Gross National Income Inventory (ESA 1995)
Sources and Methods for the Compilation of the Gross
National Income for the Maltese Islands
Compiled by the
National Accounts Unit
Economic Statistics Division
Version 3.0
April 2008
Gross National Income Inventory
Foreword
This Gross National Income (GNI) Inventory was written by the staff of the National
Accounts Unit, within the Economic Statistics Division. Reference was also made to reports
written for the various EU-funded Eurostat projects. The input of the Government Finance
Unit and the Balance of Payments Unit was also important. The inventory refers to annual
National Accounts for benchmark year 2001 and uses the structure recommended by Eurostat
in its March 2005 guidelines. This is the third and final version of the GNI inventory,
following the first two confidential versions submitted to Eurostat in December 2006 and
December 2007.
This version incorporates changes and updates following Eurostat’s
information visit to Malta in September 2007. As an appendix to this Inventory there is a set
of Process Tables available separately in Excel.
I would like to thank the writers of this document: Michael Pace Ross, Mary Grace Buttigieg,
Joseph Vella, Jennifer Vassallo, Annabelle Mifsud, Valerie Cremona, Vanessa Dimech,
Waldemar David Galea, Caroline Porter, Dorota Zammit, Mark Theuma, Joseph Bonello and
Mark Galea.
Reno Camilleri
Acting Director General
April 2008
Economic Statistics Division
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Gross National Income Inventory
Table of contents
Chapter 1 Overview of the system of accounts
7
1.1
Introduction
7
1.2
The revisions policy and the timetable for revising and finalising the estimates
10
1.3
Outline of the production approach
11
1.4
Outline of the income approach
13
1.5
Outline of the expenditure approach
15
1.6
The balancing or integration procedure, and main approaches to validation
18
1.7
Overview of the allowances for exhaustiveness
18
1.8
The transition from GDP to GNI
21
1.9
FISIM: calculation, allocation and impact on GNI
25
Chapter 2 The revisions policy and the timetable for revising and finalising the
estimates
26
2.1
The revisions policy
26
2.2
Timetable for revising and finalising the accounts
27
Chapter 3 The production approach
29
3.0
GDP according to the production approach
29
3.1
The reference framework
30
3.2
Valuation
32
3.3
Transition from private accounting and administrative concepts to ESA95
national accounting concepts
33
3.4
The roles of direct and indirect estimation methods
34
3.5
The roles of benchmarks and extrapolations
34
3.6
The main approaches taken with respect to exhaustiveness
34
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Gross National Income Inventory
3.7
Agriculture, hunting and forestry (NACE A)
35
3.8
Fishing (B)
40
3.9
Mining and Quarrying (C)
41
3.10
Manufacturing (D)
42
3.11
Electricity, gas and water supply (E)
55
3.12
Construction (F)
63
3.13
Wholesale and retail trade; repair of motor vehicles, motorcycles and
personal and household goods (G)
66
3.14
Hotels and restaurants (H)
74
3.15
Transport, storage and communication (I)
84
3.16
Financial intermediation (J)
89
3.17
Real estate, renting and business activities (K)
96
3.18
Public administration and defence; compulsory social security (L)
114
3.19
Education (M)
115
3.20
Health and social work (N)
120
3.21
Other community, social and personal service activities (O)
127
3.22
Private households with employed persons (P)
144
3.23
Treatment of extra-territorial organisations and bodies (Q)
145
3.24
Taxes on products, excluding VAT
145
3.25
VAT
146
3.26
Subsidies on products
149
Chapter 4 The income approach
150
4.0
GDP according to the income approach
150
4.1
The reference framework
153
4.2
Valuation
154
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4.3
Transition from private accounting and administrative concepts to ESA95
national accounts concepts
154
4.4
The roles of direct and indirect estimation methods
154
4.5
The roles of benchmarks and extrapolations
155
4.6
The main approaches taken with respect to exhaustiveness
155
4.7
Compensation of employees
156
4.8
Other taxes on production and imports
180
4.9
Other subsidies on production
181
4.10
Gross operating surplus
182
4.11
Mixed income
182
4.12
Consumption of fixed capital
182
Chapter 5 The expenditure approach
196
5.0
GDP according to the expenditure approach
196
5.1
The reference framework
196
5.2
Valuation
198
5.3
Transition from private accounting and administrative concepts to ESA95
national accounts concepts
198
5.4
The roles of direct and indirect estimation methods
198
5.5
The roles of benchmarks and extrapolations
199
5.6
The main approaches taken with respect to exhaustiveness
200
5.7
Household final consumption expenditure
200
5.8
NPISH final consumption expenditure
228
5.9
Government final consumption expenditure
231
5.10
Acquisitions less disposals of tangible fixed assets
240
5.11
Acquisitions less disposals of intangible fixed assets
262
5.12
Additions to the value of non-produced non-financial assets
266
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5.13
Changes in inventories
266
5.14
Acquisitions less disposals of valuables
267
5.15
Exports of goods
269
5.16
Exports of services
270
5.17
Imports of goods
269
5.18
Imports of services
270
Chapter 6 The balancing or integration procedure, and validating the estimates
272
6.1
GDP balancing procedure
272
6.2
Other approaches used to validate GDP
273
Chapter 7 Overview of the allowances for exhaustiveness
275
Chapter 8 The transition from GDP to GNI
287
8.0
Introduction and reference framework
287
8.1
Compensation of employees
293
8.2
Taxes on production and imports
294
8.3
Subsidies
296
8.4
Interest
297
8.5
Distributed income of corporations
309
8.6
Reinvested earnings on foreign direct investment
313
8.7
Property income attributed to insurance policy holders
315
8.8
Rents on land and sub-soil assets
316
Chapter 9 FISIM: calculation, allocation and impact on GNI
Economic Statistics Division
317
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Chapter 10 Main classifications used
332
10.1
Classifications used for the production approach
332
10.2
Classifications used for the income approach
337
10.3
Classifications used for the expenditure approach
338
10.4
Classifications used in the transition from GDP to GNI
343
Chapter 11 Main data sources used
345
11.1
Statistical surveys and other data sources used for the production approach
350
11.2
Statistical surveys and other data sources used for the income approach
352
11.3
Statistical surveys and other data sources used for the expenditure approach
352
11.4
Statistical surveys and other data sources used for transition from GDP to GNI
354
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Chapter 1
1.1
Overview of the system of accounts
Introduction
Introduction
1.1.1
Compilation of National Accounts in Malta started in 1954. At the time Malta was a
British colony and its statistics followed the British system. Malta became independent in
1964. Over time Malta’s National Accounts improved in quality but methodology and
presentation did not change much, retaining the 1954 SNA system with elements from the
1968 SNA system also incorporated.
1.1.2
When Malta re-applied for European Union (EU) membership in September 1998,
preparations were underway to adopt the acquis communautaire in the field of statistics by
the National Statistics Office (NSO). Actual implementation of ESA 95 commenced in 2001.
For a start it was aimed to compile the Production and Generation of Income accounts by
NACE at A60 level for benchmark years 2000 and 1999. It was also planned to review the
Expenditure approach. The task was formidable especially in Malta’s case because the
production approach was never compiled before.
1.1.3
Before actual implementation a complete overhaul of the work of the NSO was
undertaken. Key surveys were introduced e.g. Business Register, Labour Force Survey,
Household Budgetary Survey, Structural Business Survey. A Census of Agriculture was also
held in 2001 after a long absence. Numerous other new censuses and surveys were carried
out such as Information Society Statistics, Culture Statistics, Short-Term Business Statistics,
Tourism Accommodation Survey and the Voluntary Organisations Survey.
Education,
Transport, Travel Agents, Insurance, Hotels, Government Enterprises, and Foreign owned
companies continued being surveyed.
1.1.4
To bring government statistics in line with ESA 95, an action group was set up
consisting of representatives from NSO, the Ministry of Finance, the Treasury and the
Central Bank of Malta (CBM). All the transactions of Government were ESA-coded and the
accounts of all extra-budgetary units were examined to determine their institutional
classification. NACE and COFOG codes were also assigned to the departments and units
concerned.
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1.1.5
Arrangements were also made with the respective bodies to make their databases
available to the National Accounts Unit. These included ETC (Employment and Training
Corporation), the administrative employment agency, MFSA (Malta Financial Services
Authority), the registry of companies, DAS (the departmental accounting system),
government’s accounting system and the VAT Department. The Registry of Companies is an
important source to the National Accounts Unit because the audited accounts of any company
operating in Malta may be downloaded in real time.
1.1.6
Another pre-requisite was the introduction of ‘new’ nomenclatures such as NACE,
COICOP (classification of individual consumption by purpose), COFOG (classification of
the functions of government), COPNI (classification of the purposes of non-profit institutions
serving households) and CPA (classification of products by activity).
Main approaches used
1.1.7
Each of the three measures of Gross Domestic Product (GDP) is estimated, using
different data sources as far as possible. The GDP is an estimate of the value of goods and
services produced in the economy during a period of time. It is estimated at current market
prices from the Production side, involving the aggregation of the output of various productive
sectors net of the cost of intermediate inputs. The Production side estimate is reconciled with
figures of expenditures on output produced.
1.1.8
In Malta, the production approach is therefore the main approach to estimate GDP.
The basic elements of this approach are output and intermediate consumption, with value
added as the balancing item.
1.1.9
The expenditure components of GDP are estimated on the basis of other independent
sources and methodologies. While in theory the expenditure approach should reconcile with
the production approach, in practice statistical compilation may lead to a difference between
them. Since the two approaches are based on independent statistical sources, revisions in the
expenditure approach need not necessarily imply the need for revisions in the production
approach, and vice-versa. The Expenditure approach is then used to derive an estimation of
GDP at constant prices, in other words excluding the effects of price inflation on market
prices.
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1.1.10
The income approach towards GDP measurement shows how GDP valued at current
market prices through the production approach is distributed into compensation of
employees, operating surpluses of enterprises and taxes on production and imports net of
subsidies.
Geographical coverage
1.1.11
The territory of Malta is made up of the following three inhabitable islands: Malta,
Gozo (Għawdex) and Comino (Kemmuna). Gozo and Comino are considered one region (at
NUTS III level) for the purpose of statistics, and are administered by the Ministry for Gozo.
The island of Malta is the second NUTS III region of the Maltese Islands and is administered
the Maltese government. Regional GDP data is available annually at NUTS III level and
quarterly for the whole territory of Malta. The economic territory also includes:
(i)
free zones, including bonded warehouses under Maltese customs control
(ii) the national airspace and Maltese territorial waters
(iii) territorial enclaves in the rest of the world, such as embassies, used by the
Government of Malta with the formal political agreement of the governments in
which these units are located
1.1.12
The economic territory excludes any parts of the Maltese territory used by
governments of other countries, such as embassies, and by institutions of the European
Union.
Organisation and responsibilities within the NSO
1.1.13
The National Statistics Office is the executive arm of the Malta Statistics Authority,
and was legally set up by Act XXIV of 2000 as an independent authority distinct from the
Government of the day to take over the functions previously done by a Government
department. The National Statistics Office was formerly known as the Central Office of
Statistics. The mission statement of NSO is “to serve the statistical information needs of
Parliament, Government and the community by striving for excellence through the rigorous
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protection of confidential data, quality information from respondents and a timely and
responsive statistical service”.
1.1.14
The NSO’s vision statement is “to contribute to a sustainable and orderly pattern
of socio-economic development in Malta and in the European Union by excelling in the
provision of relevant, timely and quality statistical information in a credible and coherent
manner so as to enable decision-making and knowledge accumulation at all levels and in all
spheres of the community”.
1.1.15
The responsibility for producing Malta’s national accounts falls specifically
within the Economic Statistics Directorate of the NSO, which post at the time of writing
(April 2008) is assumed by the Acting Director Mr Michael Pace Ross. One of the units
within this directorate is the National Accounts Unit, which is directly responsible for the
compilation and co-ordination of all aspects of the National Accounts. Other units assisting
the National Accounts within this Directorate are the Government Finance Unit and the
Balance of Payments Unit. Each of the three units has its own manager who reports to the
Acting Director, who in turn reports to Mr Reno Camilleri, the Acting Director General.
Within the National Accounts Unit there are six senior statisticians and four statisticians (as
at April 2008), besides the unit manager.
1.2
The revisions policy and the timetable for revising and finalising the
estimates
1.2.1
A revisions policy was adopted in 2007. This revisions policy focuses on the
revisions of already published data. It organises and limits the number of periods for which
data can be revised in terms of various frequencies. The depth of a revision refers to the
number of periods that are revised. There are usually three frequencies at which data are
revised backwards, namely quarterly, annually and benchmark revisions.
(a) Every quarter: Data are revised for the previous twelve quarters (depth=12), and
all quarterly data is supported by revised annual data.
(b) Every year: The depth of the revision is three years.
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(c) Benchmark revisions: These are major revisions aimed at incorporating major new
data sources or methodological changes, or a change in what is being described.
These imply a full backward revision of all time periods. These benchmark
revisions are carried out every five years with the next one due in 2010.
1.3
Outline of the production approach
1.3.1
The production approach to the estimation of GDP looks at the contribution to
production of each economic unit, in other words the value of their total outputs less the
value of the inputs used up in the production process. For market producers, value added is
derived as the difference between gross output and intermediate consumption. Value added
for non-market producers is calculated as the sum of compensation of employees, other taxes
less subsidies on production and consumption of fixed capital.
Reference framework and main data sources
1.3.2
According to ESA 95, the production approach defines gross value added (GVA) as
the value of output less the value of intermediate consumption. Output is valued at basic
prices, GVA is valued at basic prices and intermediate consumption is valued at purchasers’
prices. GVA plus taxes on products less subsidies on products gives GDP at market prices,
as shown below:
Main aggregates
Sum of all industries’ total output of goods and services (at basic prices)
Sum of all industries’ total intermediate consumption (at purchasers’
prices)
Total gross value added (at basic prices)
Taxes on products
Subsidies on products
GDP (at market prices)
1.3.3
2001
(Lm’000s)
3,188,142
1,662,814
1,525,327
223,468
15,722
1,733,073
The process of compiling the Production approach relies on various inquiry sources,
such as the structural business survey (SBS) and the annual audited financial statements
submitted by enterprises to MFSA. These sources are supplemented with others at various
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Gross National Income Inventory
levels such as income earned in kind, capital consumption, imputed insurance premium
supplements, and general government expenditure data.
1.3.4
The objective of the SBS is to provide a source of data regarding the performance of
business enterprises, mainly for the purposes of the compilation of National Accounts. It is
thus an important source of data for National Accounts. The SBS is based on a census or
sample taken from the Business Register (BR). In fact the BR is primarily used as a tool for
conducting surveys, or as a source of statistics in its own right. This register incorporates
lists of enterprises, other organisations or units whose activities contribute to the GDP. These
units can be defined as those that exercise control over the use of resources, including land,
labour, capital, goods and services, in order to produce goods and services for their own
consumption or for consumption by other units.
1.3.5
The standard objectives of the BR include:
(i) Coverage: the aim is to cover as much national economic activity as possible,
including very small units, even though there is often an increasing ratio of
costs to benefits involved. The proportion of GNI covered by a register is
often a more useful measure than the proportion of enterprises covered.
(ii) Quality: the BR helps to improve the efficiency of the national statistical
system. Overall quality is not easy to measure, though various specific
aspects of it can be used as indicators, such as coverage, accuracy of the
data held, frequency of updates, and consistency of processes.
(iii) Authority: the BR is recognised as the authoritative source of data on
business populations and demography by NACE.
It is used as the
sampling frame for all SBSs within the national statistical system.
1.3.6
The BR is used in five main ways: (i) for the detection and construction of statistical
units; (ii) as a tool for the preparation and co-ordination of surveys, and for grossing up
survey results; (iii) as a source of information for statistical analysis of the population of
enterprises and its demography; (iv) as a tool for the mobilisation of administrative data; and
(v) as a dissemination tool.
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Transition from basic data sources to national accounts concepts and exhaustiveness
1.3.7
Output is normally recorded and valued at basic prices, in other words when it is
produced. Output for own final use is valued at the basic prices of similar products sold on
the market, except for own-account construction, which normally is valued by costs of
production. Intermediate consumption is recorded when the good or service enters the
production process and is, therefore, valued at purchasers’ prices, or what the producer would
have to pay to replace it. This is the basic price of the good or service plus any transportation
costs, trade margins or taxes, less subsidies on products.
1.3.8
Most of the enterprise data used in the production approach are obtained from
statistical surveys specifically designed for this purpose, or administrative records (for
government) and therefore mainly in line with the ESA 95 requirements. Regarding data that
is extracted from published financial accounts, the necessary adjustments are made to select
only those items that are required for the production and generation of income accounts.
Other adjustments are made for capital formation. By their very nature, certain activities
cannot be covered by enterprise surveys. For such activities, expenditure or income data are
used, as appropriate, to impute the relevant production data. Furthermore, adjustments are
made for the ‘hidden’ activity on a case-by-case basis. The main approaches taken with
respect to exhaustiveness of the Production approach are also described in Chapter 3.
1.4
Outline of the income approach
1.4.1
The income measure is made up of the different uses to which value added is put. It
consists of compensation of employees, other taxes less subsidies on production, gross
operating surplus and mixed income. This approach therefore adds up all income earned by
resident individuals and corporations in the production of goods and services. Some types of
income are not included.
These are transfer payments, such as, unemployment benefits,
children’s allowances, or state pensions. Although these payments provide individuals with
money to spend, the payments do not represent payment for production during the accounting
period.
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Reference framework and main data sources
1.4.2
The income approach is not estimated directly, but derived from the other two
approaches. Compensation of employees is taken from the Generation of Income account,
which is used for the Production Approach. Taxes on production and imports, and subsidies
on production, are estimated by the Government Finance Unit. Gross operating surplus and
mixed income is the balancing item of the Generation of Income account plus consumption of
fixed capital. The income measure of GDP is obtained by summing together the following
components:
Main components
D.1 Compensation of employees (section 4.7)
D.2 Taxes on production and imports (section 4.8)
D.3 Subsidies on production (section 4.9)
B.2 Gross operating surplus (section 4.10) and B.3 Mixed income
(section 4.11)
Total GDP by income approach
1.4.3
2001
(Lm’000s)
807,198
229,799
-28,495
724,584
1,733,073
Compensation of employees is the total remuneration in cash or in kind, payable by
an enterprise or government to an employee, in return for work carried out during the
accounting period. It has two components: wages and salaries payable in cash or in kind; and
employers’ social contributions. Taxes on production and imports are levied by general
government or the European Union and relate to: the production and import of goods and
services; the employment of labour; and the ownership or use of land, buildings or other
assets used in production. Subsidies are payments for which no service is received, made to
resident producers by the general government or the EU. The objective of such payments is
to influence production levels or the payment level of the factors of production.
Transition from basic data sources to national accounts concepts and exhaustiveness
1.4.4
The NSO makes the necessary adjustments for the transition from business
accounting concepts to ESA 95 national accounts concepts. These adjustments are further
explained in Chapter 4. The NSO makes further ‘exhaustiveness’ adjustments to capture the
hidden activity and adjust for coverage.
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1.5
Outline of the expenditure approach
1.5.1
The expenditure approach measures total expenditure on final goods and services
produced in the domestic economy or, alternatively, the sum of final uses of goods and
services by resident institutional units less the value of imports of goods and services. The
total is obtained as the sum of: final consumption expenditure by households, non-profit
institutions serving households (NPISH) and government, on goods and services; gross fixed
capital formation (capital expenditure on fixed and intangible assets, changes in inventories
and acquisitions less disposals of valuables); and net exports of goods and services. These
categories are estimated from a wide variety of sources including expenditure surveys, the
government’s departmental accounting system, surveys of traders and the administrative
documents used in the imports and exports of goods.
1.5.2
GDP at constant 2000 prices is arrived at by adding the separately deflated
components of final expenditures, to exports of goods and services at constant prices and
deducting imports of goods and services at constant prices. A chain Laspeyres index formula
is used throughout for indices, which are computed specifically for the deflation of GDP.
Specific price indices are compiled by obtaining the quantities, values, unit prices, rates, fees,
etc., relevant to the items concerned.
The unit prices of the period under review are
compared to the unit prices of the previous year, using the previous year’s values or suitable
alternatives as weights.
Reference framework and main data sources
1.5.3
The table below shows how the expenditure measure of GDP is calculated, together
with example figures for 2001:
Main components
Household final consumption expenditure (section 5.7)
NPISH final consumption expenditure (section 5.8)
Government final consumption expenditure (section 5.9)
Gross fixed capital formation (section 5.10-5.12)
Changes in inventories (section 5.13)
Acquisitions less disposals of valuables (section 5.14)
Exports of goods and services (section 5.15-5.16)
Imports of goods and services (section 5.17-5.18)
Total GDP by expenditure approach
Economic Statistics Division
2001
(Lm’000s)
1,132,801
28,323
347,985
357,447
-62,231
10,594
1,418,474
1,500,320
1,733,073
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1.5.4
Private consumption expenditure consists of various components of households’
consumption classified by COICOP according to the ESA 95 framework. The main data
sources used for the computation of this aggregate are the household budgetary survey
(HBS), the SBS, and the imports of consumer goods (the commodity flow approach). This
data is supported by other direct sources, especially for agriculture and for services, and data
from administrative sources.
1.5.5
NPISH final consumption expenditure covers institutions such as charities, non-
governmental organisations, trade unions and political parties. This data is extracted from a
variety of administrative sources and published audited accounts and financial statements.
1.5.6
The general government sector is split into three broad categories: central
government, extra-budgetary units (EBUs), and local councils.
According to ESA 95,
general government final consumption expenditure is calculated as the sum of production
costs (intermediate consumption plus compensation of employees plus consumption of fixed
capital). Sales and own-account capital formation are then subtracted, whilst social benefits
in kind via market producers are added. Central government final consumption expenditure
is obtained from the departmental accounting system and from the Treasury. These audited
accounts are also presented to the Maltese Parliament. EBUs publish their own audited
financial statements on an annual basis, and also provide quarterly management accounts.
The same applies for the 68 local councils across the Maltese Islands. Data are measured on
an accruals basis.
1.5.7
Gross fixed capital formation (GFCF) consists of expenditure on machinery and
equipment, construction and other capital products. Different data sources are used for
annual and quarterly estimates of GFCF. For data up to 2003, the sources correspond to
those used for compiling GDP from the production approach, mainly the Structural Business
Statistics (SBS) and corporate financial statements.
Data from 2004 onwards are being
estimated on the benchmark of 2003, upon which growth rates compiled on the basis of
indicators of imports of capital goods and the output of the construction industry are applied.
More detail is available in Chapter 5.
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1.5.8
Changes in inventories are supplied to the National Accounts Unit on a quarterly
basis by the short-term business statistics (STBS) unit and cover three asset groups: materials,
work-in-progress and finished goods. Data is considered provisional until it is benchmarked
to the SBS. Estimates of acquisitions less disposals of valuables are mainly based on the
value of imported and exported valuables, which are available from the International Trade
Statistics Unit.
1.5.9
The source of data for exports and imports of goods and services it’s the Balance of
Payments (BOP) Unit. The BOP system compiles data on imports and exports of goods and
services on the basis of: (i) data on international trade, covering the physical goods exported
from, or imported to, Malta are derived from Customs (and Intrastat) and other administrative
sources; (ii) a direct reporting survey of firms to capture data on services; (iii) the Tourstat
and Cruistat surveys to capture data on tourism. Regarding (i), coverage adjustments are
made, including, for example, estimates for returned goods and goods for processing and
repair, and exports/imports through the post.
The statistics of trade in services cover
activities such as travel, transport and the provision of business and financial services. This
data is compiled by the BOP unit through monthly or quarterly questionnaires in conjunction
with the Central Bank of Malta.
1.5.10
There are conceptual differences in the computation of the aggregates for exports
and imports of goods and services between the National Accounts and the Balance of
Payments, which stem from the official international manuals relating to National Accounts
(ESA 95) and to Balance of Payments (BPM5).
Transition from basic data sources to national accounts concepts and exhaustiveness
1.5.11
The NSO ensures it receives sufficient data to make any adjustments necessary for
the transition from basic data sources to ESA 95 national accounts concepts. Since most data
is based on surveys specifically designed for national accounts purposes, this type of
adjustment is not significant for this source within the expenditure approach. This approach
is mainly based on direct estimation methods, such as sample surveys and administrative
records.
However, model-based estimation is used for some components of final
consumption expenditure and consumption of fixed capital.
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1.5.12
As with all three approaches to measuring GDP, the NSO makes significant efforts
to ensure exhaustiveness even in the expenditure approach. The household budgetary survey
is adjusted for under reporting in the consumption of certain products or services, for
example.
Other checks and balances are also carried out with other sources to ensure
complete coverage.
1.6
The balancing or integration procedure, and main approaches to
validation
1.6.1
The balancing or integration approach is carried out with the help of Supply and Use
Tables (SUTs), which are worked out after t+36. There is no straightforward approach in the
balancing procedure. However, the difference between the supply table and the use table (by
product) is first analysed. The first products to be balanced are those that are relatively close
to each other, no matter the value of the products. Then the largest differences are also
identified, both in terms of values and also percentage differences. All industry breakdowns
of output and intermediate consumption are looked into once again to verify whether data has
been correctly entered in the SUT table. Some errors are detected at this input stage and
corrected. However these are normally minor ones.
1.6.2
The SUT balancing exercise involves carrying out various comparisons, checks and
analyses on the detailed product data received.
Certain validation checks lead to
investigations and subsequent changes affecting either product supply or product demand,
and at times value added. Further details are found in Chapter 6.
1.7
Overview of the allowances for exhaustiveness
1.7.1
The NSO makes significant efforts to ensure that National Accounts are of the
highest quality.
This commences by making informed decisions about whether to use
administrative data sources or survey data within the components of each of the three GDP
measures. This work culminates in the balancing through the supply and use process. Till
this process is initiated, GDP is revised quarterly as actual data replaces preliminary estimates
and revised SBS data is available.
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National Accounts Unit
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1.7.2
Estimates are also made for exhaustivity purposes. In order to ensure full coverage
of the economic activity, the GDP must include all activities carried out in the economy
including those observed and also hidden activities. This calls on for an estimation of the
non-observed economy. In Malta the estimation of the non-observed economy was attempted
the first time during for reference year 2000. The results of the exhaustiveness exercise are
fully included in the GDP except for certain types of illegal activities, such as narcotics and
prostitution. In the GDP it has been decided to calculate and include estimates for ‘soft’
illegal activities such as copying of recorded media and the widespread local custom of
lotteries (raffles).
1.7.3
The study of the non-observed economy was conducted in three ways:
•
A survey about fringe benefits, covering General Government and units where
government is a shareholder;
•
Interviews with interested parties especially in the illegal activities areas;
•
Study of:
o official reports e.g. Household Budgetary Survey and Structural Business
Statistics (SBS);
o unpublished official reports, e.g. Benchmarks of economic sectors in use by
the Inland Revenue Departments;
o private reports e.g. The Salaries and Benefits Report.
1.7.4
The thorough scrutiny for non-exhaustiveness by each category of NACE has
brought to light past efforts for full coverage of the National Accounts. Adjustments in areas
traditionally regarded as understated such as agriculture, doctors, dentists, lawyers, taxis,
holiday flats and grossing up to official labour figures were all being done previously and no
further adjustment is needed.
1.7.5
Adjustments for output and GVA in the GDP have been identified using one of these
main methods:
Economic Statistics Division
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Gross National Income Inventory
Supply-based method:
1.7.6
This method is mainly utilised for sectors where the production of goods and
services is considered understated. This underreporting of production can be found by
comparing different data sources for production and consumption of goods and services.
Some of the recent data sources utilised in this approach are the: Agriculture Census,
Fisheries Census, SBS, Business Register and VAT records.
The labour input method:
1.7.7
This method was used extensively. It implied the raising of the results of surveys
and censuses to the level of national labour data provided by ETC, the national employment
agency and the Labour Force Survey. Estimates were also made for irregular non-registered
part-time ‘employment’ such as farmers, fishermen, football players, bandsman, and
domestic maids.
Expert judgement:
1.7.8
Where data was not available to the NSO, in particular for certain types of illegal
activities, estimates were based on data averages and information obtained from police,
NGOs and associations. At times data was arrived at after a wide internal discussion within
the NSO.
Income based (Franz method):
1.7.9
This type of adjustment approach was mainly applied for sectors where it is a
common practice that profits and income of self-employed and companies are understated.
This approach builds on the assumption that earnings per self-employed should at least be
equal to the wages and salaries of employees. Where this condition was not true, the income
of the self-employed was raised to the level of the earnings of employees in the same
industry. However, it was not always possible to identify and compare the profits by the selfemployed and compensation of employees in the same category. In these cases other
comparisons had to be made with the profits and wages and salaries of similar sectors or with
the averages for the whole economy.
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Gross National Income Inventory
Demand based:
1.7.10
The demand-based method was used extensively where output recorded by
producers was found to be much less than that consumed by the economy. The main source
of data used for this approach was the HBS survey held in 2000. Findings were used to
correct the output recorded by producers when this was found to be under reported. More
details are available in Chapter 7.
1.8
The transition from GDP to GNI
1.8.1
Chapter 8 outlines the transition from GDP to GNI. This is obtained by adding ‘net
property income from abroad’ to GDP at market prices, as shown below:
Gross National Income (GNI) at market prices
GDP at market prices
Compensation of employees:
Receipts from the rest of the world
Payments to the rest of the world
Taxes on production and imports paid to institutions of the EU
Subsidies received from institutions of the EU
Property income received from the rest of the world
Property income paid to the rest of the world
Gross National Income (ESA 95)
2001
(Lm’000s)
1,733,073
5,577
3,114
0
0
374,095
359,001
1,750,630
Compensation of Employees
1.8.2
Compensation of Employees (D.1) is defined within the 1995 European System of
Accounts (ESA 95) as the total remuneration, in cash or in kind, payable by an employer to
an employee in return for work done by the latter during the accounting period (ESA 95
p.4.02). Incoming flows concern payments by non-resident employers to resident employees;
outgoing flows concern payments by resident employers to non-resident employees.
Economic Statistics Division
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Gross National Income Inventory
Taxes on Production and Imports
1.8.3
ESA 95 defines taxes on production and imports (D.2) as ‘compulsory, unrequited
payments in cash or in kind which are levied by general government, or by the Institutions of
the European Union, in respect of the production and importation of goods and services, the
employment of labour, the ownership or use of land, buildings or other assets used in
production’ (ESA 95 p.4.14).
1.8.4
These flows become relevant (for the transition from GDP to GNI) when the
resident government pays taxes to non-resident governments. For Malta, this component has
become of importance for GDP to GNI calculations from 2004 onwards when Malta became
a member state of the EU.
Subsidies on Production and Imports
1.8.5
Subsidies (D.3) are defined in ESA 95 as current unrequited payments that (non-
resident) general government or the Institutions of the European Union make to resident
producers, with the objective of influencing their levels of production, their prices or the
remuneration of the factors of production (ESA 95 p.4.30).
Subsidies granted by the
Institutions of the European Union cover only current transfers made directly by them to
resident producer units. This income component has become of relevance for the GDP to
GNI calculations of Malta as from 2004 onwards.
Interest
1.8.6
Interest income flows are defined in ESA 95 as amounts that debtors become liable
to pay to creditors over a given period of time without reducing the amount of principal
outstanding. This form of property income is receivable by the owners of deposits (AF.2),
securities other than shares (AF.3), loans (AF.4) and other accounts receivable (AF.7).
Interest should be recorded on an accrual basis: - recorded continuously over time to the
creditor on the amount of the principal outstanding whether or not it is actually paid and is to
be recorded before the deduction of any taxes levied on it and inclusive of grants for interest
relief (ESA 95 p.4.50; 4.51).
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Gross National Income Inventory
Distributed Income of Corporations
1.8.7
Distributed income of corporations (D.42) may be in the form of dividends (D.421)
or withdrawals from the income of quasi-corporations (D.422). ESA 95 defines dividends as
income earned by owners of shares (AF.5). Dividends are recorded at the time they are due
to be paid as determined by the corporation (see ESA 95 p.4.53-4.55).
1.8.8
Withdrawals from the income of quasi-corporations refer to amounts that
entrepreneurs actually withdraw for their own use from the profits earned by the quasicorporations that belong to them. D.422 includes the net operating surplus received by
residents as owners of land and buildings in the ROW, or by non-residents as owners of land
or buildings on the economic territory. These flows should be recorded when they are made
by the owners. All forms of distributed income of corporations should be recorded before the
deduction of any current taxes on income, wealth, etc. (see ESA 95 p.4.56-4.63).
Reinvested Earnings on Direct Foreign Investment
1.8.9
Reinvested earnings on direct foreign investment (D.43) are defined in ESA 95 as
equal to the operating surplus of the direct foreign investment enterprises, plus any property
incomes or current transfers receivable, minus any property incomes or current transfers
payable, including actual remittances to foreign direct investors and any current taxes payable
on the income, wealth, etc., of the direct foreign investment enterprise (ESA 95 p.4.64). D.43
should be recorded when earned, and the concept of operating surplus should be in line with
the current operating performance concept (COPC). The COP concept refers to income from
normal operations of the enterprise and that do not include any realized or unrealized holding
(capital) gains or losses arising from valuation changes such as inventory write-offs (for more
detail refer to the IMF manual on balance of payments (BPM5 Chapter XIV p.285)
1.8.10
A direct foreign investment enterprise is an incorporated or unincorporated
enterprise in which an investor resident in another economy owns ten percent or more of the
ordinary shares or voting power (for an incorporated enterprise), or the equivalent (for an
unincorporated enterprise). These enterprises comprise those entities that are identified as
subsidiaries (investor owns more than fifty per cent), associates (investor owns fifty per cent
or less) and branches (wholly or jointly owned unincorporated enterprises), either directly or
indirectly owned by the investor’ (ESA 95 p.4.65).
Economic Statistics Division
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Gross National Income Inventory
Property Income attributed to Insurance Policy Holders
1.8.11
Property income attributed to insurance policy holders (D.44) is defined in ESA 95
as total primary incomes received from the investment of insurance technical reserves. In the
context of GDP to GNI transition calculations, D.44 refers to the primary income received
from (paid to) the rest of the world from the investment of insurance technical reserves.
Rents
1.8.12
Rents refer to rents (D.45) received from (paid to) the rest of the world on land and
sub-soil assets. It also includes rents receivable (payable) to owners of inland waters and
rivers for the right to exploit such waters for recreational or other purposes, including fishing.
Rents on sub-soil assets includes the royalties that accrue to owners of deposits of minerals or
fossil fuels who grant leases to other institutional units permitting them to explore or to
extract such deposits over a specified period of time.
Reference Framework
1.8.13
Prior to the participation of the National Statistics Office in the Phare 2002 project
on the GDP to GNI transition calculations, the Balance of Payments (BOP) was the main
source for items of relevance for the transition exercise. The only source other than BOP was
the Ministry of Finance and the Ministry for Rural Affairs and the Environment as the Paying
Agency, providing data on taxes paid to and subsidies on production received from the
European Union as detailed below.
1.8.14
Concepts such as property income attributed to insurance policy holders (D.44)
received from (paid to) the rest of the world and withdrawals from the income of quasicorporations (D.422) were not included. Other sources such as the Labour Force Survey, and
data collected by the tax authorities were not exploited to the full when calculating
compensation paid to (received from) non-residents (D.1) or dividends received by
households from the rest of the world, for example.
1.8.15
In particular, a difficult issue in the current GDP to GNI calculations is the issue of
coverage of income flows of resident natural persons. In the current system, these income
flows are covered by the Partial Settlements System (PSS). The greater reliance of the BOP
on enterprise surveys from 2004 onwards, together with the fact that the PSS may not exist
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Gross National Income Inventory
forever, jeopardizes the reliable calculation of income flows of natural persons. A solution to
this problem may be found, as outlined in further detail in Chapter 8 for each income flow.
1.9
FISIM: calculation, allocation and impact on GNI
1.9.1
The effect of FISIM allocation is not to be taken into account for purposes of the
fourth own resource. Thus revised GNI figures, which include the effect of FISIM allocation,
are corrected in the GNI questionnaire. The calculation of this correction is straightforward.
It is exactly that amount of FISIM that is included in final consumption expenditure of the
total economy. In other words that part which is allocated to households’ expenditure,
NPISH expenditure and General Government expenditure. Only the impact on GNI that is
due to the allocation of FISIM is included in the transition item, and not the impact due to
any changes in the level of total FISIM. The details on the calculation and impact on GNI are
available in Chapter 9.
Economic Statistics Division
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Gross National Income Inventory
Chapter 2
The revisions policy and the timetable for revising
and finalising the estimates
2.1
The revisions policy
2.1.1
Revisions to statistical information are an essential bridge between the timeliness
and accuracy of data. A statistical system that does not encompass revisions would soon
become irrelevant, as it would not be responsive to the availability of updated data, improved
methodologies and developments in the socio-economic spheres. This is especially the case
in complex statistical compilations such as the National Accounts, which would require
inputs from a multitude of sources and substantial computations.
Revisions reflect the
availability of new information as well as efforts to improve methodologies.
2.1.2
The national accounts is compiled from a myriad of data series derived from
administrative and survey sources, which are subject to sampling and non-sampling error.
Early estimates of the accounts are based on less information than will be available later.
Later information relies on more comprehensive and higher quality data sources, which can
yield substantial improvements in the quality of the accounts. The process of incorporating
these quality improvements inevitably leads to revisions of earlier published figures. Users’
needs are an important input, but at the same time it must be acknowledged that within the
time available for compiling the accounts, it is not feasible to revise backwards all available
quarters each time. Therefore a revision policy has been adopted in 2007.
2.1.3
The revisions policy focuses on the revisions of already published data. It organises
and limits the number of periods for which data may be revised in terms of various
frequencies. The depth of a revision refers to the number of periods that are revised. There
are usually three frequencies at which data are revised backwards, namely quarterly, annually
and benchmark revisions.
(i) Every quarter: Data are revised for the previous twelve quarters (depth=12),
and all quarterly data is supported by revised annual data.
(ii) Every year: The depth of the revision is three years.
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(iii) Benchmark revisions: These are major revisions aimed at incorporating major
new data sources or methodological changes, or a change in what is being
described.
These imply a full backward revision of all time periods.
These benchmark revisions are carried out every five years with the next
one due in 2010.
2.1.4
At present the first annual data for year t is available after t+70 days. These data are
revised every quarter for three consecutive years, as new data sources or more definitive
estimates become available. When Supply and Use Tables are worked out after three years,
the necessary balancing adjustments are carried out and then estimates are considered final.
However at the moment estimates may be subject to further minor revisions. In fact the data
from 1995 onwards is still subject to these minor revisions. In the future SUT tables will
finalise the estimates, and after adjustments are made emerging from the SUT workings, data
will be considered final.
2.1.5
Up to 2006, the revisions were necessitated by the phasing in of ESA 95 concepts in
the National Accounts and the introduction of the allocation of FISIM. The magnitude of
revisions in the National Accounts were also routinely analysed by Eurostat’s GNI
Committee. The underlying significant changes were thoroughly explained in the quarterly
news releases in a separate information box or a separate notification of revisions.
Furthermore, users are asked to contact the NSO for a detailed technical explanation, if they
require so.
2.1.6
In addition to the SUT balancing process, national accounts revisions may be caused
by data re-assessment, as a result of changes to business register classification grossing up,
internal methodological review, or changes to international standards. These changes are
normally explained to users in news releases and would normally have to be taken back as far
as the beginning of the series depending on the type of revision involved. However, these
benchmark revisions only take place every five years.
2.2
Timetable for revising and finalising the accounts
2.2.1
Annual estimates are fully consistent with ESA 95 standards, and the quarterly
accounts and annual accounts are fully integrated.
Economic Statistics Division
Developments in recent years have
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Gross National Income Inventory
improved the coverage and quality of quarterly estimates and strengthened this method of
production. Apart from major conceptual changes, such as those that were involved with the
introduction of ESA 95, there are other revisions that arise from methodological reviews and
data assessments. One particular case in point is the Balance of Payments. These changes
are taken back to 1995, when the data series based on ESA 95 started.
2.2.2
The decision on whether to incorporate these revisions is taken during the monthly
staff meeting to ensure consistency in the approach used and also to agree on a timeframe
when these revisions will take place. Since the Production Approach and the Expenditure
Approach are based on independent statistical sources, revisions to one of the approaches
need not necessarily imply the need for revisions in the other approach.
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Chapter 3
The production approach
3.0
GDP according to the production approach
3.0.1
For 2001, the production approach used to compile gross value added in Malta can
be summarised as follows:
Main aggregates
Sum of all industries’ total output of goods and services (at basic prices)
Sum of all industries’ total intermediate consumption (at purchasers’
prices)
Total gross value added (at basic prices)
Taxes on products
Subsidies on products
GDP (at market prices)
3.0.2
2001
(Lm’000s)
3,188,142
1,662,814
1,525,327
223,468
15,722
1,733,073
The aggregate estimate of value added is based on an estimate at the level of
national accounts’ A60 industry grouping. The estimates for the 60 individual industries are
set out in sections 3.7 to 3.22, which explain the calculations for each of the NACE
subsections. The national accounts are balanced at this 60-industry level in the supply and
use tables.
Breakdown of GVA by NACE (A17)
A: Agriculture, hunting and forestry
B: Fishing
C: Mining and Quarrying
D: Manufacturing
E: Electricity, Gas and Water Supply
F: Construction
G: Wholesale and Retail Trade; Repair of Motor Vehicles, Motorcycles
and Personal and Household Goods
H: Hotels and Restaurants
I: Transport, Storage and Communication
J: Financial Intermediation
K: Real Estate, Renting and Business Activities
L: Public Administration and Defence; Compulsory Social Security
M: Education
N: Health and Social Work
O: Other Community, Social and Personal Service Activities
P: Persons employed with private households
Gross Value Added (total)
Economic Statistics Division
2001
(Lm’000s)
35,827
6,410
3,653
285,648
28,485
57,079
189,483
103,073
172,508
92,758
197,024
114,267
89,734
78,929
67,883
2,565
1,525,327
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Gross National Income Inventory
3.1
The reference framework
3.1.1
The basic elements of the production approach are output and intermediate
consumption, with value added as the balancing item, recorded in the production account of
the system. Production is defined by reference to the production boundary. A satisfactory
solution to applying the production approach for the GDP compilation depends on the
conceptual framework as well as measurement issues. The latter issues are described in
detail in this chapter from section 3.7 onwards, while conceptual and general aspects are dealt
with in sections 3.1 to 3.6.
3.1.2
In Malta, the production approach is now the main approach to estimate GDP. This
was not the case in the former system, in which the income approach was the main one.
Production accounts have been compiled in a detailed way from establishment or local kindof-activity units (KAUs) production data from 1995 onwards.
3.1.3
The production boundary is defined as any activity carried out by an institutional
unit that uses inputs of material, labour and capital to produce output of goods and services.
Purely natural processes of production are excluded by the need for the institutional unit to
control and be responsible for the activity. To clarify this and the borderline issues in this
respect, the production boundary includes production of individual and collective services by
government, own-account production of housing services by owner-occupiers and production
of goods for own final consumption. It includes the production of services by paid domestic
staff, and in principle production forbidden by law, and production from which the revenues
are not declared to the fiscal authorities.
3.1.4
Production for own final use includes production, storage and processing of
agricultural products for own-account by households, including fishing. Likewise, ownaccount production of capital goods includes construction of dwellings by households, but do
not include other capital formation like software, literary and artistic originals, minerals
exploration under the heading of production.
3.1.5
Institutional units that are involved in production are called enterprises. These can
be corporations, non-profit institutions or unincorporated enterprises. Large enterprises are
partitioned into units that are reasonably homogenous with respect to output, cost structure
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and technology, called KAUs.
These correspond to the class level of the European
Classification of Economic Activities (NACE Rev.1).
At a minimum, an enterprise’s
information system needs to be capable of recording the value of production, intermediate
consumption, compensation of employees, operating surplus, employment and gross fixed
capital formation for each local KAU. This data is taken from the Business Register.
3.1.6
All EU Member States, including Malta, maintain business registers for statistical
purposes. This register incorporates lists of enterprises, other organisations or units whose
activities contribute to the GDP. These units can be defined as those that exercise control
over the use of resources, including land, labour, capital, goods and services, in order to
produce goods and services for their own consumption or for consumption by other units.
The BR is primarily used as a tool for conducting surveys, or as a source of statistics in its
own right. The availability of a BR is of fundamental importance to the compilation of the
statistics needed to provide indicators of both short-term and structural economic
developments.
3.1.7
The standard objectives of the BR include:
(i) Coverage: the aim is to cover as much national economic activity as possible,
including very small units, even though there is often an increasing ratio of
costs to benefits involved. The proportion of GNI covered by a register is
often a more useful measure than the proportion of enterprises covered.
(ii) Quality: the BR helps to improve the efficiency of the national statistical
system. Overall quality is not easy to measure, though various specific
aspects of it can be used as indicators, such as coverage, accuracy of the
data held, frequency of updates, and consistency of processes.
(iii) Authority: the BR is recognised as the authoritative source of data on
business populations and demography by NACE.
It is used as the
sampling frame for all SBSs within the national statistical system.
3.1.8
The BR is used in five main ways:
(i) for the detection and construction of statistical units;
(ii) as a tool for the preparation and co-ordination of surveys, and for grossing up
survey results;
Economic Statistics Division
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Gross National Income Inventory
(iii) as a source of information for statistical analysis of the population of
enterprises and its demography;
(iv) as a tool for the mobilisation of administrative data; and
(v) as a dissemination tool.
3.1.9
The SBS, which is based on the BR, covers the following economic activities:
NACE 14 to 55 and 63.3 from 1999 onwards; NACE 72 and part of NACE 92 from 2000
onwards, NACE 74 from 2001 onwards, and NACE 90 and 93 from 2004 onwards.
3.2
Valuation
3.2.1
Both production and intermediate consumption are shown in monetary terms. For
production basic prices are used whilst for intermediate consumption market prices are
shown, in line with ESA 95. This applies to values that are directly available, such as
monetary transactions, cash holdings and liabilities. Since prices for non-market services
produced by government are not available, valuation is based on production costs.
3.2.2
Theoretically, products used for intermediate consumption are recorded and valued
at the time they enter the process of production. They are valued at purchasers’ prices. What
is normally done, however, is that purchases intended to be used as inputs and the changes in
the amounts of such goods held in inventory are recorded.
To arrive at intermediate
consumption the NSO subtracts the changes in inventories of inputs from the purchases.
3.2.3
Imports and exports of goods are recorded at c.i.f. (cost of insurance of freight) and
f.o.b. (free on board) respectively. This means that in the case of imports, all transport and
insurance services are included in the value. For exports, foreign transport and insurance
services between the importer’s and exporter’s frontiers are not included in the value of
goods but are recorded under services.
3.2.4
Valuation at constant prices from the Production side has not yet been compiled.
This will become a priority in 2008.
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3.3
Transition from private accounting and administrative concepts to
ESA95 national accounting concepts
3.3.1
Intermediate consumption consists of the value of the goods and services consumed
as inputs by a process of production, excluding fixed assets whose consumption is recorded
as consumption of fixed capital.
3.3.2
There are a number of adjustments made in the transition from private, or business
accounting, to the national accounting concepts. For example, for ‘output’ we do not only
take ‘turnover’ from the accounts but also add to that any other operating income such as
recovered costs.
Consumption of fixed capital is identifiable in the accounts as the
depreciation charge for the year. Usually depreciation is not given as one whole figure in the
business accounts but is listed under cost of sales, administrative expenses, operating
expenses, transmission and distribution costs and costs of generation. All these figures are
added together to arrive at the total depreciation.
3.3.3
In a nutshell, therefore, to arrive at intermediate consumption we have to do some
adjustments: from administrative expenses, operating expenses and distribution expenses we
deduct directors’ emoluments, office salaries and national insurance, interest paid, provisions
and bad debts written off, loss/gain on foreign exchange, and depreciation. This ultimately
implies that the operating profit or loss in the business accounts is not necessarily equal to the
resulting figure in the national accounts.
3.3.4
Regarding the borderline cases mentioned in the ESA (paragraphs 3.69-3.71 and
3.75-3.79), the intermediate consumption as defined there is in line with the business
accounting procedures as applied locally by private accountants. The same applies for final
consumption.
3.3.5
In some cases, the National Accounts Unit referred to the Links between Business
Accounting and National Accounting, a handbook issued by the UN Statistics Division in
1997 in the transition from private accounting and administrative concepts to national
accounts concepts.
Economic Statistics Division
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Gross National Income Inventory
3.4
The roles of direct and indirect estimation methods
3.4.1
Data for most industries are based on direct methods, i.e. sample surveys for
producers and administrative records for government. Extensive use is made of the separate
surveys undertaken for the various groups of industries by other units within NSO. However
these surveys do not cover all sectors, so alternative sources are used to fill in the gaps.
Furthermore, survey data for a few industries, such as construction, were not considered to be
reliable enough, so other sources, such as income data, were used instead.
3.4.2
The results of the enterprise surveys are validated by SBS unit staff. In addition,
further extensive consistency checks are carried out at the National Accounts Unit and
comparisons made over periods of time. Some data is referred back to the SBS unit, who in
turn confirm, after checking with the respondent, whether an entry was correct or not.
3.5
The roles of benchmarks and extrapolations
3.5.1
For annual accounts published in year t, detailed production data only cover the
years up to and including t-3 and sometimes even t-4. This may cause significant revisions
once the final production data for a particular year is published. The Supply and Use Tables
are usually available for the year t-2 twelve months after the end of year t. However, some
aggregate estimates are produced for year t-1 by summing the corresponding values from the
quarterly accounts.
3.6
3.6.1
The Main Approaches taken with respect to exhaustiveness
Different parts of the economic accounts are affected by hidden activity to varying
degrees. When administrative data are used, data may be ‘hidden’ from the competent
authority. For example data on incomes taken from tax returns can be affected by underreporting. On the other hand, there is less reason to misreport when responding to Household
Expenditure Surveys.
Against this, however, is the fact that respondents tend to take
administrative forms, such as tax returns, more seriously than they do surveys. So in some
instances surveys are more likely to suffer from non-response or poor quality data.
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3.6.2
This makes the choice of which data source to use, whether administrative or
otherwise, quite difficult. Consequently, decisions have to be made on a case-by-case basis.
For instance, published company accounts are used for industries dominated by a few large
enterprises, such as water and electricity. This is because these are considered more reliable
than the corresponding survey returns. On the other hand, industries populated by a large
number of small firms are probably better covered by sample surveys. The reason for this is
that small firms are more likely to avoid taxation than larger enterprises.
3.6.3
There are a number of specific adjustments made for the hidden economy and these
are noted in the descriptions for the relevant industries. Also, some adjustments, though not
explicitly aimed at measuring the hidden economy, partly adjust for it anyway. The ESA 95
explicitly states that all economic activities, regardless of their legal status, should be
included within the accounts. Thus the accounts should in principle also cover the sale of
illegal drugs and prostitution. However there are no immediate plans to include these two
activities within the accounts as there is as yet no European wide consensus on how illegal
activities should be treated. Chapter 7 provides more details on exhaustiveness adjustments.
3.7
Agriculture, hunting and forestry (NACE A)
NACE 01
Agriculture, hunting and forestry
Introduction
3.7.1
The main data source for the compilation of the production and generation of
income accounts for the Maltese agricultural sector is the Economic Accounts for Agriculture
(EAA), which have been published and presented to the Agro Monetary Statistics Unit at
Eurostat. This system of accounts is aimed to provide an overview of economic activities
which are rather systematic, comparable and as complete as possible.
3.7.2
Basic sources for the compilation of EAA for Malta include data from the
Department of Agriculture, direct sources from companies producing specific agricultural
goods and from various other administrative sources. In 2001, NACE A accounted for 2.35
per cent of the value added of the Maltese economy. Table 3.7 indicates the contribution of
the three institutional units towards agricultural output and value added during 2001. At
Economic Statistics Division
35
Gross National Income Inventory
65.12 per cent, the households sector (S.14) was the largest contributor towards agricultural
gross value added followed by the government sector (S.13) at 18.13 per cent and nonfinancial sector (S.11) at 16.75 per cent.
