Agenda item 6d
The National Statistical Committee of
Kyrgyz Republic
Non-observed economy in
Kyrgyz Republic
Sultanaliev M.K. – Leading specialist of the Department of National Accounts
Workshop on the Implementation of the 2008 SNA,
Kiev, 29 November – 2 December 2011
Content
1. Non-observed economy (NOE) by
activities
2. Dynamics, structure and methods for
estimation of NOE: production,
expenditure, income
3. Applying the Eurostat Tabular Approach
4. Alternative surveys
5. Conclusions, proposals, issues
2
The presence of NOE is typical for any economy
to some extent, but in many cases for transition
economies its size became a national problem.
NOE in the Kyrgyz Republic is an admitted fact
as well.
Taking into consideration the relevance of the
issue the National Statistical Committee
constantly improves the methodology and
calculation methods of NOE.
3
In execution of Order № 38 “On Action Plan on
Legalization of Shadow Economy” as of July 6,
2008, a Methodology for estimation of nonobserved economy volumes1 was developed and
accepted by Order No. 30 by the Board of the
National Statistical Committee as of May 25,
2009.
1
Placed at National Statistical Committee web-site www.stat.kg
4
Non-observed economy by activities:
(data sources)
Agriculture, hunting and forestry
 Data from sample surveys of agricultural (farming)
and own account production households.
 It is reflected as an element of NOE only in the
Eurostat Tabular Approach.
5
Industry
Tax Inspectorate data on patents granted
Data on average output per worker of smallsize enterprises
Adjustment for own account production of
flour and bread by households
6
Construction
Tax Inspectorate data on patents granted
Data from sample surveys on persons, carrying
out construction and conversion of projects
 Data from sample surveys on actual cost of a
square meter of floor area in an expensive
domestic house
7
Trade; hotels and restaurants
Tax Inspectorate data on patents granted
Data on industry average performance
indicators obtained through one-time surveys
and supplementary questionnaires and
revisions
Data from regular sample surveys of all types
of markets
8
Transport
State Transport Inspection data on the quantity
of technically sound freight and light motor
vehicles
Average mileage, freight and income from
freight and passenger transportation
Data from specialized surveys of freights and
passenger land transport
9
Financial services
Data of National Bank on the number of
licensed exchange offices
Data on income, expenses and number of
employed in legal entities
10
Real estate, renting and business services;
education; health and social services;
communal, social and personal services
Data on issued patents and specialized surveys
Data from sample surveys by types of services
provided to the population
Income from rentals
11
Parameters of non-observed economy
(excluding agriculture)
12
The structure of the NOE, 2009 in% of GDP
(production method)
Mining and quarrying 0%
The manufacturing industry 2.3%
Construction 0.7 %
Trade 13.3 %
Transport 2.2 %
Kyrgyz Republic 19.8%
Hotels and restaurants 0.2 %
Real estate, renting and business
activities 0.1%
Health 0.1 %
Financial services 0.1%
Education 0.1 %
Communal, social and personal
services 0.1 %
13
Official Estimates of Non-Observed Economics, 2009
(Production Method)
Total
Non-financial sector
Households sector
Total
output
Gross value
added
% to
GDP
Gross
value
added
Gross value
added
% to
GDP
Total
output
Gross value
added
% to
GDP
79959.7
39838.2
19.8
5885.3
3685.7
1.8
74074.4
36152.5
18.0
55.6
20.0
55.6
20.0
Construction
Transport
15903.6
5435.9
10072.3
4566.7
1314.4
4404.6
2.3
0.7
2.2
0.0
0.0
0.0
15903.6
5435.9
10072.3
4566.7
1314.4
4404.6
2.3
0.7
2.2
Trade, repair of motor vehicles,
household goods and personal
items
43245.7
26848.8
13.3
5,372.1
3,361.7
1.7
37873.6
23487.1
11.7
Hotels and restaurants
1303.4
461.1
0.2
303.9
158.2
0.1
999.5
302.9
0.2
Real estate, renting and business
activities
services
Financial servuces
563.1
209.3
280.7
165.8
0.1
0.1
165.8
0.0
0.1
563.1
209.3
280.7
0.0
0.1
0.0
Health and social services
Education
509.7
267.4
255.8
127.0
0.1
0.1
0.0
0.0
0.0
0.0
0.0
0.0
509.7
267.4
255.8
127.0
0.1
0.1
Communal, social and personal
services
2393.7
1393.3
0.7
0.0
0.0
2393.7
1393.3
Total
Mining and quarrying
Manufacturing
0.7
14
Official estimates of non-observed economy, 2009
(according to the expenditure method )
• In addition to the calculation of NOE parameters
on the production side there is an analysis of the
structure of final consumption and capital
formation of households in order to have an
adequate idea of the level of their prosperity
including the one coming from hidden or informal
sources
15
Official estimates of non-observed economy, 2009
