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Context of Feasibility Study

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Report of Feasibility Study on Capacity Building in National Accounting in the East Timor National Statistics Directorate

    Report of Feasibility Study on Capacity Building in National Accounting in the East Timor National Statistics Directorate

Project Sponsor: NZ Aid

    Prepared by: Michael Andrews

    Statistics New Zealand

     June 2004

Key Input from: Mr Manuel Mendonca

     Director, National Statistics Directorate,

     Government of East Timor

    Page 2

    Executive Summary

    This feasibility study has been conducted to assess how Statistics NZ could provide

    long term assistance to the National Statistics Directorate of Timor-Leste, specifically for national accounts statistics. This report is addressed to the executive of Statistics NZ, and NZAid.

The study identified the key uses of the national accounts, what national accounts

    statistics are needed, and what support the NSD needs to build its capacity over the

    next several years. The NSD has considerable ability in conducting surveys of

    households, and recently upgraded the CPI collection and begun compiling external

    trade statistics. However, the NSD currently has little experience of producing

    analytical outputs, particularly from economic or financial data. Therefore, it will take a number of years for the NSD to build up to a level of experience and knowledge

    needed to produce national accounts without external assistance.

This report provides a proposed plan for a series of missions to Timor-Leste. These

    missions will provide both training and statistical assistance to compile the accounts

    while the NSD staff develop their skills and knowledge. It also outlines available data

    sources, possible methodology for developing time series for value added by industry,

    and identifies areas where additional collections may need to be developed to fill

    critical data gaps.

Recommendations:

    1. That two visits per year be undertaken. This maintains regular face to face contact,

    while still requiring the NSD to take responsibility for the bulk of the work. 2. That remote support via email and telephone be provided on an ad hoc basis, to

    answer queries as they arise in the NSD’s work.

    3. That SNZ liase with the Boston Institute of Development Economics while they

    visit Dili from July 2004 to develop methodology and compile the national

    accounts for 2001-2003. Ideally this would include a face to face meeting while

    BIDE are in Dili.

    4. That Statistics NZ keep the Director NSD informed of upcoming regional training

    courses and meetings relevant to national accounts, and which would assist the

    NSD in capacity building.

    5. That Statistics NZ begin to liase with the new IMF Statistical Advisor to the

    Director of the NSD after their arrival in Dili in approximately September, on

    matters relevant to the national accounts.

Context of Feasibility Study

    A number of events are occurring, or will occur shortly, which influence the

    recommendations of this feasibility study. These include:

    1. The first census of population is under way. Enumeration occurs in July, and

    building the framework for the census is absorbing nearly all the resources and

    energy of NSD staff (as well as the UN personnel working on it). Because of its

    high importance (and profile), the options for additional work being undertaken by

    NSD staff are very limited. As well as most of the existing staff of the NSD, many

    extra staff have been employed for the census work. A number of these extra, Feasibility Study Report Timor Leste.doc, June 2004 Statistics New Zealand

    Page 3

    temporary staff are proving capable and would be good candidates for work on economic statistics after the census concludes. However, they are currently fully committed to census work, and will be so until at least August. Also, the budget of the NSD, and government recruitment constraints limit the scope for the NSD to take on additional permanent staff.

    2. The Statistical Advisor (IMF) to the Director of NSD departed in February. Since then, the Chief Census Advisor has been providing limited assistance to the Director where possible. A replacement advisor has been appointed, but will not begin until approximately September. At these early stages of establishing the NSD a statistical advisor contributes a great deal to the direction and development of the statistics office and its staff. While in Dili, I also assisted the Director on a number of matters unrelated to my mission, and he asked if it would be possible for someone from Statistics NZ to fill the gap as advisor until the IMF appointee begins in September.