Table 3.7.1 NACE A’s Non-financial Accounts by Institutional Sector for 2001
Non Financial Corporations (S.11)
Output
Lm’000
IC
Lm’000
GVA
Lm’000
% GVA of
Section A
% GVA of
the whole
economy
12,288
6,288
6,000
16.75
0.39
Government Sector (S.13)
7,248
754
6,494
18.13
0.43
Households Sector (S.14)
44,626
21,293
23,333
65.12
1.53
0
0
0
0
0
64,162
28,335
35,827
100.00
2.35
Non-Profit Institutions Serving Households (S.15)
Total
Source: News Release 106/2007
Measurement of Output
3.7.3
According to ESA 95, output of the industry represents all of the products produced
over the accounting period under review by all the units of the industry except for goods and
services produced and consumed over the same accounting period by the same unit.
3.7.4
Output is valued at basic prices. The basic price is the price receivable by the
producers from the purchaser for a unit of a good or service produced as output minus any tax
payable on that unit as a consequence of its production or sale (i.e. taxes on products) plus
any subsidy receivable on that unit as a consequence of its production or sale (subsidies on
products). Measurement of output for the Maltese agricultural sector comprises mainly of
crop and animal output.
Figure 3.7 Agricultural output by category
23%
14%
7%
29%
11%
16%
Milk Products
36
Poultry
Rabbits
Other meat products
Fruit and Vegetables
Others
National Accounts Unit
Gross National Income Inventory
3.7.5
As shown in figure 3.7, output of fruit and vegetables, at 29 per cent, form the
highest proportion amongst the given output categories. This category refers to output of
fruit and vegetables sold through the markets or directly to households, or exported. Output
of other agricultural goods accounted to 23 per cent of total output. ‘Other agricultural
goods’ includes various agricultural output such as government output, production of eggs,
plant and flowers, wines, forage plants and honey. Output of other meat products amount to
16 per cent of output and refers to all meat production, except for rabbits and poultry. Output
of milk products, including milk production and cheese products, totalled 14 per cent of total
agricultural output. The remaining agricultural output was obtained from 11 per cent from
output of rabbits and 7 per cent from poultry output.
Crop Output
3.7.6
Crop output includes the growing of forage plants, vegetables and horticultural
products, potatoes, fruits, and wine produced on farms. Data on production volumes, prices
and wholesale values are gathered from the organised fruit and vegetable market, and form
the major part of estimates for cropping products. Volumes are grossed-up by means of a
factor value in order to cater for the rather high amount of fruit and vegetable produce that
tend to bypass organised market structures and thus do not feature in data provided by this
source. Estimation of forage output is based on the estimation of consumption of forage by
animals as provided by the department of agriculture whilst output of other crops, flowers
and seeds are mainly based on export figures, consumption by consumers, hotels etc.
Animal Output
3.7.7
Animal output is estimated mainly on the basis of statistics provided by
slaughterhouses. Data from the civil abattoir provide information regarding meat production
and meat producer prices by animal species whilst direct information from various poultry
slaughterhouses provides the output value of poultry.
3.7.8
Other animal output data sources include dairy statistics compiled by the Malta
Dairy Products Ltd (MDP) used principally as a data source for milk production. MDP
provides both the quantity value and monetary value of milk production. By multiplying the
average milk yield per sheep and goat, obtained from expert advice, and multiplying this by
the number of sheep and goat population in the Maltese Islands, an estimate for the output
value of cheeselets (gbejniet) production was obtained.
Economic Statistics Division
37
Gross National Income Inventory
Own Final Consumption
3.7.9
Estimation of own consumption of agricultural produce is based on expert advice
from the Department of Agriculture. Estimates for own consumption comprise:
•
products consumed by the farmers’ households which produced them;
•
products stemming from the agricultural unit (holding) and used for the payment in
kind in the form of remuneration paid to holding workers or exchanged for other
goods.
Exhaustiveness
3.7.10 In 2005, the Agriculture and Fisheries Unit (AFU), with financial aid under TAPAS
(technical action plan for the improvement of agricultural statistics), undertook a direct sales
survey to analyse in detail the extent of direct sales in relation with market sales in Malta.
(Report is available on NSO’s website: www.nso.gov.mt).
3.7.11 The direct sales survey analysed the direct sales of the most important crops sown in
Malta. The results from this survey were applied to quantify direct sales in Malta relating to
the agricultural sector replacing factor values which were mainly based on expert advice from
the Ministry of Rural Affairs and the Environment.
3.7.12 Minor exhaustiveness adjustments for animal production in Malta were applied.
Since all animal slaughtering, except for rabbit slaughtering, are carried out at the local
slaughtering houses, data collected is regarded as exhaustive. There are two government
slaughterhouses, which slaughter cattle and pigs, and four licensed slaughterhouses
slaughtering poultry. On the other hand, the rabbit industry is a backyard industry and is very
difficult to estimate. The number of rabbits slaughtered is estimated by the purchases of
rabbit feed from feed mills in Malta. This data is obtained from the Business and Enterprise
Unit of NSO. Technical experts in the field have also been consulted to verify the figures.
All cows’ milk is taken to the national dairy while the number of eggs produced is estimated
according to the number of laying hens through the bi-annual farm structure survey
undertaken by the AFU.
38
National Accounts Unit
Gross National Income Inventory
3.7.13 Results obtained from the TAPAS project, along with technical advice from experts
engaged within relevant areas of the agricultural sector formed the basis to improvements
methods and adjustments directed towards ensuring exhaustiveness within this NACE
category.
Intermediate Consumption
3.7.14
The value of intermediate consumption for the agricultural sector is measured in
accordance with Eurostat requirements, and is obtained from the EAA as presented by NSO.
The main data sources for these estimates include importation of goods used within the
process of production and information from surveys regarding the production of specific
agricultural goods. The main categories of intermediate consumption include:
•
Energy; lubricants: mainly electricity, gas and all other solid and liquid fuels and
propellants.
•
Fertilisers and soil improvers.
•
Plant protection products and pesticides: includes herbicides, fungicides, pesticides
and other similar inorganic and organic substances
•
Veterinary expenses: Medicines that are invoiced.
•
Rents paid: due to EAA requirements, rents paid are not included under the heading
of intermediate consumption. However, in order to obtain the value of intermediate
consumption compliant with ESA 95 requirements this expenditure item has been
included.
Compensation of Employees
3.7.15
Compensation of employees has been estimated on the basis of a wage per full-time
equivalent employee. Employment figures for the agricultural sector were based on data
from the Employment and Training Corporation (ETC). This does not correspond to the
estimate of compensation of employees as presented in the EAA mainly due to differences in
methodology.
Economic Statistics Division
39
Gross National Income Inventory
3.8
Fishing (B)
NACE 05
Fishing
Introduction
3.8.1
The compilation of production and generation of income accounts for NACE 05 was
based mainly on data gathered from organised fish markets, trade data, the 2005 Census of
Fisheries and information obtained from an annual survey. This sector of the economy
accounted for 0.42 per cent of the value added of the Maltese economy in 2001.
Table 3.8.1 NACE B’s Non-financial Accounts by Institutional Sector for 2001
Non Financial Corporations (S.11)
Output
Lm’000
IC
Lm’000
GVA
Lm’000
% GVA of
Section B
% GVA of
the whole
economy
0.35
14,766
9,454
5,312
82.87
Government Sector (S.13)
0
0
0
0
0
Households Sector (S.14)
2,586
1,488
1,098
17.13
0.07
0
0
0
0
0
17,352
10,942
6,410
100
0.42
Non-Profit Institutions Serving Households (S.15)
Total
Source: News Release 106/2007
Measurement of output
3.8.2
The main data source for the calculation of output of sea fishing is both the fish
report and trade data. Figures for wild fish have been brought in line with results obtained
from the 2005 Census of Fisheries. Referring to other sources of data, such as the 2000
Household Budgetary Survey, another independent estimate on the output of wild fish was
obtained, and a comparison made with the original estimate.
After analysing the two
independent sources, the original estimate was revised to equal the latter independent source,
which was considered more reliable.
3.8.3
The output of Maltese fish farms directed towards exports was based on two main
sources: trade data and data acquired from the National Aquaculture Centre. Output of fish
farms was estimated as an average of these two independent sources.
40
National Accounts Unit
Gross National Income Inventory
Intermediate Consumption
3.8.4
The Census of Fisheries served as the main data source for the calculation of
intermediate consumption of wild fish landings. According to output and expenditure values
obtained from the 1997 Census of Fisheries, an intermediate consumption to output ratio of
59.7 per cent was established. This ratio was applied to the total output of wild fish landings
so as to obtain the value of intermediate consumption for 2001.
Own Final Consumption
3.8.5
The estimate of own consumption of fishermen is based on information regarding
the number of employees engaged within the fishing activity, the average number of weeks
worked during a year and the estimated value of fish landings for own consumption per
fisherman.
Compensation of Employees
3.8.6
Compensation of employees of both companies engaged in fish farm activities and
those of open sea fishing activity have been estimated on the basis of employment data
obtained from the ETC employment registry.
3.9 Mining and quarrying (C)
3.9.1
NACE C is defined by group of producer units and covers the following industries:
(i) NACE 11: Extraction of crude petroleum and natural gas: service activities incidental to
oil and gas extraction, excluding surveying
(ii) NACE 14: Other mining and quarrying
3.9.2
In 2001, this sector accounted for 0.2 per cent of the value added of the Maltese
economy as shown in Table 3.9.1 below:
Economic Statistics Division
41
Gross National Income Inventory
Table 3.9.1 NACE C’s Non-financial Accounts by Institutional Sector for 2001
Non Financial Corporations (S.11)
Output
Lm’000
IC
Lm’000
GVA
Lm’000
% GVA of
Section C
% GVA of
the whole
economy
0.18
4,985
2,271
2,714
74.32
Government Sector (S.13)
0
0
0
0
0
Households Sector (S.14)
1,511
573
938
25.68
0.06
0
0
0
0
0
6,496
2,844
3,652
100
0.24
Non-Profit Institutions Serving Households (S.15)
Total
Source: News Release 106/2007
Sources and Methods
3.9.3
Estimates for total output, intermediate consumption and value added for NACE 11
are based on data obtained from direct company information and from annual audited
financial accounts.
3.9.4
According to the Business Register, NACE 14 consists of 80 establishments
employing about 227.
More than half the labour force is employed by just five
establishments. Full accounts are not available and estimates had to be made based on past
ratios from SBS and the former census of industrial production.
3.10 Manufacturing (D) 1
3.10.1
Manufacturing is one of the key players in the Maltese economy with a contribution
of 18.7 per cent to value added gross (B.1g) in 2001. However, the share of value added
gross (B.1g) as a percentage of output (P.1) stood at 26.6 per cent for activities in Section D
in 2001, compared to a national ratio of 47.8 per cent.
3.10.2
Activities in Section D are now distinguished in 28 industries within 23 A60
headings.
Prior the implementation of ESA 95 activities Section D were not analysed
separately.
1
Data in Section 3.10 is in line with News Release No. 96/2007, Finalisation of GDP data: 1995-2003.
42
National Accounts Unit
Gross National Income Inventory
Box 3.10.1 Section D at 2-digit NACE for 2001
NACE Rev.1: A60 classification
15 Manufacture of food products and
beverages
16 Manufacture of tobacco products
Output
Lm'000
IC
Lm'000
GVA
Lm'000
% GVA of
Section D
% of GVA of
the whole
economy
134,298
92,372
41,926
14.7%
2.7%
14,630
11,608
3,022
1.1%
0.2%
18,013
10,101
7,912
2.8%
0.5%
59,814
41,197
18,617
6.5%
1.2%
16,772
12,583
4,189
1.5%
0.3%
2,445
1,281
1,164
0.4%
0.1%
8,423
5,722
2,701
0.9%
0.2%
44,890
25,530
19,360
6.8%
1.3%
359
203
156
0.1%
0.0%
27,474
19,777
7,697
2.7%
0.5%
39,327
18,037
21,290
7.5%
1.4%
25,367
16,655
8,712
3.1%
0.6%
624
235
389
0.1%
0.0%
21,697
12,837
8,860
3.1%
0.6%
17,309
11,883
5,426
1.9%
0.4%
5,971
3,758
2,213
0.8%
0.1%
43,329
26,460
16,869
5.9%
1.1%
455,744
402,832
52,912
18.5%
3.5%
23,922
13,679
10,243
3.6%
0.7%
1,411
924
487
0.2%
0.0%
35,328
16,640
18,688
6.5%
1.2%
75,950
43,821
32,129
11.2%
2.1%
2,196
1,513
683
1,075,293
789,645
285,648
3,188,142 1,662,814 1,525,327
0.2%
100%
0.0%
19%
17 Manufacture of textiles
18 Manufacture of wearing apparel;
dressing and dyeing of fur
19 Tanning and dressing of leather;
manufacture of luggage, handbags,
saddlery, footwear
20 Manufacture of wood and of
products of wood and cork, except
furniture
21 Manufacture of pulp, paper and
paper products
22 Publishing, printing and
reproduction of recorded media
23 Manufacture of coke, refined
petroleum products and nuclear fuel
24 Manufacture of chemicals and
chemical products
25 Manufacture of rubber and plastic
products
26 Manufacture of other non-metallic
mineral products
27 Manufacture of basic metals
28 Manufacture of fabricated metal
products, except machinery and
equipment
29 Manufacture of machinery and
equipment n.e.c.
30 Manufacture of office machinery
and computers
31 Manufacture of electrical
machinery and apparatus n.e.c.
32 Manufacture of radio, television
and communication equipment and
apparatus
33 Manufacture of medical, precision
and optical instruments, watches and
clocks
34 Manufacture of motor vehicles,
trailers and semi-trailers
35 Manufacture of other transport
equipment
36 Manufacture of furniture,
manufacturing n.e.c.
37 Recycling
Total Manufacturing
Total Economy
Economic Statistics Division
43
Gross National Income Inventory
3.10.3
Four institutional sectors are involved in manufacturing: the non-financial
corporations sector (S.11), the general government sector (S.13), the households sector (S.14)
and the non-profit institutions serving households sector (S15).
Box 3.10.2 Section D by Institutional Sector for 20012
Institutional Sector
Non-financial corporations (S.11)
General government (S.13)
Households (S.14)
Non-profit institutions serving households (S.15)
% GVA of
Section D
92.1%
3.7%
4.2%
0.05%
% GVA of
Total
Economy
15.2%
0.6%
0.7%
0.01%
Main data sources
3.10.4 The main data sources for national accounts estimates in the manufacturing sector are
the Employment and Training Corporation (ETC) database, the Business Register, the
Structural Business Statistics (SBS) survey, the annual reports and financial statements, and
the Short-term Business Statistics (STBS) survey.
3.10.5
The ETC database provides detailed information about employment. However, the
ETC has not fully adopted NACE Rev.1.1, and the database is only used to find employment
figures for each individual company listed in the business register.
3.10.6
The Business Register provides a list of the companies classified under Section D at
4-digit NACE, for each particular year, together with turnover and employment data. This
list is used to identify the largest companies at the A60 level, for which full financial
statements are downloaded from the Malta Financial Services Authority (MFSA) website, to
which NSO has access. This list is also used to find employment figures at the A60 level for
those years in which the SBS figures are not finalised.
3.10.7
The SBS survey presents a detailed statistical analysis on output, costs of
production, employment, wages, size of enterprise, and product information at 6-digit CPA
for each 4-digit NACE category. SBS data are available in NACE Rev.1.1 as from 1995, and
44
National Accounts Unit
Gross National Income Inventory
up to 2002 the SBS unit surveyed all enterprises in Section D (i.e. an annual census was
carried out covering all manufacturing enterprises). As from 2003, a sample survey will be
made annually. The SBS is a very important data source for activities in Section D, as it
allows size class analysis of the above mentioned variables. The National Accounts Unit
generally groups size-classes as follows in case of manufacturing:
ƒ
0 to 5 employees
ƒ
6 to 10 employees
ƒ
11 to 20 employees
ƒ
20 employees and over
3.10.8
Annual reports and financial statements are generally preferred in case of large
companies that submit a full set of financial statements to the MFSA. The annual accounts
are available with a time lag of approximately two years. On the other hand, finalised SBS
data are available with a lag of four years. Wherever financial statements are used in the
compilation of national accounts, care is taken to adjust business accounting concepts to
national accounting concepts3.
The financial year of the annual reports and financial
statements may differ from the calendar year. In such case a calendar year adjustment is
made in case of very large companies.
3.10.9
A survey of about 350 manufacturing companies is carried out on a quarterly basis
by the STBS unit. The variables surveyed by the STBS unit include turnover, wages,
employment and investment. The STBS survey is a very important data source due to its
timeliness for quarterly estimates. Ratios derived from the STBS data are often compared to
those derived from the SBS survey and used whenever SBS results are not yet finalised.
3.10.10 Sources used vary depending on the availability of data. However, generally a mix
of all the above mentioned sources is applied. Whilst annual reports and financial statements
are available with a time lag of two years, the SBS data has a time lag of four years. Annual
estimates for 2001 are mostly based on SBS data, for which a finalised version is available in
2
Data as per News Release No. 106/2007, Non-Financial accounts by institutional sector: 2000-2003
United Nations (1998), ‘Handbook of National Accounting: LINKS BETWEEN BUSINESS ACCOUNTING
AND NATIONAL ACCOUNTING’ United Nations Publications, New York
3
Economic Statistics Division
45
Gross National Income Inventory
case of small to medium enterprises and on annual reports and financial statements for large
companies (Box 3.10.3).
Box 3.10.3 Data sources used in terms of GVA during 2001 for activities in Section D
(for S.11 and S.14)
NACE Rev.1: A60 specifications
15 Manufacture of food products and beverages
16 Manufacture of tobacco products
17 Manufacture of textiles
18 Manufacture of wearing apparel; dressing and dyeing of fur
19 Tanning and dressing of leather; manufacture of luggage, handbags,
saddlery, footwear
20 Manufacture of wood and of products of wood and cork, except
furniture
21 Manufacture of pulp, paper and paper products
22 Publishing, printing and reproduction of recorded media
23 Manufacture of coke, refined petroleum products and nuclear fuel
24 Manufacture of chemicals and chemical products
25 Manufacture of rubber and plastic products
26 Manufacture of other non-metallic mineral products
27 Manufacture of basic metals
28 Manufacture of fabricated metal products, except machinery and
equipment
29 Manufacture of machinery and equipment n.e.c.
30 Manufacture of office machinery and computers
31 Manufacture of electrical machinery and apparatus n.e.c.
32 Manufacture of radio, television and communication equipment and
apparatus
33 Manufacture of medical, precision and optical instruments, watches and
clocks
34 Manufacture of motor vehicles, trailers and semi-trailers
35 Manufacture of other transport equipment
36 Manufacture of furniture, manufacturing n.e.c.
37 Recycling
SBS data and/or
other sources
Annual reports
and financial
statements
43.0%
0.4%
51.9%
100.0%
57.0%
99.6%
48.1%
18.7%
100.0%
81.3%
78.3%
43.8%
100.0%
46.5%
22.3%
100.0%
100.0%
75.6%
21.7%
52.7%
49.3%
0.1%
7.6%
50.7%
99.9%
92.4%
3.0%
9.8%
97.0%
90.2%
100.0%
5.5%
68.0%
100.0%
94.5%
32.0%
53.5%
77.7%
24.4%
Output (P.1) - Non-financial corporations (S.11) and Households (S.14)
3.10.11 The explanation below will be subdivided into:
•
Estimates for large to medium enterprises filing full annual reports and financial
statements, and
•
46
Estimates for medium to small enterprises derived from the SBS data
National Accounts Unit
Gross National Income Inventory
3.10.12 Box 3.10.4 (which refers to 2003) gives an indication of the enterprises covered by
the annual reports and financial statements, in the table referred to as “large to medium
enterprises” and those covered by the SBS and/or other sources, in the table referred to as
“medium to small enterprises”.
Box 3.10.4 Share of large to medium and medium to small enterprises in NACE D for
2003 (excluding S.13; S.15 are included in medium to small enterprises)
Large to Medium to
medium
small
enterprises enterprises
819,903
286,945
74%
26%
Grand
Total
1,106,847
Turnover
Lm'000
%
Full-time gainfully occupied
No.
%
13,628
48%
14,840
52%
28,468
Number of enterprises
No.
%
77
3%
2,828
97%
2,905
Estimates for large to medium enterprises filing full annual reports and financial statements
3.10.13 Annual reports and financial statements are generally preferred in case of large to
medium companies that submit a full set of audited accounts to MFSA. As mentioned in
paragraph 3.10.6, these companies are identified from the business register. Generally annual
reports and financial statements are available with a time lag of two years, unlike the SBS
which is available with a time lag of four years. As shown in Box 3.10.4 turnover derived
from audited accounts in 2003 was equivalent to 74 per cent of the total output produced by
NACE D (excluding S.13). The use of annual reports and financial statements reduce risks
associated with unnecessary estimates which would have to be done if the National Accounts
Unit had to completely rely on SBS data for annual estimates or STBS data for quarterly
estimates. In fact, almost all companies have submitted the audited accounts of 2005 by
March 2007, and the data derived from the STBS (turnover) have been substituted
accordingly.
3.10.14 Adjustments are made such that every transaction in the annual reports and financial
statements is reclassified according to ESA 95 definitions (especially in relation of ‘other
income’). Output is calculated as follows:
Economic Statistics Division
47
Gross National Income Inventory
Output = Turnover less cost of goods bought for resale less opening stock of finished goods
and work-in-progress plus closing stock of finished goods and work-in-progress plus selected
items of other income
3.10.15 Only ‘selected items of other income’ are added to turnover and changes in
inventories because in company accounts other income may include transactions which
should not be included as output according to ESA 95. These transaction may include; profit
on sale of assets, realised/unrealised gains on exchange, interest received, government
training grants, litigation revenues, and rent received
3.10.16 The STBS survey covers all the large to medium enterprises. Thus, as from 2006
extensive use is made of the turnover figures supplied by the STBS Unit. These are later
substituted with the audited figures published in the accounts.
Box 3.10.5
Large to medium enterprises covered by annual reports and financial
statements in NACE D as at 2003 (excluding S.13 and S.15)
Composition of output as at 2003
ESA Code Description
P.1
Output
Turnover
P.52
Change in stock of finished goods
P.52
Change in stock of work-in-progress
P.12
Output for own final use
Lm
821,002,336
819,902,513
(310,485)
3,434,702
154,404
Estimates for medium to small enterprises derived from the SBS data
3.10.17 Output data for medium to small enterprises is generally derived from the SBS4 for
the years 1995 to 2003.
The output figure reported by the National Accounts Unit for the
years 1995 to 2003 may vary from that derived directly from the SBS due to some
adjustments. These adjustments were necessary for output, given that some variables were
not grossed up to cover for non-response, amongst which were changes in inventories. As
4
Output in the SBS is calculated as follows: Production Value (i.e. Output) = Turnover + Change in stocks of
finished goods and work-in-progress + Change in stocks of goods and services purchased for resale – Purchases
of goods and services purchased for resale + Capitalised production + Operating Income – Subsidies
48
National Accounts Unit
Gross National Income Inventory
from 2003 such adjustments were not necessary, and thus output was taken directly from the
SBS.
Box 3.10.6 Medium to small enterprises covered by the SBS/other sources in NACE D
for 2003 (excluding S.13 and S.15)
Composition of output for 2003
ESA Code Description
P.1
Output
Turnover
P.52
Change in stock of finished goods
P.52
Change in stock of work-in-progress
P.12
Output for own final use
Lm
283,142,955
286,559,695
(310,485)
3,434,702
154,404
3.10.18 Output in case of medium to small enterprises for the years 1995 to 2002 is
generally calculated as follows:
Output = (Total full-time equivalent gainfully occupied less the full-time equivalent gainfully
occupied covered by the accounts)
multiplied by the output per full-time equivalent gainfully occupied
3.10.19 One of the most important indicators used in the calculation of output is the level of
employment, the main source being the SBS for the period 1995 to 2002. Ideally the SBS
data is compared to an administrative source, such as the ETC database, in order to capture
those small entrepreneurs who are not covered by the census. However, the ETC has not
fully adopted NACE Rev.1.1 and thus such checks are not yet possible.
3.10.20 The output per full-time equivalent gainfully occupied is derived from the SBS for
each size-class at 2 or 3-digit NACE. This is then applied to the number of full-time
equivalent gainfully occupied not covered by the annual accounts. The size-class applied
generally depends on the NACE category being analysed.
3.10.21 Output in case of medium to small enterprises for the 2003 is derived directly from
the SBS.
3.10.22
SBS figures are not yet available for 2004. Thus an alternative method is used to
calculate output as from 2004. A list of companies is extracted from the business register for
each 2-digit NACE category. The ETC database is then used to find employment figures for
all enterprises which are neither covered by the STBS quarterly survey nor by the annual
Economic Statistics Division
49
Gross National Income Inventory
reports and financial statements, for each particular year. This system has its limitations
especially in a number of NACE categories characterised by a large number of small
unincorporated businesses (e.g. NACE 26, 28).
These unincorporated businesses are
generally registered by the name and surname of the owner, and thus quite difficult to find in
the ETC database. Hopefully, this system will be replaced once the ETC database fully
adopts NACE Rev.1.1.
3.10.23 Estimates for medium to small enterprises are either based on 2003 SBS data
(benchmark year), and/or the STBS data, the latter being available on a quarterly basis.
The
STBS survey covers a number of small to medium enterprises, thus, as from 2004 extensive
use is made of the turnover figures supplied by the STBS Unit. An estimate is made for all
other gainfully occupied which are neither covered by the STBS survey or the accounts. This
estimate is based on ratios derived from the SBS or the STBS. Ratios derived from the STBS
survey such as the sales per full-time equivalent gainfully occupied are compared to the SBS
data for a series of years, generally from 1995 to 2003. If in line, STBS ratios are preferred
to the SBS of 2003, as from 2004 onwards. Thus, as from 2004 onwards output for small to
medium enterprises is calculated as follows:
Output = Turnover derived from the STBS manufacturing survey (excluding those companies
covered by the annual accounts)
plus
[(total full-time equivalent gainfully occupied less the full-time equivalent gainfully occupied
covered by the STBS manufacturing survey and accounts)
multiplied by
the output per full-time equivalent gainfully occupied derived from the 2003 SBS
or the sales per full-time equivalent gainfully occupied derived from STBS manufacturing
survey]
Product breakdown
3.10.24 For supply and use tables purposes, output (P.1) is broken down by using the
national CPA classification at P.90 at 2-digit NACE. This product breakdown is derived
from the SBS, which supplies a detailed product breakdown of the production value for each
4-digit NACE category at 6-digit CPA category. Sometimes enterprises fail to disclose all
necessary product detail in the SBS questionnaire; thus a small proportion of the output
50
National Accounts Unit
Gross National Income Inventory
remains unclassified. Unclassified products are reclassified during the balancing process of
the supply and use tables.
Intermediate Consumption (P.2) - Non-financial corporations (S.11) and Households (S.14)
Estimates for large to medium enterprises filing full annual reports and financial statements
3.10.25 In the case of large companies that submit a full set of financial statements to
MFSA, intermediate consumption is derived from the accounts. The method used depends
on the details available in the financial statements. Some companies, in addition to the full
set of accounts, also submit detailed notes to the accounts, such that a list of costs is available
for each of the main headings found in the profit and loss account, i.e. for the cost of sales,
the administrative costs, the selling and distribution costs and the other operating expenses.
In this case, each item is classified according to the classification of transactions and other
flows listed in ESA 95, and thus identifying intermediate consumption is relatively
straightforward.
However, costs are not always listed separately for each of the main
headings, in which case, using the cash flow statement and the notes to the accounts,
intermediate consumption is calculated as follows:
Intermediate Consumption =
(Cost of sales plus administrative costs plus selling and distribution costs plus other
operating expenses)
less compensation of employees, depreciation,(increase)/decrease in provisions, profit/(loss)
on exchange, profit/(loss) on sale of fixed assets, government grants, write-offs
less opening stock of finished goods and work-in-progress plus closing stock of finished
goods and work-in-progress5
less cost of goods bought for resale
5
The opening and closing stocks of finished goods and work-in-progress are used in the calculation of output
and thus need to be excluded from the cost of sales. Materials used (Purchases – Change in stocks of raw
materials) = Cost of sales – opening stocks of finished goods and work-in-progress + closing stocks of finished
goods and work-in-progress
Economic Statistics Division
51
Gross National Income Inventory
3.10.26 It has been observed that over the years, intermediate consumption as a percentage
of output remains quite stable. Thus, to fill in the two-year time lag, the intermediate
consumption of 2006 and 2007 is generally based on the intermediate consumption to output
ratio derived in 2005, such that the cost structure of each NACE division is updated with the
latest available information. Adjustments are necessary to account for the surcharge on water
and electricity bills introduced as from 2005.
Estimates for medium to small enterprises derived from the SBS data
3.10.27
Intermediate Consumption for medium to small enterprises is generally derived
from the SBS6 for the years 1995 to 2003. The intermediate consumption figure reported by
the National Accounts Unit for the years 1995 to 2002 may vary from that derived directly
from the SBS due to some adjustments. These adjustments were necessary with regards to
the intermediate consumption, given that some variables were not being grossed up to cover
for non-response, amongst which were changes in inventories.
As from 2003 such
adjustments were not necessary, and thus intermediate consumption was taken directly from
the SBS.
3.10.28 Ratios derived from the SBS for 1995 to 2002 are used to calculate intermediate
consumption. The ratio derived is generally intermediate consumption as a percentage of
output for each size-class at 2 or 3-digit NACE.
These ratios are then applied to the
corresponding estimated output for 1995 to 2002. The size-class applied generally depends
on the NACE category being analysed.
3.10.29 As from 2004 onwards, given that SBS is not yet finalised, the ratios derived from
the 2003 SBS (benchmark year) are applied to the estimated output of medium to small
enterprises derived from the SBS data. However, adjustments are made to account for the
surcharge on water and electricity bills introduced as from 2005.
6
Intermediate Consumption in the SBS is calculated as follows: Intermediate Consumption = Total purchases
of goods and services - Purchases of goods and services purchased for resale - Change in stocks of raw materials
and consumables + Rent on building + Hire charged for machinery and vehicles + Work given out to
subcontractors.
52
National Accounts Unit
Gross National Income Inventory
Product breakdown
3.10.30 For supply and use tables’ purposes, intermediate consumption (P.2) is broken down
by using the national CPA classification at P.90 at 2-digit NACE. This product breakdown is
derived from the SBS, which supplies a detailed product breakdown of the materials used for
each 4-digit NACE category at 6-digit CPA category. Sometimes enterprises fail to disclose
all necessary product detail in the SBS questionnaire, thus a small proportion of the output
remains unclassified. Unclassified products are reclassified during the balancing process of
the supply and use tables.
Output and intermediate consumption - General government sector (S.13)
3.10.31 The contribution of the general government sector (S.13) towards the sector’s value
added gross amounted to 3.7% in 2001 (refer to Box 3.10.2).
3.10.32 Two government departments are involved in manufacturing: publication, printing
and reproduction of recorded media (NACE 22) and manufacture of furniture: manufacturing
n.e.c. (NACE 36). Further details on the calculation of output and intermediate consumption
reference are available in section 3.18. Prior the implementation of ESA 95 (i.e. in the
income approach), these two departments were classified under public administration and not
as part of Section D.
3.10.33 Only one government enterprise is involved in manufacturing: building and
repairing of ships and boats (NACE 35.1). Annual reports and financial statements are used
to compile the full sequence of accounts recommended in ESA 95. As from 2004, this
enterprise has been reclassified as a non-financial corporation after a restructuring
programme launched in 2003. Further details on the calculation of output and intermediate
consumption reference are available in section 3.18.
Output and intermediate consumption - Non-profit institutions serving households (S.15),
(NPISH)
3.10.34 A small number of NPISHs operate in the manufacturing sector. The activities are
involved in the publication, printing and reproduction of recorded media (NACE 22), and the
Economic Statistics Division
53
Gross National Income Inventory
manufacture of chemicals and chemical products (NACE 24). Their contribution towards the
sector’s value added gross was of 0.05% in 2001 (refer to Box 3.10.2).
3.10.35 Each activity – publication, printing and reproduction of recorded media (NACE
22), and the manufacture of chemicals and chemical products (NACE 24) - covers five
organisations. The STBS survey is used to estimate market output (P.1) and intermediate
consumption (P.2) for NACE 22. These two components are calculated as shown below.
3.10.36 Market Output (P.1) is the product of output per FTE gainfully occupied from the
STBS survey and the number of FTE employees:
Market Output (P.1) = (M.O/FTE gainfully occupied_STBS survey)*(FTE
employees_NPISH)
3.10.37 Intermediate Consumption (P.2) is the product of intermediate consumption per FTE
gainfully occupied from the STBS survey and the number of FTE employees.
Intermediate Consumption (P.2) = (IC/FTE gainfully occupied_STBS survey)*(FTE
employees_NPISH)
3.10.38 Output for the manufacture of chemicals and chemical products (NACE 24) is the
sum of production costs – intermediate consumption (P.2) and compensation of employees
(D.1) - based on a set of expert estimates.
Exhaustiveness
3.10.39 A further adjustment has been necessary in a number of NACE categories to account
for misreporting (N.6) and illegal activities (N.2). The following NACE categories have been
reviewed by the Phare 2000 exhaustiveness project:
54
ƒ
Adjustment for misreporting (N.6) – NACE 15, 18, and 36
ƒ
Adjustment for misreporting, illegal activities (N.2) – NACE 22 and 36
National Accounts Unit
Gross National Income Inventory
Box 3.10.7 Exhaustiveness adjustments by NACE
2001
2001
2001
2001
22.3
775,984
18.22
241,771
NACE
Exhaustivity adjustment
Lm
NACE
Total output
15
22
18
36
Lm 134,297,243 44,890,159 59,813,793 75,949,119
Exhaustivity adjustment as a % total output
%
3.11
15.81
1,493,158
1.1%
1.7%
36.1
3,829,854
0.4%
5.0%
Electricity, Gas and Water Supply (E)
3.11.1
The activities of Section E are distinguished in two industries within the two A60
headings. There is no gas, steam or hot water supply on the island. Electricity is treated as
one industry. The electricity, gas and water supply contributed 1.87 per cent to the total gross
value added in 2001, up from 1.79 per cent in 2000.
Table 3.11.1
40
41
NACE E contribution to gross value added of the economy for 2001
NACE E
2001
Electricity, gas,
steam and hot water
supply
Collection,
purification and
distribution of water
Output
Intermediate
Consumption
Gross
Value
Added
% of
Section
E
Lm'000
Lm'000
Lm'000
% of
Total
Gross
Value
Added
% of
GDP
119,734
105,909
13,825
48.53%
0.91%
0.80%
23,326
143,060
8,666
114,575
14,660
28,485
51.47%
100.00%
0.96%
1.87%
0.85%
1.65%
Table 3.11.2 Composition of output in NACE E for 2001
40
41
NACE E
2001
Electricity, gas, steam and hot water
supply
Collection, purification and
distribution of water
Economic Statistics Division
Turnover
Changes in
inventories
of finished
goods and
WIP
Other
subsidies
on
products
Output
for own
final use
Output
Lm'000
Lm'000
Lm'000
Lm'000
Lm'000
119,202
0
0
532
119,734
15,160
134,362
0
0
7,808
7,808
358
890
23,326
143,060
55
Gross National Income Inventory
3.11.2
Stocks of electricity and water are not identifiable. Electricity, once generated, is
distributed or transmitted through the grid. Water is treated as a flow and is not classified as
a finished good or work-in progress.
3.11.3
The main sources used for output and intermediate consumption are:
(a)
Audited annual financial statements
(b)
Quarterly returns from Enemalta Corporation (Electricity Division) and Water
Services Corporation
(c)
3.11.4
Government Finance Statistics
Audited financial statements include data on turnover, other operating income,
government subsidy, capitalised staff costs, operating and other expenses. These statements
are available with a time lag of over a year. Quarterly returns include data on turnover,
government subsidy, wages on capital works and recurrent expenditure.
3.11.5
The financial year of the annual audited accounts of the corporations falling under
this NACE category does not coincide with the calendar year. In fact this financial year
closes on 30th September. Use is made of the quarterly returns to rescale the annual figure
for the year ending September so that the sum of the quarters is equal to the financial
statements. In this way, whilst the quarterly distribution is maintained, the sum of the four
quarters ending September tallies with the accounts. Therefore NSO does not take the
accounts for the period ending September to be equal to that for the calendar year under
review.
NACE 40
3.11.6
The Maltese national electricity grid is an isolated one and is not connected to any
other electrical network. Therefore, all the electrical energy that is required is generated in
Malta. This activity is carried out by Enemalta Corporation. At present, the corporation
operates two power stations, located at Delimara and Marsa, which supply all the electrical
power needs of the Maltese Islands.
56
National Accounts Unit
Gross National Income Inventory
3.11.7
Enemalta Corporation also acts as an agent for petroleum and gas products,
importing petroleum and distributing it through petrol stations, and bottling gas for
distribution by its authorized distributors. Enemalta Corporation has separate accounts for
the three divisions. It is therefore possible to identify data relating only to electricity, which
is entered under NACE 40, whilst the data of the other two divisions is included under NACE
51.
Market Output
3.11.8
Market Output is calculated by adding turnover generated from domestic,
commercial and industrial units, together with other operating income consisting mainly of
electricity-related services and installations provided by the Corporation. Insurance claims
and gain on disposal of property, plant and equipment are not included. As from 2005,
turnover is inclusive of the fuel surcharge.
3.11.9
Following the increase in the international price of oil, in January 2005
Government introduced an oil surcharge of 17 per cent on water and electricity consumption,
payable to Enemalta Corporation. The maximum annual surcharge for factories and hotels
was capped at Lm5,000 (€11,647). Between 11,000 and 13,000 households, considered as
social cases, continued to pay their electricity bill without the fuel surcharge. In November
2005, the maximum capping for factories and hotels was increased to Lm21,000 (€48,917).
Fuel surcharge has since then been revised as shown in Table 3.11.3 below.
Table 3.11.3
Surcharge rates on electricity and water consumption
Period
January 2005 to October 2005
November 2005 to December 2005
January 2006 to February 2006
March 2006 to April 2006
May 2006 to June 2006
July 2006 to August 2006
September 2006 to October 2006
November 2006 to December 2006
January 2007 to February 2007
March 2007 to July 2007
August 2007 to June 2008
Economic Statistics Division
Fuel
Surcharge
17.0%
55.0%
47.5%
67.5%
64.0%
62.0%
63.5%
59.5%
54.0%
45.0%
50.0%
57
Gross National Income Inventory
3.11.10
Data for turnover and other income are received on a quarterly basis from
Enemalta Corporation (Electricity Division). This data is adjusted by the National Accounts
Unit in order to arrive at a preliminary estimated for market output. The adjustment is based
on the relationship between market output derived from the latest audited annual financial
statements for the financial year ending 30th September and turnover in respect of the same
accounting period as per quarterly returns.
3.11.11
Preliminary quarterly estimates are eventually revised when the annual audited
financial statements covering the said quarters are published. Market output is then recalculated from published accounts and the preliminary quarterly estimates are re-scaled to
come in line with the annual data from the financial statements.
3.11.12
As from 2005, quarterly returns also include details of other operating income.
Interest income, insurance claims receivable and gain on disposal of fixed assets are reported
separately and are deducted from other income in arriving at the preliminary estimate for
quarterly market output. No further adjustments to quarterly data are carried out at this stage.
As stated in paragraph 3.11.11 however, preliminary estimates are reviewed when the annual
audited financial statements are published.
3.11.13
Since Malta joined the EU in 2004, Enemalta Corporation has been applying the
EU Electricity Directive and the generation of electricity has been unbundled from the
transmission and distribution and from the supply of electricity in terms of accounting.
Initially, this exercise included the unbundling of the generation of electricity (NACE 40.11)
from the transmission and distribution and supply of electricity (NACE 40.12 – 40.13). This
resulted in additional turnover in the generation division, which was compensated by an
identical amount in the cost of sales of the transmission and distribution division (which in
2004 incorporated the supply division), with gross value added remaining unchanged.
3.11.14
During Enemalta’s financial year ending 30th September 2006, this exercise has
been widened and the transmission and distribution has been unbundled from the supply of
electricity. This resulted in additional turnover in the transmission and distribution division,
compensated by an identical amount in the cost of sales of the supply division, with value
added for NACE 40 remaining unchanged. Moreover, during this financial year a charge for
ancillary services was introduced by the corporation, resulting in additional turnover for the
58
National Accounts Unit
Gross National Income Inventory
generation division and increased cost of sales for the transmission and distribution division,
again with no effect on gross value added.
3.11.15
In order to show a consistent time series, an adjustment has been made to include
all three interdivisional entries described in paragraphs 3.11.13 and 3.11.14 for the whole
time series.
Output for own final use
3.11.16
Staff costs that are capitalised within property, plant and equipment are shown as
output for own final use. No other further costs are included here since own account
investment relates only to the wages payable in connection with the installation of equipment
bought by the corporation.
An adjustment is made to the quarterly data based on the
relationship between capitalised staff costs as derived from the latest audited financial
statements and data for wages on capital works for the same accounting period as submitted
in quarterly returns. When the audited accounts are eventually published, quarterly estimates
are reviewed.
Intermediate Consumption
3.11.17
Intermediate Consumption includes the total cost of generation, transmission and
distribution costs, administrative expenses and street lighting expenses. It excludes wages
and salaries, directors’ emoluments, provision for depreciation, impairment charges,
operating licenses, donations, provisions for bad and doubtful debts and bad debts written off.
3.11.18
Data on ‘other recurrent expenditure’ is received on a quarterly basis from
Enemalta Corporation (Electricity Division).
‘Other recurrent expenditure’ excludes
expenditure on gross wages and salaries, social security contribution paid by employer in
respect of employees and provision for depreciation.
An adjustment is made to ‘other
recurrent expenditure’ as submitted in quarterly returns based on the relationship between
intermediate consumption as derived from the latest audited annual financial statements and
‘other recurrent expenditure’ in respect of the same accounting period as per quarterly
returns.
3.11.19
The resulting preliminary estimate for intermediate consumption is then revised
when the annual audited financial statements for financial year ending 30th September are
Economic Statistics Division
59
Gross National Income Inventory
eventually published. Intermediate consumption is re-calculated from the published accounts
and preliminary estimates are re-scaled to come in line with the annual data from the
financial statements.
3.11.20
As from 2005 quarterly returns also include data on interest payable and claims
receivable. Both items are deducted from ‘other recurrent expenditure’ in order to arrive at a
preliminary quarterly estimate for intermediate consumption.
quarterly data is made at this stage.
No further adjustment to
When audited financial statements are published,
intermediate consumption is then re-calculated and preliminary estimates are reviewed as
explained in paragraph 3.11.19.
3.11.21
As stated in paragraph 3.11.15, Intermediate Consumption has also been adjusted
upwards, back to 1995, following the EU Electricity Directive.
NACE 41
3.11.22
The Water Services Corporation (WSC) acts as the sole and exclusive authority to
acquire, produce and distribute potable water for domestic, industrial and commercial use. Its
subsidiary, the Malta Desalination Services (MDS) Ltd acts as a contractor to the WSC and
runs, designs, builds, operates, maintains and manages the desalination facilities belonging to
the WSC. During 2006, MDS Ltd was liquidated and the desalination facilities are now
being operated by the WSC.
3.11.23
The value added of groundwater abstraction through private boreholes which is
then distributed by trucks is also included under NACE 41.
3.11.24
As from 1 October 2003, the government passed over the operational responsibility
and assets of the Drainage Directorate to the WSC. The financial responsibility was taken
over by the corporation on 1 January 2004. The WSC has separate accounts for the two
divisions and it is therefore possible to identify data relating to the production and
distribution of water. The Wastewater Section is included under NACE 90.
3.11.25
The price charged by the WSC for water consumption is subsidised. Government
subsidy represents the contribution by Government towards subsidising the cost of providing
water to the consumer and is calculated as the difference between turnover and total costs.
Market Output
60
National Accounts Unit
Gross National Income Inventory
3.11.26
Data from audited financial statements for financial year ending 30th September are
extensively used. Market Output is derived by adding the ‘net’ subsidy to turnover. The
‘net’ subsidy consists of the government subsidy given to the WSC to cover for the losses
incurred due to the subsidised rates (D.319) and excludes the interest charge on government
interest and debenture stock which is included in the accounts under Government subsidy but
is classified as a subsidy on production (D.39).
3.11.27
Data for turnover and government subsidy are received on a quarterly basis from
the WSC. Government subsidy is checked with the Government Finance Statistics. An
adjustment is made to quarterly turnover based on the relationship between market output, as
calculated from the latest audited financial statements, and turnover submitted in respect of
the same accounting period in quarterly returns.
3.11.28
The resulting preliminary estimates for quarterly market output are then revised
when the annual audited financial statements for the year ending 30th September is eventually
published. Market output is calculated from the published accounts and quarterly data are rescaled to come in line with the annual data from the financial statements.
3.11.29
Market Output calculated from the annual financial statements of MDS Ltd for the
financial year ending 30th September is distributed quarterly based on the quarterly market
output of the WSC.
3.11.30
Market output for water distributed by trucks is estimated on the number of
bowsers, estimated trips per day and basic price per metres cubed. Estimates have been
based on a preliminary report on the development of a programme of measures for Malta
groundwater.
Output for Own Final Use
3.11.31
Capitalised staff costs are shown as output for own final use. Quarterly data
regarding wages on capital works are adjusted by the National Accounts Unit in order to
arrive at a preliminary estimate of output for own final use. This adjustment is based on the
relationship between capitalised staff costs as derived from the latest audited financial
statements and data for wages on capital works for the same accounting period as submitted
in quarterly returns. When audited accounts are eventually published, quarterly estimates are
re-scaled to come in line with the annual data from the financial statements.
Economic Statistics Division
61
Gross National Income Inventory
Intermediate Consumption
3.11.32
Intermediate Consumption is arrived at by deducting, from production, distribution
and administration costs, the total wages and salaries, directors’ remuneration, provision for
depreciation, exchange differences, bad debts written off and any provisions for bad debts or
for mains and pipes.
3.11.33
Quarterly data on ‘other recurrent expenditure’ is received on a quarterly basis
from the WSC. ‘Other recurrent expenditure’ excludes gross wages and salaries, social
security payable by employer in respect of employees and provision for depreciation. An
adjustment is made to ‘other recurrent expenditure’ as submitted in quarterly returns and is
based on the relationship between intermediate consumption calculated from the latest
audited financial statements and ‘other recurrent expenditure’ in respect of the same
accounting period as per quarterly returns.
3.11.34
Preliminary estimates for intermediate consumption are then revised when the
audited financial statements of the WSC for the financial year ending 30th September are
eventually published.
Intermediate consumption is re-calculated from the accounts and
quarterly estimates are re-scaled to come in line with the annual data from the financial
statements.
3.11.35
Intermediate consumption for MDS Ltd is calculated from annual audited financial
statements ending 30th September. The ratio of intermediate consumption to output derived
from the annual accounts is applied to the quarterly output in order to arrive at a quarterly
estimate of intermediate consumption.
3.11.36
Intermediate Consumption for bowser operators is estimated at 20 per cent of
market output.
62
National Accounts Unit
Gross National Income Inventory
3.12 Construction (F)
NACE 45 Construction
Table 3.12.1 NACE 45 Contribution to gross value added of the economy for 2001
NACE
F
2001
3.12.1
Output
Intermediate
Consumption
Gross Value
Added
Lm'000
Lm'000
Lm'000
Percentage
of
Total Economy
Gross Value
Added
%
132,188
75,109
57,079
3.74
Three institutional sectors contribute principally to the activities of the construction
industry: the non-financial corporations sector (S.11), the general government sector (S.13),
and the households the households sector (S.14).
Section F by Institutional Sector - 20017
Table 3.12.2
Institutional Sector
% GVA of
Section F
Non-financial corporations (S.11)
General government (S.13)
Households (S.14)
Non-profit institutions serving households (S.15)
NACE 45
reporting
entity in 2001
Amounts in
Maltese Lira
Lm
Company A
Company B
Company C
47,751
42,664
215,669
Company D
11,047
152
908
Economic Statistics Division
52.14
24.59
23.27
0.00
% GVA of
Total
Economy
1.95
0.92
0.87
0.00
Description of item included under
other operating income
Hire of machinery and other income
Unclaimed creditors
Exceptional item: representing success
and retainer fees relating to a
construction contract completed in the
past
Quality assurance tests (costs of)
recoverable
Police attendance (costs of)
recoverable
Contingency general expenses
recoverable
63
Gross National Income Inventory
Table 3.12.3 NACE F: Breakdown of output for 2001
Account Item Description
(a) Turnover, including other operating income
Amount in Maltese Lira (Lm)
114,890,153
(b) Changes in inventories of finished goods
2,420,047
(c) Changes in inventories of work-in-progress
1,031,725
(d) Changes in inventories of goods and
services purchased for resale
(e) Output for own final use (own account
GFCF)
(f) Purchases of goods and services for resale
-53,025
Output* (Private sector only)
3.12.2
38,788
1,205,540
117,122,148
The most reliable source for the construction industry is the company’s annual
accounts. The BR is used to determine which are the largest companies in terms of turnover;
the accounts of those entities whose annual turnover exceeds Lm1 million, and consequently
are more likely to have a full set of accounts registered with the MFSA, are subsequently
obtained and processed. The figures derived from the published annual financial statements
for these entities are used to replace those which are available in the most recent version of
the SBS, since these are considered to be more accurate than data available from surveys.
3.12.3
Differences in accounting periods covered by the published financial statements and
the SBS may however translate into substantial divergences between the relevant variables
from these two separate sources, and this effect of this divergence is likely to be more
pronounced in the case of the large companies. Since the financial statements represent the
most recent audited accounts of companies, the figures extracted from them are considered to
be a more accurate representation of the true statement of affairs of a company than the
picture furnished by the SBS. In the case of smaller establishments whose turnover lies
below the Lm1 million threshold, and which therefore have no obligation to publish and
7
Data as per News Release No. 106/2007, Non-Financial accounts by institutional sector: 2000-2003
64
National Accounts Unit
Gross National Income Inventory
submit to the local financial regulatory body a full set of accounts, the figures from the SBS
are taken as de facto in the absence of a more reliable source of information.
3.12.4
To obtain the absolute levels of the main national account components for the
quarterly national accounts, the average employment figure obtainable from ETC for the
relevant quarter is used to apportion the annual key variables accordingly.
Due to a
combination of untimely and erratic availability of what is, after careful scrutiny, found to be,
unreliable data for STBS data for the construction sector, the practice of validating quarterly
aggregates with this source has been discontinued. The use of VAT data to validate past
quarterly national accounting figures will also be reviewed in the light of the new system of
compiling NACE F accounts as described in the aforementioned paragraph.
It is also
intended to use the measured floor area, collected according to established parameters, of
approved building permits issued during a specific year. Currently this exercise has only
been carried out in respect of a large sample representing terraced houses, maisonettes,
apartments and similar dwellings for 2004. Once data has been collected for a sufficient
number of years to establish a proper time series for comparative purposes, this system will
also subsequently be incorporated in the validation process.
3.12.5
Output data for small to medium enterprises is generally derived from the SBS for
1995 to 2003. The output figure reported by the National Accounts Unit for this period
varies from the figure derived directly from the SBS due to raising; this raising process
involves the grossing up of some variables used in the computation of output, such as
changes in inventories (particularly changes in: stocks of work-in-progress, finished goods
and goods and services purchased for resale), since these variables were not initially adjusted
for non-response by the Business Statistics Unit. This same grossing up procedure is also
applied to the intermediate consumption figure, which is subjected to a similar grossing up
procedure - the computation of the final figure of intermediate consumption also involves
changes in inventories (particularly changes in stocks of raw materials). Again, this is limited
to the period 1995 to 2003, following which no adjustment for non-response was required.
3.12.6
This industry is also subjected to substantial exhaustiveness adjustments that are
described in Chapter 7. Establishments from the government sector, which are engaged in
construction, are included.
