Govt set to alter system of national accounts

Indicators on GDP, inflation, GDS may change

Kathmandu, May 25 :

Central Bureau of Statistics (CBS), a government undertaking under the National Plann-ing Commission, is planning to change the system of national accounts (SNA) to make it ‘compatible’ locally and globally.

The System of National Accounts is being altered for the first time since 1968. Despite the directions from five international agencies to change their SNA to make them compatible with the global economies, Nepal had failed to alter the system till date, sources informed The Himalayan Times. Due to outdated national accounting system, it lacked authenticity and reliability.

To change the system, CBS has already started surveys of 30 various economic sectors, say sources. The proposed list of surveys for benchmarking national accounts estimates include agriculture and forestry, organise farming, mushroom, community forestry, cooperatives, specific agriculture commodities, mining and quarrying, electricity, gas and water, micro-hydro and solar energy, construction, hotels and restaurants, transport, and trekking operators.

Dr Rudra Suwal, economist at the CBS confirmed the change in system of national accounts. He said, “Yes we are working on that. We are preparing for an overhaul of SNA to make it more compatible with global economies.”

While doing surveys, issues of employment, compensation to employees, current expenditure, intermediate consumption, income/output, tax and transfer payment and major

financial transactions are being taken into consideration, said a CBS official on condition of anonymity.

The broad objectives of strengthening the national accounting system is to revisit estimation mechanisms, moving to 1993 SNA as then United Nations, OECD, World Bank, IMF, European Union had recommended to incorporate new issues in the system. CBS officials on requesting anonymity said that existing Nepali macro economic outlook is not real and does not represent the economy in the current scenario, due to outdated methodologies of the government to measure economic sectors as a whole.

Even the countries in South Asia such as India, Pakistan, Bangladesh and Sri Lanka have already updated their SNA ‘partially’, Nepal and Bhutan are yet to update the system. According to the sources at CBS, new SNA will be announced by this November. “Current national account estimates are mainly based on 1968 SNA,” said the CBS official.

Prof Bhuwan Bajracharya, an economist, said that despite the fact that Nepal had to update its SNA in 1993 — after it was recommended — to make it compatible with global trends, it could not update the system till date that has already left Nepal’s economy far behind in terms of calculating GDP, gross domestic saving (GDS), inflation and per capita income. “For example, construction sector is a major component of our economy but its contribution has not been judged effectively. It is calculated according to the baseline survey of 10 years ago,” said Prof Bajracharya.

“Due to a failure in updating our SNA, GDP has been underestimated,” he added. The contribution of financial institutions, non-financial institutions, government, NGOs, household, and trade and commerce is lacking in our national accounts that has demeaned GDP calculation.”

After the completion of SNA, GDP calculation is likely to increase by about 15 per cent from the current growth rate including other economic indicators such as Gross Domestic Saving (GDS) and per capita income, he said.