The national accounts cast a sober light on an inflated budget
The preliminary national accounts were released on Thursday by the Namibia Statistics Agency.The new document closely follows the format of last year’s National Accounts for 36 pages, then adds another 7 pages that cast some light on the execution of the underlying methodology.
These additional pages take this year’s document to a total of 42 pages, a not insignificant expansion on the 36 pages of the preceding document.
It is a good sign that the preparation of the national accounts has settled into a structured, predictable format. It lends extra credibility to the process, and to the validity of the economic data. The fact that we now follow a settled format makes the data easier to find, to compare, to analyse, and ultimately, to trust. Compiling national accounts is not a very complex undertaking although it must be stated that some of the underlying models, may be fairly complex. The same goes for the overall methodology, and then for specific modular methodologies.
The new set also contains a bit more flesh where it comes to technical analysis, and the sectoral discussions on pages 12 through 14, certainly show more grit and depth. Also, the technical notes on pages 31 through 34 reflect much more depth and descriptive detail of various metrices employed in the final compilation. A large part of the main body, pages 17 to 30 contains the by-now-familiar economic aggregates. These follow exactly the same format as in previous years.
The Preliminary National Accounts have become an invaluable document for analysts, academics and policymakers. The data seems to be generally sound, rational, and incorporated into models that make sense, reflect a large measure of harmonisation with peer group reviews of other jurisdictions, and find a definite connecting node to the real economy.
A standardised format is one of the hallmarks of reliable data. It shows that the statisticians are comparing apples with apples. It also helps to improve reliability.
But national accounts are not to be judged by externalities only. Ultimately, their value lies in the correctness and reliability of the statistics they present. Compiling national accounts is notoriously difficult, not because of the risk of errors or omissions, but because in a very large country with a small population, the number of data points across all sectors, ministries, departments and agencies, across all 14 regions, are numerous. To collect this large body of data, processed by a relatively small number of people, it becomes a gigantic task to submit every required detail to the statistics agency. It also takes time resulting in an almost built-in delay in this type of statistics, and the inevitable revision of earlier statistics as more, and more representative, data becomes available.
It is obvious to any user of the Statistics Agency’s data, that a certain measure of reliability is guaranteed by the settled format, the sound technical discussions, the pointing out of previous errors and/or omissions, and the subsequent revisions. The agency is to be commended for this excellent work and for the fact that it has consistently, over a number of years, managed to move the publication date of the national accounts, forward.
Despite the anticipation of revisions in subsequent editions, the fact that the data now reflects conditions closer to the actual period under review, contributes to make the life of those responsible for future planning, easier, the outcomes more dependable.
I wish the 2014 preliminary national accounts were available just a fortnight earlier. Then the new Minister of Finance could have included them in his maiden budget statement and realised there is a massive discrepancy between his estimated GDP growth of 6.2% and the actual, published growth rate for 2014, of only 4.5%. To the layman this looks like a small difference but the statistics show percentage points, not real percentages. Expressed as the latter, the 6.2% GDP growth estimate, is some 27.4% off the mark, and as statistics go, this constitutes a massive anomaly. Also, the GDP deflater, although adjusted considerably from the values published in last year’s national accounts, still does not reflect a rational underlying methodology. Either the GDP deflater is correct (as adjusted) and the CPI (inflation) statistics are wrong, or the deflater is incorrect, and the inflation figures are true. The way they are presented in the national accounts, both can not be correct. The anomaly is too big to ignore.
If the GDP estimates that served as the underlying fundamental values for the purpose of designing the budget, are that much out, how big will be the deviance between budgeted estimates for revenue and expenditures, and the actual outcomes. We shall only know in a year from now.