Economic Statistics Division
65
Gross National Income Inventory
3.13
Wholesale and Retail Trade; Repair of Motor Vehicles, Motor
Cycles and Personal and Household Goods (G)
3.13.1
In 2001, total wholesale and retail trade services contributed to 12.3 percent of total
gross value added at basic prices and are calculated separately for the economic activities
shown in the Table below. Only institutional sectors households (S.14) and non-financial
corporations (S.11) provide these services.
Table 3.13.1 Wholesale and Retail Trade services’ contribution to GVA for 2001
Output
(Lm
millions)
50
51
52
Sale, maintenance
and repair of
motor vehicles
and motor cycles;
retail sale of
automotive fuel
Wholesale trade
or commission
trade, except of
motor vehicles
and motorcycles
Retail trade,
except of motor
vehicles and
motorcycles;
repair of personal
and household
goods
Section G
Intermediate
Consumption
(Lm millions)
Gross
Value
Added
(Lm
millions)
% of
Total
GVA at
basic
prices
% of Total
GDP at
market
prices
38.8
9.8
28.9
1.90%
1.67%
123.3
38.7
84.6
5.50%
4.88%
106.0
30.0
75.9
5.00%
4..37%
268.1
78.5
189.5
12.40%
10.90%
Calculation of Output: Benchmark Years
3.13.2
The main data sources for benchmark national income estimates in the wholesale
and retail trade industry are the Structural Business Statistics (SBS) and financial statements
of individual companies. The SBS for Section G has been compiled for the first time for the
reference year 1999 in the form of a census up to 2002, and based on a sample survey from
2003 onwards.
66
National Accounts Unit
Gross National Income Inventory
3.13.3
The enterprises are surveyed at the 4-digit level in the NACE nomenclature and are
presented with detailed questionnaires requesting itemised information on turnover,
purchases and changes in inventories. Information on wages and salaries and employers’
social contributions paid, employment, gross fixed capital formation and capital stock, rent
on land and buildings and taxes is also collected.
3.13.4
The production and generation of income accounts for Section G are calculated
directly from the SBS at NACE 3-digit level. Data collected from the SBS is provided at
micro level and checked by the national accounts unit. Checking involves looking at ratios
such as production value per capita, gross value added per capita, production value to total
turnover, intermediate consumption to production value, compensation of employees per
capita and growth rates in the major variables are calculated for each unit when SBS is
available in the form of a census, and for each unit in the sample, when SBS is available in
the form of a sample survey. These ratios are studied for groups of companies that fall within
the same employment size class and economic activity at four digit level NACE. Outliers are
identified by comparison with companies within the same employment size class and
economic activity at four digit NACE level, or within the time series available, and validated
with the staff working in the SBS unit. For the larger companies with outlier ratios or growth
rates, financial statements are downloaded from the MFSA, and if enough detail on the major
variables are available, these are used to validate the company’s reply to the SBS unit. Any
discrepancies are identified and the SBS unit informed accordingly in an effort to arrive to a
final corrected version that is agreed upon by both the national accounts and the SBS unit.
3.13.5
The output of Section G is defined as the trade margin plus all other income from
productive activities other than wholesale or retail activities. The trade margin is defined as
follows:
Trade Margin = Turnover from the sale of goods for resale less Purchases
of goods for Resale plus Change in inventories of goods for resale
3.13.6 The SBS questionnaire is structured to allow for the separation of turnover data,
purchases data and changes in inventories data into that which is to be used in the calculation
of trade margins, i.e. pertaining solely to transactions in goods for resale.
Economic Statistics Division
67
Gross National Income Inventory
Extrapolation Procedures
3.13.7 The extrapolation procedures outlined below refer to the years for which SBS data is
not available, i.e. prior to 1999 and during the time periods in which the SBS data would not
yet have been provided to the National Accounts Unit.
NACE 50
3.13.8 The total stock of motor vehicles and motorcycles, published by the Transport Unit
(NSO), is used to extrapolate the output of enterprises classified in NACE 50.1, NACE 50.4
and NACE 50.5. For NACE 50.2, output per motor vehicle for the benchmark years is linked
to the HICP 7.2.3 Maintenance and Repair of Personal Transport, and for NACE 50.3 output
per motor vehicle is linked to the HICP 7.2.1 (Spare parts and accessories for personal
transport).
3.13.9 The table below shows the extrapolation model used for economic activities NACE
50.1, 50.4 and 50.5. Output per licensed motor vehicle is calculated in benchmark years.
This output is then multiplied by the stock of licensed motor vehicles in those time periods
when benchmark data from the SBS is not available. Note that for NACE 50.4, stock of
licensed motor cycles is used as an indicator and not stock of licensed motor vehicles.
Benchmark
Estimate
2003
volume
index
2004
volume
index
2005
Source
Output
SBS 2003:
Benchmark estimate
Output per
licensed motor
vehicle
Stock of licensed
motor vehicles
Lm’000
Lm
NSO Transport
Statistics
Number
26,000
26,300
28,000
100
100
100
260,000
101.15
263,000
106.46
280,000
indicates estimates
until benchmark data is
available
NACE 51
3.13.10 For the years prior to the reference year 1999, the output of NACE 51 is extrapolated
using output per capita ratios at NACE 3-digit level multiplied by employment. Benchmark
employment from the SBS survey is extrapolated by using the growth rates in employment
extracted from the ETC database, which provides detailed quarterly information about
68
National Accounts Unit
Gross National Income Inventory
employment in individual companies, collected from registration forms completed upon start
and termination of employment.
3.13.11 The table below provides a numerical example of how the total production value of
NACE 51 is extrapolated for those years in which a benchmark estimate is not available from
SBS.
Table 3.13.1 Extrapolation Model of Output for NACE 51
Source
Benchmark
Estimate
2003
Total Production Value
SBS Data
124,000
Total Sales (For resale and from secondary production)
SBS Data
604,000
607,961
125.83
125.83
SBS Data
480,000
483,148
SBS Data
Trade Data
97.96
490,000
305,000
97.96
493,213
307,000
NACE 51 Extrapolation Model of Output
Extrapolated
Estimate
2004
Lm’000s
Ratio: Sales to Cost of sales
Cost of Sales (Purchases + Changes in inventories)
Ratio: Cost of Sales to Purchases of Goods for Resale
Purchases of Goods for Resale
Imports by importers in NACE 51
Lm’000s
100.6
100.6
124,813
3.13.12 Purchases of goods for resale in the benchmark year are extrapolated using a volume
index based on the growth rate in imports of goods by importers classified as NACE 51. This
information is obtained from the International Trade Statistics Unit within the NSO and is
collected from Intrastat forms. This data is classified using the Harmonised System (HS)
product codes and is provided to the National Accounts Unit at the lowest level of import
product detail and with data on the importers buying these products, classified according to
NACE.
3.13.13 For the benchmark year, the ratio of cost of sales to purchases of goods for resale is
calculated from the SBS and applied to the estimated purchases of goods for resale in the
following years. Also, for the benchmark year, the ratio of total sales (which is the sum of
sales of goods for resale and turnover from the provision of secondary output) to total cost of
sales is calculated and applied to estimated total cost of sales in following years.
3.13.14 The model allows for these two ratios to be adjusted for changing trends, in the event
that such information is available. Finally, total production value of NACE 51 (except for
that produced by the Enemalta Gas and Petroleum Divisions) is the difference between total
estimated sales and total estimated cost of sales as described above.
Economic Statistics Division
69
Gross National Income Inventory
NACE 52
3.13.15 The output of NACE 52 for years prior to the reference year 1999 is extrapolated
using benchmark output per capita ratios at NACE 3-digit level calculated from the SBS and
multiplied by employment. Benchmark employment, from the SBS survey is extrapolated by
using the growth rates in employment provided by the ETC database.
3.13.16 The table below provides a numerical example of how the extrapolation of the total
production value of NACE 52 for those years in which a benchmark estimate is not available
from SBS.
Table 3.13.2 Extrapolation of Benchmark Estimate for NACE 52
Extrapolation of Benchmark Estimates for
Benchmark
NACE 52
Calculations
Extrapolations
2003
2004
480,000
483,386
139.7
139.7
343,500
345,923
98.1
98.1
Source
Total Turnover (From resale and other
SBS Data
services)
SBS Data
Turnover to cost of sales
SBS Data
Cost of sales
SBS Data
Cost of sales to purchases for resale
SBS Data
Total purchases for resale
SBS Data
Total changes in inventories for resale
350,000
100.71
352,469
100.71
514,657
6,500
Index of Purchases by Retailers in NACE
52
Total purchases by retailers
Intrastat Forms
511,052
Total imports by importers in NACE 52
70,000
73,500
2,100
2,205
180,150
180,150
on
Adjustment for imports not recorded in trade
Estimate
data
Intrastat Forms
Selected imports by importer in NACE 51
70
average
3%
National Accounts Unit
Gross National Income Inventory
on
average
Estimate
Adjustment for non response
1.5%
2,702
2,702
Intrastat Forms
Consumer goods, food and beverages
BEC 12
10,000
10,000
Intrastat Forms
Consumer goods, food and beverages
BEC 14
70,000
70,000
Consumer goods, non industrial transport
Intrastat Forms
equipment
BEC 53
150
150
Intrastat Forms
Consumer goods, durables
BEC 61
20,000
20,000
Intrastat Forms
Consumer goods, semi-durables
BEC 62
25,000
25,000
Intrastat Forms
Consumer goods, non durable
BEC 63
55,000
55,000
220,000
220,000
36,100
36,100
1,000
1,000
100
100
Meat
8,000
8,000
Rabbits
7,000
7,000
Poultry
5,000
5,000
15,000
15,000
NSO
Manufacturing
Selected manufacturing sales (excl NACE
Report
31-35)
NSO Agriculture
Reports
Local manufacturing sales
Wild fish (wholesale value and exports)
Farmed Fish
Fruit and vegetables
3.13.17 For the years other than the benchmark, the output of NACE 52 is extrapolated on the
basis of an index for purchases of resale. This index of purchases for resale is made up of:
(a) Total imports by importers classified as NACE 52: this data is obtained from the
International Trade Statistics Unit. The National Accounts Unit adjusts this information with
an estimate of the amount of imports that are not yet captured by the Intrastat forms to
anticipate average revisions in the data. An adjustment is also carried out by the National
Economic Statistics Division
71
Gross National Income Inventory
Accounts Unit to estimate the amount of imports purchased directly from countries such as
Sicily, that are not being captured in Intrastat.
(b) Imports of consumer goods by enterprises classified as NACE 51: this data is obtained
from the Trade Unit and the definition of imports of consumer goods is according to the
Broad Economic Category (BEC) import classification.
(c) Domestic sales of manufacturing companies: this data is obtained from the manufacturing
survey carried out by the STBS Unit.
(d) Domestic sales of non-manufacturing companies: this data is obtained from the
Agriculture Unit. Assumptions are made on the proportions of these domestic sales that
actually pass through retail outlets, and are not sold directly to the consumer by
manufacturing and non-manufacturing enterprises.
3.13.18 Trade margin rates are assumed to remain constant until updated by information from
the SBS each year.
Breakdown of Output by Product
3.13.19 The output of Section G consists of trade margins and other secondary output. All
trade margins, calculated as described above, were classified under the product codes 50, 51
and 52 accordingly. The secondary output of enterprises operating within these economic
activities has been classified on the basis of the CPA product detail specified in the SBS.
Method of Calculation of Intermediate Consumption
Benchmark Years
3.13.20 Intermediate consumption is calculated directly from data collected within the SBS
survey. It is defined as the difference between value-added at basic prices and output, where
value added at basic prices is defined as follows:
Value added at basic prices = Output plus Subsidies on production less
total purchases of goods and services (excluding purchases for resale) plus
Inventories of raw materials and consumables less Rent on Land less Rent
on Building less Hire charged for Machinery less Hire charged for Vehicles
less Work given to sub-contractors
72
National Accounts Unit
Gross National Income Inventory
3.13.21 Note that rent on land is added back to value added at basic prices as the national
accounts unit classifies rent on land as D.45 Rents and not as P.2 Intermediate Consumption.
Output is defined above.
Extrapolation Procedures
3.13.22 Intermediate consumption is extrapolated using the constant technology assumption
for those years in which SBS are not available. When information on major changes in the
cost structure of these entities are identified, e.g. the introduction of a fuel surcharge on water
and electricity bills, for years in which SBS is not yet available, adjustments are made
accordingly. These estimates are revised with data from the SBS survey once this is made
available to the National Accounts unit.
Breakdown of Intermediate Consumption by Product
3.13.23 The SBS survey also provides product detail at CPA 6-digit level on intermediate
consumption. The product distribution coefficients within the SBS are then used to allocate
total intermediate consumption of enterprises within this economic activity by product
categories.
Economic Statistics Division
73
Gross National Income Inventory
3.14 Hotels and restaurants (H)
Introduction
3.14.1 In the Maltese National Accounts the activities of Section H are grouped all together
within the A60 level.
Table 3.14.1: Gross Value Added of Section H for 20018
Nace Code
Output (P.1)
Intermediate
Consumption
(P.2)
Value added
gross (B.1g)
Lm millions
Lm millions
Lm millions
% of
Section H
GVA
% of the
GVA of total
economy
Nace 55.11
113.6
57.6
56.0
54.32
3.67
2
17.7
4.5
13.2
12.79
0.86
1.94
Nace 55.2
86.5
57.0
29.5
28.66
Nace 55.51
Nace 55.3 and 55.4
1.0
0.7
0.3
0.32
0.02
Nace 55.52
9.2
5.2
4.0
3.91
0.26
228.0
125.0
100.00
6.76
Total
1
103.1
Nace 55.1 includes hotels and other similar accommodation (aparthotels and small guesthouses)
2
Nace 55.2 includes income paid to owners of private residences, renting of holiday flats and similar
accommodation
3.14.2 NACE 55.1 covers hotels and other similar accommodation services (small units like
guest houses, tourist villages) irrespective of being accompanied by a restaurant or not.
NACE 55.2 covers other accommodation services include short-stay accommodation in flats
and similar units (55.23) by local residents and tourists. Camping sites, including caravan
site activities (55.22) are insignificant in Malta. The above table shows that NACE 55.1 is
the main contributor to the gross value added of the total NACE 55.
3.14.3 NACE 55.3 to 55.5 includes all output from restaurants, bars, canteens and catering
establishments. Table 3.14.2 shows that the gross value added per full-time equivalent
gainfully occupied of NACE 55 is around Lm8,142.
8
As per news release No 96/2007 published on 8th June 2007
74
National Accounts Unit
Gross National Income Inventory
Table 3.14.2: GVA per FTE for NACE 559
Section H
FTE Gainfully
Occupied
NACE 55
12,660
GVA PER FTE
Gainfully
Occupied
8.142
Main sources
3.14.4 The main sources used to calculate the production and generation of income accounts
for Section H are:
o National Accounts Hotels Census started to be compiled annually by the National
Accounts Unit before 1995. This census is used to calculate the following variables
for NACE 55.1 - output (P.1), intermediate Consumption (P.2), consumption of fixed
capital (K.1) (refer to Chapter 5) and compensation of employees (D.1) – for the years
between 1995 and 2004 inclusive. In 2006 there was an agreement between the
National Accounts and the Business and Enterprise Units that for the financial year
2005 one questionnaire will be sent by the Business and Enterprise Units to
accommodation and catering establishments, so as to reduce any burden on
respondents.
o Household Budgetary Survey (HBS) is conducted by the Research and
Methodology Unit. The latest household budgetary survey was conducted in 2000.
An ongoing HBS is underway in 2008.
o Tourism Expenditure Survey – This survey is conducted annually by the Malta
Tourism Authority and it provides a detailed breakdown of expenditure made by
tourists. Expenditure ratios from this survey are used to estimate tourists’ expenditure
in bars and restaurants.
o Structural Business Survey (SBS) is compiled by the Business and Enterprise Unit.
The SBS for hotels and restaurants was conducted primarily in 1999 as a census, but
as from 2000 onwards it is carried out as a sample survey.
9
As per news release No 96/2007 published on 8th June 2007
Economic Statistics Division
75
Gross National Income Inventory
o Employment and Training Corporation Database (ETC) is a quarterly
employment database compiled by the public employment agency.
o VAT Register data consists of sales and purchases compiled annually by the
Government Finance Unit from the VAT Department. VAT register data is used for
the calculation of output of NACE 55.51 – canteen services.
o Tourism Inbound Survey (Tourstat) - This survey is conducted monthly by the
Tourism Unit, as from 2001 to collect relevant data on inbound tourism – number of
tourists, expenditure, purpose of visit and others. Data from the Tourstat survey is
used to calculate part of the output of NACE 55.3 -55.4.
Output
NACE 55.1 and 55.2 Hotels and other accommodation
NACE 55.1
Hotels
3.14.5 The following establishments are taken as part of NACE 55.1 – hotels, apart-hotels,
tourist villages, holiday complexes, guesthouses and hostels.
The latter types of
accommodation are included as part of NACE 55.1 as their function is very similar to that of
hotels. Holiday Complexes are included as part of hotels because as from 2001 there was a
change in the licence of these units to hotels and apart-hotels. The National Accounts Hotels
Census survey is used to measure output. Since a long times series is available from the
National Accounts Hotels Census, it was decided that this census will be used to calculate
output of hotels and similar accommodation as it was deemed more accurate and reliable.
3.14.6 The National Accounts Hotels Census covers all accommodation establishments
licensed by the Malta Tourism Authority (MTA). The response rate of this census for 2001 is
about 89 per cent (in terms of number of beds covers). The grossing up method for the nonrespondents is done by stratifying both non-respondents and respondents by type of
accommodation and by star category and then calculate a raising factor for each star/by type
of accommodation based on the number of beds as follows:
76
National Accounts Unit
Gross National Income Inventory
Raising Factor for non respondents = Total number of beds/No of beds of respondents
The above raising factor is then used to gross up all variables in each sub-total by star
category and accommodation.
3.14.7 The output of NACE 55.1 – hotel and similar accommodation activities – is made up
of revenue from accommodation, rent received and other income which incorporates income
from bars, restaurants and ancillary services. An adjustment is done while measuring the
output of restaurants in NACE 55.3 to deduct expenditure on meals in restaurants with hotels
by local residents, so as to avoid any double counting with the item ‘other income’ reported
in the hotels and other accommodation census. Such adjustment is not necessary with respect
to tourists’ expenditure in bars and restaurants, as it is easily identified (refer to paragraphs
3.14.14 – 3.14.17). As from 2005 onwards the output of hotels and similar accommodation is
estimated using the growth rate of accommodation expenditure of package and non-package
tourists resulting from the Tourstat survey.
Table 3.14.3
Breakdown of the output for NACE 55.1 for 200110
Details
Output Lm millions
SECTION H - Accommodation Revenue
NACE 55 Rent Received
Other income
Total
NACE 55.2
70.4
0.5
42.7
113.6
Camping sites and other short-stay accommodation
3.14.8 Output for NACE 55.2 is calculated as the sum of rents paid by tourists and money
spent by Maltese residents on flats and other private accommodation.
This output is
estimated on the number of days stayed by tourists in private and other accommodation and a
set of rack rates supplied every quarter by the Consumer Prices Unit within the NSO.
Information about local residents is taken from the Household Budgetary Survey (HBS) –
10
As per News Release no: 96/2007 published on the 8th June 2007
Economic Statistics Division
77
Gross National Income Inventory
2000 as the benchmark year - and it is extrapolated backwards or forwards on the basis of the
estimated income received from tourists.
NACE 55.3-55.4
Bars and Restaurants
3.14.9 Output for bars and restaurants is estimated using expenditure data from the
Household Budgetary Survey (HBS), the Tourism Expenditure Survey and the Tourstat
Survey.
3.14.10 Output of this sub-sector is made up of expenditure made by tourists and residents on
meals out in restaurants, cafés and take away, bars etc. Since output is based on expenditure
figures and not on the supply side (turnover of bars and restaurants), adjustments are done to
add any expenditure on business lunches – 5 per cent on the Maltese expenditure - and deduct
any VAT charges.
3.14.11 The two main sources used to calculate tourists’ expenditure on bars and restaurants
are the Tourism Expenditure Survey and “other expenditure” item from the Tourstat survey.
The Tourism Expenditure Survey is carried out by the Malta Tourism Authority (MTA).
This expenditure survey is in a form of a diary distributed in the arrivals lounge to a sample
of tourists coming from the five main markets – United Kingdom, Germany, France, Italy
and Netherlands. Respondents are given a Lm10 reward for participation. In this survey
respondents are asked to state their daily expenditure whilst in Malta, according to the
different categories, namely:
78
•
On accommodation (not included in the travel arrangements they made prior to their
departure);
•
On food and drinks (in accommodation establishments, in catering establishments,
take-away, bars and groceries);
•
On transportation (ferry crossings, by vehicle hire, public transport and taxis);
•
On recreation (cultural activities, popular entertainment and other recreation);
•
On shopping (basic necessities, souvenirs/gifts/duty-free items);
•
And any other expenditure (including newspapers, medicines etc);
National Accounts Unit
Gross National Income Inventory
Survey participants are also asked to state their expenditure on travel arrangements they made
to visit Malta – package price for flight, accommodation and others.
3.14.12 The Tourism Expenditure Survey provides a detailed breakdown of expenditure in
the following categories:
Table 3.14.4: Breakdown Categories of Tourism Expenditure from the Tourism
Expenditure Survey
Expenditure Prior to Departure
Expenditure on accommodation (Non-Package)
Total Expenditure on Food and Drinks
Food and Drinks in accommodation establishments
Food and Drinks in restaurants
Food and Drinks in take-away etc.
Total Expenditure on Transport
Ferry Crossings
Vehicle Hire
Taxis
Public Transport
Total Expenditure on Recreation
Culture
Popular Entertainment
Sports
Other recreation
Total Expenditure on Shopping
Basic necessities
Souvenirs/Gifts/Duty Free
Other shopping
Other Expenditure
3.14.13 As the Tourstat survey does not provide a detailed breakdown of the item ‘other
expenditure’ from package and non-package tourists, the above expenditure ratios (Table
3.14.4) – food and drink, transport, recreation, shopping and other expenditure – derived from
the tourists’ expenditure survey are used to breakdown “other expenditure” from the Tourstat
survey. Once the ‘other expenditure’ item – Tourstat – is broken down among the previously
mentioned categories, expenditure by tourists in bars and restaurants is then calculated as the
sum of expenditure by tourists in restaurants and take-away etc. According to ESA 95,
output must be recorded exclusive of any indirect taxes. Therefore adjustments are done to
deduct Value Added Tax (VAT). Since the Tourstat survey does not provide data for the
Economic Statistics Division
79
Gross National Income Inventory
years prior to benchmark year 2001, other expenditure for previous years is estimated using
the growth rate of non-residents’ expenditure in Malta which is supplied by the Balance of
Payments Unit.
3.14.14 Expenditure by Maltese residents on meals out in restaurants, cafes, take-away, bars
etc is obtained from the Household Budgetary Survey. The latest data available from the
HBS survey is for 2000, which is considered as the benchmark year for local residents’
expenditure on bars and restaurants. For the years prior to 2000 and afterwards, local
residents’ expenditure is extrapolated using the growth rate of specific indices (P) related to
various expenditure categories of total expenditure by local residents on meals and drinks
from the HBS. It is assumed that the quantity (Q) – number of meals and drinks bought each
year – is approximately the same. This assumption may change when further information
will be available to the National Accounts Unit.
Local residents’ expenditure on meals and drinks [t+1] = Expenditure [t] * P[t+1]/[t]* Q
where: t = [2000 ……………….]; t+1 = [2001 onwards]
Local residents’ expenditure on meals and drinks [t-1] = [Expenditure [t] / P[t]/[t-1] ]* Q
where: t = [1996 ……………1999]; t-1 = [1995…………..1998]
3.14.15 Expenditure by Maltese residents in bars and restaurants is adjusted to deduct
expenditure on meals and drinks consumed in hotels’ bars and restaurants, in order to avoid
any double counting with the output of hotels. Since there is no indication about how much
money is spent on meals and drinks in restaurants with hotels, a set of estimate ratios is
applied to Maltese residents’ expenditure in catering establishments.
These ratios may
change once information will be available from the Household Budgetary Survey of 2008.
3.14.16 The share of expenditure on meals in restaurants by local residents is assumed to be
similar to the share spent by tourists. Therefore the percentage ratio of tourists’ expenditure
on food and drinks in accommodation establishments is used to deduct the amount spent by
local residents in restaurants with hotels.
Expenditure on meals out in restaurants with hotels =
% expenditure by tourists on food and drinks in accommodation establishments* expenditure
on meals out in restaurants by local residents;
80
National Accounts Unit
Gross National Income Inventory
The percentage ratio of expenditure by tourists on food and drinks in accommodation
establishments is calculated from the Tourism Expenditure Survey and is derived as follows:
% expenditure by tourists on food and drinks in accommodation establishments =
Expenditure on food and drinks in accommodation establishments/Sum of food and drinks in
establishments, restaurants, take-away etc.
3.14.17 To deduct expenditure by local residents in cafes, a guess estimate of 10 per cent is
applied to the expenditure of local residents on food and drinks.
Expenditure on cafes with hotels = 10% * (total expenditure on food and drinks less [the
sum of expenditure on meals out in restaurants, meals and snacks served on ferries, meals out
in self-service establishments and pizzas and burgers served in fast food outlets])
Table 3.14.5: Numerical example of adjusted expenditure on meals and drinks by local
residents as at 200111
Expenditure on meals by local residents excl. VAT
Expenditure on drinks by local residents excl. VAT
Total expenditure on meals and drinks
Adjustment for meals in restaurants:
Expenditure on meals in restaurants
Adjustment for expenditure on meals in restaurants with hotels –
(17.64%)
Unit
Lm millions
Lm millions
Lm millions
2001
39.79
12.96
52.75
Lm millions
19.12
Lm millions
3.37
Adjustment for expenditure in cafes with hotels:
Total expenditure on meals and drinks by local residents
Less:
Expenditure on meals in restaurants, ferries, snacks, burgers and pizzas
in fast food outlets
Net other expenditure by local residents
Adjustment for expenditure on cafes with hotels – 10%
Lm millions
52.75
Lm millions
Lm millions
Lm millions
29.52
23.24
2.32
Final adjusted expenditure on meals and drinks by local residents
Lm millions
47.06
3.14.18 Further adjustments are done to account for any trade margins and other secondary
output in this segment which are based on ratios taken from the SBS. Adjustments of 1 per
cent and 5 per cent respectively are applied to the output of restaurants to cover any income
11
As per News Release no: 96/2007 published on the 8th June 2007
Economic Statistics Division
81
Gross National Income Inventory
earned from tips and service charge. Such adjustments are also included with compensation
of employees of this category.
NACE 55.5
Canteens and Catering
3.14.19 Output of canteens (NACE 55.51) is taken from VAT sales database whereas the
SBS data is used to calculate output for catering services (NACE 55.52). The VAT database
is used to measure the output of canteens from 1999 to 2004. For the years prior to 1999 and
after 2004 output of canteen services is calculated as the product of the market output per
FTE gainfully occupied of the previous year and FTE gainfully occupied of each respective
year.
3.14.20 To measure the output of catering services – NACE 55.52, the SBS data for year
2002 is taken as the benchmark year and extrapolations prior to this year and afterwards are
done using the growth rate of the price index of catering services. 2002 is chosen as the
benchmark year because the data from the Structural Business Survey does not seem to be
stable.
Intermediate Consumption
NACE 55.1 and 55.2 Hotels and other accommodation
3.14.21 Intermediate Consumption of hotels is calculated from the Hotels census as a residual
between Turnover and Value Added Gross.
Value added, Gross = Operating Surplus Net (Net Profit before tax + Interest paid and
Ground rent – property income) + CFC + COE
This method is used as for years prior to 2000 the National Accounts Hotels Census did not
include any question about expenditure.
3.14.22 Intermediate Consumption of other accommodation – NACE 55.2 is estimated to be
around 25 per cent as a ratio to output. It is assumed that the main components which
82
National Accounts Unit
Gross National Income Inventory
constitute the intermediate consumption of these units are water, electricity, telephone and if
any, regular maintenance.
NACE 55.3 – 55.5
Restaurants, bars and catering establishments
3.14.23 The intermediate consumption of NACE 55.3 – 55.4 is covered by using an IC to
Output ratio which is derived from annual report analysis of a small number of
establishments in NACE 55.3/55.4. These establishments are selected by sorting the business
register’s list of establishments classified under NACE 55.3 – 55.4 by employment in
descending order. Most of the establishments do not have a full set of financial statements –
abridged – and cannot be used for National Accounts purposes. Also self-employed workers
do not provide any financial statements. In 2001 the coverage of those establishments with
full set of accounts is about 12 per cent in terms of FTE gainfully occupied. The intermediate
consumption ratio for NACE 55.3/55.4 is about 67 per cent.
3.14.21 As for NACE 55.5 – Canteen and Catering Services – the intermediate consumption
ratio of NACE 55.51 is taken the same as that of NACE 55.3/55.4 since it seems that canteen
units carry out similar activities as that of restaurants and bars. However for NACE 55.52 the
intermediate consumption ratio is taken from the SBS data which is about 55 percent. Since
there is no further information this intermediate consumption ratio is used for both years prior
to 2002 and afterwards.
Economic Statistics Division
83
Gross National Income Inventory
3.15 Transport, storage and communication (I)
Table 3.15.1: NACE I
NACE NACE Description
2-digit 3-digit
Land transport; transport via pipelines
60
Transport via railways
601
Other land transport
602
Transport via pipelines
603
611
612
Water Transport
Sea and coastal water transport
Inland water transport
621
622
623
Air Transport
Scheduled air transport
Non-scheduled air transport
Space transport
61
62
634
Supporting and auxiliary transport
activities; activities of travel agencies
Cargo handling and storage
Other supporting transport activities
Activities of travel agencies and tour
operators: tourist assistance activities
n.e.c.
Activities of other transport agencies
641
642
Post and telecommunications
Post and courier activities
Telecommunications
63
631
632
633
64
84
Remarks
Not Applicable
Not Applicable
Not Applicable
National Accounts Unit
Gross National Income Inventory
Table 3.15.2: Output, intermediate consumption and GVA for Section I
NACE
Output
Gross value
Intermediate
added, Basic
Consumption
prices
Lm'000
40,374
4,981
13,844
5,244
16,305
14,020
2,409
3,634
1,831
6,146
26,354
2,572
10,210
3,413
10,159
21,622
18,107
3,515
15,178
13,330
1,848
6,444
4,777
1,667
127,674
113,372
14,302
92,370
80,707
11,663
35,304
32,665
2,639
63 Supporting and auxiliary transport activities
6311 Cargo handling
6312 Storage and warehousing
6321 Other supporting land transport
6322 Other supporting water transport
6323 Other supporting air transport
6330 Activities of travel agencies and tour operators
6340 Activities of other transport agencies
84,466
27,067
4,751
372
10,345
15,704
21,520
4,707
35,628
10,676
891
34
5,628
4,776
11,536
2,087
48,839
16,391
3,860
339
4,717
10,928
9,984
2,620
64 Post and telecommunications
6411 National post activities
6412 Courier activities other than national post
6420 Telecommunications
97,526
6,765
415
90,346
40,045
1,857
144
38,044
57,481
4,908
271
52,302
371,662
197,241
174,422
10.86
5.82
34.35
22.73
26.24
7.11
7.70
46.83
18.06
20.30
15.11
3.69
20.24
28.00
32.96
100
100
100
1.27
0.68
4.00
2.65
3.06
0.84
0.91
5.56
2.14
2.41
1.73
0.42
2.31
3.20
3.77
60 Land Transport
6021 Other scheduled passenger land transport
6022 Taxi operation
6023 Other land passenger transport
6024 Freight transport by road
61 Water Transport
6110 Sea and Coastal water transport
6120 Inland water trasport
62 Air Transport
6210 Scheduled air transport
6220 Non-Scheduled air transport
NACE I
Transport, storage and communications
As % of total Nace I
60 Land Transport
61 Water Transport
62 Air Transport
63 Supporting and auxiliary transport activities
64 Post and telecommunications
NACE I
Transport, storage and communications
As % of National totals
60 Land Transport
61 Water Transport
62 Air Transport
63 Supporting and auxiliary transport activities
64 Post and telecommunications
NACE I
Transport, storage and communications
11.66
11.86
11.44
N.B. Values of Intermediate Consumption and Gross Value Added presented in the table above exclude
adjustments for FISIM, Wages and Salaries in kind and taxes on production.
Economic Statistics Division
85
Gross National Income Inventory
NACE 60
3.15.1
Land transport: transport via pipelines
In 2001, scheduled passenger land transport accounted for 12.3 per cent in terms of
Output. Here data is obtained from censuses carried out by the National Accounts Unit.
These censuses cover the total stock of buses and various variables such as turnover,
intermediate costs and capital costs.
3.15.2
Taxi Operation constitutes 34.3 per cent of Total Output. Benchmarks with respect
to Turnover figures are available by the Tax Compliance Unit for 2000. For all the other
years, this turnover figure is related to the number of days stayed (nights spent) by tourists.
Intermediate consumption for 1999 is based on experts’ advice and this intermediate
consumption to turnover ratio is applied for all the other subsequent years. The level of selfemployed persons is estimated to be equal to the number of licensed taxis. The number of
full-time employees is equal to half the number of garage hire, whilst the other half it is
assumed that they are classified as part-time self-employed. The licensed stock of vehicles is
available quarterly from the Licensing Department. Garage Hire refers to chauffer driven
taxi companies (black taxis) as opposed to the white taxi service.
3.15.3
12.9 per cent of Total Output within this industry classification is related to ‘Other
land passenger transport’, 91.24 per cent of which is made up of minibuses and private buses.
Data is obtained from the Censuses carried out by the National Accounts Unit covering the
total stock of licensed minibuses and private coaches and various variables such as turnover,
intermediate costs and capital costs. Within the minibuses sub-sector, there is one non-profit
institution serving households which is being covered directly by a questionnaire. Moreover,
an exhaustiveness adjustment is made for the minibuses sub-sector (equivalent to 1 per cent
of the Total Gross Value Added within this industry). The remaining 8.75 per cent is covered
by horse-drawn cabs where some estimates for the main variables namely Output,
Intermediate Consumption and Consumption of Fixed Capital had to be made. However, the
Malta Transport Authority provides us with data relating to the number of cabs and drivers.
3.15.4
Freight Transport by road represents the remaining 40.4 per cent of Total Output.
Turnover figures are available from the Business Register whilst for Intermediate
Consumption we apply the purchases to sales ratio as reported in the value added tax data.
Compensation of employees for 1999 is based on an expert’s advice and adjusted with the
cost of living adjustment for the subsequent years.
86
National Accounts Unit
Gross National Income Inventory
NACE 61
3.15.5
Water transport
Sea and coastal water transport covers 84 per cent of this industry’s Total Output.
Within this sub-sector, 73 per cent of Output is made up of data obtained from the
companies’ published annual reports and financial statements. All other variables for the
compilation of the production and generation of income accounts are obtained from such
statements. Another 10.2 per cent is obtained from quarterly questionnaires sent by the
National Accounts Unit, whilst 6 per cent is covered by censuses carried out by the same unit.
Where data is obtained from questionnaires, intermediate consumption is obtained as the
change between Output and Gross Value Added whilst census data covers all required
variables. The remaining 10.8 per cent of Output is made up of some self-employed boatmen
and operators of excursion, cruises or sightseeing boats. As for boatmen, turnover data is
available from the Business Register whilst assumptions are taken for the calculation of
Intermediate Consumption and Consumption of Fixed Capital. On the other hand, estimates
for excursion and sightseeing boats are based on other companies’ annual reports and
financial statements within the same category.
3.15.6
The remaining 16 per cent refers to Inland Water Transport which is basically made
up of one sole company where the full set of accounts are available and so all required
variables for the compilation of the production and generation of income accounts are easily
extracted.
NACE 62
3.15.7
Air transport
88.8 per cent of this industry’s Output is made up of scheduled air transport whilst
the remaining 11.2 per cent refers to non-scheduled air transport. Full coverage for all
variables within this industry is available from the companies’ annual reports and financial
statements.
NACE 63
3.15.8
Supporting and auxiliary transport activities: activities of travel agencies
Cargo handling constitutes 32 per cent of Total Output within this industry. 75.5 per
cent of output here is covered by annual reports and financial statements whilst 20.4 per cent
is covered by quarterly letters sent by the National Accounts Unit and the remaining 4.1 per
cent covered by a census carried out by the National Accounts Unit. Where data is obtained
Economic Statistics Division
87
Gross National Income Inventory
from questionnaires, intermediate consumption is derived as the change between Output and
Gross Value Added whilst census data and financial statements cover all required variables.
3.15.9
Storage and warehousing makes up for 5.6 per cent of total output of which 83.9 per
cent is covered by annual reports and financial statements whilst 16.1 per cent by a census
carried out by the National Accounts Unit.
3.15.10 Another 0.4 per cent refers to supporting land transport activities. This includes just
one non-profit making organisation from which we receive quarterly questionnaires. The
cost approach is being applied for this organisation.
3.15.11 Supporting water transport activities covers 12.3 per cent of Total Output within this
NACE. This sector includes a couple of companies from which we get the full set of
accounts for the compilation of gross value added.
3.15.12 18.6 per cent of Output is made up of supporting air transport activities consisting of
one sole company again having the company’s annual report and financial statements.
3.15.13 Activities of travel agencies and tour operators cover 25.5 per cent of Total Output
of which 94.5 per cent is covered by a census carried out within the National Accounts Unit
and the remaining 6.1 per cent is made up of Tourist Guides for which we are applying the
Business Register turnover and employment data.
The calculation of intermediate
consumption is based on an experts’ advice.
3.15.14 The remaining 5.6 per cent refers to activities of other transport agencies, 81.4 per
cent of which is covered by a National Accounts census whilst the remaining 18.6 per cent is
made up of two small companies for which we have the full set of financial statements.
NACE 64
Post and telecommunications
3.15.15 6.9 per cent of Total Output within this industry constitutes of National Post
Activities. This is basically made up of one sole company from which we get the full set of
financial statements.
3.15.16 Another 0.4 per cent of Output refers to courier activities other than national post
activities where again there exists only one company about which we have full information in
the annual accounts.
88
National Accounts Unit
Gross National Income Inventory
3.15.17 The remaining 92.6 per cent belongs to telecommunications. The majority of Output
within this sub-sector, 98.1 per cent, is covered by the companies’ respective annual reports
and financial statements, another 0.3 per cent by a National Accounts census and the last 1.6
per cent from quarterly questionnaires sent by the Short-Term Business Statistics Unit.
Where data is obtained from annual accounts and the National Accounts census, the full set
of variables can be extracted for the production and generation of income accounts
compilation whilst when using the short term business statistics questionnaires, intermediate
consumption is calculated as the change between Output and Gross Value Added.
3.16
Financial intermediation (J)
Table 3.16.1: Output, intermediate consumption and GVA of Section J for 2001
65 Financial intermediation, except insurance and pension funding
66 Insurance and pension funding, except compulsory social security
67 Activities auxiliary to financial intermediation
NACE J Financial intermediation
Lm'000
92,818
22,708
23,611
139,137
Lm'000
23,893
12,834
9,652
46,379
Gross
value
added,
Basic
prices
Lm'000
68,925
9,874
13,959
92,758
As % of Financial Intermediation
65 Financial intermediation, except insurance and pension funding
66 Insurance and pension funding, except compulsory social security
67 Activities auxiliary to financial intermediation
66.71
16.32
16.97
51.52
27.67
20.81
74.31
10.64
15.05
100
100
100
2.91
0.71
0.74
4.36
1.44
0.77
0.58
2.79
4.52
0.65
0.92
6.08
NACE
NACE J
Output
Financial intermediation
As % of National totals
65 Financial intermediation, except insurance and pension funding
66 Insurance and pension funding, except compulsory social security
67 Activities auxiliary to financial intermediation
NACE J Financial intermediation
Economic Statistics Division
Intermediate
Consumption
89
Gross National Income Inventory
NACE 65
Financial intermediation, except insurance and pension funding
Table 3.16.2: Breakdown of Output for NACE 65 for 2001
Output
for own
final use
Other nonmarket
output
Market output
except FISIM
0
0
0
5,388
83,226
56,657
0
0
26,569
515
54
0
0
461
54
3,688
3,688
0
0
0
3,688
92,817
92,356
56,657
0
0
35,699
NACE Code
Output
(P.1)
NACE 65.11
5,388
5,388
NACE 65.12
83,226
NACE 65.22
NACE 65.23
Total
Market
Output
FISIM
Table 3.16.3: Breakdown of P1, P2 and B*1g for NACE 65
NACE Code
NACE 65.11
NACE 65.12
NACE 65.22
NACE 65.23
Output
(P.1)
Intermediate
Consumption
(P.2)
5,388
2,621
83,226
27,854
515
390
3,688
3,588
Value added
gross (B.1g)
% of Section J
GVA
% of the
GVA of
total
economy
2,767
4.74
0.18
55,372
94.87
3.63
125
0.21
0.01
100
0.17
0.01
Total
92,817
34,453
58,364
100
3.83
N.B. Values of Intermediate Consumption and Gross Value Added presented in the table above
exclude adjustments for FISIM, Wages and Salaries in kind and taxes on production.
3.16.1
This sector is made up of the Central Bank of Malta, Deposit Money Banks,
International Banking Institutions, Collective Investment Schemes and another three very
small companies. The latter three companies only have a share of 0.6 per cent of Total
Output within this industry.
All relevant information is obtained from their respective
Annual Reports and Financial Statements (available for download from the website of the
Malta Financial Services Authority).
3.16.2
On the other hand, data for the Central Bank of Malta, Deposit Money Banks and
International Banks is supplied by the Central Bank of Malta through the quarterly profit and
loss accounts and annual balance sheet statements. These cover 95.5 per cent of Total
Output. Measures are taken so as to exclude holding gains and losses from the output of
financial intermediation. This is done by making adjustments to basic data; other foreign
gains (losses) are netted so as not to be included, for trading gains/losses and fees dealing in
90
National Accounts Unit
Gross National Income Inventory
foreign exchange an assumption is made that two-thirds are gains (losses) and hence only the
fees are taken. The same assumption is made for gains/ losses and fees from trading
investments.
3.16.3
The output of the Financial Intermediaries (except insurance corporations and
pension funds) and the Central Bank is based on the cost approach.
3.16.4
Intermediate consumption for the Central Bank of Malta, is calculated by the
summation of the following variables which are taken from the quarterly profit and loss
accounts received from the Central Bank itself. The variables include other corporate
expenses, other staff expenses, rent, other general expenses, maintenance expenses,
telecommunication and transport expenses, currency issue expenses and also expenses on
commercial paper. The annual figure is the summation of the four quarters.
3.16.5
Data for intermediate consumption of Deposit Money Banks and International
Banking Institutions is taken from the quarterly profit and loss account and is the summation
of expenses such as rent, fees and commissions payable and other non-interest expenses. The
output of the Central Bank is entirely allocated as intermediate consumption of Deposit
Money Banks.
3.16.6
Finally, Collective Investment Schemes, which have a share of 4 per cent of Total
Output, are covered fully from their annual reports and financial statements. Intermediate
consumption of Collective Investment Schemes is calculated using financial accounts and
from which, the following fees are taken:
Management fees;
Registrar fees;
Custodian fees;
Trustee disbursements;
Legal and professional fees;
Auditors’ remuneration;
General administrative costs.
Economic Statistics Division
91
Gross National Income Inventory
However, deduction is made for any formation costs and bank interest charged that fall under
General administrative costs. This Intermediate Consumption figure is then apportioned
quarterly according to the shareholders’ units (funds).
3.16.7
Recent developments have been made in the calculation of Financial Intermediation
Services Indirectly Measured (FISIM). Up to the beginning of 2006, FISIM had not been
allocated to the sectors/industries that consume the service neither as final nor as intermediate
consumption. Instead, using a simplifying assumption, all FISIM had been recorded as
intermediate consumption of a notional industry.
3.16.8
A council regulation of 16th February 1998 defined basic principles of calculating
sector allocating FISIM in national accounts, and introduced four-year trial calculations.
After the trial calculations exercise, the EU Member States agreed on methods to calculate
the sector allocation of FISIM and these were legislated for in Commission Regulation (EC)
No. 1889/2002 of 23rd October 2002. The legislation requires that this approach be changed
in order to improve the measurement of GDP.
3.16.9
(i)
This regulation specified the following methods to be applied:
Calculation and allocation of FISIM among domestic user sectors using the reference
rate:
(a) Internal Reference Rate (IRR) for allocating domestic FISIM to be determined as the
ratio of interest receivable on loans between ‘Other Monetary Financial Institutions’
(S.122) and ‘Other Financial Intermediaries except Insurance Corporations and
Pension Funds’ (S.123), to stocks of loans between S.122 and S.123.
(b) External Reference Rate (ERR) to be used to calculate import and export of the new
FISIM is the average interbank rate weighted by the ratios of loans and deposits
between S.122 and S.123 on the one hand and non-resident financial intermediaries
on the other hand which are included in the balance sheet of financial intermediaries.
(ii) Allocation of FISIM among industries’ intermediate consumption based on the stocks of
loans and deposits for each industry, or, if this information is not reliable, on the output for
each industry.
92
National Accounts Unit
Gross National Income Inventory
3.16.10 As a consequence, the use of FISIM is not anymore by convention recorded entirely
as intermediate consumption, but can also be final consumption and exports. This implies
that imports of FISIM can also occur.
3.16.11 Moreover, there is also a change in the way FISIM is estimated. Previously, FISIM
was measured as total property income received minus total interest payments minus the
value of any income received from the investment of own funds (as such, income does not
arise from financial intermediation).
Now the calculation of FISIM is based on the
construction of three different matrices highly consistent with each other. One is the matrix
of stocks of deposits and loans by institutional sector of the FISIM producing sector, a second
is the same matrix for interest flows on deposits and loans, and a third is a matrix of interest
rates.
NACE 66
Insurance and pension funding, except compulsory social security
3.16.12 Presently, there are five insurance principals in Malta all licensed by the Malta
Financial Services Authority. Output (gross of reinsurance), Intermediate Consumption and
value added data are all obtained from information published in the annual accounts which
since 2000 have been compiled in accordance with the provisions of the EU Directive
91/674/EEC in the form in which it was adopted in national legislation. However, in the
wake of an expert mission to Malta, figures for Output, Intermediate Consumption and Gross
Value Added were revised consistently with the recommendations of Eurostat’s GNI
committee.
3.16.13 Out of the five insurance principals two companies offer both life and non-life
insurance whilst the others specify in only one type of insurance. For the two companies who
offer life and non-life insurance, data is available separately. The tables below give a detailed
methodological and numerical example of how output and intermediate consumption
variables are calculated for insurance principals using a fictitious company XYZ Ltd. The
first table refers to the method used for General Business, whilst table 3.16.5 is for long-term
business.
Economic Statistics Division
93
Gross National Income Inventory
Table 3.16.4
Method used to calculate output and intermediate consumption of
insurance principals (General Business) for 2001
XYZ Ltd.
Technical account, general business
Gross premiums written
Outward reinsurance premiums
Change in the gross provision for unearned premiums
Change in the provision for unearned premiums, reinsurance
Premium Supplement
Claims paid, gross
Claims paid, reinsurance
Change in provision for claims, gross
Change in provision for claims, reinsurance
Net operating expenses
Acquisition costs
Change in deferred acquisition costs, net of reinsurance
Administrative expenses
Less: Wages & Salaries (including social security contributions)
Less: Depreciation
Reinsurance commissions and profit participation
Premium Supplements on reinsurance technical provisions
Premium Supplements on reinsurance technical provisions
Claims Management Expenses
Investment Management Expenses
Change in the equalisation provision
Gross Value Added, general business
94
2001
O
Lm
Lm
IC
O
130,704,630
O 47,927,270
O
-5,004,220
O -1,480,970
IC
6,871,840
O
-96,672,050
IC -36,119,090
O
10,438,900
IC 15,847,600
IC 29,195,870
IC
-612,650
IC
4,579,440
IC -4,548,800
IC -1,080,430
IC -14,079,410
IC
IC
3,703,281
8,623,311
1,928,950
53,884,380
3,703,281
8,623,311
-177,440
58,488,260
4,603,880
National Accounts Unit
Gross National Income Inventory
Table 3.16.5
Method used to calculate output and intermediate consumption of
insurance principals (Long-term Business) for 2001
XYZ Ltd.
Technical account, long-term business
Gross premiums written
Outward reinsurance premiums
Premium Supplement
Premium Supplement on reinsurers' technical provisions
Other technical income, net of reinsurance
Claims paid, gross
Claims paid, reinsurance
Change in provision for claims, gross
Change in provision for claims, reinsurance
Long-term business provision, gross
Long-term business provision, reinsurance
Net operating expenses
Acquisition costs
Change in deferred acquisition costs, net of reinsurance
Administrative expenses
Less: Wages & Salaries (including social security contributions)
Less: Depreciation
Reinsurance commissions and profit participation
Claims management expenses
Investment management expenses
2001
Lm
O
IC
O
O
O
O
IC
O
IC
O
IC
IC
IC
IC
IC
IC
IC
IC
IC
Lm
6,088,090
2,871,130
72,690
134,890
72,690
0
-3,706,140
-2,149,550
-10,670
83,080
-305,760
7,930
1,121,260
-23,530
175,870
-211,880
-50,330
-540,720
371,680
1,727,630
Gross Value Added, long-term business
371,680
2,644,780
917,141
NACE 67 Activities auxiliary to financial intermediation
3.16.14 Output in this sector is mostly made up of insurance agents who cover around 44 per
cent of the total output within this industry. A complete list of the companies authorised
under the Insurance Business Act to carry on the business of insurance in Malta is obtained
annually from the Malta Financial Services Authority. Subsequently, the National Accounts
Unit carries out an annual census covering all the insurance agents listed and any data related
to the production and generation of income accounts is thus obtained.
3.16.15 Another 52.8 per cent of total output incorporates the Malta Stock Exchange, Malta
Financial Services Authority, Investment Service Providers and Exchange Bureaus.
Information related to the Production and Generation of Income accounts of the above
mentioned is fully accessible in the individual companies’ annual reports and financial
statements.
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Gross National Income Inventory
3.16.16 Whilst, 3.4 per cent is made up of stockbrokers where the list of licensed
stockbrokers is available from the Malta Stock Exchange quarterly report. Annual accounts
are available; however, turnover data is not accessible since these are only abridged accounts
having very little detail. Therefore, an estimate is being done on the estimated brokerage
from government stocks, corporate bonds and equities and this is shown in Table 3.16.4. On
the other hand, from the annual accounts of the Malta Stock Exchange, we have available the
total amount of fees paid. The fees payable together with an estimated intermediate
consumption, which is assumed to be 20 per cent of total turnover, make up the total
intermediate consumption for stockbrokers.
2001
Table 3.16.6 Estimated Brokerage for 2001
Government Stocks (0.25%)
Corporate Bonds (1.30%)
Equities (1.30%)
Total (Turnover)
Fees payable
Intermediate Consumption
Total (Intermediate
Consumption)
Total estimated brokerage
Q1
Lm’000s
61
14
109
184
29
37
Q2
Lm’000s
91
136
69
296
29
59
Q3
Lm’000s
104
20
36
160
31
32
Q4
Lm’000s
78
26
58
162
31
32
Total
Lm’000s
334
196
272
802
120
160
66
118
88
208
63
97
63
99
280
522
3.17 Real estate, renting and business activities (K)
3.17.1
Section K contributed 12.9 per cent of total Gross Valued Added (GVA) at basic
prices and 11.4 per cent of total Gross Domestic Product (GDP) at market prices in the
reference year 2001. Data for this industry is compiled in detail as shown in Table 3.17.1
below. Separate calculations are made for NACE 70.10, 70.20, 70.31, 70.32, 71, 72, 73 and
74.