    3. An agreement has just been reached between the NSD and the World Bank, to re-engage the Boston Institute of Development Economics (BIDE) consultants to develop methodology and compile updated accounts to 2003 (BIDE derived the original 2000 national accounts). This work is scheduled to begin in July 2004 and be completed by approximately October (dates are yet to be finalised). Because the accounts up to 2003 will have been compiled by the end of 2004, future Statistics NZ TA’s can focus on helping the NSD build its capacity to produce

    national accounts using the methodology developed by BIDE. This would be via formal and on-the-job training, and long-term support and development, as described in this proposal. NB if the BIDE consultancy had not been undertaken, a Statistics NZ TA would largely have comprised developing methodology and compiling the initial estimates for most of the first two years. The BIDE TOR include a requirement for NSD to provide counterpart staff to work with BIDE

    resolving this problem must become a high priority for the Director of NSD (however, refer to point 1 above re the census). It is recommended that to begin the support to NSD, Statistics NZ should undertake a short mission to Timor-Leste near the end of the BIDE consultancy. This would help the transition from the initial development and backdating phase done by BIDE to the ongoing support and advice by Statistics NZ.

    4. A recent TA project has enhanced the CPI collection, broadening coverage beyond Dili. This will provide vital source data for parts of both current and constant price GDP estimates. The World Bank is also considering sponsoring a household survey in 2005 to update the 2001 Poverty Survey this could be

    expanded into an income and expenditure survey and provide data to update the weights for the CPI, and to establish a benchmark of household consumption. 5. Another recent TA project has developed systems for Customs records to be produced regularly as statistical outputs by the NSD. This is another key input data source for the national accounts estimates. The consultant who developed these systems will shortly return to Dili for a review of progress and results, and proposes to provide remote support.

Assessment of User Needs

    The key priority is to produce annual current and constant price GDP by industry and

    by expenditure on GDP. This is predominantly structural data, to show the size and

    Feasibility Study Report Timor Leste.doc, June 2004 Statistics New Zealand

    Page 4

    structure of the economy. Users assign a lower priority to national income accounts,

    balance of payments statistics, and to quarterly or monthly indicator statistics.

    1I repeat, also, the recommendation in PFTAC’s report from August 2003 that the Director NSD form an advisory committee to guide and help co-ordinate statistical

    activities across all government offices. At present different departments develop new

    collections without consulting other potential users, either within government or

    outside. This can result in inefficiencies within government, and additional and

    unnecessary costs to donor agencies. At least some of these activities could be

    combined. For example, the World Bank has expressed interest in running a new

    Poverty Survey to update the one run in 2001 this could best be developed as a

    general purpose household survey to;

    ? collect data on poverty,

    ? collect data on subsistence production for the national accounts value added

    estimates, and

    ? collect household consumption expenditure information for use in the national

    accounts and in updating the CPI weights

    Organisation Highest Priority Needs Other Needs & Comments Ministry of Establish statistical Learning from the best is seen as

    Finance & infrastructure - office and being more important than using

    Planning statistics law. National resources in the Indonesian Bahasa

    Accounts language Macro-economic GDP, Trade, Prices, Cost of living survey (=HIES?),

    and Tax Policy Census, Agriculture, monthly CPI desirable Unit Unemployment

    Labour & Census (needs greater co-ordination Solidarity Dept between organisations LSD ran a

    disability survey in 2001 without

    involving NSD) Banking & GDP, prices, trade BOP - but acknowledge this could Payments wait until other things established Authority

    IMF (providing technical advisor to

    Director of NSD, also four at the

    Banking & Payments Authority) World Bank Funded BIDE NA project Inclusion of subsistence production

    in 2002. Contract signed to in the estimates. Envisage funding

    compile accounts 2001-03. an update of the 2001 Poverty

    Poverty data. survey in 2005, and may consider

    linking this with an HIES. ADB Helping with trade project Would like to be involved in more

    projects UNDP Currently updating the Willing to consider funding a

    Human Development HIES/Poverty study in 2005

    Report (to be published

     1 Review and Action Plan for the Statistical System in Timor-Leste, August 2003, Report prepared by Philip Turnbull, Statistics Advisor, Pacific Financial Technical Assistance Centre.