(according to the expenditure method )
Consistency with the production method:
1. Hidden turnover corresponds to household
consumption from hidden sources
2. The correction to the value of residential private
construction costs corresponds to the adjustment on
the production side
3. The value of informal consumption of agricultural
products corresponds to the production for own use
16
The NOE adjustments by expenditure component
1995
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Millions of Soms
Total of hiden sector
Individual consumption of
households
Turnover - total
hidden sales
Capital formation
hidden construction value
3712.8 14997.5 14397.9 15185.9 15401.5 17411.9
13892.3 47,882.6 53429.4
7468.4 28924.7 32426.6
3679.8 14733.2 14101.0
3221.0 10855.0 9055.2
32.9
264.3
296.9
Total hidden sector
23.0
22.9
19.5
Individual household's consumption
Turnover - total
hidden sales
Capital formation
hidden construction value
86.0
46.3
22.8
20.0
0.2
73.3
44.3
22.5
16.6
0.4
72.3
43.9
19.1
12.3
0.4
56834.6 63352.1 68220.0
35234.7 40205.4 47484.4
14998.5 15183.3 16940.8
9377.9 8950.5 10218.6
187.4
218.2
471.1
% to GDP
20.1
18.4
18.5
75.4
46.8
19.9
12.4
0.2
75.5
47.9
18.1
10.7
0.3
72.3
50.3
18.0
10.8
0.5
19929.7 23823.5 28781.0
37791.8 41220.6
83471.3 105799.4 120678.9
57683.5 70875.6 89866.9
19637.6 23530.3 28146.4
11594.6 18771.3 24087.5
292.1
293.2
634.6
171271.9 154814.2
123285.3 129697.4
37202.2 40060.3
32535.0 42496.9
589.6
1160.3
19.8
20.9
20.3
20.1
20.5
82.7
57.2
19.5
11.5
0.3
93.0
62.3
20.7
16.5
0.3
85.0
63.3
19.8
17.0
0.4
91.1
65.6
19.8
17.3
0.3
76.9
64.5
19.9
21.1
0.6
17
NOE types in Kyrgyzstan
• N 1: Non-observed for statistical reasons: the lack of answers
from respondents
• N 2: Non-observed for statistical reasons: old registers
• N 3: Non-observed for statistical reasons: units are not
entered in the register or not examined
• N 4: Unobservable due to economic reasons: under-reporting
of turnover / profit
• N 5: Unobservable due to economic reasons: the units are
not registered consciously
• N 6: The informal sector (lack of registration, underreporting)
18
Non-observed economy by types and methods of adjustment, 2009
Type of activity:
Economic sector
Agriculture, hunting and forestry
Mining and quarrying
Manufacturing
Constructions
Households
Households
Households
Enterprises
Households
Trade, repair of motor vehicles,
household goods and personal
items
Type of
enterprise
Types of errors
Gross value added 1 2
3
4.3
0.0
4
5
6
2.3
Small
0.7
Enterprises
Households
Enterprises
Households
Households
Enterprises
Small
Enterprises
Households
Enterprises
Households
Enterprises
Households
Small
Small
0.0
0.1
Enterprises
Households
total Households
total Enterprises
Cross total
Small
0.0
Hotels and restaurants
Transport and communications
Financial activities
Real estate, renting and cosumer
services
Education
Health and social services
Communal, social and personal
services
1.7
11.7
0.1
0.2
0.0
Small
2.2
Small
0.1
0.0
0.1
0.0
0.1
Small
Small
2.19
0.00
2.19
0.00
0.00
0.00
0.7
16.99
1.75
18.74
0.00
0.00
0.00
0.00
0.08
0.08
3.05
0.00
193.05
Assessment of hidden wage
(million soms)
2004
2005
2006
2007
2008
3640,1
2440,0
4968,4
4130,1
3575,9
5536,7
193,1
67,7
69,4
77,2
99,3
126,9
1474,2
1323,7
3060,5
2049
1193,2
1774,2
Constructions
128,9
71,4
83,9
248,8
416,8
448,5
Trade
794,2
43,9
59,1
237,5
362,4
504,9
10,0
27,9
36,3
38,8
43,1
57,7
Transport and communications
158,7
319,8
463,7
495,9
634,5
736,6
Financial activities
183,5
221,9
389,7
155,5
76,1
82,0
Real estate transactions
270,7
159,9
226
299,2
536,4
555,7
Other activities
426,8
203,8
579,8
528,2
214,1
1250,2
Total
Agriculture, hunting and forestry
Industry
Hotels and restaurants
2009
20
Alternative surveys in Kyrgyz Republic
Shadow economy in Kyrgyz Republic: trends,
estimates and policy variants
1. Sample (implicit) survey of enterprises:
share of shadow economy– 53% (UNDP, 2004)
2. Survey via energy consumption method:
share of shadow economy - 33% (UNDP, 2004)
Sizes and development of shadow economy and
shadow labor market…: What do we actually
know? (Schneider Ph., 2003) – 41%
21
CONCLUSIONS and PROPOSALS
Results of independent surveys carried out by
scientific
institutions,
universities,
public
organizations and individual experts should be
treated carefully.
These surveys may contain useful information, but it
should be applied after thorough check both of the
methodology used and of the reliability of primary
information.
22
ISSUES
• Quality of register: updating only of legal
entities
• Frequent change of activity both in small and
medium-size enterprises
• Big share of household sector
• Different accounting standards (the Republic
has not changed over to IAS and IFRS
completely)
23
Thank you!
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