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Table 3.17.1
Section
K
70.10
70.20
70.31
70.32
71
72
73
74
Total
3.17.2
Gross Value Added of Section K for 2001
Intermediate
Consumption
Output
(Lm
(Lm
millions)
millions)
20.0
11.2
102.6
14.1
5.3
1.8
1.0
0.7
22.3
8.8
22.8
11.0
0.2
0.1
95.7
25.1
269.9
72.8
Gross
Value
Added
(Lm
millions)
8.8
88.5
3.5
0.3
13.4
11.8
0.1
70.5
197.0
% of Total
GVA at
basic prices
0.6%
5.8%
0.2%
0.0%
0.9%
0.8%
0.0%
4.6%
12.9%
% of Total
GDP at
market prices
0.5%
5.1%
0.2%
0.0%
0.8%
0.7%
0.0%
4.1%
11.4%
Output is almost entirely generated by market producers. The government generated
2.6 per cent of the total output produced by entities whose principal activities involve ‘other
business activities’ (NACE 74). In total, non-market output constitutes 0.9 per cent of the
total output of Section K in 2001.
NACE 70 Real Estate Activities
3.17.3
National income estimates in NACE 70.1 and 70.3 are based on the Structural
Business Statistics (SBS) survey. The SBS survey for NACE 70 was compiled for the first
time for the reference year 2000. The enterprises are surveyed at 4-digit level in the NACE
nomenclature and are presented with detailed questionnaires requesting itemised information
on turnover, purchases and changes in stocks. Information on wages and salaries, employers’
social security contributions paid, employment, gross fixed capital formation and capital
stock, rent on land and buildings and indirect taxes are even collected.
3.17.4
For years prior to and following the compilation of the SBS, a value index was used
to extrapolate the benchmark results for both economic activities (NACE 70.1 and 70.32).
This value index measures the change in the stamp duty on the sales/purchases of dwellings
in a given year collected by government. The cost structure – intermediate consumption and
consumption of fixed capital as a percentage of output – is taken from the latest SBS
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Gross National Income Inventory
available. Compensation of employees have been extrapolated backwards assuming that per
capita gross wages and salaries have remained constant at 1999 levels for previous years with
an adjustment for changes in cost of living allowances. ETC employment classified by
NACE was used as an indicator for this variable.
3.17.5
NACE 70.20, which is calculated in two parts – income from actual rentals and
income from imputed rentals – is not derived from the Structural Business Statistics. Gross
value added generated from the production of actual rentals is compiled from various
censuses, surveys and annual returns. These include the Census of Agriculture, Census of
Production, income and expenditure returns from the banking industry and the government
financial report, details of which are found within the documentation on the compilation of
the production accounts of the relevant industries.
3.17.6
Out of total Section K, NACE 70.20 (letting of own property) is the largest
contributor to GDP at market prices. The production and generation of income accounts for
this industry have been calculated separately for the following activities:
•
Actual rents: residential dwellings and garages
•
Actual rents: commercial premises
•
Imputed rents
3.17.11 Actual rents earned from residential dwellings and garages are estimated from the
HBS conducted in 2000. The source of residential rents received by the general government
is the government’s annual financial report.
3.17.12 Intermediate consumption of landlords, consisting of expenditure on repairs and
maintenance and insurance charges on the structure of the dwelling, is based on the
calculations of intermediate consumption of owner-occupiers.
Repairs and maintenance
incurred by private landlords on dwellings they rent out to tenants is not captured by the
HBS, as this is not expenditure on repairs and maintenance for final consumption but
intermediate consumption.
Therefore, an estimate is made over and above the total
expenditure on repairs and maintenance reported in the HBS. This is made by assuming that
private landlords incur the same intermediate consumption to output ratio as owneroccupiers. Given that the intermediate consumption of owner-occupiers includes insurance
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service charges on the structure of the dwellings, this method ensures that an imputation is
made for this component of intermediate consumption.
3.17.13 Consumption of fixed capital is estimated using the straight-line depreciation
method – the depreciation rate is calculated as the inverse of the service life of a dwelling,
which is assumed equal to 75 years, the average used by OECD. This rate is subsequently
applied to the value of the rented dwelling stock. The value of the rented dwelling stock is
calculated as described in the GNI Inventory paragraphs 3.17.32 - 3.17.40 for the calculations
involved in calculating the value of the owner-occupied dwelling stock.
3.17.14 The market output generated from the rental of residential dwellings is extrapolated
using a rent value index. This value index is measured as the product of a rent-price index
and a dwellings volume index. The volume index measures the estimated change in the
number of dwellings put on the rental market each year. This change is calculated by using
the total estimated change in the number of dwellings in a given year (calculated using
MEPA data on permits and discards as described in the GNI Inventory paragraph 3.17.52).
An estimate of the number of dwellings going to the rental market is then calculated, out of
the total increase in the dwelling stock. Until 2005, this variable was estimated by assuming
that the distribution by tenancy followed that reported in the 1995 Census of Population and
Housing. Information from HBS 2000 and LSS 2002 was also used for more recent years to
estimate the breakdown of total main dwellings into that available for rent and that which is
owner occupied. When the 2005 CPH results were available, these were used to rescale the
estimated distribution of the dwelling stock by tenancy back to 1995. The rent price index
used is the HICP for rents.
3.17.15 Intermediate consumption is extrapolated using the intermediate consumption per
dwelling ratio of owner occupiers. This in turn is calculated as described in paragraph
3.17.55 below. Consumption of fixed capital is estimated each year using the straight-line
depreciation method as explained in the GNI Inventory paragraph 3.17.13.
3.17.16 Actual rents earned on commercial premises are also compiled from an expenditure
point of view, that is, how much rent is paid by each respective industry. The number of
industries taken into consideration is nine, and does not follow the A17 industry classification
by NACE.
The compilation of the rents paid by each of these industries are treated
separately below:
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Gross National Income Inventory
•
Agriculture: Rents paid by units operating in this sector is compiled by using the
results of the Census of Agriculture in benchmark years. The rents paid are kept
constant from one benchmark year to the next.
•
Construction and Quarrying: Rent paid by this industry is compiled from the Census
of Production in benchmark years. This is extrapolated by using the development in
the gainfully occupied operating in this sector.
•
Manufacturing: The Census of Production (COP) is used to compile rents paid by
manufacturing companies in benchmark years. Rent on buildings per capita from the
COP is used to impute a value for rent paid by small establishments not covered by
the Census.
The COP is not used as a source for the largest manufacturing
companies.
These companies are surveyed directly by quarterly questionnaires,
requesting the amount of rent on buildings they pay.
•
Banks and Financial Institutions: Data on income earned and expenditure incurred –
and rents paid – by banks is compiled every quarter, directly from these institutions
by the Central Bank of Malta (CBM).
•
Government Enterprises: Rents paid by these units are collected from a quarterly
survey covering all government enterprises.
•
Public Administration: Rents paid by the government are collected directly from the
Government Financial Report.
•
Transport and Communication, Wholesale and Retail Trade and the Private Services
Sector (including hotels and restaurants): An estimate based on various sources is
made for the benchmark year, and extrapolated annually by a rate of growth.
3.17.17 The sum of the above paid rents represents the total market output earned on
commercial rents.
Intermediate consumption is estimated using the same intermediate
consumption to output ratio pertaining to residential dwellings. Consumption of fixed capital
is estimated using the consumption of fixed capital to output ratio of owner-occupied
dwellings. The reason for using this ratio and not that of rented dwellings is due to the very
low output registered for residential dwellings that are a result of rent laws.
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3.17.18 Imputed rents have been computed using the user cost method as recommended by
Eurostat, due to the specific characteristics of the Maltese Islands’ rental market. Table
3.17.2 below shows that 1995 and 2005 (the benchmark years for which a census of
population and housing was carried out), only 2.5 per cent of total main dwellings (sum of
rented and owner occupied dwellings) were rented out at market rates (where market rentals
are assumed to be tenants paying at least €1,657 a year).
Table 3.17.2
Dwellings rented out
Total
Dwellin
g Stock
Rented approximately
at market rates
Rented
significantly
below market
prices
% of
Year
Total*
% of Total
Total
Total
Total
1995 131,155
1%
871
25% 32,551
2005 151,141
3%
3793
18% 27,855
Owner-Occupied (Main
and secondary
residence)
Owner
% of
Occupied
Total
(Main and SR)
75%
79%
97,733
119,493
3.17.19 Table 3.17.3 shows more detail on the structure of the rentals market in Malta. The
CPH of 2005 asked households how much rent they pay annually. On the basis of this
information, the total numbers of tenants in the Maltese Islands have been classified under
three ranges of annual rents paid12:
¾ €0 – €280
¾ €281 – €1,675
¾ €1,676 and over
3.17.20 The threshold of €1,676+ was chosen as that reflecting the minimum annual rent
paid for a dwelling rented out at market prices. All dwellings falling within this range are
considered as rented at approximately market prices. Dwellings falling within the other two
ranges are considered as rented at below market prices. Using these figures and definitions,
the ratio of average market rentals to non-market rentals is greater than 3 for all dwelling
sizes as shown in Table 3.17.3.
12
The average exchange rate of the Maltese lira (Lm) to the Euro for 2005 is used: Lm1= €2.3259.
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Gross National Income Inventory
Table 3.17.3
Structure of the rentals market
UNFURNISHED RENTED DWELLINGS
Average Monthly Rent
<=280
281-1675
1 to 2 rooms
3 rooms
>=4 rooms
8
8
11
27
FURNISHED RENTED DWELLINGS
Average Monthly Rent
<=280
>=1675
65
55
47
168
281-1675
1 to 2 rooms
3 rooms
>=4 rooms
11
10
11
32
* Average exchange rate in 2005 used 2.3259
236
241
381
858
>=1675
102
92
80
274
236
260
352
848
Total
309
304
439
1,053
Total
349
363
442
1,154
Source: Survey Unit Extract _ Census of Population and Housing Malta 2005
3.17.21 The user cost method consists of adding up the various cost components incurred
and profit earned in the production of dwelling services to impute a rental for owner-occupied
dwellings. Specifically, output is calculated as the sum of the following components:
UC01 Intermediate Consumption
UC02 Consumption of Fixed Capital
UC03 Net Taxes on Dwelling Services
UC04 Net Operating Surplus on the Structure of the Dwelling
UC05 Net Operating Surplus on the Value of the Underlying Land
3.17.22 Table 3.17.4 below shows the magnitude of each component in the calculations for
2005. Imputed rent calculated using this method yields a monthly rent per dwelling of €190
for main dwellings and €114 for summer residences.
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Table 3.17.4
User cost components for 2005, Lm and %
UC01
Intermediate Consumption
15,422,723
12.6%
UC02
UC03
Consumption of Fixed Capital
Net Taxes on Dwelling Services
29,248,875
24.0%
0.0%
UC04
Net Operating Surplus on the Structure of the Dwelling 38,948,606
Net Operating Surplus on the Value of the Underlying
Land
38,310,297
31.9%
UC05
31.4%
3.17.23 Intermediate consumption (UC01) is the sum of expenditures on maintenance and
repair incurred by the owner-occupier as a landlord, and the insurance service charge on the
structure of the dwelling.
3.17.24 Data on repairs and maintenance works carried out by owner-occupiers was
collected from the 2000 HBS, which provides total expenditure by households broken down
by tenancy. This total expenditure on repairs and maintenance, connected with dwellings,
includes: (a) materials and services purchased for self-construction, which is classified as
Gross Fixed Capital Formation (GFCF); (b) an element of expenditure on repairs and
maintenance classified as Intermediate Consumption (IC) for the owner-occupier; and (c) an
element of expenditure on repairs and maintenance that should be classified as Household
Final Consumption (HFC).
3.17.25 To single out repairs and maintenance classified as IC incurred by owner-occupiers,
the following 3 steps were taken:
(a) Each item classified as expenditure on repair and maintenance on dwellings in
the HBS 2000 was investigated and a coefficient indicating that proportion to be
allocated as GFCF was estimated by expert assessment, case by case. The share
of GFCF out of total maintenance and repair of dwellings by owner-occupiers
was determined according to the nature of expenditure. For example, plastering
of building interiors was considered as almost entirely HFC (or IC) and only a
small part was allocated to GFCF given that only when a dwelling is first
plastered is this service to be classified as GFCF. Another example would relate
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Gross National Income Inventory
to installation of apertures, which is assumed to be almost entirely GFCF given
that this type of expenditure is of a long-term nature.
(b) The breakdown of the total repair and maintenance reported in HBS 2000 into
HFC and GFCF was estimated both for owner-occupiers and tenants in rented
buildings. The rationale underlying this breakdown is the fact that due to the
very low rents charged for pre-1995 contracts, landlords refused to carry out
major repairs and maintenance themselves. Subsequently, the tenants tended to
incur such major expenditure.
(c) The remaining expenditure for owner-occupiers was separated into IC and HFC.
This was done based on knowledge that whilst expenditure on repairs and
maintenance (excluding GFCF) by owner-occupiers is a composite of IC and
HFC, that of renters (excluding GFCF) is entirely HFC. Therefore, by assuming
that HFC per dwelling for owner-occupiers was equal to that by renters, it was
possible to single out IC per dwelling for owner-occupiers.
The resulting
estimated IC per dwelling ratio is then multiplied by the owner-occupied
dwelling stock – both for main dwellings and for summer residences.
3.17.26 Data on gross insurance premiums paid by households – both on the structure of the
dwelling and its contents – is obtained from the HBS 2000. For years prior to 2000, no direct
source is available specifically for house insurance.
Therefore, this component is
extrapolated by using the development of a time series on gross premiums paid on fire
insurance provided by the Malta Financial Services Authority (MFSA).
3.17.27 Only the service charge related to the structure of the dwelling should be included as
IC of the owner-occupiers, and not that related to the contents of the house. Therefore, the
gross premium paid on house insurance was split in two based on an expert assessment. Only
that part estimated as related to the structure of the dwelling is included.
3.17.28 No information about claims received by households, in relation to this insurance on
dwelling structure paid by households, has been collected within the HBS 2000.
This
component is estimated on data compiled by the MFSA. The MFSA provides information
about gross premiums received from and claims paid to households on fire insurance. The
ratio of claims to premiums received on fire insurance is then applied to the gross premiums
paid by households on house insurance. Claims received by households, on the contents of
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Gross National Income Inventory
their dwelling, as against claims on the structure, are split by expert judgment, and only the
latter are included.
3.17.29 Consumption of Fixed Capital (CFC) (UC02) is computed for the owner-occupied
dwellings stock by using the straight-line depreciation model. The dwellings stock is first
valued at current replacement cost, the details of which are explained below in paragraph
3.17.32 - 3.17.40. CFC is subsequently computed by assuming that a dwelling depreciates by
the same amount each year over the service life of that dwelling. The service life of a
dwelling is assumed to be equal to the OECD average – 75 years.
3.17.30 No taxes (UC03) are levied on the imputed value of dwelling services in the Maltese
Islands.
Subsidies are however given to owner-occupiers on the payment of mortgage
interest. These are included in the user-cost method as negative expenses. Data on subsidies
are obtained from the Government Financial Report.
3.17.31 The net operating surplus on the value of the land (UC04) is computed using the real
rate of return equal to 2.5 percent13 multiplied by the net (depreciated) value of the dwelling
stock.
3.17.32 The total value of the owner occupied stock of main dwellings was calculated using
the concept of current gross replacement cost – that is the actual costs of replacing the
existing dwellings with identical new ones. Valuation is directly related to the size of the
dwelling and its state of repair. Data on the quantity of dwellings with details on their
distribution by (a) tenancy, (b) number of rooms, (c) type of dwelling and (d) state of repair
was derived from the Census of Population and Housing (CPH) carried out in 1995 and in
2005. In 1995, the state of repair of a dwelling was approximated by its year of construction
as such data was not collected during that Census.
3.17.33 Size of dwellings is not correctly represented by number of rooms, but by square
metres. The CPH both for 1995 and 2005, do not provide information about the size of a
dwelling in square metres but only on the number of rooms. For the benchmark year of 1995,
total construction costs were calculated per room and the total value of the dwellings stock at
13
This rate was established following an experts’ meeting as part of the Phare 2000 Project on the Measurement
of Dwelling Services.
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Gross National Income Inventory
gross current replacement cost in a given year is subsequently obtained by multiplying the
cost per room by the number of rooms for each dwelling size category. For dwellings smaller
or larger than the benchmark dwelling used to compile construction costs per room
(described below), construction cost per room was estimated by scaling the benchmark cost
per room upwards for progressively smaller dwelling sizes, and downwards for larger
dwellings.
3.17.34 This was performed for the most recently built dwellings. For the older portion of
the dwellings stock quality adjustments were made to account for factors such as improved
techniques of construction, size of dwelling, lack of heating/air conditioning systems and
absence of bathrooms. Quality adjustment factors were related to the year of construction of
the dwelling, such that for older dwellings a proportion of the total gross replacement cost
calculated was used.
For dwellings built after 1995, 100 per cent of the total gross
replacement cost was used. These quality adjustment factors were estimated by expert
assessment. The gross current replacement cost of dwellings with a garage attached to the
dwelling also includes an estimate of the construction costs of a garage. All garages not
attached to the dwelling are assumed used only for business purposes.
3.17.35 For the benchmark year 2005, information about the size of houses and flats by
number of rooms, with a distinction for owner-occupied dwellings and rented dwellings in
terms of square meters, available from the 2002 Living Space Survey, was combined with
data from the CPH in 2005 to translate the total number of dwellings by tenancy, type and
number of rooms into total square metres for corresponding strata. For each stratum the
distribution of total square metres is translated into construction costs using data on
construction cost per square metre.
3.17.36 In the calculation of the value of owner occupied secondary residences, no
information on the size of these dwellings was available from the CPH of 1995. The size
structure in respect of number of rooms of summer residences were previously based on the
assumption that they follow the same size structure as that of owner occupied dwellings. A
one-off field survey was undertaken by NSO in March 2005 establishing the number of the
‘boathouses’, which are mostly one-room structures that are not used for boats but as summer
residences in certain seaside areas of Malta. In the 1995 census these ‘boathouses’ are
included as summer residences. Once the number of one-roomed summer residences out of
the 12,855 declared in the CPH, were established, the remaining summer residences were
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distributed on the results of the size structure of summer residences derived from the Living
Space Survey carried out in 2002. The quality of summer residences was determined on the
basis of an indicative question placed in the Census describing the state of repair in which the
vacant dwelling is.
3.17.37 For the benchmark year 2005, all necessary data on the quantity distribution of the
owner occupied secondary residences was collected directly from the Census of Population
and Housing, and the same valuation procedure applied for owner occupied main dwellings
was applied for this category.
3.17.38 Data on construction costs per square metre and per number of rooms were collected
by specific requests to qualified architects, with a distinction between houses and apartments
of different sizes. Construction costs refer to both the structure and finishing costs. The
definition of a room follows that provided in the Census of Population and Housing: a space
that is enclosed by walls reaching from the floor to the ceiling or roof coverings, or at least to
a height of 2 metres above the ground, of a size large enough to hold a bed for an adult (4
square metres at least), and at least 2 metres high over the major area of the ceiling.
3.17.39 Definition of square metres is defined as floor space measured inside the outer walls
minus the wall thickness of internal walls and door and window recesses. It excludes stairs,
balconies and terraces, non-habitable cellars and attics and, in multi-dwelling houses, all
common spaces.
3.17.40 These construction and finishing costs were supplemented by additional costs such
as the excavation of a plot, payments for sewage infrastructure, architect fees pertaining to
the preparation of land for construction, the construction of the dwelling itself, and the
development permit fees paid to the MEPA.
3.17.41 The net (depreciated) stock of capital, used in the computation of the net operating
surplus on the structure of the dwelling, is determined from the gross capital stock in the
following manner:
((L-a)/L)*C
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Gross National Income Inventory
where ‘L’ denotes the average total lifetime of dwellings, assumed to be equal to the
OECD average of 75 years; ‘a’ denotes the average age of dwellings in stratum x; and
‘C’ represents the gross current replacement cost of the total dwellings stock.
3.17.42 The average age is based on the state of repair of the dwelling as the first step. NSO
has details on the state of repair of all dwellings in Malta, available from the CPH of 2005.
An assumption was then made as follows: those dwellings which are in a good state of repair
are, on average, considered to be 12 years old; those needing minor repairs are estimated to
be 32 years old; those needing moderate repairs 55 years old; those needing serious repairs 65
years old; and dilapidated dwellings 75 years old. These assumptions were made considering
the Maltese scenario where dwellings are built from globigerina limestone (gebla tal-franka)
and hollow concrete blocks, which are extremely durable.
3.17.43 The net operating surplus on the value of land (UC05) is computed by multiplying
the 2.5 per cent rate of return on the value of land, by the estimated value of land on which
owner-occupied dwellings are constructed.
1995 Benchmark calculation
3.17.44 This variable is estimated as the residual between the realized property price of a
dwelling and its construction costs, i.e.
Value of a plot = Average price of a dwelling as at 2000 less the construction cost
3.17.45 As no information about plot size may be extracted from the Census, the total plot
area for owner occupied dwellings (including rent-free) was estimated using the plot size of a
terraced house. Various sources indicate that the average plot size of a dwelling lies within
the range of 135sqm to 170sqm. A MEPA study revealed that the average plot size of a
terraced house is 150sqm. This measurement is used as a benchmark to estimate the plot size
of other types of dwelling using the average living space area by year of construction and
type from the Living Space Survey carried out in September 2002.
3.17.46 Once the plot area for the total dwelling stock was estimated, the value of land per
square metre was derived using the average sales price of a dwelling as at 2000 are derived
from the Public Registry Property Price Database, as published in the Structural Plan Review
2002, The Housing Sector in the Maltese Islands.
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The average construction cost of a
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Gross National Income Inventory
dwelling is derived from the construction costs per square metre used in the valuation of the
structure of the dwelling with the current replacement cost method. This exercise has been
carried out for the Maltese Islands as a whole, with no distinction made by locality at that
time. The value of a plot is finally estimated as:
Value of a plot = (Value of a plot /square metre)*(plot size/type of dwelling)
Total Value of land = (Value of a plot)*(No of dwellings in each category)
2005 Benchmark calculations
3.17.47 For the benchmark year 2005, the value of land under owner occupied main
dwellings and summer residences was calculated by using the distribution of the owner
occupied dwelling stock by locality and by type from the CPH of 2005. This data was
translated into total plot area by using the average size (in square metres) by type of
dwellings for the total stock, and multiplied by each cell.
3.17.48 Data on the price per square metre of airspace in eight major localities (Birkirkara,
Mosta, Qormi, Rabat, Sliema, St Paul’s Bay, Zabbar and Zejtun) was obtained from a leading
real estate agency and used to translate the estimated plot area in each locality in the total
value of owner occupied land in that locality. The sum yields the total value of land, which
serves as an input in the calculation for the net operating surplus on land (UC05).
3.17.49 The imputed rental value of services of owner-occupied dwellings is the sum of the
above components (UC01 to UC05) for the benchmark year 1995. The full costs incurred in
the upkeep of a summer residence, i.e. intermediate consumption, consumption of fixed
capital and net operating surplus on land and buildings, are used as an estimate of the
imputed rent for a summer residence.
3.17.50 The user cost components for empty dwellings is not included in the benchmark
output value, as by definition empty dwellings are not producing any dwelling services and
their output is equal to zero. Empty dwellings are defined as those that are unfurnished,
whilst dwellings that are furnished can be considered as ready to produce dwelling services.
The CPH collects the total number of vacant dwellings but does not indicate whether these
are furnished or not.
Given that the number of vacant dwellings that are furnished is
considered negligible, it was assumed that all vacant dwellings – apart from holiday flats and
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Gross National Income Inventory
summer residences – are actually empty dwellings.
Although the output of empty
(unfurnished) dwellings is by definition zero, costs are still incurred in their upkeep.
Therefore, consumption of fixed capital, expenditure on repairs and maintenance and service
charge on insurance premiums connected with the dwellings with respect to this category are
netted against the total output of imputed dwelling services.
3.17.51 An adjustment is made to total output of dwellings services for owner-occupiers to
avoid double counting of income earned by these households from spare-room lodgers,
already classified elsewhere in the system of national accounts.
3.17.52 For ensuing years (until the next CPH is carried out in 2015), imputed rents are
extrapolated on the basis of the rent price index described above, and the increase in the
number of dwellings by tenancy estimated on the basis of the number of permits. The
number of units added to and discarded from the dwelling stock is estimated on the basis of
the units for which a permit was issued by the MEPA. An adjustment is made to account for
those permits that are never taken up.
This is done by taking 93 per cent of the total
dwelling units that have been issued with development permits. This adjustment is based on
a study carried out by MEPA itself, which revealed that the remaining 7 per cent of permits
are in actual fact never taken up. In the intermediate years between the Census benchmark
year and the 2005 CPH, the total dwelling stock is calculated on the basis of these estimated
additions and discards.
3.17.53 Information about the size of each type of dwelling for which a permit has been
granted, is being collected by NSO in conjunction with MEPA. This data is collected by
means of a sample designed by the NSO, stratified by type of dwelling. This exercise has
been carried out for the first time for the reference year 2004, and is to be carried out every
two years.
3.17.54 For years between 1995 and 2005, information on the size in square metres of the
units for which a permit was granted was not available. Therefore, it is assumed that the
distribution of permits granted in a given year by size (number of rooms) and whether a
garage is attached to the dwelling or not, is based on the assumption that they follow the same
distribution as the most recently built dwellings described in the Census.
The same
assumption is made with respect to the use to which this dwelling is put – that is whether it is
used for renting purposes, whether it is owner occupied or vacant. Use of more recent
110
National Accounts Unit
Gross National Income Inventory
sources is made to estimate the distribution of new additions to the dwelling stock by
tenancy. Before the 2005 Census of Population and Housing was made available, use was
made of the HBS 2000 and the LSS 2002 for the distribution of main dwellings between
owner occupied and rentals and the Water Services Corporation database on the total number
of main dwellings. Now that the 2005 Census of Population and Housing is available, the
time series between 1995 and 2005 was updated accordingly.
3.17.55 Data on construction costs per square metre and per number of rooms were collected
by specific requests to qualified architects, with a distinction between houses and apartments
of different sizes. Construction costs refer to both the structure and finishing costs.
3.17.56 Intermediate consumption for imputed rentals is extrapolated for the repairs and
maintenance component using the HICP for House Maintenance Cost; and for the insurance
service charge on the structure of the dwelling, this is related to the number of dwellings and
updated each year with information from the MFSA, as detailed elsewhere.
Exhaustiveness Adjustments
3.17.57 An exhaustiveness adjustment of type N.3 (producers not required to register) to
cover middlemen (sensara) involved in the purchase/sale of premises. This was made by
assuming that they earn 2 per cent of the stamp duty paid on the exchange of dwellings. No
adjustment for intermediate consumption has been made, as such expenses are assumed to be
negligible for these agents. No estimate of consumption of fixed capital and compensation of
employees has been made as these middlemen are assumed to operate without fixed assets or
employees, respectively.
NACE 71
Renting of machinery and equipment without operator and of personal and
household goods
3.17.58 75 per cent of total output in this division is covered by self-drive cars (NACE 71.1).
Output benchmarks for the reference year 2000 for this category are based on a report on
average turnover earned by self-drive cars compiled by the Tax Compliance Unit. Output is
extrapolated on the basis of the number of self-drive cars, which is available quarterly from
the Malta Transport Authority, and data on the number of nights spent by tourists to capture
seasonal fluctuations in this variable.
The cost structure – intermediate consumption,
consumption of fixed capital and compensation of employees – is obtained from a Tourism
Economic Statistics Division
111
Gross National Income Inventory
report compiled by the Malta Tourism Authority. These costs are then related to turnover
derived from this report and the calculated intermediate consumption to output ratio derived
is applied to output each year.
3.17.59 Another 7 per cent of output is covered by General Government, where full data
covering the production and generation of income accounts is supplied by the Government
Finance Unit.
3.17.60 Moreover, 2 per cent of total output within this industry is covered by two
companies, for which data is collected directly from their respective Annual Reports and
Financial Statements.
3.17.61 The remaining 16 per cent is made up of various establishments such as Renting of
Videos, Renting of Machinery used for Construction, Hire of Garments and others. Different
sources were used including the Household Budgetary Survey, Value Added Tax data, and
Business Register data.
NACE 72 Computer and Related Activities
3.17.62 The production and generation of income accounts of computer and related activities
(NACE 72) are calculated directly from the structural business survey (SBS) at the 3-digit
level of detail. The Structural Business Survey is conducted on a yearly basis and started
being compiled for NACE 72 in 2000. For years prior to and following the benchmark
estimates from the SBS, benchmark per capita ratios were used to extrapolate results, using
employment from the Employment and Training Corporation as an indicator. For software
consultancy and supply in particular, the method and sources used is similar to those used for
other activities under NACE 72. Some information is collected directly from large
companies.
3.17.63 The production and generation of income accounts for NACE 72 and NACE 74 are
calculated directly from the SBS at NACE 3-digit level. Data collected from the SBS is
provided at micro level and checked by the national accounts unit. Checking involves
looking at ratios such as production value per capita, gross value added per capita, production
value to total turnover, intermediate consumption to production value, compensation of
112
National Accounts Unit
Gross National Income Inventory
employees per capita and growth rates in the major variables are calculated for each unit
when SBS is available in the form of a census, and for each unit in the sample, when SBS is
available in the form of a sample survey. These ratios are studied for groups of companies
that fall within the same employment size class and economic activity at four digit level
NACE. Outliers are identified by comparison with companies within the same employment
size class and economic activity at four digit NACE level, or within the time series available,
and validated with the staff working in the SBS unit. For the larger companies with outlier
ratios or growth rates, financial statements are downloaded from the MFSA, and if enough
detail on the major variables are available, these are used to validate the company’s reply to
the SBS unit. Any discrepancies are identified and the SBS unit informed accordingly in an
effort to arrive to a final corrected version that is agreed upon by both the national accounts
and the SBS unit.
NACE 73 Research and Development
3.17.64 The production and generation of income accounts of research and development
(NACE 73) are calculated directly from the structural business survey (SBS). The Structural
Business Survey is conducted on a yearly basis and started being compiled for NACE 73 in
2001. For years prior to and following the benchmark estimates from the SBS, benchmark
per capita ratios were used to extrapolate results, using employment from the Employment
and Training Corporation as an indicator.
NACE 74 Other Business Activities
3.17.65 The production and generation of income accounts of other business services
(NACE 74) are calculated directly from the structural business survey (SBS) for the nonfinancial (S.11) and household sectors (S.14). The Structural Business Survey is conducted
on a yearly basis and started being compiled for NACE 74 in 2001. For years prior to and
following the benchmark estimates from the SBS, benchmark per capita ratios were used to
extrapolate results, using employment from the Employment and Training Corporation as an
indicator.
3.17.66 For the government sector, calculations are based largely on administrative records
(DAS system) and partially on a survey collecting information from Extra Budgetary Units
(EBUs).
Economic Statistics Division
113
Gross National Income Inventory
3.17.67 Refer to paragraph 3.17.63 for details on the validation of SBS data used in the
calculations of the production and generation of income accounts in NACE 74.
3.18
Public administration and defence; compulsory social security (L)
3.18.1
The General Government Sector (S.13) in Malta is made up of Central Government
(S.1311), consisting of budgetary central government and extra budgetary units, and the
Local Government (S.1313) (68 Local Councils). In 2001 the General Government Sector
was classified into 12 NACE categories, the largest output being by Public Administration
(L) at 42.2 percent. The following paragraphs apply also to the other 11 NACE categories.
For a broader explanation on how the general government sector’s output is calculated refer
to section 5.9.
3.18.2
All government transactions have been ESA coded by an ad hoc committee. The
relevant (coded) items are extracted from the Departmental Accounting System (DAS), such
as, for example P2, D11, D121. As the DAS is cash-based, the data is enhanced with an
accruals adjustment. To these items are added Consumption of fixed capital and employer’s
imputed social contributions. Both items are not derived from Treasury statements but
calculated by NSO. The sum of these items is the ‘Output’. When output for own final use
(P12) and market output (P11) are deducted, the result is the non-market output. The
employers’ imputed social contributions are based on the pensions paid by government to
former government employees who are entitled to a non-contributory pension.
3.18.3
Extra-budgetary units and local councils keep standard audited accounts. Non-
contributory pension schemes do not apply in their case.
3.18.4
The activities of central government (S.1311) for 2001 fall under 12 NACE
categories:
114
National Accounts Unit
Gross National Income Inventory
NACE
Output (%)
01
2.0
22
0.2
35
1.8
36
1.4
45
4.1
71
1.0
74
0.7
75
42.2
80
21.4
85
20.8
90
3.3
92
1.1
3.19 Education (M)
3.19.1
Education services are provided by the general government (S.13), the private
sector, which includes non-financial corporations and households (S.11 and S.14), and
NPISH (S.15). Table 3.19.1 below shows the contribution of each institutional sector to total
output and value added created by this industry for the reference year 2001.
Table 3.19.1: Gross Value Added for Education Services in 2001
Non Financial Corporations (S.11)
Government Sector (S.13)
Households Sector (S.14)
Non-Profit Institutions Serving
Households (S.15)
Total
Economic Statistics Division
Output
Lm
millions
13.96
79.57
4.85
IC
Lm
millions
5.57
10.75
1.10
GVA
Lm
millions
8.40
68.83
3.75
% GVA
of
Section
M
9.36
76.70
4.17
% GVA
of the
whole
economy
0.55
4.51
0.25
9.62
108.00
0.85
18.27
8.77
89.73
9.77
100.00
0.57
5.88
115
Gross National Income Inventory
3.19.2
As shown in the table above, general government is the main provider of education
services in the Maltese economy, generating around more than three quarters of the total
gross value added created by this industry.
Output and Intermediate Consumption of Government (S.13) and the NPISH (S.15)
sector
3.19.3
Total output of both the general government and the NPISH sector is calculated as
sum of costs of production. The 50 per cent criterion has been applied to distinguish between
market and non-market output. Non-market output for education services of the general
government (S.13) and the NPISH (S.15) sectors is calculated as total output less market
output and output for own final use.
The market output of the government sector for
education services is composed of fees paid for courses offered by MCAST, University and
other government educational institutions, books fees and examination fees paid by students.
The market output of the NPISH sector for education services is mainly tuition fees paid by
households to church schools. The NPISH sector does not have any output for own final use.
3.19.4
The main data source for the compilation of the production accounts of the
government sector (S.13) is the government’s detailed revenue and expenditure records
(Departmental Accounting System). Data from the DAS system is available on real time as
the Government Finance Unit has a direct access to this system.
3.19.5
Education services provided by NPISH (S.15) sector are covered mainly by a survey
compiled by the Labour and Education Unit within the NSO. This Unit collects annual
information from the Church Schools’ Survey – a survey which is carried out annually since
1980’s - on revenue, expenditure, number of teaching staff and pupils attending church
schools from the Archdiocese of Malta, which is the centralized body in charge of church
institutions.
This information is supplemented with data collected from the financial
statements of the Major Sacred Heart Seminary of Gozo and the Major Seminary of Malta. A
set of estimates is applied for those organisations without any information available,
assuming that market output is zero or negligible.
Output of the Non-Financial Corporation Services (S.11) and the Households (S.14)
Sector
3.19.6
Education services produced by the non financial corporations sector (S.11) and the
households’ sector (S.14) rely on several data sources as summarised in the table below:
116
National Accounts Unit
Gross National Income Inventory
Table 3.19.2: Main Data Sources Used to calculated Education Services of Sector S.11
and S.14
Type of Enterprises
Independent Schools
English Language Schools
Source
Survey by Education Division, NSO
Direct questionnaires; financial statements; survey by Education
Division, NSO
Private Tuition
Household Budget Survey; HICP; population
Household Budget Survey; No of driving licenses (Transport Unit,
Driving Lessons
NSO); VAT data
Household Budget Survey, Education publication, NSO; VAT data;
Adult and Other Education n.e.c Financial Statements
3.19.7
The production account for private education services is compiled from various
sources, and is compiled separately for the following types of activity: independent schools,
English language schools, driving schools and establishments providing adult and other
education not elsewhere classified.
3.19.8
The market output of independent schools is calculated from an annual survey
compiled by the Labour and Education Unit – since the early 1980’s - that covers all private
independent schools providing pre-primary, primary, secondary and post-secondary
education. As from 1998 onwards additional financial information started to be requested to
every school by the Labour and Education Unit so as to satisfy Eurostat requirements. Data
is collected on turnover, recurrent expenditure, capital expenditure, compensation paid to
employees, number of teaching staff and number of pupils attending independent private
schools. The list of schools is updated every year on the basis of the list of licensed
independent private schools compiled by the Government Education Department.
3.19.9
Total output produced by English language schools is in part calculated directly
from questionnaires compiled by the national accounts unit – an internal survey - and/or from
their financial statements. Information about the total number of students is obtained from a
survey compiled by the Education Unit that collects annual information on the total number
of students attending, and total number of teaching staff, working in these schools. Data on
students are published according to the tourism seasonal calendar. Up to 2004, financial
information about English Language Schools used to be collected by the National Accounts
Unit, but for the financial year 2005 the same questionnaire was amalgamated with the
English Language Schools’ survey sent by the Labour and Education Unit, so that one section
will be responsible for data collection of English Language Schools.
Economic Statistics Division
117
Gross National Income Inventory
3.19.10 Direct estimation from survey and/or financial statements covers around 40 per cent
of total output. The remaining 60 per cent is estimated by grossing up per capita ratios
derived from direct data and the total number of students attending these schools. Those
students covered by direct estimation – survey and financial information – were excluded
from the total number of students attending English Language Schools, so as to avoid any
double counting in the grossing up method.
3.19.11 The total output of enterprises providing driving lessons, adult and other education
and of private tutors is estimated using the total expenditure on such lessons by households as
recorded in the Household Budget Survey for 2000.
It is assumed that households’
expenditure on these services is equal to the total turnover earned from the above activities,
i.e. sectors other than households (S.11, S.12, S.13 and S.15) do not incur expenditure on this
item.
3.19.12 Market output of driving schools is extrapolated using a quantity index that
measures the development in the total local licences issued and also a price index measuring
the change in private tuition fees as a proxy to account for changes in driving lessons fees.
3.19.13 Market output of institutions providing adult and other education is extrapolated on
the basis of the total number of students attending private evening class centres compiled by
the Education Division, and a price index measuring the change in private tuition fees,
collected by the Retail Price Index (RPI) Unit within NSO. Two private companies which
offer adult and other education services are covered by financial statements. However further
sources are being examined so as to cover as part of output any expenditure on training
courses carried out by private enterprises and NPISH to their employees.
3.19.14 Market output of private tutors has been extrapolated on a price index measuring
private tuition fees collected by the RPI Unit and a quantity index showing the development
in the Maltese population aged five to twenty-four.
Intermediate Consumption of the Non Financial Corporations Sector (S.11) and the
Households Sector (S.14)
3.19.15 Intermediate consumption of private independent schools is estimated with reference
to the intermediate consumption per student ratio obtained from the detailed expenditure
statements of central government. This ratio is applied to the total number of students
118
National Accounts Unit
Gross National Income Inventory
attending these schools, information on which is obtained from the annual survey on private
independent schools carried out by the Education Unit.
3.19.16 Intermediate consumption of English language schools covered by the national
accounts questionnaire or by financial statements, is calculated directly from the information
at hand. For those schools for which no direct information is available, the intermediate
consumption to output ratio of schools for which direct information is available was used.
3.19.17 The intermediate costs of driving schools and enterprises providing adult and other
education services (not elsewhere classified) were estimated using moving averages of the
annual purchases to sales ratio of enterprises providing driving lessons from Value Added
Tax data. This ratio was applied to total output. Intermediate costs incurred by private tutors
are very small in relation to their output and were subsequently estimated as equal to 1 per
cent of their total market output. Information from financial statements is used to calculate
intermediate consumption of those companies having direct information available.
Breakdown of Output and Intermediate Consumption for Section M by Product
Table 3.19.3: Breakdown of Total Output of NACE M - 2001
CPA
P90
Details
Unit
Output
%
55
55A01 Hotel and Camping services
Lm millions
3.037
2.81
60
60A01 Land transport and transport, via pipeline
Lm millions
0.167
0.15
63
63A01 Supporting and auxiliary transport
Lm millions
0.594
0.55
70
70A01 Real Estate Services
Lm millions
0.017
0.02
80
80A01 Public Education Services
Lm millions
81.786
75.73
80
80B01 Private Education Services
Lm millions
22.400
20.74
Lm millions
108.000
100.00
Total
Economic Statistics Division
119
Gross National Income Inventory
3.19.18 Total output of government sector is broken down into the national accounts product
level of detail by using the detailed revenue statements of the central government. For
government owned enterprises not classified as central government, hardly any product detail
is collected from the questionnaires used to compile total output. As a result, total output for
these enterprises is broken down by product using information from private enterprises
engaging in similar activities if such exist, or from financial statements when available.
3.19.19 Total output of NPISH is broken down on the basis of detail breakdown provided by
the financial statements of the Major and Minor Seminary of Gozo.
3.19.20 The total output of private enterprises operating within NACE 80 is distributed
across products on the basis of information derived from financial statements of one or more
enterprises operating in a given activity that contain a detailed income and expenditure report.
The exception to this method is the product distribution of the output of secular schools,
which is assumed to be same as that of government schools.
3.19.21 The same sources and estimation procedures are used to break down intermediate
consumption into the national accounts product classification as that used for the breakdown
of output by product. This applies for all the institutional sectors.
3.20 Health and social work (N)
3.20.1
The activities of NACE N – health and social work are distinguished into three
industries within the A60 classification:
Table 3.20.1: Health and social work activities
2-digit
NACE
85
3-digit
NACE
85.1
85.2
85.3
3.20.2
Activities
Health and Social Work Services
Hospital Activities
Veterinary Activities
Social Work Activities
Table 3.20.2 shows that in 2001, the gross value added of health and social work
activities accounted to Lm79.0 million or 5.18 per cent of the total gross value added of the
120
National Accounts Unit
Gross National Income Inventory
economy. Out of Lm79.0 million, 79.75 per cent of the gross value added of this activity was
contributed by the government sector (S.13), 6.84 per cent by the non-profit institutions
serving households (S.15) and 13.42 per cent by the non-financial corporations sector (S.11)
and the households sector (S.14).
Table 3.20.1: Health and social work activities14
SECTION N
Non Financial Corporations (S.11)
General Government (S.13)
Output Lm
millions IC Lm millions
GVA Lm
millions
% of GVA of
Section N
% of GVA of
total economy
9.6
3.8
5.80
7.34
0.38
77.4
14.4
63.00
79.75
4.13
Households Sector (S.14)
6.9
2.1
4.80
6.08
0.31
NPISH (S.15)
7.4
2.0
5.40
6.84
0.35
101.3
22.3
79.00
100.00
5.18
Total NACE 85
3.20.3
The main sources used for the compilation of the production and generation of
income accounts of health and social work activities are:
ƒ
Government accounting system (DAS);
ƒ
Extra-budgetary Units (EBU’s) survey;
ƒ
Financial Statements provided by the MFSA;
ƒ
Non-Governmental Organisations (NGO’s) Survey.
3.20.4
The government accounting system and the EBU’s survey are used to calculate
output, intermediate consumption of government entities – hospitals, public retirement homes
and others.
3.20.5
Annual financial statements are obtained from the Malta Financial Services
Authority (MFSA) and the Unit for Liaison with NGO’s. These financial statements are used
to calculate output and intermediate consumption of the Non-Profit Institutions Serving
Households (NPISH) – (S.15) and the Non-Financial Corporations – (S.11).
14
As per News Release no: 96/2007 published on the 8th June 2007
Economic Statistics Division
121
Gross National Income Inventory
3.20.6
The Non-Governmental Organisations’ Survey has been compiled annually by the
Social Statistics Unit within the NSO since 1998. This survey is used together with the
financial statements to estimate the above-mentioned components for the NPISH.
Table 3.20.2: Breakdown of Market Output by CPA and Institutional Sectors - 200115
Unit
22A01
36A01
52A01
55A01
60A01
62A01
63A01
71A01
74A01
80B01
85A01
85B01
91A01
P.11
P.12/
P.13
P.1
Printed Matter and Recorded Media
Furniture; Other manufactured goods
Retail Trade Services
Hotels and Camping
Land ways transport, etc.
Air Transport
Auxiliary transporting activities
Renting of machinery etc
Legal, Accounting book-keeping etc
Private Education for primary and
secondary technical and higher etc
Public Health and social work
Private Clinics and Private Doctor
activities on health
Activities of membership organisations
n.e.c.
Total Market Output
% Market Output by Institutional
Sector
Total Non Market Output and
Output for own final use
% Non Market Output by Institutional
Sector
Total Output
% Total Output by Institutional Sector
S.11
Lm’000s
Lm’000s
Lm’000s
Lm’000s
Lm’000s
Lm’000s
Lm’000s
Lm’000s
Lm’000s
Lm’000s
S.13
156
4
234
117
6
3
Lm’000s
408
S.15
Total
6
14
0.2
0
2
2
2
0
18
6
14
0.2
160
2
2
2
240
138
% of
output
0.03
0.07
0.00
0.84
0.01
0.01
0.01
1.26
0.72
16
2,170
16
2578
0.08
13.51
15,919
83.44
Lm’000s
15,919
Lm’000s
Lm’000s
16,426
421
1
2,231
1
19,078
0.00
100.00
86.1
2.21
11.69
100.00
18.85
76,979
5,147
82,126
81.15
93.73
77,400
76.48
6.27
7,378
7.29
100.00
101,204
100.00
100.00
%
Lm’000s
%
Lm’000s
%
16,426
16.23
Non-Profit Institutions Serving Households (NPISH) – (S.15)
3.20.7
The activities covered by this sector are other human health activities (NACE
85.14), social work activities with accommodation (NACE 85.31) and social work activities
without accommodation (NACE 85.32).
The NGOs’ survey and the annual financial
statements are used to estimate total output and intermediate consumption of the above
activities. Table 3.20.2 shows that the NPISH sector contributes to 7.3 per cent of total
output and 6.27 per cent of the non market output of NACE 85. Total output is calculated
15
As per News Release no: 96/2007 published on the 8th June 2007
122
National Accounts Unit
Gross National Income Inventory
using the cost approach method by summing up intermediate consumption, consumption of
fixed capital (refer to paragraph 4.12.17) and compensation of employees (refer to section
4.7N). Non-market output is estimated as a residual after deducting any market output. For
those units without any financial information market output is assumed to be zero, as there is
no indication whether these units offer any market output. Output for own final use for the
NPISH sector is assumed to be zero.
3.20.8
The main source used to calculate output and intermediate consumption of other
human health activities (NACE 85.14) is the NGOs’ survey. Market output of NACE 85.14
consists of other services provided and other income. For those organisations without any
financial information available market output is assumed to be equal to zero and intermediate
consumption is measured by applying a set of estimates using 2000 as the benchmark year.
For the years prior to or after 2000 intermediate consumption is estimated by extrapolating
backwards and forwards using the overall price index. Non-market output is calculated as a
residual after deducting market output from total output.
3.20.9
Market output for social work activities with accommodation (NACE 85.31)
consists of income from residents, other services provided and other income. The majority of
the units classified under NACE 85.31 are covered mainly by the Non Governmental
Organisations’ Survey and financial statements.
For those organisations without any
financial information about the market output and intermediate consumption, but having only
data on the number of residents using accommodation facilities, these components are
estimated using direct information from financial statements and/or the NGOs survey
together with the number of residents as follows:
Market Output (P.1) = Market Output/resident * No of residents
Intermediate Consumption (IC) (P.2) = IC/resident * No of residents
3.20.10 As regards to social work activities without accommodation (NACE 85.32) both
components – market output and intermediate consumption - are estimated using the same
sources – financial statements and the NGOs` survey. Those organisations having only
Economic Statistics Division
123
Gross National Income Inventory
employment information available, market output is equal to zero, non-market output is
calculated as a residual and intermediate consumption is estimated on the basis of the FTE
employees as follows:
Intermediate Consumption (P.2) = IC/FTE * No of FTE employees
3.20.11 However those units who do not have any type of information available, market
output is assumed to be zero, non-market output is calculated as a residual and intermediate
consumption is measured using a set of estimates at a benchmark year 2000. Extrapolations
for years prior to or after 2000 are done using the growth rate of the overall price index and
then multiplied by the number of units without any information.
Government Sector (S.13)
3.20.12 This sector covers public health entities in Malta and Gozo – general hospitals
(NACE 85.11), elderly and special needs services such as elderly homes (NACE 85.31),
institute of healthcare services, government pharmaceutical services and extra-budgetary
units – “Sedqa” and “Appogg” agencies, Zammit Clapp and Mount Carmel Hospitals. The
DAS (departmental accounting system) and financial statements are used to calculate mainly
market output and intermediate consumption (Refer to Section L). The 50 per cent criterion
has been applied to distinguish between market and non-market output. The cost approach
method is used to estimate total output and non-market output, and government operating
surplus is assumed to be equal to zero. The output of the government sector for health
services is mainly hospital fees, certificates, sale of medicines etc.
Non-Financial Corporations (S.11) and Households Sector (S.14)
3.20.13 These two sectors cover activities of hospital (NACE 85.11), medical practitioners
(NACE 85.12), dental practices (NACE 85.13), other human health activities (NACE 85.14),
veterinary services (NACE 85.20) and social work activities (NACE 85.3).
3.20.14 Hospital activities (NACE 85.11) comprise the activity of the three main private
hospitals in Malta – St. James Hospital, Capua Palace Hospital and the St Philip’s Hospital.
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Output and intermediate consumption of these entities are computed from the financial
statements presented to the Malta Financial Services Authority (MFSA).
3.20.15 Medical, dental practices and other human health activities (NACE 85.12 to NACE
85.14) are estimated by using almost the same method. Since these activities are mostly
performed by self-employed workers, output is calculated from the expenditure side using the
Household Budgetary Survey (HBS).
2000 is taken as the benchmark year for all
components – market output and intermediate consumption. For the following years market
output for NACE 85.12 and NACE 85.13 is estimated as follows:
Market Output (Mot) = (Fee per Visitor)*(Number of Visitors each year)
3.20.16 The fee per visitor of the benchmark year for each health category is extrapolated
forward using the RPI or HICP item indices that correspond to the respective health activity.
The number of visitors in each health activity is estimated using the total population together
with the percentage of visitors both males and females that encounter either a private general
practitioner at home or at clinic, or visit a private specialist and a dentist and the mean
number of visits per year. These health indicators are derived from a health survey that was
conducted by the Health Department in 2003. Since this survey was carried only once, until
further information about the amount of health visits will be available, it is assumed that on
average each year the same percentage of visitors/patients use private health care.
3.20.17 Output of medical practice activities (NACE 85.12) includes expenditure by visitors
on consultation and treatment by general practitioners at home, consultation and treatment by
other medical and surgical specialists at home, consultation and treatment by general
practitioners at clinic, ultrasound diagnosis, x-rays and other radiotherapy and consultation
and treatment by other medical and surgical specialists at clinic.
3.20.18 Output of dental activities (NACE 85.13) consists of expenditure by visitors on
orthodontic services, tooth filling, tooth extraction, oral hygiene and other dental services.
For dental activities the number of visitors is not estimated using the total population but
different age categories taken from the total population for every dental activity.
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Gross National Income Inventory
3.20.19 Output of health activities (NACE 85.14) comprises expenditure by households on
services provided by nurses, services provided by physiotherapists and other paramedical
persons, blood tests, other services provided by medical laboratories, residential health
facilities and other human health activities. For the following years output of this category is
calculated as the product of market output per total FTE employment and the FTE
employment of each year.
Market Output (Mot) = (Market Outputt-1/FTEt-1)*FTE Employment
3.20.20 Output of veterinary services (NACE 85.20) is calculated using the financial
statements of one private company and the rest is covered from the HBS 2000. Since the
expenditure items on veterinary services reported in the HBS survey may include expenditure
on veterinary services provided by this private company, its output is deducted from the HBS.
For the following years expenditure on veterinary services is extrapolated forward using the
RPI/HICP index on veterinary services.