    Feasibility Study Report Timor Leste.doc, June 2004 Statistics New Zealand

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    May 2004)

    UNIFEM Promoting recognition of May be able to assist with NA

    role of women in society development via an expert from the

    and economy, and Indonesian statistics office.

    therefore policy makers. Considering a small-scale survey of

    Classifications used should time use in 2005, to raise awareness

    reflect Timorese society of issues among policy makers

    and needs, as well as could be useful in estimating

    international standards. subsistence and informal sector

    Classify key statistics by production.

    gender.

Summary of Proposed Statistics NZ Visits, 2004-2007

(Further detail is provided in the table following this section)

Date Main Purpose

May-June 2004 Feasibility study

    Oct 2004 Learn BIDE methodology used for 2001-2003 accounts

    March 2005 Run Intermediate national accounts course. Collate source data

    needed to update accounts to 2004. Develop new collections as

    needed to refine estimates.

    Sep-Oct 2005 Run Intermediate national accounts course. Update accounts to

    2004, revise prior years if needed.

    April 2006 Incorporate data from new collections into methodology. On-

    job training. Check and analyse quarterly tax data as published

    economic indicator.

    Sept 2006 Update accounts to 2005, revise prior years if needed use new

    sources and methods if suitable.

    Mar 2007 Develop initial collections needed for balance of payments.

    Run introductory BOP course.

    Aug 2007 Update accounts to 2007.

Feasibility Study Report Timor Leste.doc, June 2004 Statistics New Zealand

Page 6

Feasibility Study Report Timor Leste.doc, June 2004 Statistics New Zealand

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    Proposal for Statistics NZ support of Timor-Leste compilation of National Accounts, and capability development

    (Tasks in italics are not for Statistics NZ)

     Primary Compilation Tasks Duration Who Secondary Compilation Tasks Capability Development Comments 1 May Feasibility study in two parts: (1) 3 weeks Statistics Identify existing data sources to be used Help Director NSD Completed. While the NSD have a number of Jun 2004 plan for developing counterpart NZ, with for compiling the accounts. Also, identify potential capable staff at present, they are all committed to

    staff in NA's; and (2) plan for input from identify industries or other areas that candidates for future NA the census until approximately September. NB

    continuing the compilation of the NSD require new data sources or methods, development the development of methodology and assessment

    NA's as developed by BIDE and begin process of planning to collect work/training. of existing available data will be done by BIDE

    this data. as part of their consultancy (task 4).

    2 Jun 2004 Begin capture and classification of NSD Requires commitment of NSD (and the May be possible to Dependent on suitable staff being available - may

    tax data, and other data already Govt) to provide additional staff to outpost the NA staff to the not be possible due to census. A very important

    being collected by other govt begin their development of economic tax office to gain task for NSD at this time is to get commitment to

    offices, eg, agriculture. statistics. Also needs commitment and familiarity with the data? the long-term support for economic statistics in a

    assistance of other govt agencies, to co-ordinated way, eg via an advisory council, to

    provide access. include tax office, agriculture, mining, etc.

    3 Jun 2004 Trade system project consultancy Gavin Trade data already available proposed

    Lucas additional project for offsite support, plus

    occasional short visits to check progress, etc

    4 Jul Oct 1. establish classifications 4 months BIDE Set up spreadsheets for the Begin training of Ideal if NSD can begin the gathering of existing 2004 (industry, institutional sector, methodology, including for analysis of counterpart staff in data ahead of BIDE visit, with agreements with dates to transactions, etc) source data, ie, the NA s/s 'system'. collection and analysis of Tax office, Agriculture dept, etc, to supply the be 2. gather available data Fully document data sources, processes economic data. Begin data - this arrangement must continue after finalised 3. set up preliminary methods and methodology (methodology to be training in NA concepts BIDE project is completed, for future updates,

    and processes to capture, published with the estimates). (NB data and methods - general etc (refer task 2 above). Begin as soon as

    classify and analyse this data and estimates are needed separately on and specific for the possible, if suitable staff are available. NB all

