those where the loan or the security is so particular that it is not possible for the degree of security is so particular that it is not possible for the degree of risk associated with the loan to be estimated with any degree risk associated with the loan to be estimated with any degree of accuracy. of accuracy. • In most cases, the granting of a one-off guarantee is considered a In most cases, the granting of a one-off guarantee is considered a

contingency and is not recorded as a financial asset/liability.contingency and is not recorded as a financial asset/liability.

Liability in special drawing rights recognisedLiability in special drawing rights recognised

The 2008 SNA recommends to treat special The 2008 SNA recommends to treat special drawing rights (SDRs) issued by the IMF as drawing rights (SDRs) issued by the IMF as being a liability of countries receiving the being a liability of countries receiving the allocations and to record allocation and allocations and to record allocation and cancellation of SDRs as transactions. cancellation of SDRs as transactions.

The asset and liability aspects of SDRs The asset and liability aspects of SDRs should be recorded separately. should be recorded separately.

The 1993 SNA classified SDRs as assets The 1993 SNA classified SDRs as assets without corresponding liabilities arguing that without corresponding liabilities arguing that these assets do not represent claims on the these assets do not represent claims on the IMF collectively.IMF collectively.

Financial asset classificationFinancial asset classification

To reflect the innovations in the financial market and To reflect the innovations in the financial market and also maintain its relevance in a time of rapid economic also maintain its relevance in a time of rapid economic and institutional change the financial asset and institutional change the financial asset classification has been changed in the 2008 SNA. classification has been changed in the 2008 SNA.

• Monetary gold and SDRsMonetary gold and SDRs• Currency and depositsCurrency and deposits• Debt securitiesDebt securities• LoansLoans• Short-termShort-term• Long-termLong-term• Equity and investment fund sharesEquity and investment fund shares• investment fund shares/unitsinvestment fund shares/units• Insurance, pension and standardised guarantee schemesInsurance, pension and standardised guarantee schemes• Financial derivatives and employee stock optionsFinancial derivatives and employee stock options• Other accounts receivable/payableOther accounts receivable/payable

LeasingLeasing

Distinction between financial leasing and Distinction between financial leasing and operating leasing based on economic ownership operating leasing based on economic ownership

The 2008 SNA recognises the distinction between The 2008 SNA recognises the distinction between the operating leasing and the financial leasing the operating leasing and the financial leasing according to whether the lessee should be according to whether the lessee should be regarded as the economic owner of the asset or regarded as the economic owner of the asset or not.not.

The distinction between operating leasing and The distinction between operating leasing and the financial leasing in the 1993 SNA was the financial leasing in the 1993 SNA was interpreted to be based on the length of the time interpreted to be based on the length of the time of lease.of lease.

Changes in recording pension entitlementsChanges in recording pension entitlements The 2008 SNA recognizes that pension promises are contractual The 2008 SNA recognizes that pension promises are contractual

engagements, in that they are expected or likely to be enforceable engagements, in that they are expected or likely to be enforceable and therefore, they should be recognized as households’ assets, and therefore, they should be recognized as households’ assets, irrespective of the facts that segregated schemes’ assets exist or irrespective of the facts that segregated schemes’ assets exist or not, and of the fact that the employer may have recorded an not, and of the fact that the employer may have recorded an associated liability entry in the his balance sheet or not. associated liability entry in the his balance sheet or not.

Consequently the 2008 SNA recommends recording of the liabilities Consequently the 2008 SNA recommends recording of the liabilities of employers’ pension schemes, regardless of whether funding to of employers’ pension schemes, regardless of whether funding to meet them exists or not. meet them exists or not.

For pensions provided by government via social security however, For pensions provided by government via social security however, countries have some flexibility to deviate from this rule in the set of countries have some flexibility to deviate from this rule in the set of standard tables. standard tables. • This is because the division between which pensions are provided by This is because the division between which pensions are provided by

social security and which by other employment-related schemes varies social security and which by other employment-related schemes varies considerably from country to country. considerably from country to country.

However, the full range of information required for a comprehensive However, the full range of information required for a comprehensive analysis of pensions is recommended to be provided in a analysis of pensions is recommended to be provided in a supplementary table that shows the liabilities and associated flows supplementary table that shows the liabilities and associated flows of all private and government pension schemes, whether funded or of all private and government pension schemes, whether funded or unfunded and including social security unfunded and including social security

Government and public sectorGovernment and public sector

Recognising the fact that the powers, motivation Recognising the fact that the powers, motivation and functions of government are different from and functions of government are different from those of other sectors of the economy and that it those of other sectors of the economy and that it organises its operations through different organises its operations through different institutional units, the 2008 SNA gives extra institutional units, the 2008 SNA gives extra guidance for the distinction between general guidance for the distinction between general government and public corporations. government and public corporations.

Treatment of restructuring agencies has been Treatment of restructuring agencies has been elaboratedelaborated

Principles for treatment of public-private Principles for treatment of public-private partnership schemes (BOOT schemes) outlinedpartnership schemes (BOOT schemes) outlined

Guidance provided fro recording of tax creditsGuidance provided fro recording of tax credits

Harmonisation with BOPHarmonisation with BOP

Goods sent abroad for processing should be Goods sent abroad for processing should be recorded on change of ownership basis. recorded on change of ownership basis.

Merchanting: is defined as the purchase of Merchanting: is defined as the purchase of a good by a resident (of the compiling a good by a resident (of the compiling economy) from a non-resident and the economy) from a non-resident and the subsequent resale of the good to another subsequent resale of the good to another non-resident, without the good entering the non-resident, without the good entering the merchant’s economymerchant’s economy

It is a form of global wholesaling, retailing and It is a form of global wholesaling, retailing and commodity trading.commodity trading.

2008 SNA provides guidelines for recording 2008 SNA provides guidelines for recording merchantingmerchanting

Thank YouThank You