3.20.21 Intermediate consumption for medical, dental and health activities is estimated using
IC to output ratio computed from the VAT data for the period between 1999 and 2004, where
the IC ratio for 2001 of medical practices – 17 per cent, dental practices – 36 per cent, other
human health activities – 22 per cent, whereas the intermediate consumption of veterinary
services covered by the HBS is estimated using the IC to output ratio resulting from the
financial statements of the private company which operates in NACE 85.20.
Intermediate Consumption (IC) = IC ratio * MOt
3.20.22 Social work activities with accommodation (NACE 85.31) cover six private homes
where output and intermediate consumption of the two major companies are covered using
financial statements provided by the MFSA and for the rest of the private homes having only
employment data available, market output is measured as the product of the market output
per FTE from financial statements and the FTE gainfully occupied of the respective units.
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Similarly intermediate consumption is estimated by applying the IC/Output ratio from
financial statements to market output of the rest of the private homes:
Market Output = Market Output per FTE * FTE employment
Intermediate Consumption = IC/OUTPUT ratio * Market Output
3.20.23 HBS 2000 is the main source used to calculate the market output for social work
activities without accommodation (NACE 85.32). Output of social work activities without
accommodation (NACE 85.32) consists of child day-care centres, wet-nurses, crèches,
playschools, child-minding facilities, private day care services for handicapped children,
guidance and counselling services related to children. 2000 is taken as the benchmark year
and for the years prior to or after 2000, output is extrapolated backwards or forwards using
the price index of domestic help. Intermediate consumption is calculated as a ratio to output
using the same IC/Output ratio of NACE 85.31.
3.21 Other community, social and personal service activities (O)
3.21.1
Section O covers community, social and personal services and totally this section
contributes to 4.45 per cent of the total gross value added of the economy. This section is
divided into four sub-sections that are:
•
NACE 90 – Sewage and refuse disposal, sanitation and similar activities.
•
NACE 91 – Activities of membership organizations not elsewhere classified.
•
NACE 92 – Recreational, cultural and sporting activities.
•
NACE 93 – Other Service activities.
Table 3.21.1: Share of Total Gross Value added in 2001
Activity
Output
Lm'000s
Intermediate
Consumption
Lm'000s
Value Added
Gross Lm'000s
NACE 93
15.42
10.70
65.42
12.39
3.20
4.82
24.91
3.13
12.23
5.88
40.51
9.26
Total NACE O
103.94
36.05
67.88
NACE 90
NACE 91
NACE 92
Economic Statistics Division
% share by
activity of the
gross value % of total value
added of the
added of
NACE O whole economy
18.01
8.67
59.68
13.64
100.00
0.80
0.39
2.66
0.61
4.45
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Gross National Income Inventory
3.21.2 NACE 90 – sewage and refuse disposal, sanitation and similar activities – contributes
to 18.01 per cent of the total value added of section O.
Table 3.21.2: Gross Value Added of NACE 90 by Institutional Sector for 200116
Output
Intermediate Consumption
Gross Value Added
% GVA by sector
Unit
Lm millions
Lm millions
Lm millions
%
S.11
2.637
1.848
0.789
6.45
S.13
12.442
1.107
11.335
92.7
S.14
0.345
0.242
0.103
0.8
Total
15.424
3.197
12.227
100.00
3.21.3 The main sources used to measure output and intermediate consumption of NACE 90
are:
ƒ
Government’s Departmental Accounting System (DAS);
ƒ
EBU’s survey;
ƒ
Financial statements;
ƒ
Employment and Training Corporation Database (ETC);
Government Sector (S.13)
3.21.4
The government sector accounts for 92.7 percent of the total gross value added of
NACE 90. The main units who offer sewage and refuse disposal, sanitation and similar
services within the government sector are government departments – drainage, public
cleansing, beach cleaning sections – and Wasteserv Ltd which is an extra-budgetary unit.
Market output of these government units consists of contribution from main sewers, sale of
compost and hiring of rubbish containers. The intermediate consumption of the government
sector (S.13) in NACE 90 is calculated and distributed by product classification using the
DAS system and the EBUs survey (refer to section L). The cost approach is used to measure
total output. Non-market output is calculated as a residual after deducting market output and
output for own final use.
16
As per News Release no: 96/2007 published on the 8th June 2007
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Non-Financial Corporations (S.11)
3.21.5
The Non-Financial Corporations Sector (S.11) accounts for 6.5 per cent of the gross
value added of NACE 90. The main sources used to calculate output (P.1) and intermediate
consumption (P.2) for S.11 in NACE 90 are financial statements. These financial statements
are obtained from the Malta Financial Services Authority (MFSA) and the board of cooperatives. In terms of FTE employment, financial statements cover about 53 per cent of
FTE employment of this sector in 2001.
An estimate of the market output of those
companies without any financial information is done by raising the available financial data –
output - from financial statements using an employment raising factor which is calculated as
follows:
Raising Factor = Total FTE/FTE covered by financial statements
3.21.6 The employment raising factor used to estimate output of the rest of the companies is
1.883 in 2001.
3.21.7 Employment data is obtained from a quarterly database administered by the
Employment Training Corporation (ETC). However, intermediate consumption for the same
organisations is estimated using the IC to Output ratio from the financial statements.
Household Sector (S.14)
3.21.8 Output of the self-employed workers is estimated as a product of the Business
Register’s average turnover of the self-employed workers of this industry and the FTE selfemployed.
Market Output (P.1) = Average Turnover * FTE self-employed workers
3.21.9 Intermediate consumption is estimated using the same ratio of the non-financial
corporations sector (S.11) equal to 64 per cent.
Intermediate Consumption (P.2) = IC ratio * Self-employed turnover
Economic Statistics Division
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Gross National Income Inventory
3.21.10
NACE 91 – activities of other membership organisations n.e.c – covers 8.67
per cent of the value added of section O.
3.21.11 The main sources used to measure output and intermediate consumption of NACE 91
are:
ƒ
Financial Statements;
ƒ
Non-governmental Organisations (NGOs) survey;
ƒ
Youth Organisations Survey;
ƒ
Band Clubs’ Survey.
3.21.12 NGOs, youth organisations and band clubs’ surveys are compiled annually by the
population and social statistics unit within the NSO, whereas financial statements are
obtained directly from the Department of Industrial Relations and Employment.
Table 3.21.3: Gross Value Added of NACE 91 by Institutional Sector for 2001
Output
Intermediate Consumption
Gross Value Added
% GVA by sector
Unit
Lm millions
Lm millions
Lm millions
%
S.11
0.551
0.306
0.245
4.16
S.15
10.15
4.51
5.64
95.8
Total
10.701
4.816
5.885
100.00
Non-Financial Corporations (S.11)
3.21.13 This sector covers activities of business, employers’ and professional organisationsNACE 91.11 which accounts to 4.16 per cent of the gross value added of NACE 91. The
main sources used to measure output and intermediate consumption are financial statements
of the respective employers’ organisations and annual returns for other professional
organisations.
3.21.14 Output and intermediate consumption of the major seven employers` associations
(which cover about 88 per cent of the subscribed members) are calculated using information
from their financial statements, which are supplied to the National Accounts Unit by the
Department of Industrial and Employment Relations. Output of the rest of the employers’
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Gross National Income Inventory
associations is estimated either as the product of the market output per member (financial
statements) and the number of members (without financial information):
Market Output (P.1) = Market Output per member * Number of members
Or as the product of the market output per FTE (financial statements) and FTE employment,
depending whether the number of members or the FTE employment is available for those
organisations which an estimate is needed:
Market Output (P.1) = Market Output per FTE * FTE employment
3.21.15 Intermediate consumption is estimated using the ratio of intermediate consumption to
output from these financial statements.
3.21.16 Output and intermediate consumption of other organisations – the Federation of
Industry, the Malta Chamber of Commerce and other foreign chambers of commerce – are
covered by annual financial questionnaires.
For those years without any financial
information, output is estimated as the product of market output per FTE (financial returns)
and FTE employment of each respective year, whereas intermediate consumption is estimated
using the ratio of intermediate consumption to output from the information already available.
Non-Profit Institutions Serving Households (S.15)
3.21.17 95.8 percent of the gross value added of NACE 91 is covered by the non profit
institutions serving households sector (S.15). This sector covers activities of professional
organisations – NACE 91.12, activities of trade unions – NACE 91.20, activities of religious
organisations – NACE 91.31, activities of political organisations – NACE 91.32 and
activities of other membership organisations n.e.c – NACE 91.33. Total output of the above
activities is measured using the cost approach. Total output is calculated as the sum of
production costs (see paragraph 4.12.17 for consumption of fixed capital and Chapter 4 as
regards to Compensation of Employees). Non-market output is estimated as a residual after
deducting market output from total output.
Economic Statistics Division
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Gross National Income Inventory
NACE 91.12 – Activities of professional organisations
3.21.18 Output and intermediate consumption of the professional organisations are mostly
based on estimates, as only one organisation has financial statements available. To gross up
for the rest of the organisations having only employment data available, an employment
raising factor - 5.1087 - is used keeping 1998 as the benchmark year. For the years prior and
after 1998 total output of those organisations having employment data available is estimated
by extrapolating forwards the main components using the overall price index, because there is
no indication about the performance of these organisations.
Market output for these
organisations is assumed to be zero.
Raising Factor for 1998 = (Total employees/ FTE employment)/(Employment FTE covered
by direct information)
3.21.19 A set of estimates for intermediate consumption is applied for another set of
organisations without any type of information available. These estimates are extrapolated
backward or forward using the overall price index. Market output is assumed to be equal to
zero and non-market output is calculated as a residual after deducting any market output or
output for own final use if available.
NACE 91.20 - Activities of trade unions
3.21.20 NACE 91.20 covers about 36 employee trade unions, where output, intermediate
consumption of the major five trade unions (which cover 97 per cent of the subscribed
members) are calculated using information from their financial statements filed at the
Registrar of Trade Unions.
3.21.21 Grossing up for the other trade unions is done by using any financial information per
member together with the number of members excluding those which are already covered by
direct information. Market output (P.1) is estimated as the product of the market output per
member (financial statements) and the number of members, whereas intermediate
consumption (P.2) is estimated as the product of the intermediate consumption per member
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Gross National Income Inventory
(financial statements) and the number of members. Non-market output (P.13) is measured as
a residual after deducting market output (P.11) and output for own final use (P.12).
Intermediate Consumption (P.2) = IC/member * no of members
Market Output (P.11) = MO/member * no of members
NACE 91.31 – Activities of religious organisations
3.21.22 This category covers religious activities of the following organisations:
•
Religious Organisations (Christian organisations, catechism, etc.);
•
Convents, monasteries and oratories of religious orders;
•
Religious churches, metropolitan cathedrals etc.
Religious Organisations
3.21.23 Financial statements and surveys are used to estimate total output and intermediate
consumption for Religious organisations. Estimates for those religious organisations which
are not covered by direct information are done by either raising direct information using a
raising factor based on FTE employment, which is calculated as follows:
Raising Factor = (Total FTE employees / FTE employees covered by available information)
3.21.24 Or applying a set of estimates and extrapolate them backwards and forwards using
the overall price index, keeping 2000 as a benchmark year. The latter method of estimation is
applied to those organisations without any information available. Throughout the estimates
of religious organisations, market output is assumed to be zero as there is no indication about
what type of market output it is produced by these organisations and sometimes it is also
negligible. Non-market output is calculated as a residual after deducting market output.
Economic Statistics Division
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Gross National Income Inventory
Convents and Monasteries
3.21.25 As regards to convents and monasteries, the financial statements which are supplied
by the Archdiocese of Malta to measure output and intermediate consumption of about seven
monasteries. Since there is no other information regarding the finance of the rest of the
convents and monasteries, a set of estimates is applied to calculate intermediate consumption
keeping 2000 as a benchmark.
For the years prior to and after 2000, intermediate
consumption is extrapolated using the overall price index (consumption of fixed capital and
compensation of employees refer to Chapter 4).
Market output of those convents and
monasteries which are covered by estimates, is equal to zero. Non-market output is estimated
as a residual after deducting the market output.
Religious Churches
3.21.26 Religious churches include the Archdiocese of Malta – an institution which is
considered as the head of catholic churches in Malta, Diocese of Gozo – the institution in
charge of all the catholic churches in Gozo, parishes run by religious orders and other
religious churches – different religion. Financial information about the curia and Maltese
parishes which form part of the Archdiocese of Malta is obtained from the annual financial
statements provided by the same organisation on an annual basis. Since there is no financial
information available about the Diocese of Gozo, all components are estimated on the basis
of the available information of the Maltese Archdiocese and the Gozitan population as
follows:
Market Output (P.1) = (Market Output/head of Maltese population * Gozitan population)
Intermediate Consumption (P.2) = (Intermediate Consumption/head of Maltese population *
Gozitan population)
3.21.27 Market output of the Archdiocese of Malta includes any church dues on weddings,
funerals, baptisms and related events and any publications and advertising sales. Non-market
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Gross National Income Inventory
output is calculated as a residual for both the Maltese Archdiocese and the Diocese of Gozo
after deducting market output.
3.21.28 Total output and intermediate consumption of the parishes run by religious orders are
estimated on the basis of the financial information of the Archdiocese of Malta excluding the
curia (administration) and the Maltese population within the localities run by religious orders.
Non-market output is estimated as a residual after deducting market output.
Market Output (P.1) = (Market Output/head of Maltese population * Maltese population in
localities run by religious orders)
Intermediate Consumption (P.2) = (Intermediate Consumption/head of Maltese population *
Maltese population in localities run by religious orders)
3.21.29 A set of estimates has been applied to calculate total output and intermediate
consumption of other different religious churches, where 2000 is assumed to be the
benchmark year and for the following years these components are estimated by extrapolating
forward using the growth rate of the overall price index.
NACE 91.32 – Activities of Political Organisations
3.21.30 This sub-industry includes headquarters of the two major political parties and their
branches around Malta and Gozo. Output of political organisations is estimated by applying
a set of estimates for costs of production as at 1998 (benchmark year) and extrapolated
forward using the growth rate of the overall price index. Regarding the estimates of political
headquarters it is assumed that when an election takes place intermediate consumption only is
tripled. In 2001 there were no general elections.
Economic Statistics Division
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Gross National Income Inventory
NACE 91.33 – Activities of Membership Organisations
3.21.31 NGOs, Youth Organisations, Band Clubs surveys and financial statements are used to
calculate output and intermediate consumption of other membership organisations. Output
and intermediate consumption of organisations with only employment information available
are calculated by raising available information with an FTE raising factor that is calculated
the same as in the above industries. A set of estimates is applied for those organisations
without any information available, assuming 2000 as benchmark year and they are
extrapolated backward or forward using the growth rate of the overall price index.
NACE 92 Recreational, Cultural and Sporting Activities
3.21.32 Recreational, cultural and sporting activities (NACE 92) generate around 60 per cent
of the total gross value added at basic prices created by Section O, and contribute to 2.8 per
cent of the gross value added for the total economy.
Table 3.21.4: Gross Value Added of NACE 92 by Institutional Sector for 2001
Output
Intermediate Consumption
Gross Value Added
% GVA by sector
Unit
Lm millions
Lm millions
Lm millions
%
S.11
50.32
19.78
30.54
75.39
S.13
4.05
0.98
3.07
7.58
S.14
6.60
2.21
4.39
10.84
S.15
4.45
1.94
2.51
6.20
Total
65.42
24.91
40.51
100.00
3.21.33 Most of the recreational, cultural and sporting activities are produced by the nonfinancial corporations sector (S.11) which accounts for 75 per cent of the gross value added
of NACE 92. The households sector (S.14) covers 11 per cent of the gross value added,
whereas the government sector (S.13) and the non profit institutions serving households
(S.15) contribute to 7.5 per cent and 6.2 per cent of the gross value added of NACE 92
respectively.
Government Sector (S.13)
3.21.34 Government production accounts (output and intermediate consumption) are
compiled from the detailed revenue and expenditure reports of central government. For those
state-owned enterprises providing recreational, cultural and/or sporting activities that are not
part of central government (extra-budgetary units), information is collected quarterly by
means of a survey conducted by the Government Finance Unit (NSO).
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3.21.35 The product breakdown of output and intermediate consumption produced by the
government sector is derived from the central government’s itemised revenue and
expenditure report. For extra-budgetary units reference is made to the product breakdown of
market producers engaged in similar activities, when existent.
In the absence of such
information the product coefficients are estimated on the basis of expert advice.
Non-Financial Corporations (S.11) and Households (S.14)
3.21.35 Production accounts of households and non-financial corporations are calculated
separately for each of the activities listed in Table 3.21.5 below, which summarizes the major
sources used for each activity. The major sources used to calculate output and intermediate
consumption are: the financial statements of individual companies (derived from the MFSA
website), the Structural Business Statistics (SBS), the Business Register (BR), the Household
Budgetary Survey (HBS), surveys on dance schools and museums compiled by the
Population and Social Conditions Unit (NSO), the Employment and Training Corporation
(ETC) database, and the Labour Force Survey data (LFS).
Table 3.21.5: Main Data Sources used in calculation of NACE 92 Production Accounts
Main Statistical Sources: Sectors S.11 and S.14
NACE
Code Source
Financial statements; Annual individual questionnaires; Cinema Survey (PSC Unit,
92.1 NSO), HBS 2000; Structural Business Statistics (SBS)
92.2 Financial statements; Structural Business Statistics (SBS)
Dance School Survey (PSC Unit, NSO); Financial Statements; Structural Business
92.3 Statistics (SBS)
92.4 Structural Business Statistics (SBS)
92.5 Museums survey (PSC Unit, NSO)
92.6 Structural Business Statistics (SBS); Financial Statements
Financial Statements; Specific Questionnaires; Data from Gaming Authority;
92.7 Structural Business Statistics (SBS); Remote Betting Survey (BOP Unit, NSO)
3.21.36 The general procedure of compiling these financial statements involves identifying
the largest companies from the Business Register, which provides a list of companies
classified under NACE 92 with data on turnover and employment by company, obtaining
their financial statements wherever such companies are obliged to publish full annual reports,
or any other source of direct information on their activities.
This information is then
transformed into the national accounting concepts necessary to compile the production
Economic Statistics Division
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Gross National Income Inventory
account. Details on the sources and methods used for each of the above activities are treated
in more detail below.
3.21.37 Two major companies operate in the production of motion pictures and videos
(NACE 92.11) and the distribution of motion pictures and videos (NACE 92.12) and are
covered directly by their annual published financial statements. Since financial statements
are not available on time, an estimate is done for output and intermediate consumption.
Market output is estimated as the product of previous year’s market output per FTE and the
FTE employment. As regards to intermediate consumption, previous year’s intermediate
consumption ratio is taken and applied on the estimated market output.
Market Output [t] = Market Output/FTE[t-1] * FTE employment [t]
3.21.38 The production account for smaller operators in these activities is estimated by using
information from the Structural Business Statistics (SBS), which started to compile
information on this activity for the reference year 2000.
The production account of
companies engaged in motion picture projection (NACE 92.13) have been calculated by
making use of data collected through a survey on this activity carried out by the Population
and Social Statistics Unit (NSO). Since the latest data available is up to 1999, estimates had
to be done for 2000 onwards. Total output is extrapolated forwards using the growth rate of
the total income from box office tickets excluding VAT. Information on income from box
office tickets is provided by the Malta Film Commission. With regards to intermediate
consumption, previous year’s ratio is applied to the estimated output figure.
3.21.39 The production account for the largest operator in the production and broadcasting of
radio and television activities (NACE 92.2) is calculated separately from their financial
statements. The next largest companies are also covered directly from their annual published
financial accounts.
The output and intermediate consumption of all remaining smaller
operators is calculated by making use of data collected within the SBS.
3.21.40 Enterprises and individuals engaged in the production of other entertainment
activities (NACE 92.3) are numerous and are largely small operators. The calculation of
gross value added for this branch of activities relies almost entirely on the SBS and
supplemented with information collected from the Malta Film Commission (MFC) on the
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Gross National Income Inventory
expenditure incurred by non-resident film makers on activities of resident artists, musicians,
sculptors, painters, stage-set designers. Expenditure by film-makers on these activities is
classified as the output (and gross value added) of these individuals. The gross value added
of a few number of companies is calculated using their own financial statements. Separate
calculations are made for the gross value added generated through dance school activities on
the basis of a survey that collects information on revenue, expenditure and employment of
these enterprises and which is carried out by the Population and Social Statistics Unit (NSO).
3.21.41 The production account of news agency activities (NACE 92.4) is calculated from the
Structural Business Statistics. The production account of libraries, archives, museums and
other cultural activities (NACE 92.5) is calculated from a survey on museums conducted by
the Population and Social Statistics Unit (NSO). Services of libraries and archives are
provided entirely by the institutional sectors government (S.13) and NPISH (S.15) with no
activity registered by private establishments. The production account of sporting activities
(NACE 92.6) conducted by private enterprises is calculated from the Structural Business
Statistics.
3.21.42 The largest generators of gross value added created in NACE 92 are providers of
gambling and betting services (NACE 92.71). This industry is made up of a few large
casinos, one large market producer owned by the state in the reference year 2001 (as from the
second half of 2004, the ownership of this unit was transferred from the state to the private
sector), around 192 self-employed lotto receivers who earn their living from a minimum
salary plus commission, and remote gaming operators. The production accounts for the
casinos and the state owned/private operator are calculated separately on their annual
financial statements. Information on the commission paid to lotto receivers is obtained from
the Department of Public Lotto (DPL), the stated owned market producer of betting activities.
Information regarding output and intermediate consumption incurred by internet betting
companies is obtained from a survey carried out on annual basis by the Balance of Payments
Unit within the NSO.
3.21.43 An exhaustiveness adjustment for producers deliberately not registering (type N.1)
has been made under NACE 92.71, gambling and betting activities. Specifically this covers
the sale of bingo tickets (tombolas) and lottery tickets (prima estratta) by unregistered
establishments.
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Gross National Income Inventory
3.21.44 The estimate of the sale of bingo tickets is based on the number of tombola licence
holders (286 in 2000; 343 in 1999), derived from the annual report of the DPL. The
registered number of tombola licence holders was raised by an expert estimate to cover all
sellers of tombola tickets that are not registered with the DPL, and multiplied by an average
turnover per seller to yield total turnover. Finally, only 50 per cent of this estimate was taken
into consideration, as part of this turnover is covered by other institutional sectors, namely
NPISH in fund-raising activities. Intermediate consumption of these units is estimated at 1
per cent of market output annually. The amount of licence fees actually paid, have been
added to this estimate of intermediate consumption, as reported within the annual report of
the DPL.
3.21.45 The estimate of the sale of prima estratta tickets is calculated by multiplying the total
number of unregistered sellers of such tickets, by the average price per ticket sold and the
average number of tickets sold in a given year. These variables were estimated by expert
assessment. From this total estimated turnover, an estimate of the winnings paid out was
deducted, as the market output of gambling and betting activities should be recorded net of
winnings paid out. Only 50 per cent of this estimate was taken into consideration, as part of
this turnover is covered by other institutional sectors. Intermediate consumption is estimated
at 5 percent of total turnover (not output net of winnings). This is also based on expert
assessment.
3.21.46 The product breakdown of both output and intermediate consumption produced by
non-financial corporations and households is obtained from individual financial statements
for the largest operators and from the Structural Business Statistics forms.
Non-profit institutions serving households (S.15)
3.21.47 Activities of NPISH are in large part related to sporting activities. In this respect,
direct information is collected for two of the larger sports associations in the form of financial
reports and an annual questionnaire sent by the national accounts unit. A large number of
sports organizations are surveyed by the Population and Social Statistics Unit (NSO) and
used to calculate the production account of NPISH operating within these activities. Special
adjustments are made to cover sportsmen – football clubs- that are not considered as
employees by the ETC. NPISH also provide radio broadcasting services and museum
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activities, direct information on which is obtained from surveys carried out by the Population
and Social Statistics Unit (NSO).
3.21.48 The product breakdown of output and intermediate consumption produced by NPISH
is obtained from the annual reports of the largest sports operator containing an itemised
breakdown of revenue and expenditure and from the sports organization survey which
contains some details on the composition of these organizations’ finances.
NACE 93 Other Service Activities
3.21.49 NACE 93 covers 13.64 per cent of the gross value added of section O, and it is
entirely provided by non-financial corporations (S.11) and households (S.14) sectors. The
following table shows that the main contributor to the gross value added of NACE 93 is the
households’ sector which accounts for 58.6 per cent, whereas the rest of the gross value
added of NACE 93 – 41.41 per cent is provided by the non financial corporations sector.
Table 3.21.6: Gross Value Added of NACE 93 by Institutional Sector for 2001
Output
Intermediate Consumption
Gross Value Added
% GVA by sector
Unit
Lm millions
Lm millions
Lm millions
%
S.11
5.52
1.69
3.83
41.41
S.14
6.87
1.44
5.43
58.59
Total
12.39
3.13
9.26
100.00
3.21.50 Production and generation of income accounts have been estimated separately for the
following economic activities under the industry NACE 93 according to the NACE
nomenclature:
NACE 93.01 Washing and dry-cleaning of textile and fur products
NACE 93.02 Hairdressing and other beauty treatment
NACE 93.03 Funeral and related activities
NACE 93.04 Physical well-being activities
NACE 93.05 Other service activities not elsewhere classified
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Main Data Sources
3.21.51 The main data sources used for national income estimates within this economic
activity are the Business Register (BR) and the Household Budgetary Survey (HBS).
Financial statements of individual companies have also been used to a smaller extent than the
use of these two major sources.
•
The Business Register provides a list of companies classified under NACE 93. This
list is used to identify the largest companies in terms of employment. It also provides
information on turnover and employment, classified at the 4-digit level of the NACE
nomenclature.
•
The Household Budget Survey compiled in the year 2000 is also used to estimate the
output of hairdressers and other beauty therapists (NACE 93.02) and enterprises
providing funeral and related activities (NACE 93.03). For details on the compilation
of the HBS 2000 see documentation in Phare 2000 Report on Private Household
Consumption.
•
Financial statements of the larger companies are downloaded from the Malta
Financial Services Authority (MFSA) that collects all financial statements of
enterprises which are eligible by law to file full annual reports with the authority.
Wherever financial statements are used in the compilation of national accounts
concepts, care is taken to adjust business accounting concepts to national accounting
concepts. Within the context of NACE 93, financial statements have been used
largely economic aggregates, for enterprises operating within this industry.
•
The Sports Organisation Survey is compiled by the Population and Social Statistics
Unit and collects data on income and expenditure related to sports organisation,
starting from the reference year 2000.
Table 3.21.7: Main Data Sources used in the Calculation of Other Service Activities
NACE Code Source
93.01
Financial Statements; ETC Employment
93.02
HBS 2000; Financial Statements; ETC Employment
93.03
HBS 2000; Population Statistics
93.04
Sports Organisation Survey, NSO
93.05
ETC Employment
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Output
3.21.52 The market output of dry cleaning services (NACE 93.01) is calculated partly by
financial statements, and for those enterprises for which no direct information is available,
output is grossed up on the basis of per capita ratios from financial statements multiplied by
employment from the Employment and Training Corporation’s database.
3.21.53 Market output of hairdressing and other beauty treatment services (NACE 93.02) is
calculated using the expenditure by residents on these services from the HBS for the
benchmark year 2000 as the starting point. Two adjustments are added to this figure - an
estimate of tourist expenditure on these services, including tips, is obtained from private
household consumption calculations, and an adjustment for businesses’ expenditure on these
services, which is around 1 per cent of residents’ expenditure on hairdressing and beauty
services.
3.21.54 The market output of funeral services (NACE 93.03) is calculated for the benchmark
year 2000, using residents’ expenditure on these services from the HBS. An adjustment for
the extent of underreporting was made by using the product of the number of deaths in a
given year (source: Demographic Review) by an estimated average cost of a funeral (source:
expert assessment). The difference between the turnover reported in the HBS 2000 and the
output estimated in this manner is the extent of underreported output.
This figure is
extrapolated backward and forward using the overall RPI growth rate.
3.21.55 Market output of physical well-being activities (NACE 93.04) is calculated from the
Sports Organisation Survey for benchmark years and extrapolated using the growth rate of
the overall RPI.
Breakdown of output by product
3.21.56 The product distribution of the output of NACE 93 using the CPA and NA product
classification is obtained from enterprise accounts containing detailed information about
expenditure and output. Each level of economic activity at the NACE 4-digit level has been
treated separately. It is only for funeral services, that no such information about product
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distribution is available. In this case it was assumed that the only type of output produced by
enterprises operating within this economic activity, is their primary output, which is CPA
93.03.
Intermediate Consumption
3.21.57 The intermediate consumption of establishments providing dry cleaning services
(NACE 93.01), hairdressing and other beauty treatments (NACE 93.02) and physical wellbeing activities (NACE 93.04) is collected from financial statements for those companies for
which this information is available. The intermediate consumption of the remaining
companies, not covered by financial statements, is estimated by assuming that they have the
same intermediate consumption to output ratio as those covered by direct information.
3.21.58 For those establishments providing funeral services (NACE 93.03), intermediate
consumption is estimated at 10 per cent of total output produced.
Breakdown of intermediate consumption by product
3.21.59 The same procedure used for the breakdown of output by product has been used to
obtain the product distribution of intermediate consumption. This data is obtained from
enterprise accounts containing detailed information about expenditure and output for each
level of economic activity at the NACE 4-digit level. It is only for funeral services, that no
such information about product distribution is available and an estimate had to be built upon
assumptions about the cost structure of enterprises operating within this economic activity.
3.22
Private households with employed persons (P)
Section P
NACE 95
3.22.1
Output Lm
millions
2.599
GVA Lm
IC Lm millions millions
0.034
% of Total
Economy
2.565
0.17
The ETC database is not considered reliable for this sector. It is a known fact that
there are several self-employed workers who provide services related to this NACE category
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but they are not registered.
These include mainly maids, who offer their services to
households and are paid per hour. These are normally employed for a few hours a week.
3.22.2
Since no financial information is available about this activity, the HBS 2000 –
benchmark year - is the main source of information used to estimate output and it is
extrapolated backward or forward using the growth rate in RPI/HICP index of the item
‘Domestic Help’.
3.22.3
Intermediate consumption for these types of activities is assumed to be negligible
since all the cleaning equipment and materials are generally provided by the household
employing the person. Since cleaning equipment is assumed to be supplied by households,
no estimate for consumption of fixed capital is required.
3.23 Treatment of extra territorial organisations and bodies (Q)
NACE 99
3.23.1
Extra territorial organisations and bodies
In Malta in 2001 there was only one establishment that fell under this category: the
Delegation of the Commission of the European Communities.
A specific annual
questionnaire is sent to the Delegation wherein details are supplied, including wages and
salaries paid and the number of employees.
3.24
Taxes on Products, excluding VAT
3.24.1
Taxes on products have been extracted from the DAS and Financial Report of
government departments made available by the Ministry of Finance and the Treasury
respectively. All types of taxes have been classified under different categories, each coded
by NSO following the ESA 95 standard coding:
Value Added Tax (VAT)
D211
Import Duties
D2121
Taxes on Imports Excluding VAT and Duties
D2122
Taxes on Products except VAT and Import Duties
D214
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3.24.2
Taxes on production and imports (D.21) for 2001 totalled Lm223.5 million, whilst
‘Other taxes on production’ (D.29) added up to Lm6.3 million. Other Taxes on Production
will be explained further in Section 4.8.
3.25
VAT
3.25.1
Value-added tax (VAT) is a tax on products, which producers are required to charge
on the goods and services they sell.
Intra-community acquisitions of goods by small
undertakings, wholly exempt businesses and non-taxable legal persons in principle are not
chargeable to tax, as long as the total amount of acquisitions in the current year and in the
preceding calendar year does not exceed the threshold of Lm4,000 (approximately €9,300).
3.25.2
Data for VAT is obtained from the DAS. As this system is cash-based, the Treasury
Departments collects accruals data, mainly debtors and creditors, from the VAT Department.
This data is subsequently provided to the NSO to be used in the compilation of the annual
national accounts data.
3.25.3
The standard VAT rate is 15 per cent (18 per cent from 1st January 2004 onwards).
It applies to supplies of all goods and services not qualifying for the reduced rate or for an
exemption. The reduced rate of 5 per cent applies to the following supplies of goods and
services:
(i)
accommodation in hotels and licensed premises
(ii) supply of electricity in accordance with Article 12 of Directive 77/388/EC
(iii) works of art
(iv) collector’s items and antiques
(v) certain confectionery
(vi) medical accessories
(vii) printed matter
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(viii) items for exclusive use of the disabled
3.25.4
(i)
The zero-rate applies to the following supplies of goods and services:
exports of goods
(ii) intra-community supplies of goods subject to certain conditions
(iii) internal transport including inter-island sea transport of passengers, school transport,
bus services and transport organised by an employer to and from the place of
work
(iv) the international transportation of goods and passengers directly to or from another
country and ancillary services
(v) the supply and repair of commercial aircraft and vessels and related ancillary
services
(vi) duty-free supplies
(vii) food
(viii) pharmaceuticals
(ix) the supply of gold to the Central Bank of Malta
(x) goods under a customs duty suspension regime
(xi) the supply of goods on board cruise liners
3.25.5
(i)
The following are exempt from VAT:
immovable property
(ii) non-commercial rent
(iii) services by non-profit making organisations
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(iv) insurance, banking and investment services
(v) sports, religious and cultural activities
(vi) lotteries
(vii) public postal services
(viii) health
(ix) welfare
(x) education
(xi) public broadcasting
(xii) the supply of water by a public authority
3.25.6
Regarding Intrastat, a standard return has to be filed for the arrival and dispatch of
goods amounting to less than Lm300. Extended Intrastat returns are to be filed for amounts
greater than Lm300 (approximately €700). For arrivals, the following data are required per
shipment: period, destination Member State, region of origin, terms of delivery, mode of
transport, commodity code, net mass, invoice amount, location, date, signature, total items,
country of origin, total invoice amount and nature of document.
For dispatches, the
following data are required: trader number, period, number of third-party declarant, item
number, destination Member State, terms of delivery, mode of transport, statistical code, net
mass, invoice amount, region of destination, serial number of the report, country of dispatch,
number of lines, total invoice amount and nature of document.
3.25.7
Intrastat declarations are due by the tenth day of the month following that of the
movement of the goods. However the Commissioner may set other filing deadlines. The
current procedure is to require Intrastat returns to be filed as the goods enter or leave Malta.
The Intrastat return can be submitted electronically.
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3.26
Subsidies on products
3.26.1
Subsidies on products are divided into two components:
•
import subsidies (D.311);
•
other subsidies on products (D.319).
3.26.2
In Malta there are no import subsidies, whilst subsidies on products totalled Lm15.7
million in 2001. All subsidies are obtained from government accounts and financial
statements.
For 2001, a large proportion of these subsidies are allocated to the Water
Services Corporation for the provision of water services (51 per cent) and to subsidise tour
operators offering special packages to tourist coming from the UK (25 per cent).
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Chapter 4 The Income approach
4.0
GDP according to the income approach
4.0.1
The income approach provides estimates of GDP and its ‘income’ component parts
at current market prices. This approach does not provide an independent estimate of GDP,
since operating surplus is derived as a residual. Consumption of fixed capital is based on
financial accounts submitted by enterprises to MFSA.
4.0.2
The income approach adds all income earned by resident individuals or corporations
in the production of goods and services and is therefore the sum of uses in the generation of
income account for the total economy. Some types of income are not included, such as
transfer payments like unemployment benefits, children’s allowances, or government
pensions. Although they do provide residents with money to spend, the payments are made
out of, for example, taxes and NI contributions.
Transfer payments are therefore
redistributing existing incomes and do not represent any addition to current economic
activity.
4.0.3
In Malta the income approach of GDP is obtained by the following calculation.
Main components
2001
(Lm’000s)
807,198
229,799
-28,495
724,584
D.1 Compensation of employees (section 4.7)
D.2 Taxes on production and imports (section 4.8)
D.3 Subsidies on production (section 4.9)
B.2 Gross operating surplus (section 4.10) and B.3 Mixed income
(section 4.11)
Total GDP by income approach
4.0.4
1,733,073
A brief description of each component of the income approach is given below.
Compensation of employees (D.1)
4.0.5
This is the total remuneration in cash or in kind, payable by an employer to an
employee, in return for work done during the accounting period.
It has two main
components, which are (i) wages and salaries payable in cash or in kind, and (ii) employers’
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social contributions. The calculation of compensation of employees is described in Chapter
4.7.
Main components
D.11 Wages and salaries
D.12 Employers' social contributions
Sub-components
Wages and salaries in cash
Wages and salaries in kind
D.121 Employers' actual social contributions
D.122 Employers' imputed social
contributions
D.1 Compensation of employees by industry
A: Agriculture, Hunting and Forestry
B: Fishing
C: Mining and Quarrying
D: Manufacturing
E: Electricity, Gas and Water Supply
F: Construction
G: Wholesale and Retail Trade; Repair of Motor Vehicles
H: Hotels and Restaurants
I: Transport, Storage and Communication
J: Financial Intermediation
K: Real Estate, Renting and Business Activities
L: Public Administration and Defence; Compulsory Social Security
M: Education
N: Health and Social Work
O: Other Community, Social and Personal Service Activities
P: Persons employed with Private Households
Total Compensation of Employees
2001
(Lm’000s)
8,295
784
1,527
170,192
20,357
31,328
73,065
57,865
83,544
49,668
36,010
97,527
78,304
65,109
33,627
0
807,198
Taxes on production and imports (D.2)
4.0.6
Taxes on production and imports are taxes levied by general government or by
institutions of the European Union relating to the production and import of goods and
services, the employment of labour, the ownership or use of land, buildings or other assets
used in production. These are described in section 4.8.
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D.2 Taxes on Production and Imports
Value Added Type Taxes
Import Duties
Taxes on Imports excluding VAT and duties
Taxes on products
Other Taxes on Production
Total Taxes on Production and Imports
2001
(Lm’000s)
111,126
12,223
9,237
90,882
6,332
229,799
Subsidies on production (D.3)
4.0.7
Subsidies are current unrequited payments that the Maltese government, or
institutions of the EU, make to resident producers. These are subsidies given independent of
the quantity or value of the goods and services produced or sold. These are described in
section 4.9.
D.3 Subsidies on production
D.31 Subsidies on products
D.311 Import subsidies
D.319 Other subsidies on products
D.39 Other subsidies on production
Total Subsidies on production
2001
(Lm’000s)
15,722
0
15,722
12,773
28,495
Gross operating surplus (B.2)
4.0.8
This is the balancing item in the generation of income account and is described in
Chapter 4.10. It represents the income which the units obtain from their own use of their
production facilities, in other words value added less compensation of employees less taxes
on production payable plus subsidies receivable.
4.0.9
For non-market production, gross operating surplus is equal to the consumption of
fixed capital. This item represents the imputed charge for capital consumption, which is
added to non-market producers (Government and NPISHs) in order to align their gross
operating surplus to the same base as market producers.
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Mixed income (B.3)
4.0.10
Mixed income is the term used for the generation of income by unincorporated
enterprises (sole traders) owned by members of households and in which the owner also
works without receiving a wage or salary.
4.1
4.1.1
The reference framework
The main data sources used for the income approach are outlined for each of the
main components.
Compensation of employees
4.1.2
Various sources are used for compensation of employees, depending on the
economic sector being compiled, and these sources are verified against other sources
available. The main sources are administrative records (ETC), labour force survey data, and
quarterly returns from the large enterprises. The characteristics of these sources are outlined
in section 4.7.
Taxes and subsidies
4.1.3
The main sources of data for both taxes and subsidies are the Government’s
Departmental Accounting System (DAS) and the annual Financial Report. Details on the
characteristics of these sources are described in sections 4.8 and 4.9.
Operating Surplus and Mixed Income
4.1.4
Operating Surplus is the balancing item of the generation of income account (of
which, for the household sector, mixed income represents one segment of operating surplus,
while income for owner-occupiers producing dwelling services still remains as operating
surplus). It is the surplus accruing from processes of production before deducting any
interest charges, rent or other property incomes payable on the financial assets, land, or other
tangible non-produced assets required to carry on production.
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4.2
Valuation
4.2.1
In general, the accruals basis principle of recording is applied in the National
Accounts.
The NSO is complimenting the cash data with an accruals adjustment for taxes
and subsidies on products.
4.2.2
The NSO ensures that it receives sufficient data from the relevant sources to
conform to ESA 95 prices. In some cases where this is not possible, particularly where some
administrative sources are used, the NSO makes the necessary adjustments to be in line with
ESA 95.
4.3
Transition from private accounting and administrative concepts to
ESA95 national accounts concepts
4.3.1
The NSO ensures that it receives enough data to make any adjustments necessary for
the transition from business accounting concepts to ESA 95 national accounts concepts
ensuring a correct treatment within the accounts.
4.3.2
A number of adjustments are made wherever necessary in the income approach,
however since this approach is not estimated independently, most adjustments are done to the
expenditure approach.
4.4
4.4.1
The roles of direct and indirect estimation methods
The income approach is mainly based on direct estimation methods, i.e. sample
surveys and administrative records. Operating surplus is a residual (balancing item). Indirect
estimation methods are partly used for compensation of employees, when indicators of wage
rates and employment are combined to estimate wages and salaries. Extensive use of the
Salaries and Benefits Report, undertaken by MISCO for 2000, was made especially in those
sectors where data from other sources was lacking or considered inaccurate (refer to Chapter
4.7 for further details).
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4.5
4.5.1
The roles of benchmarks and extrapolations
As in the production approach, the role of benchmarks and extrapolations in the
National Accounts compilation is very limited in the income approach. The sources referred
to are available every year, therefore reducing drastically the need to extrapolate. However,
when survey data are not available on time, previous year’s data are used as a benchmark.
4.6
4.6.1
The main approaches taken with respect to exhaustiveness
As with all three approaches to measuring GDP, NSO makes significant efforts to
ensure exhaustiveness in the income approach.
Wages and Salaries in Kind
4.6.2
The NSO carried out an extensive exercise to capture as far as possible wages and
salaries in kind distributed in the economy. The estimation of wages in kind was based on
two major sources:
(i) A survey on wages and salaries in cash and in kind for the private sector conducted by a
private company; and
(ii) A survey on wages and salaries in kind for the public sector carried out by the NSO for
this specific exercise.
4.6.3
Wages and salaries in kind for the private sector were calculated based on the
findings of the “Salaries and Benefits Report 2000” conducted by Misco Ltd. This report
reviews 2,066 remuneration packages for 2000. It covers 27 different types of positions
ranging from director to storekeeper. Moreover, different company sizes where considered in
order to have a better understanding of the financial packages being offered by large and
small companies.
4.6.4
Wages and salaries in kind for the public sector were calculated based on a survey of
fringe benefits for government entities and departments carried out by the NSO. The survey
was mainly concerned with the most common types of income in kind offered by government
ranging from free meals to purchase of vehicles for employees private use.
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4.6.5
Since no information regarding income in kind is provided at a company level, it
was only possible to arrive to a global estimate of income in kind. The total figure derived
from this exercise was then distributed according to the employment distribution (based on
ISCO classification) in each NACE category. The figure for income in kind of the public
sector was distributed as follows:
(i) wages and salaries in kind for government entities was calculated for each individual
entity and this was allocated to its respective NACE category
(ii) for those entities which are not government departments but fall under NACE 75, the total
figure was added to NACE 75. Those entities falling under NACE 80 and 85 were also
allocated to their respective categories
(iii) for the remaining government departments, the total figure was allocated to NACE 75.
4.6.6
One disadvantage with this distribution approach is that it might not yield very
accurate results especially for the private sector. However, given the current level of detailed
information the NSO has, this approach is considered to be the best one that could be applied.
4.7
Compensation of Employees
4.7A
Agriculture, hunting and forestry
4.7.1
For agriculture services, compensation of employees has been estimated at Lm8.3
million during 2001 representing 1.03 per cent of total compensation of employees for the
whole economy and 0.47 per cent of Gross Domestic Product during the reference period.
Main sources used for compensation of employees are both the Census of Agriculture and
data provided by the Employment and Training Corporation.
4.7B
Fishing
4.7.2
Compensation of employees engaged in fishing amounted to Lm0.8 million during
2001 from Lm0.7 million in 2000. Fishing activities constituted 0.3 per cent to GDP during
2001. Compensation of employees of fish farms is based mainly on an annual survey sent to
individual fish farm companies whilst the compensation of employees of employees engaged
in sea fishing is measured on the basis of ETC employment data.
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4.7C
Mining and Quarrying
4.7.3
Compensation of employees in NACE C was estimated at Lm1.5 million during
2001. This constitutes a share of 0.09 per cent to GDP during the reference period. ETC
employment data serves as the main data source in the calculation of compensation of
employees.
4.7D
Manufacturing
4.7.4 Compensation of employees in Section D constitutes a share of 9.8 per cent to GDP at
market prices in 2001. Manufacturing activities contributed to 21.1 per cent of the total
compensation of employees paid in Malta in 2001.
4.7.5 Activities in Section D are distinguished in 28 industries within 23 A60 headings and in
four institutional sectors for compensation of employees i.e. as for the output approach
(section 3.10).
4.7.6 The main sources used are the same as those used in the production approach, described
in paragraphs 3.10.4 to 3.10.10.
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Box 4.7D.1 - Section D as at 2001
NACE Rev.1: A60 specifications
D.1 Compensation of employees
Lm’000
15 Manufacture of food products and
beverages
16 Manufacture of tobacco products
17 Manufacture of textiles
18 Manufacture of wearing apparel;
dressing and dyeing of fur
19 Tanning and dressing of leather;
manufacture of luggage, handbags,
saddlery, footwear
20 Manufacture of wood and of products
of wood and cork, except furniture
21 Manufacture of pulp, paper and paper
products
22 Publishing, printing and reproduction
of recorded media
23 Manufacture of coke, refined
petroleum products and nuclear fuel
24 Manufacture of chemicals and
chemical products
25 Manufacture of rubber and plastic
products
26 Manufacture of other non-metallic
mineral products
27 Manufacture of basic metals
28 Manufacture of fabricated metal
products, except machinery and
equipment
29 Manufacture of machinery and
equipment n.e.c.
30 Manufacture of office machinery and
computers
31 Manufacture of electrical machinery
and apparatus n.e.c.
32 Manufacture of radio, television and
communication equipment and apparatus
33 Manufacture of medical, precision
and optical instruments, watches and
clocks
34 Manufacture of motor vehicles,
trailers and semi-trailers
35 Manufacture of other transport
equipment
36 Manufacture of furniture,
manufacturing n.e.c.
37 Recycling
Total Manufacturing
158
% of
Section D
% of total
economy
% of GDP
at market
prices
19,680
1,611
4,413
11.6%
0.9%
2.6%
2.4%
0.2%
0.5%
1.1%
0.1%
0.3%
15,009
8.8%
1.9%
0.9%
4,002
2.4%
0.5%
0.2%
450
0.3%
0.1%
0.0%
2,015
1.2%
0.2%
0.1%
11,076
6.5%
1.4%
0.6%
112
0.1%
0.0%
0.0%
5,339
3.1%
0.7%
0.3%
12,146
7.1%
1.5%
0.7%
4,846
308
2.8%
0.2%
0.6%
0.0%
0.3%
0.0%
5,422
3.2%
0.7%
0.3%
3,096
1.8%
0.4%
0.2%
815
0.5%
0.1%
0.0%
8,301
4.9%
1.0%
0.5%
19,367
11.4%
2.4%
1.1%
6,967
4.1%
0.9%
0.4%
293
0.2%
0.0%
0.0%
27,240
16.0%
3.4%
1.6%
17,372
312
170,192
10.2%
0.2%
100%
2.2%
0.0%
21%
1.0%
0.0%
10%
National Accounts Unit
Gross National Income Inventory
Non-financial corporations (S.11) and Households (S.14)
Estimates for large to medium enterprises filing full annual reports and financial statements
4.7.7 Financial statements are generally preferred in case of large companies that submit a
full set of financial statements at MFSA. Information available in annual accounts includes;
ƒ
Wages and salaries
ƒ
Social security costs
ƒ
Directors’ emoluments
These have been classified according to ESA 95 definitions as D.11, D.121 and D.11
respectively.
ƒ
Average number of persons employed by the company during the year
ƒ
Capitalised compensation of employees
4.7.8 Financial statements are available with a time lag of two years. Gaps are filled using
the wages and salaries available in the STBS data, since all the large enterprises are covered
by the STBS survey on manufacturing.
Estimates for medium to small enterprises derived from SBS data
4.7.9 In case of medium to small enterprises, compensation of employees is derived partly
from the STBS survey and partly from the SBS survey for the years 1995 to 2002. As from
2003, compensation of employees for medium to small enterprises is directly taken from the
SBS.
4.7.10 The most important indicators in the calculation of compensation of employees are
employment and the wage per full-time equivalent employee. Estimates for the employers’
actual social contribution are derived from the SBS survey. Roughly, compensation of
employees for 1995 to 2002 is calculated as follows:
Compensation of employees =
Wages and Salaries derived from the STBS survey
Economic Statistics Division
159
Gross National Income Inventory
plus
(Total full-time equivalent employees less the full-time equivalent employees covered by the
STBS survey and the large companies covered by the accounts) multiplied by the wages and
salaries per full-time equivalent employees
4.7.11 The wages and salaries per full-time equivalent employees are derived from the SBS
census for each size-class at 2 or 3-digit NACE. This is then applied to the number of fulltime equivalent employees not covered by the STBS survey and the annual accounts. The
size-class applied generally depends on the NACE category being tackled.
4.7.12 Compensation of employees for medium to small enterprises for 2003 is derived
directly from the SBS.
4.7.13 The same method described in paragraph 4.7D.8 is applied for 2004 and the years to
follow, for which SBS data are not yet available.
The wages per full-time equivalent
employees derived from the SBS of 2003 are adjusted each year to include the relevant cost
of living increase.
4.7.14 The SBS is also used to calculate the social security contributions in case of small to
medium enterprises.
General government sector (S.13)
4.7.15 Two government departments are involved in manufacturing; publication, printing and
reproduction of recorded media (NACE 22) and manufacture of furniture: manufacturing
n.e.c. (NACE 36). For further details reference should be made to sub-section 4.7L. Prior
the implementation of ESA 95 these two departments formed part of public administration
and not part of manufacturing.
4.7.16 One government enterprise is involved in manufacturing; building and repairing of
ships and boats (NACE 35.1). Annual reports and financial statements are used to compile
the full sequence of accounts suggested in ESA 95. As from 2004, this enterprise has been
reclassified as a non-financial corporation after a restructuring programme launched in 2003.
160
National Accounts Unit
Gross National Income Inventory
Non-Profit Institutions Serving Households (S.15)
4.7.17 As it was previously mentioned in the last chapter, a small number of organisations in
activities of publishing, printing and reproduction of recorded media – NACE 22 and
manufacture of chemicals and chemical products – NACE 24 fall under the NPISH sector
(S.15). The STBS survey is the main source used to estimate compensation of employees for
NPISHs in NACE 22. This component is estimated as the product of compensation of
employees per full-time equivalent from the STBS survey and the full-time equivalent
employees in NPISHs.
Compensation of Employees (D.1) = (COE/FTE employees_STBS survey)*(FTE
employees_NPISHs)
As regards NACE 24 a benchmark estimate is taken as at 2000 and it is extrapolated forward
using the growth rate of RPI index.
4.7E Electricity, Gas and Water Supply
4.7.18
The activities of Section E are distinguished in two industries for compensation of
employees and employment as for output etc. There is no gas, steam or hot water supply
activity on the island.
4.7.19
Compensation of employees in section E amounts to Lm20.4 million in 2001, or
2.52% of total compensation of employees in all industries and 1.17 per cent of Gross
Domestic Product.
Per full-time equivalent employees, compensation of employees in
Section E equals Lm6,880 in 2001.