    4. compile preliminary estimates the formal/market sector and the methods used. existing NSD staff will largely be committed to

    of value added, in current and informal sector - this will largely be their existing work (trade, CPI, etc) or to census.

    constant prices driven by data sources, ie, tax and

    5. repeat steps 1-4 for other admin data will largely cover the (See also the comment below, re Statistics NZ

    expenditure components formal sector). keeping in touch with BIDE during their mission

    6. consolidate accounts, to develop methodology.)

    reconciling production and

    expenditure estimates

    7. finalise methods and estimates

    Feasibility Study Report Timor Leste.doc, June 2004 Statistics New Zealand

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     Primary Compilation Tasks Duration Who Secondary Compilation Tasks Capability Development Comments 5 Oct 2004 Visit near the end BIDE’s 2 weeks Statistics Identify areas that require additional Work with BIDE to pass Ideally, would keep in touch with BIDE during - date is consultancy, to learn their NZ data to update assumptions or fixed on some of their their visit, while they develop methodology, depend-methodology, etc, for ongoing proportions used in the BIDE estimates knowledge of methods, systems, etc - is this possible? Timing dependent ent on compilation/support to NSD. - develop plans for collecting this data. etc to NSD staff, and on BIDE TOR. Need to identify tasks for NSD timing of Provide input to design of HIES if confirm the plan for staff staff to work on, to continue their involvement in BIDE confirmed for 2005. development for next two national accounts and economic statistics in mission years. general. Liase with Statistical Advisor.

    6 Nov 04 - Establish processes for ongoing Ongoing NSD Become familiar with Mar 05 gathering and analysing tax and BIDE workings,

    other admin data, for 2004. methodology, etc.

    7 Mar Help the NSD staff in gathering 3 weeks Statistics Design and develop new surveys for Run an introductory Requires the NSD to have identified and 2005 and analysing tax and other NZ, with additional data as needed to update in national accounts course committed at least two staff to become full time

    administrative data for 2004, and input from future the fixed ratios, assumptions, etc, on; classifications, and permanent national accountants. Training

    any revisions for earlier years, NSD. NSD made by BIDE. Include additional price industry production a/cs, should be provided to these staff, and also others

    using same procedures established to run the information needed to supplement the expenditure aggregates, who will provide back up. Include staff from

    by BIDE. Check the work done to new CPI data for good constant price consolidated a/cs, current other govt offices if appropriate, data suppliers

    date on this data, by NSD. surveys. estimates. and constant prices. and users of the NA's - NSD to advise.

8 Apr - Continue to gather and process tax ongoing NSD Run the small-scale surveys developed

    Aug 05 and other admin data. in task 7. Capture the data and check it

    for accuracy, etc.

    9 Sep - Oct Update the estimates to 2004, using 6 weeks Statistics Check whether any revisions are Run an intermediate Timing to be confirmed, dependant on when the 2005 the methodology established by NZ with needed to earlier years, due to national accounts course tax and other crucial data sources will be

    BIDE. assistance additional or revised source data, etc. repeat some parts from complete enough to compile the estimates. Much

    by NSD intro course, and add of the training to be on-the-job, with NSD staff

    more depth where processing and analysing the data using the BIDE

    appropriate. To be mainly methodology to make the estimates where

    practical training. possible.

    Feasibility Study Report Timor Leste.doc, June 2004 Statistics New Zealand

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     Primary Compilation Tasks Duration Who Secondary Compilation Tasks Capability Development Comments 10 Oct 05 - Continue to gather and process tax ongoing NSD Run the small-scale surveys developed Obtain access to the quarterly tax data, with Nominate staff to attend

    Jan 06 and other admin data. in task 7. Capture the data and check it ongoing supply arrangement. Arrangement must the SIAP national

    for accuracy, etc. include approval to publish results along with accounts course (refer

    other economic indicator data. task 11).

    11 Jan Attend Module III training course two months 1 NSD NA Three modules: Statistical and Survey Methods, Mar on National Accounts at SIAP, staff Demography and Social Statistics, National 2006 Japan - part of the three module, Accounts. The goal is to get an NSD officer at the

    six month Group Training Course NA module. Try to get other staff to attend the

    on Core Official Statistics other two modules relevant to their specialities.

