Implementation of 2008 System of National Accounts (2008 SNA) In Georgia – Main Changes And Challenges

Abstract

In the process of active globalization, an important task of the economic agenda of any country is to ensure mutual comparability of statistical indicators. This can be achieved through the implementation of internationally approved methodologies and modern standards. The System of National Accounts is at the top of the economic pyramid. The implementation of SNA 2008 was envisaged by the Association Agreement with the European Union. In 2008, the United Nations, European Commission, International Monetary Fund, World Bank and the Organization for Economic Co-operation and Development jointly released The System of National Accounts, 2008 (2008 SNA). This update better reflects the changing economic landscape and the advances in methodological research, data sources and compilation methods and provides clarification on a number of issues not clearly stated in the 1993 SNA. Timely, relevant and comprehensive national account information is a significant intellectual asset for any country, and serves important functions. Like any asset the national accounts depreciate with time. Therefore, periodic new investments are crucial, to ensure that they continue to provide high quality services to their users. Implementing 2008 SNA improved the relevance of a country’s national accounts information. In the new version of SNA, changes were introduced in various directions: updates in calculation methods, improvement of data sources, introduction of an international approach to the coverage of the economy and other methodological changes, which include the introduction of new classifications, the use of the accrual method for taxes, a change in the base period (instead of 2010, the base period 2015 is used instead of the period) and many others. Updated calculation methods were introduced in the following direction: Changes in the Financial Intermediation Services Indirectly Measured (FISIM); Improving the calculation of Imputed Rent of Own Occupied Dwellings; Capitalization of costs related to Research and Development (R&D) and others. The factor of improving the data source should also be emphasized. In this regard, it is worth noting: updating the structure of intermediate consumption on the basis of a special surveys; Special survey conducted in various sectors of economy, such as agriculture, construction, hotels and restaurants and ect. Other methodological changes include also the use of new classifications, change of the base year (2015 instead of 2010). During the implementation of new standards and methodologies, many countries face a number of challenges. In many ways, national accounts data represent an important part of a country's economic history. Of course, it is more acceptable for users to have a continuous and consistent time series, which simplifies its use in economic modeling. However, as already mentioned, this process is associated with certain difficulties, among which access to historical rows of updated data sources is noteworthy. In such cases, they need to develop models that put new concepts and methodologies into historical perspective. In order to harmonize with the indicators of the previous period, Georgia has recalculated the historical data series since 2010. The introduction of the new methodology and the above-mentioned updates caused changes in the total volume of GDP. During the implementation of new methodologies and standards, and therefore the recalculation of historical dynamic series, another important challenge is to inform users about all changes and how each change affected the main macroeconomic indicators. At the same time, users should understand that the change of methodologies and their implementation in practice is an ongoing process by which the country strives to comply with international standards. This is vitally necessary to ensure continuity of the country's integration into the world economic system and future sustainable development. Keywords: The System of National Accounts 2008, Financial Intermediate Service Indirectly Measured (FISIM), Non-observed economy, Research and Development (R&D).