NACE E
40
41
2001
Electricity, gas, steam and
hot water supply
Collection, purification and
distribution of water
Economic Statistics Division
Compensation of Employees
% of
% of all
Section E
Industries
Lm'000
% of
GDP
Employment
Full-time
equivalent
12,376
60.79%
1.53%
0.71%
1,675
7,981
20,357
39.21%
100.00%
0.99%
2.52%
0.46%
1.17%
1,284
2,959
161
Gross National Income Inventory
4.7.20
The main sources used for compensation of employees are:
(a) Audited annual financial statements
(b) Quarterly returns from Enemalta Corporation (Electricity Division) and Water
Services Corporation
(c) ETC database
4.7.21
Audited financial statements include data on gross wages and salaries, capitalised
staff costs, social security costs, directors’ emoluments and average number of employees for
the financial year. These statements are available with a time lag of over a year. Quarterly
returns include data on gross wages and salaries, wages and salaries on capital works, social
security contributions paid by the employer in respect of employees and the number of fulltime employees at the end of the quarter.
4.7.22
The financial year of the annual audited accounts of the corporations falling under
this NACE category does not coincide with the calendar year. In fact this financial year
closes on 30th September. Use is made of the quarterly returns to rescale the annual figure
for the year ending September so that the sum of the quarters is equal to the financial
statements. In this way, whilst the quarterly distribution is maintained, the sum of the four
quarters ending September tallies with the accounts. Therefore NSO does not take the
accounts for the period ending September to be equal to that for the calendar year under
review.
NACE 40
4.7.23
Data for compensation of employees are received on a quarterly basis from
Enemalta Corporation (Electricity Division). An adjustment is made to the quarterly data
based on the relationship between data for compensation of employees as derived from the
latest annual audited financial statements and data for the same accounting period extracted
from quarterly returns. When audited accounts for the financial year ending 30th September
are eventually published, quarterly estimates are re-scaled to come in line with the annual
data from the financial statements.
162
National Accounts Unit
Gross National Income Inventory
4.7.24
Employment data are derived from the return submitted by the Electricity Division.
ETC data cannot be used in this case, since the database does not distinguish between the
three divisions but shows Enemalta Corporation as one unit.
NACE 41
4.7.25
Quarterly data for gross wages and salaries and social security contribution paid by
the employer in respect of employees are submitted by the Water Service Corporation (WSC)
to the National Accounts Unit. An adjustment is made to quarterly data based on the
relationship between data for compensation of employees as derived from the latest annual
audited financial statements and data for the same accounting period extracted from quarterly
returns.
When the audited accounts for the financial year ending 30th September are
eventually published however, compensation of employees is re-calculated and the
preliminary quarterly estimates are then re-scaled to bring in line with the annual data from
the financial statements.
4.7.26
The number of persons employed by the WSC are extracted from the ETC database
and cross checked with the quarterly returns and with the average employment figure found
in the annual accounts. Persons employed with the Wastewater Section are excluded.
4.7.27
The financial statements of Malta Desalination Services (MDS) Ltd are also used
extensively to arrive at compensation of employees for the financial year that also ends on
30th September. Data on employment are extracted from the ETC database and are doublechecked with average employment shown in financial statements. Preliminary estimates are
based on the number of full-time equivalent employees and an average wage per employee
resulting from the latest audited financial statements but adjusted for any cost of living
increase. Preliminary quarterly estimates are eventually re-scaled to come in line with the
annual data from the financial statements when published.
4.7.28
Compensation of employees of water bowser operators is based on the number of
employees as per preliminary report on the development of a programme of measures for
Malta groundwater and an estimated gross wage, which is adjusted from year to year by the
cost of living increase.
Economic Statistics Division
163
Gross National Income Inventory
4.7F
Construction
4.7.29
Box 4.7F.1 indicates that the compensation paid to employees working in the
construction sector amounts to 4.0 per cent of the total compensation of employees in the
overall economy – this is equivalent to 1.9 per cent of GDP at market prices.
Box 4.7F.1: Construction, Compensation of Employees in 2001
NACE Industry
Compensation of Employees, 2001
Lm’000s
% of Total COE
% of GDP
32,428
4.0
1.9
45
Construction
4.7.30
Compensation of employees is calculated on the basis of the average of the
following: the full-time equivalent compensation obtained from the SBS (for which the latest
available is established as the benchmark year) and the per full-time equivalent obtained from
the STBS. Compensation of employees per capita is then extrapolated for the later years in
which the SBS is not available using data on changes in cost of living allowances; a minor
adjustment is added in respect of each quarter to reflect the increase in the individual
worker’s experience.
4.7G Wholesale and Retail Trade; repair of motor vehicles, motorcycles and personal
and household goods
4.7.31
Box 4.7G.1 indicates that the compensation paid to employees working in the
wholesale and retail trade sector makes up 9.1 per cent of total compensation of employees in
the economy, and 4.2 per cent of gross domestic product at market prices.
Box 4.7G.1: Wholesale and Retail Trade, Compensation of Employees 2001
NACE
Industry
50
Sale, maintenance and repair of motor
164
Compensation of Employees, 2001
% of Total
Lm’000s
COE
% GDP
10,366
14.2%
0.6%
National Accounts Unit
Gross National Income Inventory
vehicles and motorcycles; retail sale of
automotive fuel
Wholesale trade and commission trade
services, except of motor vehicles and
motorcycles
51
Retail trade services, except of motor
vehicles and motorcycles; repair
services of personal and household
goods
52
Total Section G
4.7.32
37,455
51.3%
2.1%
25,246
73,067
34.6%
9.1%
1.4%
4.2%
Compensation of Employees is calculated directly from the SBS and is defined as
the sum of total Wages and Salaries, Payments to Outworkers and Social Security Costs and
is compiled directly from the SBS for those years in which the SBS is available. An
adjustment for wages and salaries paid in kind is made separately.
4.7.33
For those years in which SBS is not available, compensation of employees per capita
is extrapolated using data on changes in cost of living allowances. Employment in the
benchmark years is extrapolated at NACE three-digit level on the basis of employment from
the Employment and Training Corporation. These estimates are revised with data from the
SBS survey, once this is made available to the national accounts.
4.7H Hotels and Restaurants
4.7.34
A distinction is made between hotels and other accommodation (NACE 55.1 and
55.2) and catering establishments (NACE 55.3 – 55.5). Compensation of employees for
NACE 55 amounts to Lm57.8 million or 3.3 per cent of the GDP in 2001. For the same year
compensation of employees per full-time equivalent amounts to Lm4,957. The sources used
to calculate compensation of employees are:
ƒ
Structural Business Survey
ƒ
National Accounts Hotels Census
Economic Statistics Division
165
Gross National Income Inventory
Box 4.7H.1: Hotels and Restaurants (NACE 55) – Compensation of Employees17
NACE Industry
55 Hotels and Restaurants
Compensation of Employees 2001
Employment - 2001
% of Total
Full-time and Part-time
COE
employees
Lm'000s
% GDP
FTE
57,843
7.1
3.3
15,068
11,669
Hotel and Other accommodation (NACE 55.1 and 55.2)
4.7.35
Information about compensation of employees and employment of hotels is taken
directly from the National Accounts Hotels Census. As regards to other accommodation
units compensation of employees is estimated to make up for 2 per cent of output. It is
assumed that employees are part-time employed in NACE 55.2. Since we do not have
enough information about the number of workers employed in other accommodation units an
estimate has been done by assuming an annual wage of Lm3,000 per worker which is
extrapolated forward using the growth rate of the item index of domestic help. Therefore the
number of employees is estimated as:
No of Employees Part-time = Total Compensation of Employees/Annual wage per worker
Restaurants, bars and catering establishments (NACE 55.3-55.5)
Bars and Restaurants (NACE 55.3-55.4)
4.7.36
Compensation of Employees for bars and restaurants is estimated using data from
the SBS as follows:
ƒ
Calculate the average wage/fte from SBS – Nace 55.3/55.4;
ƒ
The average wage rate Nace 55.3/55.4 from the SBS is then calculated as a ratio to the
wage/fte of hotels from the SBS;
ƒ
The above ratio is then applied to the COE/fte of hotels from the hotels census
provided by the National Accounts;
17
As at news release No 96/2007 issued on 7th June 2007
166
National Accounts Unit
Gross National Income Inventory
ƒ
Unless data is available COE/fte for the following years is estimated by adjusting cost
of living allowance.
Compensation of Employees (COE) = Estimated COE/fte * FTE employees
Canteens and Catering (Nace 55.5)
4.7.37
Compensation of employees for canteens and catering services is estimated using
the COE per full-time equivalent from the Structural Business Survey between 1999 and
2002.
Compensation of Employees (COE) = COE/fte from SBS 2002*FTE employees
4.7I
4.7.38
Transport, Storage and Communication
The Total Compensation of employees for NACE I contribute to a share of 10.35
per cent of the Total Economy Compensation of Employees (this is equal to 11.3 per cent in
terms of gross value added) in 2001. Per full-time equivalent employee, compensation of
employees in NACE I was Lm6,671 in 2001.
2001
Nace
Compensation of Employees
Industry
60 Land Transport
61 Water Transport
62 Air Transport
Supporting and Auxiliary
63
Transport Activities
Post and
64
Telecommunications
Nace I
4.7.39
Employment, Employees
7,763
4,898
25,851
0.96
0.61
3.20
0.45
0.28
1.49
Number of
Full-Time
Employees
1,166
602
2,007
23,360
2.89
1.35
21,672
2.68
83,544
10.35
Lm’000s
Percentage of Percentage of
Total COE
GDP
Number of FTEGVA/FTE
Employees
1,584
604
2,007
16
10
17
3,165
3,298
15
1.25
2,842
2,884
20
4.82
9,782
10,377
17
The revision from the old approach to the new system in line with the ESA 95
increased the Compensation of Employees as depicted in the table below:
Economic Statistics Division
167
Gross National Income Inventory
ESA 95
2001
Nace I
2000
2001
2002
2003
4.7.40
Prior ESA 95
Compensation
Per Capita Employment
Full-Time
of Employees
COE
Income
Employees
Lm'000s
Lm
Lm'000s
75,568
9,365
8,069
50,461
83,544
9,782
8,541
56,848
84,850
9,424
9,004
62,211
83,964
9,455
8,880
58,823
Full-Time
Employees
7,647
7,816
7,791
7,647
Per Capita
COE
Lm
6,599
7,273
7,985
7,692
The revision from the old to the new approach incorporated companies that might
have been misclassified previously. These new nomenclature changes increased the full-time
employment level by around 24 per cent. Moreover, the increase in the Compensation of
Employees per full-time employee was due to the availability of more direct sources being
used in the ESA calculation; therefore, much less estimates had to be carried out.
4.7.41
Main sources used are:
-
Annual Censuses carried out by the National Accounts Unit covering Land
Transport (36.6 per cent in terms of Full-Time Equivalent Gainfully
Occupied) and Travel Agents
-
Annual Reports and Financial Statements
-
Quarterly letters and questionnaires (used for the quarterly calculations until
Annual Reports and Financial Statements become available)
4.7.42
Short-Term Business Statistics
A large percentage of Compensation of employees within NACE I is being covered
by the Annual Reports and Financial Statements. The following table shows clearly the main
data sources (in percentage terms) within each NACE industry within the Transport and
Communication sector:
2001
Nace
60
168
Compensation of Employees
Industry
Land Transport
Annual
Reports and
Financial
Statements
Lm'000s
Census
(National
Accounts
Unit)
Lm'000s
1,385
Grand
Total
Lm'000s
7,746
%
18
National Accounts Unit
Gross National Income Inventory
61
62
63
Water Transport
64
Post and
Telecommunications
Air Transport
Supporting and
Auxiliary Transport
Activities
4.7.43
4,030
25,243
15,162
20,446
74
7,592
4,805
25,286
23,088
85
100
99
89
21,306
96
Within NACE 60, 54.8 per cent of Compensation of Employees is covered by Taxis
and Garage Hire.
Here, the only available links are the Turnover Benchmark Report
available by the Tax Compliance Unit and quarterly data on the number of taxis and garage
hire vehicles provided by the Licensing and Testing Department. The remaining 27.32 per
cent of the Compensation of Employees are covered by Freight Transport by Road. Here,
sources are a bit scarce. Some figures were available from Business Statistics and linked
with Import and Export figures whilst the Compensation of Employees was raised according
to the Cost of Living Adjustment.
Non-Governmental Organisations survey was the main source used for compensation of
employees in NPISH sector.
4.7J
Financial Intermediation
4.7.44
The Total Compensation of employees for NACE J contributes to a share of 6.17 per
cent of the Total Economy Compensation of Employees (this is equal to 6.0 per cent in terms
of gross value added) in 2001. Per full-time equivalent employee, compensation of
employees in NACE J was Lm9,444 in 2001.
2001
Nace
Compensation of Employees
Industry
Financial intermediation
services
Insurance and pension
66
funding services
Services auxiliary to
67
financial intermediation
Nace J
65
Economic Statistics Division
Employment, Employees
Number of Number of
Percentage
Percentage
Full-Time
Lm’000s of Total
FTEGVA/FTE
of GDP
Employees Employees
COE
40,348
5.00
2.33
4,090
4,100
17
1,892
0.23
0.11
189
189
52
7,428
0.92
0.43
916
970
14
49,668
6.15
2.87
5,195
5,259
18
169
Gross National Income Inventory
4.7.45
As can be observed from the table below, the transition from the Old Approach to
the New Approach (i.e. upon implementing the ESA 95) increased the per capita
Compensation of Employees very marginally.
ESA ’95
Nace
2000
2001
2002
2003
4.7.46
Compensation
Per Capita Employment
Full-Time
of Employees
COE
Income
Employees
Lm'000s
Lm
Lm'000s
48,098
5,308
9,061
45,087
49,668
5,195
9,561
46,068
49,690
5,057
9,826
45,783
53,061
5,022
10,566
50,617
Prior ESA ’95
Full-Time
Employees
5,002
4,860
4,708
4,598
Per Capita
COE
Lm
9,014
9,479
9,725
11,008
Moreover, the Total Compensation of Employees for NACE J increased by an
average of Lm3.4 million per annum. This is due to the inclusion of a couple of companies
that were previously being misclassified. The introduction of such new companies increased
the employment level by an average of 7 per cent. Additionally, the slight drop in the
Compensation of Employees in 2003 is only due to a revision in the source data.
4.7.47
Main sources used are:
-
Insurance Census (carried out annually by the National Accounts Unit)
-
Annual Reports and Financial Statements
-
Survey carried out by the Central Bank of Malta covering Deposit Money
Banks and International Banks
4.7.48
As can be illustrated in the table below, a high proportion of Compensation of
Employees within the Financial Intermediation sector is covered by the survey conducted by
the Central Bank of Malta. Moreover, another 9 per cent is covered by the Census carried out
within the National Accounts Unit (where the response rate is equal to 100 per cent, implying
that no grossing up is needed).
170
National Accounts Unit
Gross National Income Inventory
2001
Nace
Industry
65 Financial intermediation
66
67
services
Insurance and pension
funding services
Services auxiliary to
financial intermediation
Nace J
% of Total
Compensation of Employees
Census
Annual Reports
Central Bank
(National
and Financial
Survey
Accounts Unit)
Statements
Lm'000s
Lm'000s
263
39,610
1,827
2,833
4,403
4,923
10%
4,403
9%
39,610
81%
Grand
Total
Lm'000s
39,873
100%
1,827
100%
7,236
97%
%
48,936
4.7K Real Estate, Renting and Business Activities
Box 4.7K.1: Real Estate, Renting and Business Activities, Compensation of Employees,
2001
NACE Industry
70 Real estate services
Renting services of machinery and
equipment without operator and of
71 personal and household goods
72 Computer and related services
73 Research and development services
74 Other business services
Total Section K
4.7.49
Compensation of
Employees, 2001
% of
% of
Lm’000s Total
GDP
2,580
0.3%
0.2%
4,002
6,130
0
26,957
39,669
0.5%
0.8%
0.0%
3.3%
4.9%
0.3%
0.4%
0.0%
1.8%
2.7%
Compensation of employees within the real estate services industry (NACE 70) is
estimated by using information on wages and salaries paid in cash and employers’ social
security contributions on behalf of their employees directly from the Structural Business
Statistics (SBS) Survey.
4.7.50
Compensation paid to employees working within the computer and related services
industry (NACE 72) and other business services (NACE 74) was estimated by using
information on basic wages and salaries paid in cash and employers’ social security
contributions collected within the SBS and the Short-Term Structural Business Statistics
Survey, and employment data from both the LFS and ETC statistics. 2001 was chosen as the
benchmark year, given that data from both the STBS and SBS were available. The average
Economic Statistics Division
171
Gross National Income Inventory
of the basic wage per full time equivalent derived from the SBS and STBS was taken and
multiplied by LFS employment for the total economy distributed across industry using ETC
industry distribution coefficients.
Backcasts and forward extrapolations were made by
assuming that the estimated basic wage in 2001 increases and decreases in line with the cost
of living allowances granted to employees by employers as declared in the annual
government budget.
4.7.51
Employers and employees do not pay social security greater than ten percent of a
threshold basic wage. Employers’ social security contributions are calculated on the smaller
of the threshold basic wage and the benchmark basic wage for the benchmark year. For years
prior to or later than the benchmark year, D.12 is calculated on the basis of the lesser of the
threshold basic wage and the basic wage back cast or extrapolated using cost of living
allowances as described in paragraph 4.7K.2.
The result is employers’ social security
contributions per full-time employees, which is multiplied by LFS for the total economy
distributed by ETC industry coefficients.
4.7L
4.7.52
Public Administration and Defence
Compensation of employees of the Public Administration and Defence sector is
derived from the Departmental Accounting System (DAS) and financial statements by ExtraBudgetary Units (EBUs) and Local councils. This administrative source is made available to
the NSO on-line, whilst management accounts of EBUs and local councils are submitted
quarterly and audited financial statements are made available on an annual basis. For a more
detailed explanation refer to section 5.9.
4.7M
Education
4.7.53
Compensation of employees of section M represent a share of 4.52 per cent of GDP
by income approach and 9.70 per cent of total compensation of employees of the whole
economy.
Box 4.7M.1: Compensation of Employees of Section M18
NACE
80
18
Industry
Education services
% of Total
COE % of GDP
Lm'000s
78,304
9.70
4.52
As per News release no: 96/2007 issued on 8th June 2007
172
National Accounts Unit
Gross National Income Inventory
4.7.54
The main sources used to estimate compensation of employees are:
ƒ
Government statistics
ƒ
Financial Statements
ƒ
Surveys
Box 4.7M2: Compensation of Employees by Institutional Sector of Section M for 200119
Compensation of Employees
% of Compensation of Employees of Section M
4.7.55
Units
Lm millions
Percentage
S.11
4.91
6.27
S.13
64.83
82.8
S.14
0.47
0.6
S.15
8.09
10.33
Total
78.30
100.00
Education services are in the large part provided by the government institutional
sector. Around 82.8 per cent of total compensation paid to employees working in this
industry is paid for by the state. Information on wages and salaries paid in cash and social
security contributions paid on behalf of employees by central government is obtained from
the government’s revenue and expenditure reports. For extra budgetary units operating
within the education industry, this information is collected via a specific survey.
4.7.56
Around 10.33 per cent of the compensation of employees are covered by the Non-
Profit Institutions serving Households (NPISH) sector (S.15). Compensation of employees in
NPISHs are collected from the Archdiocese’s financial statement of revenue and expenditure
of all church institutions and supplemented with data collected from the financial statements
of seminaries, which are not included in the Archdiocese financial report.
4.7.57
The remaining employees work with the non-financial institutional sector (S.11) and
the households sector (S.14). The compensation paid to these employees, amounts to around
6.87 per cent and 0.6 per cent of the total paid to employees in the education industry (NACE
80). A number of sources were used to estimate this share of total compensation as shown in
Box 4.7M.3 below.
19
As per News release no: 96/2007 issued on 8th June 2007
Economic Statistics Division
173
Gross National Income Inventory
Box 4.7M.3 Main Data Sources used in the Estimation of Compensation of Employees, Sectors
S.11 and S.14, Education
Type of Enterprises
Secular Schools
Source
Survey by Education Division, NSO
Direct questionnaires; financial statements; survey by Education Division,
English Language Schools
NSO
Driving Lessons
Employment and Training Corporation Employment
Adult and Other Education n.e.c Adult and Other Education survey by Education Division, NSO
4.7.58
The Education Unit within the NSO compiles a survey on secular schools, which
contains a question about total compensation paid to employees, without any distinction
between wages and salaries paid in cash (D.11) and employers’ social security contributions
(SSC) on behalf of employees (D.12). All private non-church schools providing pre-primary,
primary, secondary and post-secondary education are covered. The information provided by
respondents is grossed up to the total population on the basis of the total number of pupils
frequenting these schools, also collected by the Education Unit. The breakdown between
D.11 and D.12 is estimated using the ratio of employers’ SSC to total compensation of
employees of church schools.
4.7.59
Compensation paid to employees working with English Language Schools is
estimated by using information on D.11 and D.12 published in financial statements and
reported in direct questionnaires to the largest schools collected by the National Accounts
Unit. This information is grossed up to the total by using information on total teaching staff
and number of pupils in English language schools collected through an annual survey
conducted by the Education Unit.
4.7.60
Compensation of employees working with driving schools has been estimated on the
basis of an estimated wage per full-time equivalent employee equal to Lm4,990 for the
benchmark year 2000. This average wage is increased each year with the cost of living
allowances declared in the government Budget estimates and multiplied by the number of
employees working with driving schools as published by the Employment and Training
Corporation. The subdivision of total compensation between D.11 and D.12 is assumed to be
the same as that of employees working with church schools.
4.7.61
Compensation paid to employees working in adult and other education is estimated
by multiplying an estimated average wage adjusted to take into account changes in cost of
174
National Accounts Unit
Gross National Income Inventory
living allowances each year, by employment in enterprises providing this class of education
as collected by the Education Unit within the NSO. The subdivision between D.11 and D.12
is assumed to be the same as that of employees working with English language schools.
4.7N
4.7.62
Health and Social Work
Compensation of employees of section N – health and social work activities
constitute to 3.8 per cent of the GDP by income approach and 8.1 per cent of total
compensation of employees for the whole economy.
Box 4.7N.1: Compensation of Employees for Section N in 200120
NACE Industry
85
4.7.63
Health and Social
Work activities
Lm'000s
% of
Total
COE
65,109
8.1
% of GDP
3.8
Around 87.4 per cent of compensation of employees is covered by the government
sector (S.13), 7.01 per cent by the Non-Profit Institutions Serving Households (S.15) and the
rest by the Non-Financial Corporations sector and households (S.11 and S.14).
Box 4.7N.2: Compensation of Employees by Institutional Sector of Section N for 200121
Compensation of Employees
% of Compensation of Employees of Section N
4.7.64
Unit
Lm millions
Percentage
S.11
2.91
4.47
S.13
56.92
87.42
S.14
0.72
1.1
S.15
4.57
7.01
Total
65.11
100.00
The Non-Governmental Organisations survey and financial statements are the main
sources used to estimate compensation of employees paid on behalf of employees by
organisations performing health and social work activities in the NPISH sector.
For
organisations having only employment data, compensation of employees are calculated as the
20
21
As per news release no 96/2007 published on 8th June 2007
As per news release no 96/2007 published on 8th June 2007
Economic Statistics Division
175
Gross National Income Inventory
product of compensation of employees per FTE employees from direct sources and FTE
employees of these organisations.
Compensation of Employees (D.1) = (COE/FTE)*(FTE employees)
4.7.65
Compensation of employees paid to the employees by the government sector (S.13)
is estimated using the government departmental accounting system (DAS) and any available
government financial statements. As regards to the non financial corporations sector (S.11),
information of wages and salaries paid to employees by private companies are calculated
using financial statements if they are available and the rest are estimated using 2000 as a
benchmark year – Lm5,000 – and it is adjusted backward or forward by the cost of living
allowance.
4.7O
Other Community, Social and Personal Activities
4.7.66
Compensation of employees in NACE O represents a share of 1.94 per cent of GDP
in 2001.
Box 4.7O.1 –Breakdown of compensation of employees of NACE O22
NACE Industry
4.7.67
22
% of Section
Lm'000s
O
% of Total
COE of all
industries % of GDP
90
Sewage and Refuse disposal, sanitation and
similar activities
9,477
28.18
1.17
0.55
91
Activities of membership organisations
4,943
14.70
0.61
0.29
92
93
Recreational, Cultural and Sporting activities
Other services activities
Total Section O
14,719
4,488
33,627
43.77
13.35
100.00
1.82
0.56
4.17
0.85
0.26
1.94
The main sources used to estimate compensation of employees are:
ƒ
Government statistics
ƒ
Financial statements
ƒ
Structural business statistics
As per news release no: 96/2007 published on 8th June 2007
176
National Accounts Unit
Gross National Income Inventory
Box 4.7O.2: Compensation of Employees by Institutional Sector of NACE 90 - 200123
Compensation of Employees
% of Compensation of Employees of NACE 90
4.7.68
Unit
Lm millions
Percentage
S.11
0.79
8.33
S.13
8.64
91.14
S.14
0.05
0.53
Total
9.48
100.00
In NACE 90 compensation of employees constitute a share of 28.18 percent of total
NACE O. Government statistics are used to calculate compensation of employees in the
government sector (S.13). The government sector accounts for about 91.14 percent of total
compensation of employees in this activity. As regards to the non-financial corporation
sector (S.11), financial statements are used to calculate compensation of employees, whereas
for those employees engaged within the households sector (S.14), compensation of
employees is estimated as a product of the average wage paid per full-time employee and the
FTE employees within the households sector.
Box 4.7O.3: Compensation of Employees by Institutional Sector of NACE 91 for 200124
Compensation of Employees
% of Compensation of Employees of NACE 91
4.7.69
Unit
Lm millions
Percentage
S.11
0.31
6.27
S.15
4.64
93.73
Total
4.94
100.00
Compensation of employees in NACE 91 accounts to 14.7 per cent of compensation
of employees in NACE O. Around 93.7 per cent of the compensation of employees of this
activity is covered by the non-profit institutions serving households sector (NPISH) (S.15)
and the rest are covered by the non-financial corporations sector (S.11).
4.7.70
Compensation of employees of the following organisations – professional (NACE
91.12), trade unions (NACE 91.20), religious organisations (NACE 91.31) and other
membership organisations (NACE 91.33) in the NPISH sector are calculated using financial
statements, non-governmental organisations, band clubs and youth organisations surveys.
Since there is not enough information about convents and monasteries and churches of
various religions (NACE 91.31), a benchmark wage of Lm3,000 and Lm5,000 in 2000 is
applied respectively and it is adjusted backwards or forward for cost of living purposes. The
same procedure is applied for activities of political organisations (NACE 91.32).
Employment data is derived from the ETC database, the Business Register and surveys.
However adjustments have been made to include unregistered employment.
23
As per news release no: 96/2007 published on 8th June 2007
Economic Statistics Division
177
Gross National Income Inventory
4.7.71
Compensation of Employees of Non-Financial Corporations (S.11) is calculated
using financial statements and financial returns.
Box 4.7O.4: Compensation of Employees by Institutional Sector of NACE 92 for 200125
Compensation of Employees
% of Compensation of Employees of NACE 92
4.7.72
Unit
Lm millions
Percentage
S.11
9.91
67.36
S.13
2.78
18.90
S.14
0.24
1.63
S.15
1.78
12.10
Total
14.71
100.00
Compensation to employees working in recreational, cultural and sporting activities
(NACE 92) were estimated using various sources amongst which specific surveys conducted
by the Culture Unit within the NSO, the Structural Business Statistics (SBS) survey and
financial statements of large companies. Given that NACE 92 contains a number of activities
that are varied in nature, estimates were made separately at the three-digit NACE activity
level and wherever possible at the class level.
4.7.73
Specific surveys containing questions on total compensation to employees, full-time
and part-time employment conducted by the Culture Unit (NSO) were used for the following
activities: NACE 92.13, cinemas, NACE 92.34, dance school activities and NACE 92.52,
museums. The subdivision of D.1 into D.11 and D.12 was derived from ratios of employers’
social security contributions to total compensation of employees compiled by the SBS in
2000 and 2001.
4.7.74
For the larger companies operating within NACE 92.1, 92.20, 92.34 and in
particular 92.7 (betting activities), compensation of employees, subdivided into D.11 and
D.12 is collected directly from their financial statements. The companies are selected from
the Business Register on the basis of their turnover and employment size.
4.7.75
Finally for those employees that are not covered either by direct surveys or financial
statements an estimate is made by using the basic wage per full time equivalent from the SBS
for that given year. Employment covered by direct information (ETC provides data on
individual companies) is deducted from total employment, yielding employment of
enterprises not covered by direct information. This is multiplied by basic wages from the
SBS for each respective NACE class. When SBS is not available, such as in the case of
24
25
As per news release no: 96/2007 published on 8th June 2007
As per news release no: 96/2007 published on 8th June 2007
178
National Accounts Unit
Gross National Income Inventory
classes 92.5, 92.6, 92.7 the basic wage from one or two financial statements or Business
Register questionnaire is used. The subdivision of D.1 into D.11 and D.12 is obtained from
information within the SBS.
4.7.76
Total employment for NACE 92 is derived on a case-by-case basis. Sources are
compared at three-digit NACE level and the most reliable or appropriate source is chosen at
that level. For classes 92.1, 92.2, 92.3 and 92.4 the ETC and the Business Register sources
are used for employment. Classes 92.5, 92.6 and 92.7 are not surveyed by the SBS, except
for a few enterprises, such that information on employment in these classes is strongly
underestimated. For class 92.5, the employment from the direct survey conducted by the
Culture Unit, which is much higher than the SBS, was used. SBS employment data for NACE
92.6 was supplemented with information collected by the NPISH expert on sports
organisations, as the SBS tends to underestimate employment in this institutional sector.
Employment in NACE 92.7 is collected from ETC.
4.7.77
12 per cent of total compensation to employees working within NACE 92 is paid for
by the NPISH institutional sector. This proportion is compiled from financial statements,
youth organisations and sports organisations’ surveys are the main sources used. An average
wage is applied for football players.
4.7.78
Nineteen percent of total compensation to employees within NACE 92 is paid for by
the state. Information for the proportion of employees working with central government is
obtained from the state’s revenue and expenditure reports. For those employees working
with extra budgetary units, direct surveys are used.
4.7.79
The compensation of employees of establishments providing dry cleaning services
(NACE 93.01) is collected from financial statements for those companies for which this
information is available. The compensation of employees of the companies not covered by
financial statements is estimated by assuming that they pay the same compensation per
employee as those covered by direct information, and is multiplied by their employment,
which is obtained from ETC records.
4.7.80
For physical well-being activities (NACE 93.04), compensation paid to employees is
collected directly from the Sports Organisation Survey.
Economic Statistics Division
179
Gross National Income Inventory
4.7.81
Compensation paid to employees working with establishments providing
hairdressing and other beauty treatments (NACE 93.02), funeral services (NACE 93.03) and
other service activities (NACE 93.05), is estimated using the per capita compensation of
employees working in NACE 93.01.
4.7P
Private Households with Employed Persons
4.7.82
No compensation of employees is registered under NACE 95 as the persons
employed in this industry are considered to be self-employed.
4.8
Other Taxes on Production and Imports
4.8.1
This category is composed mainly of licences on the provision of services. All
information was obtained from government accounts and financial statements.
The
distribution of Other Taxes on Production according to NACE A60 classification was done as
follows:
4.8.2
Where a particular licence was easily identified to fall under a particular NACE
category this was directly allocated to its respective NACE. Out of the total taxes on
production, 45 per cent were directly allocated to a particular NACE category.
4.8.3
The remaining 55 per cent were distributed among the NACE categories based on
the number of enterprises registered in the Business Register (BR) in each NACE category.
The number of enterprises in the BR was calculated after excluding any inactive or ‘dead’
units.
NACE 64, 73, 75 and 99 were also excluded since these are mainly composed of
government entities.
4.8.4
In using this allocation procedure, the NSO managed to use any direct information
available, whilst at the same time allocating the remaining taxes among economic sectors
proportionally to the number of enterprises.
180
National Accounts Unit
Gross National Income Inventory
D.29 Other Taxes on Production
A: Agriculture, Hunting and Forestry
B: Fishing
C: Mining and Quarrying
D: Manufacturing
E: Electricity, Gas and Water Supply
F: Construction
G: Wholesale and Retail Trade; Repair of Motor Vehicles
H: Hotels and Restaurants
I: Transport, Storage and Communication
J: Financial Intermediation
K: Real Estate, Renting and Business Activities
L: Public Administration and Defence; Compulsory Social Security
M: Education
N: Health and Social Work
O: Other Community, Social and Personal Service Activities (including
Nace P)
Total Other Taxes on Production
2001
(Lm’000s)
375
46
8
392
0
399
1,638
477
1,772
25
682
0
81
97
336
6,328
4.9
Other Subsidies on Production
4.9.1
Subsidies on production have been identified from government accounts and
financial statements. Most of the subsidies are given to public corporations and therefore it
could be easily allocated to a particular NACE category.
4.9.2
In 2001 there is one type of subsidy namely the ‘Training Grants’, which cannot be
attributed directly to one particular NACE category. As a result, these were distributed
among the manufacturing sectors (NACE 15-36), which are the most likely to benefit from
training grants for industry. The allocation among these sectors was based on the number of
enterprises registered in the Business Register (BR) in each sector.
Economic Statistics Division
181
Gross National Income Inventory
D.39 Other Subsidies on Production
A: Agriculture, Hunting and Forestry
B: Fishing
C: Mining and Quarrying
D: Manufacturing
E: Electricity, Gas and Water Supply
F: Construction
G: Wholesale and Retail Trade; Repair of Motor Vehicles
H: Hotels and Restaurants
I: Transport, Storage and Communication
J: Financial Intermediation
K: Real Estate, Renting and Business Activities
L: Public Administration and Defence; Compulsory Social Security
M: Education
N: Health and Social Work
O: Other Community, Social and Personal Service Activities (including
Nace P)
Total Other Subsidies on Production
2001
(Lm’000s)
363
25
0
4,144
1,883
0
0
0
5,627
0
644
0
91
0
2
12,779
4.10
Gross Operating Surplus
4.10.1
This aggregate is calculated as a residual. It is the balance that is arrived at after
subtracting compensation of employees and other taxes on production, and adding other
subsidies on production, from the net value added.
4.11
Mixed Income
4.11.1
This aggregate is calculated as a residual.
4.12
Consumption of Fixed Capital
4.12.1 The calculation of Capital Stock (CS) and Consumption of Fixed Capita (CFC) is
based on two approaches. The direct method was applied in the case of Dwellings (Refer to
Chapter 3, paragraph 3.17), whilst the PIM model was applied for all the remaining assets.
182
National Accounts Unit
Gross National Income Inventory
4.12.2 The PIM model is recommended by ESA 95 for estimating Gross Capital Stock
(GCS) if GCS cannot be calculated from direct observation of the capital assets. Given that
ESA 95 prescribes that the CFC must be estimated on the basis of the GCS, the PIM model is
also applied to calculate CFC.
4.12.3 The PIM model estimates GCS as the sum of fixed capital ‘surviving’ in the current
period from earlier gross fixed capital formation (GFCF), i.e. which are still in use in the
current period. The following core data are essential in order to estimate the GCS and
subsequently CFC using PIM:
•
historic series of data relating to GFCF;
•
information about service life of capital assets and how the retirements of those
capital assets relate to the average service live (i.e. the survival function)
4.12.4 Both the historic capital formation series and service lives applied will be discussed
below. This will be followed by a general explanation of the estimation of GCS and CFC
using PIM.
Historic series of GFCF - General Government (S.13)
4.12.5
During the Phare 2000 project on CS and CFC, NSO has been advised to collect data
dating back to 1900 for buildings and structures and back to 1955 with respect to machinery
and equipment, in order to improve the previous estimate made for non-market producers.
Data for general government dating back to 1919 has been collected from administrative
records achieved at the National Library.
4.12.6
Data going back to 1919 is available at a very high level of detail at the National
Library, the main sources being the Government Department Reports and the Government
Statements of Expenditure. The data collected from the National Library cover the years
1919 to 1975. The years 1977 to 1994 were covered using the Government Financial Report,
available at the NSO. Data from 1995 onwards were forwarded to the National Accounts
Unit by the Government Finance Unit.
Government transfer of fixed assets and/or non-produced non-financial assets to public
corporations
Economic Statistics Division
183
Gross National Income Inventory
4.12.7
Adjustments had to be made to account for a number of government transfers of
fixed assets and/or non-produced non-financial assets to public corporations.
These
adjustments were not included in the previous estimate of CFC, and thus CFC of the General
Government Sector was being overestimated. The data collected from the above mentioned
sources (paragraph 4.12.6) have been supplemented by further information derived from
annual reports and financial statements of various corporations and from the Financial
Reports issued by Government of Malta and The Treasury. Below is a list of such transfers,
and treatment in national accounts
a) Air Malta plc – 2004 – Transfer of an emphyteutical concession on property to Air
Malta plc by the government amounting to Lm21,298,000 with respect to Property,
plant and equipment and Lm3,066,000 with respect to investment properties. The
cost of the concession was met through an increase in the company’s issued share
capital26. The increase in share capital is also accounted for in the Financial Report
2004 issued by the Treasury in appendix H, Statement of investments as at 31st
December 2004. With respect to GCF, this transfer was treated as per Chapter II.3.2,
paragraph 2b in the ESA 95 Manual on Government Deficit and Debt. However,
following an expert advice, CFC was charged to the Non-financial Corporations given
that the assets are now owned by Air Malta plc. Consequently CFC for the General
Government will in future be lower.
b) Enemalta Corporation – 2004 – Transfer of temporary leasehold of land and
property to Enemalta Corporation by the government amounting to Lm53.5 million,
of which Lm11 million was land and Lm42.5 million was buildings. The cost of the
concession was met through an increase in the company’s issued share capital,
referred to as Government Interests in the annual report and financial statement for
the year ended 30 September 2004. This increase in share capital is shown both in the
Statement of changes in equity and the Balance Sheet of the Enemalta Corporation.
With respect to GCF, this transfer was treated as per Chapter II.3.2, paragraph 2b in
the ESA 95 manual on government deficit and debt. However, following an expert
advice, CFC was charged to the Non-financial Corporations given that the assets are
26
Source: Air Malta plc - Annual Report and Consolidated Financial Statements for the year ended 31 July
2004
184
National Accounts Unit
Gross National Income Inventory
now owned by Enemalta Corporation.
Consequently CFC for the General
Government will in future be lower.
c) Malta International Airport plc (MIA) – 1992 – By virtue of a public deed
registered on 7th February 1992 the company acquired title to the Malta International
Airport from the Government of Malta. During the year, the company acquired the
air terminal from the main shareholder for a total price of Lm15.1 million which was
not paid in cash. The cost of the concession was met through an increase in the
company’s issued share capital and a shareholder’s loan. The issued share capital
amounted to of Lm8.7 million, of which Lm8.2 million were shares issued for a noncash consideration, and the shareholder’s loan amounted to Lm7.2 million27. The
increase in share capital is also accounted for in the Financial Report 2004 issued by
The Treasury in appendix H, Statement of investments as at 31st December 1992.
The shareholder’s loan represents the assignment of all obligations relating to a
foreign currency loan originally granted by the European Investment Bank to the
Government of Malta in connection with the completion of the new air terminal. CFC
was charged to the Non-financial Corporations given that the assets are now owned
by MIA. Consequently CFC for the General Government will in future be lower.
d) Water Services Corporation – 1993 – The Water Services Corporation was
established on 20th January 1992. The Corporation took over the assets and
undertakings owned by the Government of Malta which amounted to Lm45.6 million.
A permanent debenture bearing an interest of 6% per annum has been issued to cover
the costs of the assets taken over. This debenture is referred to in the annual report
and financial statement for the year ended 30th September 1993 of the Water Services
Corporation as Government Interests.
CFC was charged to the Non-financial
Corporations given that the assets are now owned by Water Services Corporation.
Consequently CFC for the General Government will in future be lower
e) Enemalta Corporation – 1978 – Enemalta Corporation was established on the 1st
October 1977 and acquired as at that date all the assets and liabilities which vested in
or belonged to the Government of Malta. The fixed assets acquired amounted to
Lm10.1 million. CFC was charged to the Non-financial Corporations given that the
Economic Statistics Division
185
Gross National Income Inventory
assets are now owned by Enemalta Corporation. Consequently CFC for the General
Government will in future be lower.
f) Telemalta Corporation – 1976 – Telemalta Corporation (now Maltacom plc) was
established on 1st January 1975.
The fixed assets acquired amounted to Lm7.5
million. CFC was charged to the Non-financial Corporations given that the assets are
now owned by Telemalta Corporation.
Consequently CFC for the General
Government will in future be lower.
Historic series of GFCF - Financial Corporations (S.12), Non-financial Corporations (S.11)
and Households (S.14), NPISH (S.15)
4.12.8 GFCF in Malta has been compiled by the National Accounts Unit since 1954. In the
old approach, based on SNA 53, data compilation was neither by activity and sector nor by
product. As part of the Phare 2000 project on Gross Capital Formation, considerable work
has been done by NSO to collect GFCF data by industry at 2-digit NACE, by sector, and at 2digit CPA from 1995 to 2003 in line with ESA 95. At present, no distinction has yet been
made between the Non-financial Corporations and the Household sectors. However, the
National Accounts Unit is undergoing another project on sector accounts, thus this split
should be available shortly.
4.12.9 It has been observed that the previous GFCF figures were overestimated by an
average of 8 per cent. The averaged years in question were 1995 to 2003 for which a new
method in line with ESA 95 was applied. Thus, following this exercise, the old GFCF figures
were revised downwards by 8 per cent for the years 1954 to 1994.
27
Source: Malta International Airport plc - Annual Report and Consolidated Financial Statements for the year
ended 30 September 1992
186
National Accounts Unit
Gross National Income Inventory
Box 4.12.1:
Year
1995
1996
1997
1998
1999
2000
2001
2002
2003
Average
New versus old GFCF
GFCF28
ESA 95
Lm’000
288,320
306,092
305,470
338,670
346,599
391,252
357,447
298,512
369,762
GFCF29
SNA 53
Lm’000
365,175
345,265
326,443
333,561
339,975
409,475
379,506
350,648
419,242
New vs old
%
79.0
88.7
93.6
101.5
102.0
95.6
94.2
85.1
88.2
92.0
4.12.9 GFCF by the General Government Sector (S.13) was deducted from the new
backdated GFCF series (1954 to 1994), since data for S.13 was available direct from the
sources explained above. The residual, was then sub-divided into:
ƒ
NPISH S.15 (2 per cent);
ƒ
Financial corporations S.12 (2 per cent);
ƒ
Households and Non-financial corporations S.11 and S.14 (96 per cent)
This subdivision was based on the sectoral breakdown in 1995, following the expert’s advice.
4.12.10 Total GFCF for NPISH (S.15), Financial corporations (S.12), Households and Nonfinancial corporations (S.11) and (S.14) was further subdivided by asset. For each sector, the
corresponding asset breakdown available in 1995 has been applied. In case of CPA 35.3
(Aircraft and spacecraft), an adjustment was made taking into account that the national air
carrier was set up in 1973. Thus, by definition, there were no such assets owned by residents
before this year in the Maltese economy. Moreover, a further adjustment had to be made due
to the large additions and disposals of aircraft made between 1973 and 1995 which were not
fully captured during the extrapolation exercise.
Service lives
4.12.11 The second component required in order to estimate the GCS using PIM is the
average service life of the capital assets in the various industries. The average service life of
28
29
Data as per News Release 96/2007
Data as per News Release 58/2004
Economic Statistics Division
187
Gross National Income Inventory
a capital asset indicates the average time span after which a capital asset is retired. Moreover,
the necessary length of the time series on GFCF for calculating CS by applying the PIM
depends on the service life assumptions and the starting year for which CS estimates have to
be done.
4.12.12 Following the Phare 2000 project on the measurement of dwelling services for the
Maltese Islands, the service life for dwellings suggested by the OECD manual on CS and
CFC has been applied – 75 years.
4.12.13 In case of plant and machinery and other buildings and structures (excluding
dwellings), tax service lives have been applied at first. However, our expert pointed out that
tax service lives tend to be too short and that experience shows that firms use assets for a
longer time period. Thus, it was decided that a mix of different sources will be used. This
still includes tax service lives; however, further reference was made to the OECD manual and
to the expert’s suggestions.
4.12.14 Tax service lives in Malta were first introduced in 1965. These were never updated
until 2001. Amendments did not only concern the time period over which assets had to be
depreciated but also new assets had been introduced with respect to machinery and
equipment such as computers, lifts and escalators and air conditioners, which when these
rules came into effect in 1965, were not contemplated. During the Phare 2000 project on CS
and CFC it was established that whenever tax lives are updated, such changes will be very
close to reality.
4.12.15 These tax service lives were compared to the OECD average of eight other European
countries and with the expert’s suggestions.
188
National Accounts Unit
Gross National Income Inventory
Box 4.12.2: Service lives
CPA
Average
Malta Germany
29.00
5
29.11
6
29.23
6
29.52
6
30.00
32.00
33.00
34.00
4
6
6
5
35.10
10
35.30
12
36.00
10
45.00
50
45.21
20
45.21
20
72.00
4
13
Average
Average Service Lives derived from OECD paper30
Belgium Finland France Germany Iceland Norway
Sweden
15
17
18
15
22
25
23
26
20
15
17
18
15
22
25
23
26
20
15
17
18
15
22
25
23
26
20
15
17
18
15
22
25
23
26
14
22
22
14
25
25
7
15
23
23
4
26
26
10
5
10
15
9
12
20
20
9
15
15
7
17
17
10
18
18
10
8
15
15
9
21
21
11
10
22
23
37
13
15
10
16
10
14
15
15
10
54
38
45
36
56
58
66
71
60
23
16
66
(5)
4.12.16 The most relevant service lives to our country were hence applied.
Box 4.12.3: Service lives applied in the PIM Model
CPA
Code
29.00
29.11
29.23
29.52
30.00
32.00
33.00
34.00
35.10
35.30
36.00
45.00
45.21
45.21
72.00
30
UK
20
CPA Description
Machinery and equipment n.e.c.
Equipment mainly designed or used for the production of water and electricity
Catering equipment
Equipment used for construction of buildings and excavation
Computer and electronic equipment
Communication and broadcasting equipment
Medical equipment
Motor vehicles
Ships and vessels
Aircraft and spacecraft
Furniture, fixtures, fittings and soft furnishings
Construction work
Cable infrastructure
Pipeline infrastructure
Computer software
Other machinery / plant
Maximum
Service life
(M)
26
26
26
26
8
12
30
18
42
24
20
100
40
40
8
26
Average
Service life
13
13
13
13
4
6
15
9
21
12
10
50
20
20
4
13
OECD (December 1992), “Methods used by OECD countries to measure stocks of fixed capital”
Economic Statistics Division
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Gross National Income Inventory
4.12.17 Due to the fact that no relevant information on service lives is available by industry,
the PIM model was applied across sectors. Industry breakdown was subsequently done in
proportion to the old estimate which was more based on company accounts.
4.12.18 NSO (Malta) implemented ESA’95 as from calendar year 1995; therefore, starting
values for CS and CFC are needed as from 1995. Given that the highest average service life
is equal to 50 years and the discard function applied in the PIM model is assumed to be
symmetric, then the time series of GFCF data should go back to the year 1895.
4.12.19 In case of the Government Sector for which GFCF figures are available as from
1919, data had to be extrapolated backwards for the period 1845 to 1918. This was done by
applying a correction factor of 0.5. In case of all other sectors, data had to be extrapolated
backwards for the period 1845 to 1953. This was done by applying a correction factor of 0.5
for the period 1941 to 1953, whilst a correction factor of 0.4 was used for the years prior to
1941. Given the average service lives listed in Box 4.12.3, the extrapolated figures (i.e. prior
to 1954 in case of all sectors except S.13 and prior 1919 for S.13) will only have an effect on
‘Construction Work’ which has a maximum service live of 100 years.
Price Indices (base year 2000)
4.12.20 The GFCF deflator is made up of two broad components: a machinery deflator and a
construction deflator. In turn, the machinery deflator is broken down into a number of
deflators, based on the importation of machinery (unit value indices). These deflators were
introduced in 1995, when a new base year was introduced in the National Accounts Unit and
when the whole system of deflators was reviewed.
This review brought about a new
deflation system, whereby aggregates started being deflated at the lowest level of detail
possible. Previously, such level of detail was not available.
4.12.21 The deflator for construction is based on the inputs of construction such as stone,
bricks, fuel, etc and also a wage element. This split is available from 1995 onwards.
4.12.22 Therefore, in the deflation of GCF we cannot use detailed deflators prior to 1995
simply because this data is not available in the level of detail that it is available now. So we
would have to stick to the overall machinery and construction deflators to go back to 1895.
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National Accounts Unit
Gross National Income Inventory
Thus, the GFCF deflator for machinery was applied for the following assets:
CPA Code
29.00
29.11
29.23
29.52
30.00
32.00
33.00
34.00
35.10
35.30
36.00
72.00
CPA Description
Machinery and equipment n.e.c.
Equipment mainly designed or used for the production of water and electricity
Catering equipment
Equipment used for construction of buildings and excavation
Computer and electronic equipment
Communication and broadcasting equipment
Medical equipment
Motor vehicles
Ships and vessels
Aircraft and spacecraft
Furniture, fixtures, fittings and soft furnishings
Computer software
Other machinery / plant
and, the GFCF deflator for construction was applied for the following assets:
CPA Code
45.00
45.21
45.21
CPA Description
Construction work
Cable infrastructure
Pipeline infrastructure
The PIM Model
4.12.23 During the Transition Facility 2004: Capital Stock and Consumption of Fixed Capital
Project, our expert, prepared a PIM model for the estimation of CS and CFC. The four main
functions applied in this model are the following:
Where:
M maximum service life of a vintage of an asset (i.e. 2 * the average service life)
c steepness of the mortality function (assumed to have the value of 3)
p skewness of the mortality function (assumed to have the value of 0.5)
k remaining years of service of a piece of a vintage of investment
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Gross National Income Inventory
i age of a capital asset (the actual service life of a piece of a vintage of an investment)
t year
4.12.24 Apart from the basic core data mentioned earlier (i.e. historic series of data relating to
GFCF and service life assumptions), the PIM model requires additional assumptions about
the spread of the retirements of the capital assets around the average service life. These
assumptions can be represented by a density function which is called the mortality function.
A mortality function h(i) indicates what proportion of a vintage of capital assets are retired in
a given period. A bell-shaped mortality function is usually used to describe the pattern of
retirements. A quasi-logistic function is being applied in Malta. This is a function which can
be either symmetrical or skewed to the left or right, depending on the values assigned to
particular parameters. In Malta, a symmetrical mortality function is being used for all
sectors.
4.12.25 The survival function g(i) indicates the proportion of the vintage of capital assets
acquired over the period (t – i) that is still in use in period t (i.e. after i periods). In other
words, if one wants to know what proportion of a vintage of capital assets are still in use over
a given period, one has to add up all the retirements from the preceding periods.
In other words the GCS at the beginning of year t may be calculated as follows:
M
GCSt = ∑ I t-i g(i)
i=1
(5)
where:
I t-i = GFCF in year t-i
CFC is equivalent to the difference between the GCS and the net capital stock (NCS).
4.12.26 The calculation of the NCS is similar to that of the GCS, with the difference that an
additional variable is incorporated which describes the consumption of fixed capital. The
formula for the NCS at the beginning of year t is as follows:
M
NCSt = ∑ I t-i g(i)net
i=1
(6)
where
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National Accounts Unit
Gross National Income Inventory
g(i)net, the net value function shows the proportion of capital assets purchased over the period
t-i and not yet depreciated at time t (i.e. after i periods).
In the model the net value function g(i)net is equivalent to:
g(i)net = g(i-1)net – h(i-1)net
(7)
i.e. the net value function when the age of an asset is i-1 less the depreciation function when
the age of an asset is i-1
In the model the depreciation function h(i)net is assumed to be linear. This means that
depreciation is equally distributed according to the service life i of an individual piece (H_i)
of a vintage t of GFCF. This individual piece of GFCF is given by the mortality function
h(i), derived from the survival function. No age efficiency schedules have been assumed.