    12 Apr 2006 Analyse the data from the small- 4 weeks Statistics Check and analyse quarterly tax On the job training in Do not publish revised accounts incorporating the

    scale surveys. Build the new data NZ, with revenue data in preparation for analysis of source data, new data from the small-scale surveys and HIES

    into the methodology where NSD publication if suitable as a short term formal training in at this time wait until the next update visit. Do

    appropriate, analyse the effect of indicator of the formal sector assist quarterly data methods, this work in a separate complete copy of the

    this new data on the NA estimates. NSD to prepare for publishing if seasonal adjustment, etc. system to maintain integrity of the published

    suitable. Analyse results of HIES for Training on use of HIES accounts and their workings. Time this visit for

    incorporation into the accounts for NA's. just after the end of the SIAP course (if attended),

    (assumes HIES proceeds) is training to reinforce learning from SIAP course - get the

    on analysis part of HIES project? attendee to run some of the training sessions for

    other NSD staff.

    13 May 06 Continue to gather and process ongoing NSD Begin regular publication of quarterly Development of NSD's Requires NSD's ongoing commitment to onward annual tax and other admin data. tax revenue data, as a short-term own timetable, processes producing these data, and a regular publication.

    economic indicator, along with trade for publication, etc. Dissemination should include via the internet.

    and CPI data. Nominate staff for IMF

    Washington National

    Accounts course in

    November 06 (if not

    attended SIAP course)

    Feasibility Study Report Timor Leste.doc, June 2004 Statistics New Zealand

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     Primary Compilation Tasks Duration Who Secondary Compilation Tasks Capability Development Comments 14 May Analyse source data, enter into NSD First set of estimates for NSD to take the lead in Aug spreadsheets, and compile the NA's compilation. Aim to complete the initial estimates 2006 for 2005. prior to next visit by SNZ. Determine when there

    will be enough annual data available to compile

    the annual NA's - advise SNZ to visit at that time,

    aiming for earliest possible publication (without

    cutting quality).

    15 Sep 2006 Update NA estimates to 2005 - 4 weeks NSD with Important to analyse the effects of Reinforces the previous The NSD takes the lead in compiling the nominal

    compile using both the existing and advice methodology and source data changes, training, by getting NSD a/cs using existing methods. NSD should (a)

    updated methods (ie, latter to from and be prepared to explain and justify to take the lead. Reassess obtain the necessary data, (b) input the data into

    include the additional data Statistics the differences. Publish on the new future needs for the relevant worksheets, (c) derive the output

    collected, eg, HIES). NZ method basis, if results are acceptable, capability building, and tables. Statistics NZ's role is to check and

    with full explanation of changes made. refine plan for support confirm the workings and analysis. Calculating

    over next two years. on both bases enables comparison of estimates,

    before and after changes to methodology.

     Nov 4 weeks Attend IMF National Not scheduled for 2005 (too soon for NSD 2006?? Accounts training course anyway), so may be in 2006. Usually run

    (if don't attend SIAP Oct/Nov, applications in by May. Try to get NSD

    course in Jan 2006). staff to attend either this or the SIAP course.

    16 Mar Develop initial collections needed 4 weeks Statistics Training in basic BOP Dependent on location for BOP to be produced, 2007 for Balance of Payments current NZ. NSD concepts, survey ie, NSD or the Banking & Payments Authority

    account - trade in services. Should to run development cycle, etc this needs to be decided by Statistical Advisory

    provide enough data for the surveys Board during 2006?

    national income a/c also.

    17 Mar 07 Run the new BOP surveys. ongoing NSD Analyse and cross check results with Note that this needs to be in addition to the Aug 07 other sources where possible, eg, tax ongoing compilation of NA's, which must be

    data. completed by the end of July (date to be

    confirmed, dependent on critical source data

    availability)

    Feasibility Study Report Timor Leste.doc, June 2004 Statistics New Zealand

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