This implies that every piece of investment of a certain vintage will have the same efficiency
over its service life. The depreciation function is equivalent to:
h(i)net= [(g(i) – g(i+1) – 0)/i] + h(i+1)net
(8)
i.e. the survival function when the age of an asset is i less the survival function when the age
of an asset is i+1 less salvage value31 of the asset which is assumed to be equivalent to 0
divided by age of a capital asset i (the actual service life of a piece of a vintage of an
investment) plus the deprecation function when the age of an asset i+1
4.12.27 In the model CFC at time t is calculated as follows:
CFCt = NCSt- NCSt+1 + I t
(9)
where:
NCSt+1- NCSt = It net
Then, CFCt = (-ve)It net + I t
where:
It net = net fixed capital formation at time t
Assuming t = 2003
Then the CFC for 2003 is equivalent to:
31
Cash received upon disposal
Economic Statistics Division
193
Gross National Income Inventory
the NCS at the beginning of 2003 (i.e. closing NCS at end of 2002) less the NCS at beginning
of 2004 (i.e. closing NCS at end of 2003) which is equivalent to the net fixed capital
formation for 2003 (i.e. GFCF less depreciation) plus GFCF for 2003
Results
4.12.28 Box 4.12.4 compares the old and new estimates (the latter now based on ESA95
methodology) of consumption of fixed capital in the national accounts system. CFC figures
have been revised upwards with the exception of 2004.
Box 4.12.4:
Year
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Comparing old and new figures for Consumption of fixed capital
Financial
Corporations
Lm'000
1,982
2,469
2,907
3,692
4,942
6,352
7,016
8,262
7,955
7,707
7,641
7,779
NonFinancial
Corporations
and
Households
Lm'000
144,055
156,379
161,657
177,672
184,485
198,801
216,318
235,910
228,519
230,527
233,619
235,899
NPISH
Lm'000
2,180
2,357
2,412
2,676
2,744
2,990
3,229
3,688
3,831
4,059
4,306
4,499
General
Government
Lm'000
21,861
24,273
26,734
29,840
32,321
35,268
37,565
39,890
40,809
43,864
44,767
46,468
Total
Economy
(new) 32
Lm'000
170,078
185,478
193,709
213,880
224,492
243,412
264,127
287,750
281,114
286,157
290,333
294,644
Total
Economy
(old) 33
Lm'000
159,360
173,939
185,807
201,231
214,729
228,782
245,525
252,100
264,684
294,305
277,087
287,860
4.12.29 Revisions were mainly due to the sources and methodology used in the old approach.
CFC for the private sector was mainly based on the depreciation reported in annual reports
and financials statements, the Structural Business Survey, and various other surveys and
censuses carried out by the NSO. CFC for the general government was calculated using PIM,
however, the back series of GFCF went only as far as 1955, and data was extrapolated
backwards to 1945, whereas now actual data as from 1919 has been used in the model. CFC
32
33
Data as per News Release 94/2007 and 96/2007. Data for 2004 to 2006 is still provisional.
Data as per News Release 94/2007 and 96/2007. Data for 2004 to 2006 is still provisional.
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National Accounts Unit
Gross National Income Inventory
for the general government was previously calculated for just two asset types; construction
and machinery and equipment. Consequently only 2 different service lives were applied, 50
years for construction and 5 years for machinery and equipment. On the other hand, now
GFCF is broken down into 16 asset types with different service lives for each asset. The
maximum service lives applied in the model described above vary between 100 years to 8
years.
Furthermore, the government transfer of fixed assets and/or non-produced non-
financial assets to public corporations discussed in paragraph 4.12.7 were not included in the
previous estimate of CFC.
4.12.30 Box 4.12.4 below shows the effect on the Gross Value Added (B.1g) and Output
(P.1) after introducing the new consumption of fixed capital figures. This is due to the fact
that the cost approach is used for the calculation of Gross Value Added (B.1g) and Output
(P.1) for non-market producers. These feature generally in only two sectors of the economy,
NPISH and General Government. In the case of dwellings the same approach established
during the Phare 2000 project on the measurement of dwelling services for the Maltese
Islands has been retained.
Box 4.12.4: Effect on Gross Value Added (B.1g) and Output (P.1)
Year
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
NPISH
CFC New
Approach34
Lm'000
2,180
2,357
2,412
2,676
2,744
2,990
3,229
3,688
3,831
4,059
4,306
4,499
NPISH
CFC Old
Approach35
Lm'000
897
964
1,007
1,082
1,194
1,187
1,105
1,262
1,414
1,330
1,356
1,384
General
Government
CFC New
Approach36
Lm'000
21,861
24,273
26,734
29,840
32,321
35,268
37,565
39,890
40,809
43,864
44,767
46,468
General
Government
CFC Old
Approach37
Lm'000
33,984
40,065
40,724
45,103
47,285
48,883
52,101
55,906
58,392
61,349
63,535
65,000
Effect on
B.1g, P.1
Lm'000
-10,840
-14,399
-12,586
-13,669
-13,414
-11,812
-12,412
-13,590
-15,166
-14,756
-15,818
-15,417
34
Data as per News Release 94/2007 and 96/2007. Data for 2004 to 2006 is still provisional.
Data as per News Release 94/2007 and 96/2007. Data for 2004 to 2006 is still provisional.
36
Data as per News Release 94/2007 and 96/2007. Data for 2004 to 2006 is still provisional.
37
Data as per News Release 94/2007 and 96/2007. Data for 2004 to 2006 is still provisional.
35
Economic Statistics Division
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Gross National Income Inventory
Chapter 5
The expenditure approach
5.0
GDP according to the expenditure approach
5.0.1
The expenditure approach measures total expenditure on final goods and services
produced in the domestic territory, or, alternatively, the sum of final uses of goods and
services by resident institutional units plus exports less imports of goods and services.
5.0.2
The total is obtained from the sum of final consumption expenditure of households,
non-profit institutions serving households (NPISH) and government on goods and services;
gross capital formation (capital expenditure on fixed and intangible assets, changes in
inventories and acquisitions less disposals of valuables); and net exports of goods and
services.
5.0.3
In Malta the expenditure approach of GDP is obtained by the following calculation.
Main components
Household final consumption expenditure (section 5.7)
NPISH final consumption expenditure (section 5.8)
Government final consumption expenditure (section 5.9)
Gross fixed capital formation (section 5.10-5.12)
Changes in inventories (section 5.13)
Acquisitions less disposals of valuables (section 5.14)
Exports of goods and services (section 5.15-5.16)
Imports of goods and services (section 5.17-5.18)
Total GDP by expenditure approach
5.1
5.1.1
2001
(Lm’000s)
1,132,801
28,323
347,985
357,447
-62,231
10,594
1,418,474
1,500,320
1,733,073
The reference framework
The principal data sources used for the expenditure approach are outlined below for
each of the main components.
5.1.2
Household final consumption expenditure is made up of three broad categories:
locally produced consumer goods, imported consumer goods and services to consumers.
Household final consumption expenditure in the domestic market consists of expenditure in
Malta by residents and non-residents.
Expenditure abroad by residents is added while
expenditure by tourists in Malta is deducted to arrive at the total final consumption
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National Accounts Unit
Gross National Income Inventory
expenditure estimate. The commodity flow method is used extensively for imported and
locally manufactured goods while services are covered by extensive enquiries and use of
existing data.
5.1.3
Non-profit institutions serving households’ (NPISH) final consumption expenditure
has been calculated for the first time in 1995 and classified using the COPNI classification
(see Chapter 10). In 2001 the NPISH final consumption expenditure is estimated as Lm28.3
million or 1.63 per cent of the GDP at market prices.
5.1.4
Detailed statements of the government’s recurrent expenditure are obtained on a
quarterly basis from the Treasury Department and classified. Extra-budgetary units are
surveyed quarterly too. Detailed information on local councils’ expenditure is available from
the quarterly accounts. Government recurrent expenditure is classified by COFOG.
5.1.5
The main sources used for the annual calculation of changes in inventories are
annual reports and financial statements, the structural business survey (SBS) and quarterly
and annual censuses carried out by various units at NSO including the National Accounts
Unit. These sources are not always exhaustive, thus adjustments to cover non-response are
made by the National Accounts Unit. Grossing up is based on employment for every 2-digit
NACE category. Inventories are split in the four recommended categories in ESA 95:
materials and supplies, work-in-progress, finished goods and goods for resale. However this
breakdown is not explicitly shown in the national accounts publications. For each category, a
detailed product breakdown at P90 level is available for changes in inventories on an annual
basis with a time lag of three years.
5.1.6
Acquisitions less disposals of valuables are calculated from the supply-side as
suggested in the Phare 2000 project on GFCF. The main data being, imports and exports
domestic production, household final consumption expenditure and margins of dealers.
5.1.7
Exports and income received from abroad are derived from the credit side of the
BOP and include exports of merchandise including ship repairing, freight, transhipment
activities within the Freeport, port services such as stores, bunker oil, fuel and port dues,
registration fees, passenger service charges, route air navigation charges, air and sea fares,
non-residents expenditure in Malta, income of residents from investments abroad, nonresidents’ reinvested earnings and diplomatic expenditure in Malta.
Economic Statistics Division
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Gross National Income Inventory
5.1.8
Imports and income paid abroad are derived from the debit side of the BOP and
include imported merchandise, freight and insurance, air and sea passenger fares, port
services such as stores, bunker oil, fuel and port dues, expenditure by residents abroad, nonresidents’ income from investments in Malta and diplomatic expenditure.
5.2
Valuation
5.2.1
Where practical the NSO ensures that it receives sufficient data from the relevant
source to conform to ESA 95 prices. In some cases this is not practical, and therefore the
NSO makes the necessary adjustments to conform to ESA 95, rather than asking the data
supplier to make the adjustment. In the expenditure approach the survey sources used are
predominantly in line with ESA 95 concepts and no significant adjustments are necessary.
5.2.2
Valuation is particularly relevant for transactions in goods and services, but also to
the general aspect of time of recording. In general, the accruals basis principle of recording is
applied.
5.3
Transition from private accounting and administrative concepts to
ESA95 national accounts concepts
5.3.1
The National Accounts Unit ensures it receives enough data to make any
adjustments necessary for the transition from business accounting concepts to ESA 95
national accounts concepts, ensuring a correct treatment within the accounts.
5.4
5.4.1
The roles of direct and indirect estimation methods
The expenditure approach is mainly based on direct estimation methods. This also
applies to the item ‘changes in inventories’ from 2003 onwards, when a stock survey was
introduced. However before this year this item included a statistical discrepancy. The
application of direct methods comes from up-to-date statistical sources that are available with
mostly annual data. Indirect estimation methods are used partly for gross fixed capital
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National Accounts Unit
Gross National Income Inventory
formation, when annual sources are lacking, but this is quite limited after the introduction of
structural business statistics (SBS).
Direct and Indirect Methods of NPISH final consumption expenditure
5.4.2
Both direct and indirect methods are used to estimate NPISH final consumption
expenditure. As explained further in this chapter NPISH final consumption expenditure is
calculated as a residual after deducting market output (P.11) from total output (P.1). The
direct methods used for calculation purposes are based on financial statements and statistical
surveys which are available on an annual basis. Indirect estimation methods are used to
estimate NPISH final consumption expenditure of two groups of organisations. The first
group consists of those organisations having only employment data available – estimates are
based on the financial data available and full-time equivalent employment - whereas the
second group consists of those organisations without any information available. The latter
group is made up of small organisations where a set of estimates for the main components is
established for a benchmark year – usually 2000 – and these estimates are extrapolated
backward or forward using the growth rate of the overall retail price index.
5.5
5.5.1
The roles of benchmarks and extrapolations
The role of benchmarks and extrapolations in the national accounts is quite limited.
In the Maltese statistical system, using the SUT framework and combining different data
sources, economic statistics have been established with a high degree of regularity, on an
annual basis in most cases. Short-term statistics for quarterly national accounts add to this,
but are outside the scope in this respect.
5.5.2
Benchmarking is normally important when undertaking a main revision.
It is
usually both convenient and useful to establish revised levels for the national accounts
estimates for a benchmark year in the first place. Given available annual sources, the role of
extrapolations is restricted to the main revision process only, and not to sources. This means
that new levels obtained initially for the benchmark year are extrapolated to other years in the
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Gross National Income Inventory
sense that the revised time series are being established, normally from the same quality of
sources that was initially introduced for the benchmark year.
5.6
5.6.1
The main approaches taken with respect to exhaustiveness
As with all the three approaches to measuring GDP, the National Accounts unit
makes significant efforts to ensure exhaustiveness in the expenditure approach. This is
especially so for household consumption expenditure, when this is based on the Household
Budgetary Survey (HBS) in which certain items of expenditure are known to be underreported.
For example data from HBS on expenditure on food, beverages and tobacco, is
adjusted for under-reporting. Such adjustments to ensure exhaustiveness are made regularly.
More details may be found in Chapter 7.
5.7 Household final consumption expenditure
Introduction
5.7.1
The National Statistics Office, through its participation in the Phare 2000 Project on
PHC, has managed to set up a reliable benchmark estimate for PHC for 2000, in compliance
with ESA 95 requirements. Substantial improvements have been carried out within the
context of this project and also in relation with other Phare 2000 projects.
The place of HFC estimates in the National Accounts (NA)
5.7.2
Two methods of estimating GDP are currently in place – the Income Approach and
the Expenditure Approach. PHC estimates play an important role in the balancing of these
two approaches, given its weight in total value added – PHC makes up 64 per cent of total
GDP as at 2002.
5.7.3
Household final consumption expenditure is compiled in the context of ESA 95 and
COICOP classification requirements whilst the former structure of Private Household
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National Accounts Unit
Gross National Income Inventory
Consumption Expenditure was compiled for a total of 61 commodities using the SNA 1968
classification, and estimated by means of the commodity flow method. Considerable changes
to the structure of PHC resulted from the adoption of ESA95 and COICOP requirements to
the PHC framework.
Valuation
5.7.4
The valuation of transactions in the new system of national accounts that is currently
being set up is consistent with ESA 95. In particular, estimates based on HBS are valued at
purchasers’ prices.
5.7.5
Retained goods or services for own consumption are valued at basic prices.
5.7.6
Wages and Salaries in kind purchased by an enterprise and provided to its
employees were valued at purchaser prices of enterprise.
The Roles of Direct and Indirect Estimation Methods
5.7.7
The PHC estimates consist of a number of direct and indirect estimates as defined by
expert Mr. Van den Bos in his “Elaborated Structure for CC Report on PHC”, i.e. direct
estimates refer to the direct outcome of a survey (after grossing up). Indirect estimates are
such that a direct estimate has to be adjusted for components that are not part of the variable
we are estimating.
5.7.8
PHC direct estimates include:
(i) 2000 Household Budgetary Survey based PHC estimates
(ii) Other direct sources such as: the MISCO Survey on Fringe Benefits, the Government
Fringe Benefit Survey and various administrative sources as well as financial statements of
large enterprises and monopolistic producers.
5.7.9
PHC indirect estimates include:
PHC estimates for persons living in institutions, inbound and outbound visitor expenditure;
Economic Statistics Division
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Gross National Income Inventory
Expert advice from various sources;
Direct estimates amount to a large proportion of total PHC expenditure in 2000 as for almost
all commodities the HBS has been used as the direct source.
The Main Approaches taken with respect to Exhaustiveness
5.7.10
The objective of the NSO’s participation in the Phare 2000 Project was to develop a
bottom-up approach and have at least two independent estimates for each product group. A
bottom-up approach has been used in the compilation of the PHC for 2000; however, only
one source has been considered as the most reliable at the moment. This is the HBS based
PHC estimate.
The project has aided the NSO in setting up a structure where three
alternative sources of information may be exploited in improving this estimate.
5.7.11
The exhaustiveness of the PHC estimates has been taken into account in the
following manner:
5.7.12
Attention has been paid to the proper transformation of administrative concepts into
NA concepts.
5.7.13
The particular problem areas have been treated according to ESA 95.
5.7.14
The entire population of households, including the persons living in institutions and
residents living abroad but accounted as residents has been accounted for.
5.7.15
HBS based estimates have not been adjusted for differential non-response with
respect to the higher-income households. However, discussions have been held with the
persons responsible for the compilation of the HBS, during the expert’s mission to Malta, and
possible treatments of this issue were explored.
5.7.16
Estimates are based on grossed up data - both for HBS and retail sales and all other
surveys. Adjustments for non-observed transactions and under-reporting have been made.
5.7.17
Proper estimation and registration of income in kind has been applied. Further on in
this chapter the detailed methodology by which this has been achieved will be analysed.
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Sources and Methods Used
Household Budgetary Survey
5.7.18
The 2000 Household Budgetary Survey (HBS) compiled for that year was used in
the compilation of PHC. The HBS 2000 is based on a random sample 6,798 households,
representing 5 per cent of total households in the Maltese Islands.
The survey was
characterized by a high non-response rate – standing at 62 per cent – giving observations for
only 2,586 households. No adjustment was made for the bias in non-response towards old
persons, single person households and households in high income brackets in the raw data.
5.7.19
The respondent households filled in a main questionnaire containing detailed
questions relating to the income earned from various sources and expenditure on consumer
durables – vehicles, household appliances and audio visual equipment and furniture. Data
was also collected on households’ expenditure on cable television, internet, telephone,
electricity and water bills, actual rents, non-life insurance policies, loan repayments, licences
and education. Maintenance and repairs in connection to the dwelling, to personal and
household goods and own transport, and expenditure incurred whilst on holiday abroad was
also requested. These questions related to expenditure over the previous 12 months prior to
the period during which the household was surveyed. Participants to the HBS residing in
Malta further filled in daily expenditure diaries, covering a period of three weeks.
5.7.20
The expenditure by residents abroad is recorded in the main questionnaire over a
one-month period of recall. Information about expenditure by residents on (a) package tours,
(b) non-package tours, further broken-down into that part relating to air/sea/land fares and
accommodation, and (c) all other expenditure. No product detail is provided for components
(a) and (c).
5.7.21
Various adjustments have been made to remedy any bias present in the grossed up
HBS data. One of the adjustments made to the initial HBS results is that of accounting for
under declared expenditure by young people and the PHC of funeral services.
5.7.22
Currently, an ongoing HBS is in the process of being designed. A number of
meetings are being held between the Research and Methodology Unit, National Accounts and
the Retail Price Index Unit to determine the requirements of each user. Implementation of
this survey is still under consideration.
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Gross National Income Inventory
Trade Data
5.7.23
The value of the imported consumer goods is obtained from the International Trade
Statistics Unit by means of Intrastat forms which is classified using the harmonised system
product codes. Product taxes, transport costs and trade margins are added to arrive at PHC at
purchasers’ prices.
Local production of goods is derived mainly from a monthly
manufacturing survey. Local production of services is compiled from the Household
Budgetary Survey (HBS) along with direct feed back from a number of organisations
providing such services.
Tourism Statistics
5.7.24
Non-resident expenditure on the economic territory is based on information
extracted from the Tourism Inbound Survey (Tourstat). This monthly survey, conducted by
the Tourism Unit, serves to collect data on inbound tourism.
5.7.25
Non-residents expenditure on the economic territory is compiled by the Central
Bank of Malta and is based on total foreign exchange dealings by tourists in the Maltese
Islands. This data is grossed up by the Balance of Payments unit.
5.7.26
A second source of information on non-residents expenditure on the domestic
territory is an annual survey carried out by the Malta Tourism Authority (MTA). This survey
consists of aggregate information on products purchased by tourists in the Maltese Islands,
compiled by means of an expenditure diary handed out randomly to tourists. This is filled
out by the tourists, who are compensated upon handing back the diary to the MTA prior to
their departure.
5.7.27
This survey provides information on 18 categories of tourist expenditure in the
Maltese Islands. These categories are used to distribute the total non-residents expenditure in
the Maltese Islands compiled into the various COICOP commodity groups.
5.7.28
Total resident households’ expenditure in the rest of the world used in the
calculation of PHC in the national concept is compiled from the HBS. The Balance of
Payments also compiles information on the expenditure of Maltese residents abroad, in
cooperation with the Central Bank of Malta and based on foreign exchange dealings.
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However, no distinction is made between expenditure by consumers and that incurred during
business travel.
Particular Problem Areas
Wages and Salaries in Kind
5.7.29
Wages and salaries in kind earned by households is estimated in two parts: an
estimate based on a ‘Salaries and Benefits’ report carried out by MISCO for 2000 and the
other on a survey on fringe benefits covering government agencies.
5.7.30
The MISCO ‘Salaries and Benefits Report 2000’ surveys a sample of 2,066
remuneration packages and is compiled over an 8-month period – January to August 2000.
The categories of personnel covered include management, executive, clerical, technical and
non-manual personnel in various private, foreign-owned and government controlled service
and manufacturing companies. The following categories of fringe benefits were identified:
•
Health insurance
•
Company car
•
Life Insurance
•
Personal Accident Insurance
•
Petrol Allowance
•
Car Maintenance
•
Telephone Bill
•
Club Membership
5.7.31
The sample of 2,066 employees must be raised to cover the total employees in each
category. Data for the private sector is grossed up using the employees registered in the
Business Register as the total population.
Economic Statistics Division
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Gross National Income Inventory
5.7.32
The MISCO survey is restricted only to private enterprises. A separate survey was
carried out gathering information about the fringe benefits paid to government employees.
The following wages in kind were identified:
•
Provision of free meals/drinks
•
Provision of clothing
•
Purchase of vehicles for employees
•
Cost of servicing of vehicles used by employees
•
Cost of fuel consumed by vehicles used by employees
•
Payment of employees’ domestic telephone and cellular bills
•
Payment of premiums in respect of health/life insurance
•
Cost of transportation facilities for employees to/from work
•
Other benefits in kind
5.7.33
Only that proportion estimated as used for private household consumption was
included in the PHC estimates. This subdivision was based on a working day to non-working
day ratio for the use of company cars, cost of vehicles servicing, clothing and telephone bills
both for the MISCO and the survey covering enterprises partly or wholly owned by
government. A Labour Cost Survey will be carried out in the near future. This would be
extremely useful in identifying wages in kind paid to all categories of employees.
Final Consumption of Own Production
5.7.34
An estimate of the final consumption of own production by households of the
following items: (a) fruit and vegetables, (b) eggs, (c) poultry, (d) wine, (e) sheep and goats,
(f) rabbits, (g) milk, (h) wine and (i) fish caught was carried out. Data for items (a) to (h) are
based on quantity values for own consumption as a percentage of total output, obtained on the
basis of expert advice provided by the Department of Agriculture.
Values for own
consumption were obtained using a mix of wholesale and retail prices of different categories
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National Accounts Unit
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of agricultural goods. Note that values for own consumption for items (a) to (h) were not
obtained from the recent Census for Agriculture, as it did not provide a true indication of
agricultural own consumption in Malta.
5.7.35
The consumption of wild fish catches is estimated using current data from the ‘Fish
Report’. The ‘Fish Report’ provides statistics regarding the amount of fish landings at the
central fish market along with values for exports of wild fish. That proportion which is
caught for own consumption is estimated by taking the proportion of wild fish caught by parttime to full-time fishermen out of the total catch of wild fish in a given time period.
Information about the number of registered part-time and full-time fishermen is obtained
from the Census of Fisheries conducted in 1997.
NSO is currently in the process of
conducting a new Census of Fisheries, which will provide a clearer picture of the value of
own consumption of fish within the local economy. The value of own consumption by
unregistered fishermen is estimated at 1 per cent of the total catch of wild fish.
Dwelling Services
5.7.36
Consumption of own production of dwelling services have been estimated using the
User Cost method, and the results reviewed within the context of the Phare 2000 Project on
Dwelling Services. Full documentation is provided in the final report by Malta on the
subject.
Tips
5.7.37
Tips have been measured directly through HBS and included in the raw data used in
the calculation of PHC.
Borderline between PHC, IC and GFCF
5.7.38
The expenditure that owner occupiers incur on decoration or maintenance and repair
of the dwelling, that is not typically carried out by tenants and the purchase of materials for
the self-construction of dwellings or other buildings have been removed from PHC. COICOP
codes 04.3.1 and 04.3.2 were investigated item by item. A large proportion of expenditure on
GFCF can be easily singled out via specific questions on major repairs and maintenance in a
detailed questionnaire requesting information about households’ expenditure over the
previous 12 months accompanying the HBS 2000 diaries. Therefore the problem of singling
Economic Statistics Division
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Gross National Income Inventory
out expenditure on self-construction is restricted to the HBS 2000 diaries. The expenditure
recorded in these diaries further includes an element of expenditure on repairs and
maintenance that is to be classified as Intermediate Consumption (IC) for the owner-occupier
and not as Final Household Consumption (PHC).
5.7.39
Therefore, to single out repairs and maintenance classified as IC incurred by owner-
occupiers, the following steps were undertaken:
5.7.40
Each item classified as expenditure on repair and maintenance in the HBS 2000
diaries was investigated and a coefficient indicating that proportion to be allocated as GFCF
was estimated by expert assessment, case by case. This was done both for owner-occupiers
and renters, although the ESA clearly specified that maintenance and repairs usually carried
out by tenants should be treated as PHC. The rationale underlying this separation of costs
into PHC and GFCF also for tenants living in rented dwellings in spite of the ESA 95
definition, is the fact that due to the very low rents charged for pre-1995 contracts, landlords
refuse to carry out major repairs and maintenance themselves. Subsequently, the tenants tend
to incur such major expenditure.
5.7.41
The remaining expenditure for owner-occupiers was separated into IC and PHC.
This was done on the basis of the knowledge that whilst expenditure on repairs and
maintenance (excluding GFCF) by owner-occupiers is a composite of IC and PHC, that of
renters (excluding GFCF) is entirely PHC. Therefore, by assuming that PHC per dwelling for
owner-occupiers was equal to that by renters, it was possible to single out IC per dwelling for
owner-occupiers. The resulting estimated IC per dwelling ratio is then multiplied by the
owner-occupied dwelling stock – including summer residences and empty dwellings owned
by households.
Expenditures of residents abroad and non-residents on the territory
Expenditure of Non-Residents on the Territory
5.7.42
The source of non-residents expenditure on the domestic territory was described
previously in this report. The distribution of this component across COICOP commodity
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National Accounts Unit
Gross National Income Inventory
groups is achieved in two steps. First, total tourist expenditure in the domestic territory is
separated for 4 different categories of non-residents, to reflect different expenditure patterns:
Tourists arriving by air transport – derived from a survey carried out by the Malta Tourism
Authority (MTA);
Tourists arriving in a cruise liner – this is compiled by the Balance of Payments (BOP) and
is based on a survey carried out in 1996 by the MTA;
Tourists arriving in yachts – this is estimated by multiplying the number of persons arriving
in yachts by an estimated expenditure per day;
Tourists arriving by sea transport – this is derived as a residual.
5.7.43
These four categories are then distributed across COICOP commodities within a 53
by 18 matrix – where the 53 rows define the COICOP commodity groups, and the 18
columns represent 18 broad categories of expenditure by non-residents on the domestic
territory compiled by the MTA. The final distribution of this component is obtained as a
combination, of direct information on the consumption of particular commodities by tourists
in Malta, and the use of expenditure ratios from the MTA Survey.
5.7.44
Harbour fees paid by non-residents arriving by yachts were included as an export of
a service to the rest of the world. Such fees were obtained through a survey carried out by the
Malta Maritime Authority. Expenditure on the provision of facilities to yachts owned by
non-residents was also obtained from this same survey. A breakdown for this type of
expenditure into various components such as electricity, water etc. could not be provided.
However, a clear indication of this category of expenditure was given by experts within the
Malta Maritime Authority.
Expenditure by Residents Abroad
5.7.45
The expenditure of Maltese resident households abroad is compiled from the HBS.
The only product detail available is the expenditure by Maltese households on
accommodation and air/sea fares, not paid for through package tours. All other expenditure
had to be broken down further. Expenditure on package tours has been separated into two
Economic Statistics Division
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Gross National Income Inventory
parts: that part relating to air/sea/land fares and classified according to COICOP and a part
equal to all other expenditure included in the package. The latter is distributed across 18
categories of expenditure, defined in a survey compiled by the Malta Tourism Authority,
across which total earnings from non-residents expenditure in the domestic territory is
classified.
This relies upon the assumption that the distribution across categories of
expenditure by residents abroad is the same as that by non-residents in the domestic territory.
The proportion of expenditure on transport services was modified to reflect more realistically
the different types of transport used by Maltese residents abroad vis-à-vis that consumed by
non-residents on the domestic territory.
These 18 categories are reclassified using the
COICOP classification and disaggregated further into the 4-digit level, in a 57 by 18 matrix.
5.7.46
Plans are underway to collect further information on this component from an
ongoing HBS so as to obtain more detail on the distribution of this expenditure across the
COICOP commodity groups.
Coverage and treatment of Shuttle Trade
5.7.47
Shuttle trade in Malta is assumed to be negligible and hence no adjustment to PHC
is required.
PHC financed directly by insurance companies
5.7.48
An adjustment for motor vehicle repairs carried out by consumers but financed by
insurance companies, was made by making use of:
Total domestic premiums for motor insurance x proportion of total premiums accounted for
by claims x proportion of total claims accounted for by vehicle repairs/replacement x
proportion accounted for by repairs
5.7.49
The data for premiums paid and claims received by households for motor insurance
were obtained from Malta Financial Services Authority (MFSA), the central body governing
financial services in the Maltese Islands.
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National Accounts Unit
Gross National Income Inventory
Expenditure by persons living in institutions
5.7.50
An adjustment has been made to include this element of PHC. The following
categories of such persons have been identified:
•
Persons living in retirement homes
•
Prison Inmates
•
Monks and nuns living in monasteries and convents
•
Others including homeless persons, orphans, refugees, disabled etc.
5.7.51
For persons living in retirement homes an estimate was made in the following
manner: the average pension earned per person was calculated by the total amount paid out in
pensions by the government, as reported in the Government Financial Report in relation to
the total number of pensioners. The average pension paid out was multiplied by the number
of residents in retirement homes obtained by a survey carried out on Retirement Homes to
estimate the total income from pensions of such residents. An estimate of the ‘disposable’
income of these residents was obtained by deducting from the total value of pensions they
receive, the expenditure on accommodation together with an estimate of gifts they give to
their families. The latter was derived as the 50 per cent of the remaining pension income
after deducting fees paid for accommodation.
The residual – estimated at Lm8.45 per
resident – is assumed to be entirely consumed i.e. none is saved. This estimated amount of
average weekly non-fee expenditure per member compares well with estimates carried out by
the UK Statistical Office38. Future plans include the addition of expenditure by persons
undergoing treatment spanning a long period of time at a hospital.
5.7.52
For prison inmates, it was assumed that all income earned from gratuities and
payments for productive work, is entirely consumed.
The source for this data is the
Government Financial Report.
5.7.53
For monks and nuns living in convents, no information is available with respect to
their expenditure. An expert estimate of Lm520 annually, and Lm200 annually was made for
monks and nuns respectively. These were multiplied by the total number of monks and nuns
38
A Survey of Expenditure in Residential and Nursing Homes – Richard Clare and Paul West (1993)
Economic Statistics Division
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Gross National Income Inventory
as reported by the Archdiocese – the central body that collects information about religious
organisations in the Maltese Islands.
It was suggested that given the absolute lack of
information about the expenditure patterns by this category of persons living in institutions, a
small survey could possibly be carried out to validate the estimated distribution of this
expenditure component. This could be included as a long-term plan. However, it was agreed
that the impact of such estimates on total PHC are minimal.
5.7.54
The expenditure of an estimated 700 refugees, 30 homeless, 30 orphans and 359
disabled persons is assumed to be equal to Lm50 per individual, reflecting as closely as
possible the average expenditure by these types of persons.
This was investigated, in
cooperation with the person in charge of the compilation of the estimates of the NPISH, the
number of this type of persons living in institutions. It is also necessary to note the following
differential treatment of these two types of transaction: orphanage or other social services
provided by government or NPISH are not to be included in PHC, but as government
consumption or NPISH consumption of own production respectively. Only expenditure
carried out by residents on their own behalf has been included under PHC.
5.7.55
The distribution of the estimated consumption of persons living in institutions was
estimated on the basis of the HBS 2000 distribution for households. Adjustments were made
to cater for the fact that such persons do not consume selected COICOP codes, e.g. less is
consumed on food and furniture.
Charity and Gifts from Abroad
5.7.56
No adjustment has been made for charity and gifts from abroad in the PHC estimates
as these are assumed to be negligible.
Consumption of Illegal Production and Import
5.7.57
The following commodities – alcoholic beverages, tobacco, compact discs, video
games and games software, and gambling and betting services – were identified as major
targets of illegal production or importation.
Upon the assumption that households
participating in the 2000 HBS would declare most of their expenditure – irrespective of
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National Accounts Unit
Gross National Income Inventory
whether it was illegally produced or imported – a mark-up was added to the reported
expenditure on these commodities. These mark-ups vary according to the type of commodity
involved in an effort to reflect varying degrees of illegal activities.
5.7.58
An attempt to conduct a comparison exercise of the excise duty revenue received by
government on tobacco and alcohol with the items reported in the 2000 HBS was made.
Meals and drinks provided by the army
5.7.59
No adjustment has been made for meals and drinks provided by the army, as this is
irrelevant for Malta.
Service charge concept for insurances
5.7.60
The HBS records only the premiums paid by households on non-life insurances and
does not record that paid on life insurances. Therefore an adjustment had to be made to
include (a) life insurances, and (b) to record only the net service charge on all types of
insurances. These adjustments have been made on the basis of data supplied by the Malta
Financial Services Authority (MFSA), which collects data on the premiums earned and the
claims paid out by insurance companies. It is to be noted that the definition of insurance
service charge is compliant with that defined in COICOP, i.e. premium supplements have
been added to the premiums actually paid by households, and also with the compilation of the
output of insurance services. The addition of premium supplements to the insurance service
charge is in line with the Task Force on Insurance Measurement.
‘Net’ valuation of the use of lottery services
5.7.61
Lottery services have been recorded net of winnings received by households in the
PHC estimates. Lottery services include gambling at casinos, the national lottery system and
betting on horse races. The information is collected from financial statements and direct
questionnaires. Adjustments to cover small lotteries have been made in cooperation with the
PHARE 2000 Project on Exhaustiveness.
Economic Statistics Division
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Gross National Income Inventory
Borderline between taxes and services provided to households by the GG
5.7.62
Licences and fees paid by households to government that are not classified as taxes
have been included in PHC. This treatment is consistent with ESA 95 paragraph 3.76.
5.7.63
Hence the following categories were identified:
•
Television licences
•
Driving licences and driving test fee
•
Fees for Visas
5.7.64
These licences are paid to the government in return for a service, and were therefore
in the PHC estimates, and classified under the appropriate COICOP classification of that
service.
Car registration taxes have been classified as taxes in accordance with the
definitions presented in ESA 95 paragraph 4.20. Stamp taxes have been classified as taxes in
accordance with the definitions presented in ESA 95 paragraph 4.20.
5.7.65
This work has been undertaken in cooperation with the persons responsible for the
classification of taxes and subsidies, to ensure consistency.
Expenditure on goods under hire purchase
5.7.66
The recording of expenditure on goods under hire purchase has been valued at the
time the good was delivered even if no legal change of ownership took place at that particular
point in time. This is in accordance with ESA 95 paragraph 3.90 in the HBS raw data.
Service charge concept for insurance
5.7.67
The net insurance service charge has been included as PHC, and not the gross
premiums paid by households for all categories of insurance.
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National Accounts Unit
Gross National Income Inventory
Treatment of second hand motor vehicles
5.7.68
The following adjustments have been made to account for the correct treatment of
second-hand motor vehicles in the HBS-based PHC estimates.
(i) No PHC has been estimated for directly traded second hand goods changing
ownership between households (HH).
(ii) For second-hand goods changing ownership between HH and traded through trade
outlets, only the margin earned by intermediaries on the sale of second hand motor
vehicles has been included in PHC. The Police Department provided an indication
of the number of times there was a change in motor vehicles ownership registration.
This was used as the basis of an estimate of the margin earned by auto dealers.
(iii) The element of second hand cars purchased by households from businesses was also
included in PHC. This was based on the total value of second hand cars purchased
by households as reported in the HBS. Specifically, a proportion of these cars were
assumed purchased from businesses.
(iv) An adjustment has also been made for the importation of second hand cars, which
have also been included in PHC. This data was provided by the Trade Unit and
treated in the same way as the PHC of new products.
Government’s payments to market producers (for medicines etc.)
5.7.69
Government’s payments to market producers for commodities such as medicines etc.
have been classified as final consumption expenditure of government in line with paragraph
3.79(b) in the ESA 95.
Package Travel Tours
5.7.70
Total expenditure by Maltese residents on package tours has been broken down into
a component corresponding to air travel, and a component representing all other expenditure
as included in the package tour. That component corresponding to air travel has been
classified under COICOP code 07.3.3, under the heading air transport.
Economic Statistics Division
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Gross National Income Inventory
Direct payments from insurers to market producers
5.7.71
Direct payments from insurers to market producers in respect of reimbursements
were treated as direct purchases of households. That is, households receive an income
transfer for the amount from insurance companies.
Voluntary transfers
5.7.72
Voluntary transfers in cash or kind from households to charities were not included in
PHC estimates. This is in accordance with ESA 95 requirements.
Subscriptions, contributions and dues paid by HH to charities
5.7.73
All subscriptions, contributions and dues paid by HH to NPISHs like trade unions,
professional societies, consumers’ associations, churches and social, cultural, recreational and
sport clubs are income transfers and hence were not included in the PHC estimates.
Imputed rents for owner occupied dwellings
5.7.74
The estimate of imputed rents for owner occupied dwellings included in PHC has
been carried out within the context of the Phare 2000 Project on Dwelling Services. Full
documentation of this method may be found in the NSO’s final report on this topic. Eurostat
has accepted the estimates.
Residents going abroad for short periods
5.7.75
Expenditure of persons going abroad but who reside in Malta along with students
abroad for any unknown period has been included in PHC estimates (national concept).
216
National Accounts Unit
Gross National Income Inventory
Description of the detailed classifications
Household final consumption expenditure in 2001
Description
01
FOOD AND NON-ALCOHOLIC BEVERAGES
233,494
17.4
01.1
01.1.1
Food
Bread and cereals
205,721
44,586
15.4
3.3
01.1.2
Meat
44,928
3.4
01.1.3
01.1.4
01.1.5
01.1.6
01.1.7
01.1.8
Fish
Milk, cheese and eggs
Oils and fats
Fruit
Vegetables
Sugar, jam, honey, chocolate and confectionery
14,080
30,240
5,869
18,945
28,198
12,410
1.1
2.3
0.4
1.4
2.1
0.9
01.1.9
01.2
01.2.1
01.2.2
Food products n.e.c.
Non-alcoholic beverages
Coffee, tea and cocoa
Mineral waters, soft drinks, fruit and vegetable juices
6,465
27,773
4,812
22,961
0.5
2.1
0.4
1.7
02
ALCOHOLIC
NARCOTICS
44,553
3.3
02.1
02.1.1
02.1.2
02.1.3
02.2
02.2.1
02.3
02.3.1
03
03.1.0
03.1.1
03.1.2
03.1.3
Alcoholic beverages
Spirits
Wine
Beer
Tobacco
Tobacco
Narcotics
Narcotics
CLOTHING AND FOOTWEAR
Clothing
Clothing materials
Garments
Other articles of clothing and clothing accessories
16,919
4,740
7,752
4,427
27,634
27,634
0
0
81,344
62,201
870
58,798
1,912
1.3
0.4
0.6
0.3
2.1
2.1
0.0
0.0
6.1
4.6
0.1
4.4
0.1
03.1.4
03.2.0
03.2.1
03.2.2
04
Cleaning, repair and hire of clothing
Footwear
Shoes and other footwear
Repair and hire of footwear
HOUSING, WATER, ELECTRICITY, GAS AND OTHER
FUELS
622
19,143
18,968
175
129,045
0.0
1.4
1.4
0.0
9.6
04.1
04.1.1
04.1.2
04.2
04.2.1
04.2.2
04.3
Actual rentals for housing
Actual rentals paid by tenants
Other actual rentals
Imputed rentals for housing
Imputed rentals of owner-occupiers
Other imputed rentals
Maintenance and repair of the dwelling
6,248
5,778
470
90,120
84,824
5,296
6,784
0.5
0.4
0.0
6.7
6.3
0.4
0.5
04.3.1
Materials for the maintenance and repair of the dwelling
1,808
0.1
04.3.2
Services for the maintenance and repair of the dwelling
4,976
0.4
Economic Statistics Division
Lm’000
Percentage
Breakdown
COICOP Group
BEVERAGES,
TOBACCO
AND
217
Gross National Income Inventory
04.4.0
Water supply and miscellaneous services relating to
the dwelling
6,837
0.5
04.4.1
04.4.2
04.4.3
04.4.4
Water supply
Refuse collection
Sewerage collection
Other services relating to the dwelling n.e.c.
6,653
8
50
126
0.5
0.0
0.0
0.0
04.5.0
04.5.1
04.5.2
04.5.3
04.5.4
04.5.5
05
Electricity, gas and other fuels
Electricity
Gas
Liquid fuels
Solid fuels
Heat energy
FURNISHINGS, HOUSEHOLD EQUIPMENT
ROUTINE MAINTENANCE OF THE HOUSE
19,056
16,100
2,365
402
188
1
112,652
1.4
1.2
0.2
0.0
0.0
0.0
8.4
05.1
Furniture and furnishings, carpets and other floor
coverings
43,988
3.3
05.1.1
05.1.2
05.1.3
Furniture and furnishings
Carpets and other floor coverings
Repair of furniture, furnishings and floor coverings
41,274
2,658
56
3.1
0.2
0.0
05.2.0
05.2.1
05.3.0
05.3.1
Household textiles
Household textiles
Household appliances
Major household appliances whether electric or not
8,133
8,133
23,848
16,913
0.6
0.6
1.8
1.3
05.3.2
05.3.3
0540
Small electric household appliances
Repair of household appliances
Glassware, tableware and household utensils
4,683
2,252
6,643
0.3
0.2
0.5
0541
Glassware, tableware and household utensils
6,643
0.5
0550
Tools and equipment for house and garden
8,522
0.6
0551
0552
Major tools and equipment
Small tools and miscellaneous accessories
1,303
7,219
0.1
0.5
0560
Goods and
maintenance
21,518
1.6
0561
0562
Non-durable household goods
Domestic services and household services
18,468
3,050
1.4
0.2
06
0610
HEALTH
Medical products, appliances and equipment
33,904
23,083
2.5
1.7
0611
0612
0613
Pharmaceutical products
Other medical products
Therapeutical appliances and equipment
16,324
962
5,797
1.2
0.1
0.4
0620
0621
0622
0623
0630
0631
07
0710
0711
0712
0713
0714
Out-patient services
Medical Services
Dental services
Paramedical services
Hospital services
Hospital services
TRANSPORT
Purchase of vehicles
Motor cars
Motor cycles
Bicycles
Animal drawn vehicles
9,064
5,835
2,172
1,057
1,757
1,757
182,994
59,697
57,905
1,209
445
138
0.7
0.4
0.2
0.1
0.1
0.1
13.7
4.5
4.3
0.1
0.0
0.0
218
services
for
routine
AND
household
National Accounts Unit
Gross National Income Inventory
0720
Operation of personal transport equipment
81,884
6.1
0721
Spare parts and accessories for personal transport
equipment
8,118
0.6
0722
Fuels and lubricants for personal transport equipment
39,924
3.0
0723
Maintenance and repair of personal transport equipment
17,525
1.3
0724
Other services in respect of personal transport equipment
16,317
1.2
0730
0731
0732
0733
0734
Transport services
Passenger transport by railway
Passenger transport by road
Passenger transport by air
Passenger transport by sea and inland waterway
41,413
0
24,297
14,021
3,059
3.1
0.0
1.8
1.0
0.2
0735
0736
08
0810
0811
0820
0821
0830
0831
09
0910
Combined passenger transport
Other purchased transport services
COMMUNICATION
Postal services
Postal services
Telephone and telefax equipment
Telephone and telefax equipment
Telephone and telefax services
Telephone and telefax services
RECREATION AND CULTURE
Audio-visual,
photographic
and
processing equipment
0
36
63,630
2,034
2,034
3,791
3,791
57,805
57,805
147,217
24,475
0.0
0.0
4.7
0.2
0.2
0.3
0.3
4.3
4.3
11.0
1.8
0911
Equipment for the reception, recording and reproduction of
sound and pictures
8,350
0.6
0912
Photographic and cinematographic equipment and optical
instruments
910
0.1
0913
0914
0915
Information processing equipment
Recording media
Repair of audio-visual, photographic and information
processing equipment
8,625
4,286
2,304
0.6
0.3
0.2
0920
Other major durables for recreation and culture
2,104
0.2
0921
0922
Major durables for outdoor recreation
Musical instruments and major durables for indoor
recreation
991
741
0.1
0.1
0923
Maintenance and repair of other major durables for
recreation and culture
372
0.0
0930
Other recreational items and equipment, gardens and
pets
19,791
1.5
0931
0932
Games, toys and hobbies
Equipment for sport, camping and open-air recreation
8,615
2,555
0.6
0.2
0933
0934
0935
0940
0941
0942
0943
0950
Gardens, plants and flowers
Pets and related products
Veterinary and other services for pets
Recreational and cultural services
Recreational and sporting services
Cultural services
Games of chance
Newspapers, books and stationery
3,963
4,326
332
53,403
6,340
27,799
19,264
25,846
0.3
0.3
0.0
4.0
0.5
2.1
1.4
1.9
0951
0952
0953
Books
Newspapers and periodicals
Miscellaneous printed matter
10,002
7,632
2,089
0.7
0.6
0.2
Economic Statistics Division
information
219
Gross National Income Inventory
0954
0960
0961
10
1010
Stationery and drawing materials
Package holidays
Package holidays
EDUCATION
Pre-primary and primary education
6,123
21,598
21,598
14,580
4,182
0.5
1.6
1.6
1.1
0.3
1011
1020
1021
1030
Pre-primary and primary education
Secondary education
Secondary education
Post-secondary non-tertiary education
4,182
3,507
3,507
0
0.3
0.3
0.3
0.0
1031
1040
1041
1050
1051
11
1110
1111
1112
1120
1121
12
Post-secondary non-tertiary education
Tertiary education
Tertiary education
Education not definable by level
Education not definable by level
RESTAURANTS AND HOTELS
Catering services
Restaurants, cafés and the like
Canteens
Accommodation services
Accommodation services
MISCELLANEOUS GOODS AND SERVICES
0
1,719
1,719
5,172
5,172
193,257
105,407
104,236
1,171
87,850
87,850
103,168
0.0
0.1
0.1
0.4
0.4
14.4
7.9
7.8
0.1
6.6
6.6
7.7
1210
1211
Personal care
Hairdressing
salons
establishments
31,315
7,556
2.3
0.6
1212
1213
Electric appliances for personal care
Other appliances, articles and products for personal care
313
23,446
0.0
1.7
1220
1221
1230
1231
1232
1240
1241
1250
1251
1252
1253
1254
1255
1260
1261
1262
1270
1271
Prostitution
Prostitution
Personal effects n,e,c,
Jewellery, clocks and watches
Other personal effects
Social protection
Social protection
Insurance
Life insurance
Insurance connected with the dwelling
Insurance connected with health
Insurance connected with transport
Other insurance
Financial services n,e,c,
FISIM
Other financial services n.e.c
Other services n,e,c,
Other services n.e.c.
0
0
13,672
8,876
4,796
4,937
4,937
21,908
17,372
462
866
2,990
218
24,914
14,650
10,264
6,422
6,422
0.0
0.0
1.0
0.7
0.4
0.4
0.4
1.6
1.3
0.0
0.1
0.2
0.0
1.9
1.1
0.8
0.5
0.5
and
personal
grooming
Households Final Consumption Expenditure in the
Domestic Market
1,339,837
Food and non-alcoholic beverages
5.7.76
Household final consumption for COICOP 01 is specified in 11 group items i.e. 9
items of food and 2 items of non-alcoholic beverages. The transition to ESA 95 framework
220
National Accounts Unit
Gross National Income Inventory
meant that expenditure on food and non-alcoholic beverages shifted downwards by 6.2
percent. This was due primarily to adjusted figures in light of HBS 2000 figures.
5.7.77
The share of Household Final Consumption expenditure of COICOP 01 during 2001
represented 17.4 per cent, of which 15.4 per cent for food and 2.1 per cent for non-alcoholic
beverages.
5.7.78
A combination of import data, local manufacturing data and information obtained
directly from producers was used to provide estimates for this particular COICOP group.
Direct information include statistics regarding slaughterings obtained from the civil abattoir,
the value of fish caught and passed through the market, dairy statistics compiled by the Malta
Dairy Products Ltd (MDP) used principally as a data source for milk consumption and data
on production volumes, prices and wholesale values are gathered from the organised fruit and
vegetable market.
Alcoholic beverages, tobacco and narcotics
5.7.79
Household final consumption expenditure COICOP 02 is classified under five main
groups. On comparable terms, COICOP 02 was revised upwards by Lm8.1 million during
the transition process. The share of this group of expenditure represented 3.3 per cent during
2001 of which 1.3 per cent for alcoholic beverages and 2.1 per cent for tobacco. Alcoholic
consumption at restaurants is excluded here and included under group 11, Expenditure in
restaurants, cafes and hotels. Trade data and manufacturing data form the basis of estimation
for this COICOP 02. Since figures from trade data do not cover direct import of alcohol by
residents arriving by sea, hence, figures are separately estimated from the total number of
arrivals by sea and the amount each resident is allowed to import duty-free on arrival in the
country.
Clothing and Footwear
5.7.80
Household consumption expenditure COICOP03 is sub-classified into two divisions.
The first is clothing and the second one is footwear, including repair.
Household
consumption expenditure of clothing and footwear rose by 19.1 per cent in the COICOP
revision whilst its share stood at 6.1 per cent during 2001. Domestically produced clothing
purchased by households is based on local manufacturing data whilst imported clothing and
Economic Statistics Division
221
Gross National Income Inventory
footwear is estimated from data of imports of clothing material. Separate estimates of direct
imports of clothing by residents arriving by sea are applied.
Housing, water, electricity, gas and other fuels
5.7.81
Household final consumption expenditure COICOP 04 is classified into 15 group
items. Such group items are presented within 10 items relating to dwellings in 4 different
sub-classes (actual rentals, imputed rentals, maintenance and repair, water supply and various
services) and 5 items of electricity, gas and fuels.
5.7.82
Actual rents include both on residential dwellings and garages that are estimated
from an expenditure point of view. The primary source regarding residential rentals is the
2000 Household Budgetary Survey.
The value of residential rents received by the
government, obtained from government’s financial report, is deducted in order to avoid
double counting.
5.7.83
The user cost method is the used so as to estimate imputed rents. The user cost
method procedure involves adding up the various cost components incurred and profit earned
in the production of dwelling services.
5.7.84
Intermediate consumption, in the form of expenditure on repairs and maintenance is
also estimated from HBS 2000. Only expenditure which tenants and owner occupiers incur
for minor maintenance and repair are estimated as households’ consumption.
5.7.85
Data from public utilities provide the basis for estimation of water and electricity
consumption by households. Although data regarding electricity consumption provide a
distinction between consumption by households and industry, however, an estimate regarding
the proportion of water consumption by households, based on HBS 2000 data, was applied to
the total water consumption as provided by the Water Services Corporation (WSC).
Expenditure by households on fuel, oil and liquid gases are based on data provided by the
supplying companies.
222
National Accounts Unit
Gross National Income Inventory
Furnishings, household equipment and routine maintenance of the house
5.7.86
Household expenditure COICOP 05 is specified in 12 group items and was
estimated at Lm112.7 million during 2001. Its share was estimated at 8.4 per cent of which
3.3 per cent for furniture, furnishings, carpets and other floor coverings, 0.6 per cent for
household textiles, 1.8 per cent for household appliances, 0.5 per cent for glassware,
tableware and household utensils, 0.6 per cent for tools and equipment for house and garden
and 1.6 per cent for good and services for routine household maintenance.
5.7.87
The value of imported items within this particular section is estimated by means of
trade data whilst the estimation of domestically produced items is estimated by means of the
manufacturing survey. Domestic services and repairs are based on household’s average
expenditure from the Household Budgetary Survey.
5.7.88
Estimates for household expenditure on laundry services are based on output in
industry 93.01, washing and dry cleaning of textile and fur products. This industry includes
both laundries and cleaning
Health
5.7.89
This particular COICOP group is classified into 7 group items: 3 items of medical
products, appliances and equipment, 3 items under out-patient services and one on hospital
services. The revision to the new COICOP system reduced expenditure on health by Lm8.1
million which was partly due to a change in classification requirements.
5.7.90
The share of household final consumption expenditure of health was estimated to be
2.5 per cent during 2001, of which 1.7 per cent from medical products, appliances and
equipment, 0.7 per cent from out-patient services and 0.1 per cent for hospital services.
5.7.91
The main data source for medical products, appliances and equipment include both
local manufacturing data and imported data. Services of physicians, nurses and related
practitioners form the major part of out-patient services. Such services are estimated by use
of the Household Budgetary Survey and RPI/HICP data for price adjustments.
Economic Statistics Division
223
Gross National Income Inventory
Transport
5.7.92
Household final expenditure COICOP 07 is specified under 13 items which are in
the following form: 4 items of purchase of vehicles, 4 items classified under operation of
personal transport equipment and 5 items classified under transport services.
Due to
differences in classification requirements, household final expenditure for this particular
group increased by 4.5 per cent.
5.7.93
The share of household consumption expenditure of COICOP 07 was estimated at
13.7 per cent during 2001 of which 4.5 per cent from purchase of vehicles, 6.1 per cent form
operation of personal transport equipment and 3.1 per cent from transport services.
5.7.94
Various data sources are referred to in order to estimate this category of expenditure.
Estimates of household spending on vehicles are based mainly on import data. Imported
vehicles are distinguished between cars purchased for private and business use. The Police
Department provides information on newly purchased vehicles by households. Estimates for
motorcycles and bicycles are also based on trade data information.
5.7.95
Direct information from all the main enterprises providing transport services serve
as the main source for estimation of household expenditure on transport services.
Information on the number of travelling residents by air and average fares paid for various
destinations form the basis of estimation of households’ expenditure by air. Other important
data sources refer to data regarding issuing of new license permits so as to estimate the
household expenditure on driving lessons. Trade data and sales of local manufactured goods
are used so as to estimate purchase of spare parts and items related to personal transport
equipment.
Communication
5.7.96
This section is specified in 3 items and includes postal and telephone services as
well as purchases of telephone and fax equipment. Following COICOP revision household
expenditure on communication increased by 10.6 per cent.
Its share during 2001 was
estimated at 4.7 per cent.
5.7.97
Direct information from enterprises providing postal, telephone services is used for
estimates of household expenditure on such services. Information regarding sales by mobile
224
National Accounts Unit
Gross National Income Inventory
telephony companies is utilized to estimate expenditure by households on mobile telephone
services.
Expert advice was consulted as to distinguish between expenditure towards
household and business use. Estimation of telephone and fax equipment is based on trade
import information.
Recreation and culture
5.7.98
Household final consumption expenditure COICOP 09 is specified in 21 items:
equipment and accessories are presented in 13 items, including repair and services, 3 items of
recreational and cultural services, 4 items of newspapers, books and stationery, and 1 item of
package holidays.
The new COICOP classification, compared to the previous system,
consists of a much more detailed breakdown of goods and services.
5.7.99
The share of household consumption expenditure for 2001 was estimated at 11.0 per
cent and of which 1.8 per cent for audio-visual, photographic and information processing
equipment, 0.2 per cent for other major durables for recreation and culture, 1.5 per cent for
other recreational items and equipment, gardens and pets, 4.0 per cent for recreational and
cultural services, 1.9 per cent for newspapers, books and stationary and 1.6 per cent for
package holidays.
5.7.100 Both import trade data and manufacturing sales data are used for estimates regarding
purchase of goods and equipment classified under this particular COICOP group. Estimates
of household consumption on repairs are based on average household expenditure obtained
from the household budgetary survey. Expenditure by households on Veterinary services is
based on information obtained from financial accounts of private companies together with
information gathered form the household budgetary survey.
Expenditure on theatres,
cinemas and museums by households are estimated on specific surveys sent to companies
that offer such recreational services. Expenditure on television licenses is obtained from
direct information obtained by from financial accounts of the local broadcasting company.
5.7.101 Household consumption on betting and gaming, including national lottery, is
measured as the amounts paid less the amount returned in winnings, representing the cost of
the service, that is, the net loss incurred by households which is equivalent to the net takings
of persons engaged in the industry plus the amount taken by the government in the form of
betting duties. Direct quarterly data from national lottery sources serves the basis for the
Economic Statistics Division
225
Gross National Income Inventory
estimate of household consumption on such services. For the various other forms of betting
expenditure estimates are based on average household expenditure along with data obtained
regarding the number of existing tombla license holders.
Education
5.7.102 Expenditure under this heading is specified in 5 items relating to different levels of
education. The share of this particular group of expenditure amounted to 1.1 per cent.
5.7.103 Information obtained by means of questionnaires from schools is used to estimate
this household expenditure group whilst expenditures from the household budgetary
expenditure form the basis for certain education services that fall under this expenditure
category.
Restaurants and hotels
5.7.104 Household final consumption expenditure COICOP 11 is specified in both catering
services and accommodation services. The share of this expenditure category was estimated
at 14.4 per cent of which 7.9 per cent for catering services and 6.6 per cent for
accommodation services.
5.7.105 Household consumption expenditure for bars and restaurants is estimated using
expenditure data from the Household Budgetary Survey (HBS), the Tourism Expenditure
Survey (Tourstat) and Price Index/HICP data. Included is this expenditure category are food,
tobacco, wine and spirits consumed in restaurants and hotels.
5.7.106 The National Accounts Hotels Census survey is used as a major source in the
estimation of expenditure on accommodation services by households.
Miscellaneous goods and services
5.7.107 COICOP 12 (Miscellaneous goods and services) is specified under 14 items, in
terms of consumption groups – 3 items of personal care, 2 items of personal effects, 1 item of
social work services, 5 items of insurance services, 2 items of financial services n.e.c and 1
item of other personal services. The share of this group of expenditure was estimated at 7.7
per cent during 2001 of which 2.3 per cent for personal care, 1.0 per cent for personal effects,
226
National Accounts Unit
Gross National Income Inventory
0.4 per cent for social protection, 1.6 per cent for insurance, 1.9 per cent for financial services
and 0.5 per cent for other services.
5.7.108 Various data sources were applied so as to estimate this particular COICOP group.
Data regarding imports and sales of domestically produced goods were often a major source
of data. Average household expenditure obtained from the 2000 HBS on various services
consumed by households formed the basis of estimation for services under this category.
With the use of data from RPI and demographic data a quarterly and annual estimate is
obtained.
5.7.109 Household expenditure on service charges for insurance services is based on
information obtained directly from insurance companies. Reference is also made to data
obtained from the 2000 HBS when estimating this particular expenditure group. Household
expenditure on other services that fall under this COICOP group is based on average
household expenditure obtained from HBS 2000 and information from company data.
Self-assessment on reliability, exhaustiveness, independence and ESA 95 compliance of
the PHC estimates
5.7.110 The use of the tabular format presented in the Phare 2000 Project on the compilation
of PHC estimates has served to substantially improve the integration of various sources in
selecting a final best estimate of PHC – often resulting in having more than two independent
estimates by COICOP groups. The Phare programme tabular format of the various PHC
estimates by COICOP commodity groups has facilitated greatly the assessment of each
estimate, enhancing the reliability of the final estimate of PHC. Furthermore, it may be said
that following the substantial improvements both in terms of better methods and
exhaustiveness adjustments to the PHC estimates that they are now in line with ESA 95
requirements.
Economic Statistics Division
227
Gross National Income Inventory
5.8
NPISH final consumption expenditure
5.8.1
NPISH final consumption expenditure is available from 1995 onwards and classified
using the COPNI classification (refer to Chapter 10). In 2001 the NPISH final consumption
expenditure is estimated as Lm28.3 million or 1.63 per cent of the GDP at market prices.
Table 5.8.1: NPISH final consumption expenditure as a ratio to GDP-200139
COPNI
02
03
04
05
06
07
08
09
5.8.2
Details
Health
Recreation and Culture
Education
Social Protection
Religion
Professional, Labour and Political Organisation
Environmental Organisations
Services n.e.c
Total
GDP at market prices
Lm'000s % of GDP
589
0.03
4,453
0.26
9,750
0.56
4,663
0.27
7,317
0.42
1,378
0.08
128
0.01
44
0.00
28,322
1.63
1,733,073
The main sources used to calculate the output for Non-Profit Institutions Serving
Households Sector are:
ƒ
Annual Financial Statements
ƒ
Non-Governmental Organisations Survey
ƒ
Youth Organisations Survey
ƒ
Sports Organisations Survey
ƒ
Band Clubs Survey
ƒ
Museums Survey
ƒ
Radio Stations Survey
5.8.3
The NPISH sector covers about 1,665 organisations, of which 58 per cent are
covered by estimates and the rest are covered by direct sources. The Non-Governmental
Organisations’ Survey has been compiled annually from the Population and Social Statistics
39
GDP at market prices as at the news release no: 96/2007 issued on 8th June 2007.
228
National Accounts Unit
Gross National Income Inventory
Unit since 1998.
Youth organisations, band clubs, museums, radio stations and sports
organisations are compiled annually from the Population and Social Statistics Unit. These
surveys have been conducted for the first time in 1997 except for the sport organisations
survey, which was initiated in 2000. The above surveys provide both financial information
and data regarding the number of members and employees.
5.8.4
The Archdiocese of Malta submits annual financial information for church schools
and also provides the National Accounts Unit financial information regarding church homes,
parishes and other entities. Further annual reports of other NPISHs are provided to the
National Accounts Unit, by a government unit which distributes grants to NGO’s – Unit for
Liaison with NGO’s and also by the Department of Industrial and Employment Relations as
regards to trade unions. Other sources used for employment include the Employment and
Training Corporation (ETC) database, providing us every quarter with the relevant
employment data and the Business Register.
Unregistered employment such as band
musicians, employment in small sports clubs and religious organisations – convents or
monasteries – is added to ETC employment data for NACE 91 and NACE 92. Estimates are
calculated for those organisations without any financial information available where further
information is provided in Chapter 3 – Production Approach.
Economic Statistics Division
229
Gross National Income Inventory
Table 5.8.2: Sources used each year
2001
Number of
NPISH Units
%
Annual Reports
205
12.31
Non-Governmental Organisations Survey
111
6.67
Youth Organisations Survey
63
3.78
Band Clubs’ Survey
79
4.74
Audio Visual Survey
7
0.42
Museums Survey
5
0.30
75
4.50
Sports Organisations Survey
148
8.89
Estimates (Indirect)
972
58.38
1,665
100.00
Source
Church Schools-Archdiocese Survey
Total
5.8.5
The value of total output (P.1) of NPISHs is calculated as the sum of total
production costs i.e. the sum of the compensation of employees (D.1), intermediate
consumption (P.2), consumption of fixed capital (K.1) and other taxes of production less
other subsidies on production (D.29-D.39). To obtain non-market output (P.13) – NPISH
final consumption expenditure for the above categories - output for own final use (P.12) and
market output (P.11) are deducted from total output (P.1). There is no output for own final
use in the NPISH sector. Market output (P.11) amounts to 13 per cent of the total output of
this sector.
230
National Accounts Unit
Gross National Income Inventory
5.9 Government final consumption expenditure
Introduction
5.9.1
The general government sector is made up of two sub-sectors – the central
government and the local government. There are no social security funds within the local
context because this function is taken over within the central government operations.
5.9.2
The general government sector includes institutional units, which are other non-
market producers, or producers for own final use that are mainly financed and/or controlled
by general government. There are units within general government, which are organised as
companies limited by shares but are nevertheless classified as other non-market producers
because they are mainly controlled and/or financed by general government. Similarly there
may be units which are similar to companies but do not have the legal form of a company.
These so-called quasi-corporations are also classified as market producers. They are
characterised both by the fact that they keep a full set of accounts and by the fact they are
managed as though they were companies.
5.9.3
With certain exceptions, publicly owned corporations and quasi-corporations do not
form part of general government.
5.9.4
The final consumption expenditure of the general government is calculated by the
value of the goods and services produced by public bodies; which is obtained from the sum of
costs being; intermediate consumption, compensation of employees, consumption of fixed
capital and other taxes on production less other subsidies received by government. Sales by
public bodies and output for own final use are deducted from the output total, while the
purchases by general government of goods and services produced by market producers that
are supplied to household – without any transformation – as part of social transfers in kind
are added.
5.9.5
The Classification of the Functions of Government (COFOG) is used for classifying
the General government consumption expenditure. The COFOG is a detailed classification
of the functions, or socio-economic objectives, that general government units aim to achieve
through various kinds of outlays. Public services may either be provided simultaneously to
all members of the community, i.e. collective consumption expenditure, or to specific
households to satisfy their needs, i.e. individual consumption expenditure.
Economic Statistics Division
Therefore
231
Gross National Income Inventory
classification in accordance with COFOG offers the possibility of distinguishing between
individual and collective services. Further details on this classification are available at the
end of this section.
Central Government
5.9.6
Central government is primarily made up of the Budgetary Central Government,
consisting of Ministries and Government Departments. These are traditionally accounted for
within the consolidated fund of the Government’s Budget.
5.9.7
Extra-budgetary units complement this sub-sector. These are ‘entities’ that receive
financial aid from government in the form of subventions, grants, and rarely loans. These
have been classified as forming part of the General government sector (S.13) based on a
delineation exercise on the criteria set out in the ESA 95 Manual on Government Deficit and
Debt. The definitive criterion was considered to be the 50 per cent rule: a decision had to be
taken on whether 50 per cent of their costs were covered by sales of goods and services.
Another criterion is whether the entity has autonomy of decision. The NSO updates this
classification yearly. Several entities although fully owned by Government are not included
in this sector (S.13) such as the Water Services Corporation and Enemalta Corporation,
because their market output covers more than 50 per cent of their total costs.
Local Government
5.9.8
Local Councils were introduced in Malta in 1993/1994. In 2000 the number of local
councils was 68. By law local councils are not allowed to introduce local taxes but they may
charge fees for specific services offered after a relative bye-law has been approved by the
council and endorsed by the Minister.
The amount of funding received from general
government is worked out according to a complex formula, which takes into account a
number of considerations, the main two being the number of residences and the area. A large
proportion of these funds assigned must necessarily be spent on the collection of refuse,
cleaning of streets and maintenance of roads, pavements and public gardens.
232
National Accounts Unit
Gross National Income Inventory
Sources
5.9.9
The data for the consolidated fund, which consists of the expenditure of departments
and Ministries, is recorded in the central government accounting system, known as
Departmental Accounting System (DAS).
The Treasury manages the DAS and the NSO has
online access to this accounting system. A series of specialized reports are used in which all
the expenditure and revenue transactions for central government are extracted according to
the ESA 95 methodology. Moreover the COFOG category for each transaction is specified.
These reports are available on a monthly basis. As from 2001 all the transactions within the
consolidated fund have been classified in line with ESA 95 methodology. Data extracted
from 2001 was worked backwards to previous years in order to ensure ESA 95 compatibility
for the previous years. As the DAS is cash based, the data was enhanced with an accruals
adjustment compiled by the Treasury Department.
5.9.10
Extra-budgetary units are also surveyed on a quarterly basis by means of a
questionnaire that captures data on gross wages and salaries, social security contributions,
other recurrent and capital expenditure. Almost all extra budgetary units prepare a full set of
financial statements.
5.9.11
The data for local councils is primarily sourced from their financial statements.
These are prepared annually, with a financial year ending 31st March. Due to the accounting
period the NSO adjusts the data by dividing the totals into four quarters. This method
assumes no seasonal or other variations between the quarters.
Valuation
5.9.12
Final consumption expenditure by general government results from the specific
recording of government output. Only a small part of government output is actually sold
(market output). The larger part of government output is paid out of public funds and
provided free of charge to all sectors (non-market output).
Because the allocation of
government output to different users will encounter large problems, the government is by
convention considered to be the consumer of its own output.
The final consumption
expenditure is calculated as:
Economic Statistics Division
233
Gross National Income Inventory
Intermediate Consumption
Add:
Compensation of Employees
Add:
Consumption of Fixed Capital
Add:
Other taxes on production (paid by government)
Minus: Other subsidies on production (received by the government)
=
OUTPUT
Minus: Market Output
Minus:
Plus:
=
Own-account capital formation
Social benefits in kind via market producers
General Government Final Consumption Expenditure
Table 5.9.1: Government Final Consumption Expenditure for 2001 and 2002
2001
(Lm’000s)
Intermediate Consumption
76,777
85,189
+
Compensation of Employees
257,704
265,421
+
Consumption of Fixed Capital
37,565
39,890
+
Other Taxes on Production
0
0
-
Other Subsidies on Production
0
0
372,046
390,500
25,774
28,883
Output (at basic prices)
-
Market Output
-
Output for Own Final Use
4,715
3,309
+
Social Benefits in Kind via Market Prices
6,430
8,208
347,986
366,516
Government Final Consumption Expenditure
234
2002
(Lm’000s)
National Accounts Unit
Gross National Income Inventory
Detail of economic aggregates
5.9.13
This section describes the method of estimating the various components making up
the final consumption expenditure for the government.
Intermediate Consumption
5.9.14
Intermediate consumption of the budgetary central government is made up of all the
operations and maintenance expenses for all the ministries and departments. This includes
expenditure on utilities, materials and supplies, repairs and upkeep, rent, international
memberships, office services, transport, travel, information services, contractual services
professional services, training, hospitality and incidental expenses; after eliminating certain
expenditure (e.g. rent on land, international memberships with UN and EU Organisations,
etc) which according to the ESA 95 methodology may not be classified as intermediate
consumption.
5.9.15
For the calculation of the budgetary central government’s intermediate consumption
figures obtained from the DAS were utilized. For the extra-budgetary units and the local
councils the annual financial statements were referred.
5.9.16
An adjustment was made where items of a recurrent nature were originally classified
as capital expenditure. These were removed from gross fixed capital formation and placed in
intermediate consumption, like hire of vehicles, certain building materials and other small
recurrent expenditures.
5.9.17
Another adjustment is the inclusion of the FISIM allocation to the General
Government Sector. The FISIM was apportioned to the 12 NACE categories, forming part of
general government, based on their output without FISIM.
Compensation of Employees
5.9.18
The General government’s total compensation of employees is calculated by
summing up the wages and salaries, actual social contributions and imputed social
contributions.
5.9.19
Wages and salaries (D11) and actual social contributions (D121) for the central
government are extracted from the DAS system of the Treasury Department, at quarterly
Economic Statistics Division
235
Gross National Income Inventory
intervals. The personal emoluments category is available in a disaggregated level, including
holders of political office, staff – wages and salaries, bonus, income supplement, social
security contributions, allowances and overtime. In addition the wages and salaries and
actual social contributions paid from the capital expenditure is included in D11 and D121
respectively. Imputed social contributions are paid by the government, as an employer.
These pensions and cost of living bonuses are granted to ex-civil servants and retired
policemen, armed forces pensioners, widows and orphans and retired members of parliament.
The allocation of imputed social contributions is based on D11.
5.9.20
As far as extra-budgetary units are concerned information on wages and salaries and
on actual social contributions has been taken from the quarterly surveys or their annual
financial statements while for local councils this data was captured from their individual
financial statements.
Consumption of fixed capital
5.9.21
Consumption of fixed capital (K1) is the reduction in value, which a fixed asset
undergoes because its economic life is limited. The method used for the general government
sector is the Perpetual Inventory Method (PIM). K1 for the General Government Sector data
was obtained from the National Accounts Unit, refer to section 4.12. This data is apportioned
to the 12 NACE (and COFOG) categories using estimations based on time-series of gross
fixed capital formation (P51) by NACE classification (and COFOG) for each sub-sector of
general government . K1 is then calculated by applying the average structure of gross fixed
capital formation by NACE (and COFOG) on total K1 of sub-sectors.
Other taxes on production
5.9.22
The Government pays no taxes on production.
Other subsidies on production
5.9.23
The Government receives no subsidies on production.
Market Output
5.9.24
Ministries and departments may engage in market activities and generate revenue;
with the main activities being rent of buildings, admissions to various buildings, court,
236
National Accounts Unit
Gross National Income Inventory
passport, and public registry fees as well as hospital fees charged to non-residents. The
information for these market activities of the central government is obtained from the DAS
system and from the Financial Report (Treasury Department) and Budget Reports (Ministry
of Finance). When coding a revenue transaction in line with the ESA 95 methodology
consideration was made to distinguish revenue from taxes (D2) and from sale of services
(P11). For this purpose it was determined that when the fee charged reflected the actual
service provided, this would be a P.11 transaction.
On the other hand taxes reflected
revenues out of proportion to the service rendered.
5.9.25
The market output of local councils consists of income raised under council bye-
laws for the use of facilities, advertising on street furniture, tender documents and hire of
skips. Revenue is collected also from cultural activities, publications, fees from courses,
media charges and other general income. Data was captured from their respective financial
statements.
5.9.26
For the extra-budgetary units their market output was captured from their financial
statements and consisted mainly of sale of new vacant premises from the Housing Authority,
development permit fees from the Malta Environment and Planning Authority and
examination and registration fees from the University of Malta.
Own-account capital formation
5.9.27
The output for own final use consists of goods and services retained either for final
consumption or for gross fixed capital formation.
Social Benefits in kind via market producers
5.9.28
These are purchases by general government of goods and services produced by
market producers that are supplied to households as social transfers in kind. This implies that
general government just pays for goods and services that the producers provide to
households.
5.9.29
The following are Malta’s social benefits in kind being; the incontinence service,
direct provision of pharmaceutical products, school transport to primary and secondary
schools, residential care in private homes, meals on wheels, residential home for disabled
persons and homes for the elderly.
Economic Statistics Division
237
Gross National Income Inventory
Individual and Collective Consumption
5.9.30
Government services can benefit the community ether individually or collectively.
The classification of expenditure according to COFOG is also used to distinguish between the
individual and collective services provided by general government. The COFOG functions
are pre-defined so that they represent individual or collective consumption, but not both.
COFOG is made up of the following Divisions:
•
General Public Services
•
Defence
•
Public order and safety
•
Economic affairs
•
Environmental protection
•
Housing and community amenities
•
Health
•
Recreation, culture and religion
•
Education
•
Social protection
5.9.31
The first 6 divisions are by convention all to be considered collective expenditure.
The other 4 divisions are in the main individual consumption expenditure, with the exception
of the general administrative costs, which are still classified as collective expenditure.
5.9.32
The General Government expenditure is reported by cost centre, and therefore the
outlays on general administrative functions (including ministerial, and permanent secretary’s
office) are adequately identifiable.
238
National Accounts Unit
Gross National Income Inventory
Table 5.9.2: Individual/Collective Consumption Expenditure for 2001 and 2002
Individual
Consumption
Expenditure
Collective
Consumption
Expenditure
Final Consumption
Expenditure for
General
Government
Lm’000s
2001
175,180
172,807
347,986
2002
189,589
176,927
366,516
Table 5.9.3: Final Consumption Expenditure by COFOG for 2001 and 2002
2001
(Lm’000s)
2002
(Lm’000s)
General Public Service
44,847
46,425
Defence
12,111
12,016
Public Order and Safety
26,594
27,958
Economic Affairs
66,814
69,378
Environmental Protection
12,278
11,924
Housing and Community Amenities
1,644
2,680
Health
79,880
85,765
Recreation, Culture and Religion
6,978
6,575
Education
77,210
80,553
Social Protection
19,630
23,244
General Government Final Consumption Expenditure
347,986
366,516
Economic Statistics Division
239
Gross National Income Inventory
5.10 Acquisitions less disposals of tangible fixed assets
5.10.1 Prior the implementation of ESA 95, Gross fixed capital formation (GFCF) included
only an estimate for new or existing tangible fixed assets. GFCF was available by type of
asset, but with a breakdown other than that suggested by ESA 95. A distinction was also
made between private producers and the government sector. GFCF was neither available by
NACE nor by CPA.
5.10.2 With the introduction of ESA 95, the compilation of GFCF was broken down in 3
categories, namely, by type of fixed asset, by kind of activity (refer to section 5.10A-5.10P),
and by product (refer to Box 10.3). The activity and product breakdown used for GFCF are
generally based on those used in the production approach i.e. the A60 and the P.90. GFCF is
also subdivided by type of producer, i.e. market (S.11 and S.14) or non-market producers, the
latter being further subdivided into central government (S.13111), local government (S.1313),
and non-profit institutions serving households (S.15). All this information is presented in an
investment matrix which allows various cross-classifications such as;
•
activities by products,
•
activities by type of asset,
•
type of producer by type of asset,
•
type of producer by type of product, and
•
activities by type of producer.
Investment matrices are compiled on an annual basis and are available for the period 1995 to
2004. At present 2004 is considered to be the benchmark year, although the data is still
provisional. This benchmark year is eventually used for the quarterly estimates as from 2005
onwards.
5.10.3 GFCF for the period 1995 to 2004 is also available by quarter. Quarterly GFCF for
the period 1995 to 2004 is only compiled in Pi6 and Pi3 formats. Four main indicators are
used to subdivide the annual estimate by quarter:
•
Import data of capital goods
•
Output of NACE F Construction, of the Non-financial corporations (S.11) and
Households (S.14) sectors
240
National Accounts Unit
Gross National Income Inventory
•
Output of NACE 72.2 Software consultancy and supply services
•
Expenditures on GFCF by the central government (S.13111) and local government
(S.1313) sectors are available on a quarterly basis in the Pi6 and Pi3 format.
Quarterly estimates for all sectors with the exception of S.13
5.10.4 For the period 1995 to 2003 the total imports of capital goods was used as an
indicator for Products of agriculture, forestry, fisheries and aquaculture (Pi6 Code 1), Metal
products and machinery (Pi6 Code 2), Transport equipment (Pi6 Code 3), and Other products
(Pi6 Code 6). As from 2004 two further refinements were introduced. Imports were first
broken down by Pi6 and used as indicators accordingly for Products of agriculture, forestry,
fisheries and aquaculture (Pi6 Code 1), Metal products and machinery (Pi6 Code 2), and
Transport equipment (Pi6 Code 3). Given that 66 per cent of the other products (Pi6 Code 6)
in the benchmark year consisted of software it has been decided to link the quarterly estimate
of other products (Pi6 Code 6) to the output of NACE 72.2 Software consultancy and supply
services. The reason behind this was that software in reality is a service and thus not
captured in trade statistics.
5.10.5 The Output of NACE F construction, derived from the production approach for nonfinancial corporations (S.11) and the households (S.14) sectors is used as an indicator to
subdivide annual estimates of GFCF on Construction (Pi6 Code 4 & 5) by quarter. A further
refinement was introduced as from 2007. Output is being used as an indicator just for “other
construction” (Pi6 Code 5), whilst “housing” (Pi6 Code 4), is being calculated directly from
building permits issued on a quarterly basis.
5.10.6 From 2005 onwards a different approach is applied in the compilation of GFCF.
GFCF is analysed by Pi6 for the benchmark year 2004, upon which growth rates are applied.
The following growth rates are applied:
Pi6
Description
1
Products of agriculture,
fisheries and aquaculture
2
Metal products and machinery
Economic Statistics Division
Growth rate
forestry, Imports of capital goods classified in
Pi6 Code 1)
Imports of capital goods classified in
Pi6 Code 2)
241
Gross National Income Inventory
5.10.7
3
Transport equipment
Imports of capital goods classified in
Pi6 Code 3)
4
Housing
Building permits issued
5
Other constructions
Output of NACE 45
6
Other products
Output of NACE 72.2
It is important to note that expenditures on GFCF by the central government
(S.13111) and local government (S.1313) sectors are available on a quarterly basis in the Pi6
and Pi3 format. Thus, in case of housing and other constructions these growth rates are only
applied to the private sector i.e. S.11, S.12, S.14 and S.15. In case of all other assets, the
growth rates are applied on the totals. Investment for private sector is arrived at by deducting
the S.13 from the totals of Pi6 Codes 1, 2, 3 and 6.
5.10.8
The main sources for the annual compilation of acquisitions less disposals of new
and existing tangible fixed assets (P.511) for the period 1995 to 2004 are:
ƒ
the annual reports and financials statements;
ƒ
the structural business statistics (SBS);
ƒ
the short-term business statistics survey (STBS)
ƒ
quarterly and annual censuses carried out by various Units at NSO including
the National Accounts Unit; and
ƒ
the ‘Departmental Accounting System’ in case of non-market producers
(central government)
The main sources used are often the same sources that are used for the estimation of the
output approach of each respective industry.
5.10.9
Annual reports and financial statements supply the following information in the
schedule of fixed assets and the cash flow statement:
ƒ
Stock of capital at the beginning of the year both at book value and net book
value (schedule of fixed assets)
ƒ
Acquisitions of tangible fixed assets (schedule of fixed assets/cash flow
statements)
ƒ
242
Disposals of fixed assets (cash flow statements)
National Accounts Unit
Gross National Income Inventory
5.10.10 Notwithstanding the fact that some companies might submit abridged accounts,
these also contain a full Balance Sheet and a Schedule of Fixed Assets. However, sometimes,
in case of abridged accounts, no asset detail is available in the Schedule of Fixed Assets, and
only totals are submitted.
The asset detail published in the accounts varies between
companies and industries however, the main headings generally are:
ƒ
Land and building
ƒ
Improvement to premises
ƒ
Plant and machinery
ƒ
Motor Vehicles
ƒ
Furniture and fittings
ƒ
Office and computer equipment
5.10.11 Information on own-account GFCF is generally found in the notes to the accounts,
as part of staff costs, thus valued at cost.
5.10.12
SBS data covers NACE categories:
ƒ
14 to 37 and 45 are available since 1995 in NACE Rev.1 and by ISIC back to
the 1950s
ƒ
50 to 52 are available since 1999 in NACE Rev.1
ƒ
55, 60.2, 62, 63 and 65 to 67 are available since 2000 in NACE Rev.1
ƒ
70, 71, 72 74, 92 are available since 2001 in NACE Rev.1
However, the SBS is not used for all the above-mentioned NACE categories. These include
the Nace classes mentioned in paragraph 5.11.8.
5.10.13
The asset breakdown in section 7 of the SBS is as follows:
ƒ
Land
ƒ
Existing buildings and structures
ƒ
Construction and alterations
ƒ
Machinery and equipment - This variable covers machinery (office machinery
etc.), special vehicles used on the premises, other machinery and equipment,
all vehicles and boats used off the premises, i.e. motor cars, commercial
Economic Statistics Division
243
Gross National Income Inventory
vehicles and lorries as well as special vehicles of all types, boats, railway
wagons, etc. acquired new or second hand during the reference period.
Of which
ƒ
Investment in equipment and plant for pollution control and special antipollution accessories (mainly end-of-pipe equipment)
ƒ
Investment in equipment and plant linked to cleaner technology (integrated
technology)
ƒ
Intangible fixed assets (as from 2003) – This variable covers concessions,
patents, licences and trademarks and similar rights
Whenever the SBS is used as the main data source for GFCF, annual reports and financial
statements are used to subdivide machinery and equipment into various CPA categories.
5.10.14 The SBS supplies data on own-account GFCF in Section 6. Capitalised production
includes the own-account production of all goods that are retained by their producers as
investment. The latter includes the production of fixed tangible assets as well as intangible
assets. Capitalised production is unsold production and is valued at cost.
5.10.15 Up till 2002 GFCF variables derived from the SBS were adjusted to cover nonresponse by the National Accounts Unit, since this was not being done by the Business
Statistics Unit. The GFCF per full-time equivalent gainfully occupied is derived for every 2digit NACE category, for each of the above-mentioned assets. Grossing up is based on the
full-time equivalent gainfully occupied used in the production approach for every 2-digit
NACE category. As from 2003 such adjustments were not necessary, and thus GFCF in
principal will be taken directly from the SBS.
5.10.16 STBS data covers NACE categories 15 to 37. This is a quarterly survey of about
350 manufacturing companies carried out by the STBS unit. The variables surveyed by the
STBS unit include investment in plant and machinery and investment in buildings. The
STBS survey is a very important data source due to its timeliness. At present, the STBS data
is being used to estimate GFCF for NACE categories 15 to 37 for 2003 and onwards. This
survey is subdivided by employment size class and grossed up by the National Accounts
Unit. The value of plant and machinery derived from the STBS is further subdivided at 2digit CPA (based on previous year estimates). Subsequently STBS data is replaced by SBS
data.
244
National Accounts Unit
Gross National Income Inventory
5.10.17 The National Accounts Unit conducts quarterly or annual censuses for a number of
activities, covering both market and non-market producers:
ƒ
Hotels (NACE 55.1 – 55.2) – Hotels, guesthouses, and apart hotels (annual)
ƒ
Other scheduled passenger land transport (NACE 60.21) and other land passenger
transport (NACE 60.23) - Minibuses, buses, private coaches and Gozo buses.
(annual)
ƒ
Activities of travel agencies and tour operators; tourist assistance activities n.e.c.
(NACE 63.3) – Travel agents (annual)
ƒ
Activities auxiliary to insurance and pension funding (NACE 67.2) – Insurance
agents. (annual)
ƒ
Ad hoc questionnaires to some of the most important companies operating in each
particular industry (quarterly and annual)
The National Accounts Unit used to conduct these surveys since no other section within NSO
provided data on the above-mentioned NACE classes. However, now that most of these
NACE classes are being covered by the SBS, it is hoped that the National Accounts Unit will
soon shift to these new sources. Other data sources include the Census of Agriculture 2001
and various questionnaires carried out by the Agriculture and Fisheries Unit on a quarterly
and annual basis and the Value Added Tax database.
5.10.18 The departmental accounting system (DAS) is the main data source used in to
compile the Central Government Sector (S.1311). All government transactions available in
the departmental accounting system (DAS) have been coded according to the classification of
transaction and other flows in ESA 95. Data extracted from DAS are available at the A60
level of detail. However, expenditure items are not coded by CPA. This is done in the
National Accounts Unit using the description available for each expenditure item in the
annual ‘Financial Estimates’ published by the Ministry of Finance. Data for S.1311 is
exhaustive and no estimates are needed.
Valuation
5.10.19 GFCF is valued at purchasers’ prices including installation charges and other costs
of ownership transfer. When produced on own-account it is generally valued at the costs of
production.
Economic Statistics Division
245
Gross National Income Inventory
5.10A GFCF – NACE A. Agriculture, hunting and forestry
5.10.20 Investment in NACE A relates only to agriculture and related service activities
(NACE 01.1 to NACE 01.4). Hunting (NACE 01.5) and forestry, logging and related service
activities (NACE 02) are not applicable in Malta. Separate estimates are made for two
different types of producers involved, i.e. non-market producers (central government) and
market producers. GFCF in agriculture is estimated at Lm2.0 million or 0.1 per cent of GDP
at market prices in 2001.
Box 5.10.1 NACE A. Gross fixed capital formation, 2001
CPA
Description
01C02
01C01
01D01
01D02
01D02
01D03
01D04
28A01
29A01
30A01
34A01
45A01
TOTAL
Orchards
Vineyards
Cattle
Sheep
Goats
Pigs
Poultry
Greenhouses
Machinery and equipment n.e.c.
Office machinery and computers
Motor vehicles, trailers and semi-trailers
Construction work
Market
2001
Lm
5,841
40,253
482,300
126,920
32,646
546,060
296,960
67,119
271,360
Non-Market
2001
Lm
81,782
6,932
22,280
29,353
143,698
1,869,459
5.10.21 The main data sources are:
ƒ
censuses, surveys and administrative data collected by the Agriculture and fisheries
Unit (within NSO)
ƒ
import data on machinery and equipment including greenhouses; and
ƒ
the ‘Departmental Accounting System’ in case of non-market producers (central
government)
5.10.22 The information available in the various surveys and censuses carried out by the
Agriculture and fisheries Unit cover livestock for breeding, diary, draught, etc (AN.11141),
246
National Accounts Unit
Gross National Income Inventory
vineyards, orchards and other plantations of trees yielding repeat products (AN.11142). The
Agriculture and Fisheries Unit compiles GFCF on livestock for breeding, diary, draught, etc
(AN.11141) in line with the manual on Economic Accounts for Agriculture Rev. 1. This
information is incorporated in the National Accounts. Separate estimates are made for
vineyards and orchards. In case of vineyards the information available includes the number
of vines and root stock together with the area in hectares under vines. In case of orchards,
only the area in hectares (by type of fruit) is available. Price information for vineyards and
orchards is obtained from the Ministry of Agriculture and Fisheries. In both cases GFCF is
calculated as follows: Number of vines or trees multiplied by the price per tree
5.10.23 Items classified under CPA Group 29.3, agriculture and forestry machinery, are
obtained from the import data. Import data are available both in value and quantity, thus all
items costing less than 500 ECU (in 1995 prices) per item are not included as GFCF. A
similar procedure is adopted for greenhouses classified under CPA 28.11.10, using in both
cases CPA – CN correspondence tables.
5.10.24 As regards the central government, data is derived from the ‘Departmental
Accounting System’, which is elaborated on in paragraph 5.10.12.
5.10B GFCF – NACE B. Fishing
5.10.25 Investment activities of NACE B are subdivided in 2 industries, namely fishing
(NACE 05.01) and fish farming (NACE 05.02). GFCF was equivalent to Lm1.8 million in
2001 or 0.1 per cent of GDP at market prices.
Box 15.10.2 NACE B. Gross fixed capital formation, 2001
CPA code
28A01
29A01
30A01
34A01
35A01
36A01
45A01
72A01(software - intangible)
Total
Economic Statistics Division
Fishing
2001
Lm
1,594,132
1,594,132
Fish Farming
2001
Lm
44,408
41,271
9,475
26,296
22,260
27,312
0
7,582
178,604
247
Gross National Income Inventory
5.10.26 The main data sources are:
ƒ
the ‘Census of Fisheries‘ published in 1997 and 2005 by the NSO;
ƒ
the ‘Agriculture and Fisheries’ published annually by the NSO as from 2000; and
ƒ
the annual reports and financial statements for fish farms
5.10.27 Information is available in the ‘Census of fisheries’ and the ‘Agriculture and
Fisheries’ covering all the fishing fleet. Capital stock figures are available for 1997 and
2000. Only the number of craft in stock is available for 2000, whilst in 1997 both the number
of craft and the average value by type of craft are available. An estimate of capital stock
(number of craft) was estimated for the period 1998-1999. Capital stock was converted to
values by applying the average value per craft obtained from the Census of Fisheries 1997
(adjusted for price movements). For 2001 to 2003 GFCF is based on the number of new
licences issued per type of vessels by the authorities multiplied by the average value per craft
obtained from the Census of Fisheries 1997 (adjusted for price movements).
5.10.28 As from 2004 onwards, use was also made of the information derived from the
fishing census of 2005 apart from the number of new licences issued per type of vessels
issued. This fishing census included information about the:
•
replacement value by type and size of vessel as at 2005 of the total fleet
•
GFCF by type of vessel during 2005 of the total fleet
5.10.29 Fish farms have been covered using annual reports and financial statements. When
necessary, employment is used for grossing up.
5.10C GFCF – NACE C. Mining and quarrying
5.10.30 Investment in NACE C relates only to service activities incidental to oil and gas
extraction, excluding surveying (NACE 11.2) and other mining and quarrying (NACE 14).
GFCF for activities in NACE C was equivalent to Lm0.3 million in 2001 or 0.02 per cent of
GDP at market prices in 2001.
248
National Accounts Unit
Gross National Income Inventory
5.10.31 Only one company is involved in NACE 11.2, for which annual reports and financial
statements are used, whilst for NACE 14, the SBS is used (refer to paragraphs 5.10.6 5.10.9).
5.10D GFCF – NACE D. Manufacturing
5.10.32 Investment activities of NACE D are distinguished in 23 industries, meaning that the
industry breakdown is not as detailed as the production approach. Separate estimates are
made for three different types of producers involved, i.e. non-market producers, central
government and NPISH and market producers. GFCF was equivalent to Lm62.7 million in
2001 or 3.6 per cent of GDP at market prices.
Box 5.10.3 NACE D. Gross fixed capital formation, 2001
NACE
code
15
16
17
18
19
20
21
22
23
24
25
NACE Description
Manufacture of food
products and beverages
Manufacture of tobacco
products
Manufacture of textiles
Manufacture of wearing
apparel; dressing and
dyeing of fur
Tanning and dressing of
leather; manufacture of
luggage, handbags,
saddlery, harness and
footwear
Manufacture of wood
and of products of wood
and cork, except
furniture;
Manufacture of pulp,
paper and paper products
Publishing, printing and
reproduction of recorded
media
Manufacture of coke,
refined petroleum
products and nuclear
fuel
Manufacture of
chemicals and chemical
products
Manufacture of rubber
and plastic products
Economic Statistics Division
Private
Central
government
(S.13111)
NPISH
(S.15)
% GFCF
of Section
D
5,658,759
na
na
5,658,759
9.0%
1,196,233
3,521,119
na
na
na
na
1,196,233
3,521,119
1.9%
5.6%
1,396,828
na
na
1,396,828
2.2%
260,833
na
na
260,833
0.4%
111,948
na
na
111,948
0.2%
2,129,093
na
na
2,129,093
3.4%
2,319,311
50,000
50,000
2,419,311
3.9%
150
na
na
150
0.0%
2,035,605
na
99,960
2,135,565
3.4%
5,121,732
na
na
5,121,732
8.2%
Total
249
Gross National Income Inventory
Manufacture of other
non-metallic mineral
products
Manufacture of basic
metals
Manufacture of
fabricated metal
products, except
machinery and
equipment
Manufacture of
machinery and
equipment n.e.c.
Manufacture of office
machinery and
computers
Manufacture of
electrical machinery and
apparatus n.e.c.
Manufacture of radio,
television and
communication
equipment and apparatus
Manufacture of medical,
precision and optical
instruments, watches and
clocks
Manufacture of motor
vehicles, trailers and
semi-trailers
Manufacture of other
transport equipment
Manufacture of
furniture; manufacturing
n.e.c.
Recycling
Total Manufacturing
26
27
28
29
30
31
32
33
34
35
36
37
3,264,751
na
na
3,264,751
5.2%
0
na
na
0
0.0%
1,500,326
na
na
1,500,326
2.4%
736,960
na
na
736,960
1.2%
0
na
na
0
0.0%
4,124,754
na
na
4,124,754
6.6%
17,381,335
na
na
17,381,335
27.7%
3,257,325
na
na
3,257,325
5.2%
4,150
na
na
4,150
0.0%
798,957
99,239
na
898,196
1.4%
7,431,275
174,994
62,426,436
na
na
149,239
na
na
149,960
7,431,275
174,994
62,725,635
11.8%
0.3%
100.0%
5.10.33 Main sources used are:
ƒ
the SBS;
ƒ
the STBS;
ƒ
the annual reports and financial statements; and
ƒ
the ‘Departmental Accounting System’ in case of non-market producers (central
government).
The SBS is the main data source for Non-financial Corporations and Households operating
NACE D (refer to paragraphs 5.10.6 – 5.10.9). However, as explained in paragraph 5.10.10
the STBS survey is being used as from 2003. Eventually figures derived from the STBS are
substituted with the SBS data. Two government departments operate in NACE D, these
being covered by the ‘Departmental Accounting System’ is tackled in paragraph 5.10.12.
250
National Accounts Unit
Gross National Income Inventory
The Malta Shipbuilding Co. Ltd. which is classified in S.1311 is covered by annual reports
and financial statements.
5.10E GFCF – NACE E. Electricity, gas and water supply
5.10.34 Investment activities in NACE E are distinguished in two industries. Only one
company operates in NACE 40, and three in NACE 41. In both cases, the main data sources
are the annual reports and financial statements or questionnaires carried out by National
Accounts Unit. Output for own-final use derived from the production approach is also
included as part of GFCF. GFCF in electricity, gas, steam and hot water supply (NACE 40)
is estimated at Lm8.0 million or 0.5 per cent of GDP at market prices. GFCF in the
collection, purification and distribution of water (NACE 41) is estimated at Lm1.2 million or
0.07 per cent of GDP at market prices.
5.10F GFCF – NACE F. Construction
5.10.35 Investment activities in NACE F are included all in one industry. Separate estimates
are made for two different types of producers involved in NACE F. GFCF was equivalent to
Lm3.7 million in 2001 or 0.2 per cent of GDP at market prices. The main data sources used
are:
ƒ
the SBS;
ƒ
the annual reports and financial statements; and
ƒ
the ‘Departmental Accounting System’ in case of non-market producers (central
government).
As regards the SBS, the method used is that described in paragraphs 5.10.6 – 5.10.9, whilst
that the ‘Departmental Accounting System’ is tackled in paragraph 5.10.12.
Box 5.10.4 NACE F. Gross fixed capital formation, 2001
GFCF (in Lm million)
GFCF as a % of GDP
at market prices
Economic Statistics Division
Market
Producers
2001
-1.3
Non-Market
Producers
2001
4.9
-0.07
0.3
251
Gross National Income Inventory
5.10G GFCF – NACE G. Wholesale and retail trade; repair of motor vehicles,
motorcycles and personal and household goods
5.10.36 Investment activities in NACE G are distinguished in 3 industries.
GFCF is
estimated at Lm19.3 million or 1.1 per cent of GDP at market prices. The main data sources
used are:
ƒ
the SBS;
ƒ
the annual reports and financial statements; and
The method used is that described in paragraphs 5.10.6 – 5.10.9.
Box 5.10.5 NACE G. Gross fixed capital formation, 2001
NACE 50
NACE 51
NACE 52
GFCF
(Lm million)
1.7
7.4
10.3
% of GDP
0.1
0.4
0.6
5.10H GFCF – NACE H. Hotels and restaurants
5.10.37 Investment activities in NACE H are distinguished in 2 industries, hotels, camping
sites and other provision of short-stay accommodation (NACE 55.1 – 55.2), and restaurants,
bars, canteens and catering (NACE 55.3 – 55.5). GFCF is estimated at Lm23.1 million or 1.3
per cent of GDP at market prices.
Box 5.10.6 NACE H. Gross fixed capital formation, 2001
NACE 55.1 - 55.2
NACE 55.3 – 55.5
GFCF
(Lm million)
20.7
2.4
% of GDP
1.2
0.1
5.10.38 Main data sources are:
ƒ
the annual census covering hotels, guesthouses, hostels, tourist villages, holiday
complexes and apart hotels (NACE 55.1 – 55.2) carried out by the National Accounts
Unit;
252
National Accounts Unit
Gross National Income Inventory
ƒ
the SBS (NACE 55.3 – 55.5); and
ƒ
the annual reports and financial statements.
5.10.39 The National Accounts census is considered to be the best reliable source for NACE
categories 55.1 – 55.2. GFCF figures are exhaustive. The asset breakdown requested by the
census is as follows:
ƒ
Buildings
ƒ
Transport Equipment
ƒ
Machinery and other equipment including furniture and fittings
‘Machinery and other equipment including furniture and fittings’ have been subdivided into
further detail, using the asset breakdown available in annual reports and financial statements.
5.10.40 Estimates for NACE categories 55.3 – 55.5 are based on the SBS as per paragraphs
5.10.6 – 5.10.9.
5.10I GFCF – NACE I. Transport, storage and communications
5.10.41 Investment activities in NACE I are distinguished in six industries.
GFCF is
estimated at Lm44.5 million or 2.6 per cent of GDP at market prices.
Box 5.10.7 NACE I. Gross fixed capital formation, 2001
NACE 60
NACE 61
NACE 62
NACE 63
NACE 64
GFCF
(Lm million)
2.4
1.4
2.2
6.0
32.4
% of GDP
0.1
0.08
0.1
0.3
1.9
5.10.42 Investment activities in NACE 60 relate only to other land transport (NACE 60.2).
The main data sources are:
ƒ
the annual census covering minibuses, buses, privates and Gozo buses (NACE 60.21,
60.23) carried out by the National Accounts Unit;
ƒ
data on licensed motor vehicles;
ƒ
the annual reports and financial statements; and
ƒ
the SBS (NACE 60.24 - Freight transport by road).
Economic Statistics Division
253
Gross National Income Inventory
5.10.43 The census covering NACE 60.21 and 60.23 is exhaustive. The estimate for taxi
operation (NACE 60.22) is based on the total number of newly licensed motor vehicles
multiplied by the average cost per passenger car. The latter is derived from the import data.
VAT has been excluded since VAT is refunded on capital expenditure. Only diesel cars have
been considered, since these are less costly to operate and thus are preferred to petrol motor
vehicles by these operators. In case of freight transport by road (NACE 60.24) annual reports
and financial statements have been used for the years 1995 to 2003. However, these are not
exhaustive and thus fixed capital formation has been raised using employment as a raising
factor. As from 2004, use is being made of the SBS data for freight transport by road (NACE
60.24).
5.10.44 Investment activities in NACE 61 are covered by annual reports and financial
statements and ad hoc questionnaires sent by the National Accounts Unit. However, these are
not exhaustive. An estimate is made to cover a number of small companies operating
excursions, cruises and sightseeing boats.
5.10.45 Only 4 companies operate in NACE 62 and these are completely covered by the
annual reports and financial statements.
5.10.46 Investment activities in NACE 63 are generally covered by annual reports and
financial statements and ad hoc questionnaires sent by the National Accounts Unit with the
exception of travel agents (NACE 63.3), which are covered by the annual census carried out
by the same unit.
5.10.47 At 1.9 per cent of GDP, investment activities NACE 64 are the most significant in
Section I. Investment activities in NACE 64 are covered by annual reports and financial
statements and ad hoc questionnaires sent by the National Accounts Unit.
254
National Accounts Unit
Gross National Income Inventory
5.10J GFCF – NACE J. Financial intermediation
5.10.48 Investment activities in NACE J are distinguished in 3 industries.
GFCF is
estimated at Lm15.3 million or 0.9 per cent of GDP at market prices.
Box 5.10.8 NACE J. Gross fixed capital formation, 2001
NACE 65
NACE 66
NACE 67
GFCF
(Lm million)
5.6
% of GDP
5
4.1
0.3
0.3
0.2
5.10.49 Investment activities in NACE 65 are covered by the annual reports and financial
statements and a quarterly survey carried out by the Central Bank of Malta (CBM). The
quarterly survey carried out by the CBM covers Deposit Money Banks (DMB), Other
Banking Institutions (OBI) and International Banking Institutions (IBI). The GFCF of the
CBM is covered by the annual reports and financial statements and a quarterly survey carried
out by the National Accounts Unit. The quarterly survey carried out by the CBM has been
used for DMB, OBI and IBI. This survey is exhaustive. No asset breakdown is available in
this survey. All assets are found under one heading ‘Bank Premises and Equipment’. The
asset breakdown has been apportioned according to the asset breakdown in the annual report
and financial statements of DMBs.
5.10.50 Only five insurance principals (NACE 66) operated in Malta in 2001. These are
fully covered by the annual reports and financial statements.
5.10.51 Investment activities in NACE 67 are covered by the annual reports and financial
statements with respect of the Malta Stock Exchange, collective investment schemes,
investment service providers, stock brokers and exchange bureaus. Not all companies are
covered by the audited accounts thus figures are grossed up using employment. Insurance
agents were being covered by a yearly census carried out by the National Accounts Unit up
till 2004. As from 2005 this was replaced by a bi-annual census carried out by the Central
Bank of Malta.
Economic Statistics Division
255
Gross National Income Inventory
5.10K GFCF – NACE K. Real estate, renting and business activities
5.10.52 Investment activities in NACE K are distinguished in 4 industries.
Separate
estimates are made for two different types of producers involved, i.e. non-market producers
(central government) and market producers. GFCF is estimated at Lm105.0 million or 6.1
per cent of GDP at market prices. The most important investment assets are dwellings.
Box 5.10.9 NACE K. Gross fixed capital formation, 2001
GFCF
(Lm million)
NACE 70
NACE 71
NACE 72
NACE 74
79.5
11.9
2.0
11.6
Of which
Non-Market
Producers
(Lm million)
na
1.6
na
0.1
% of GDP
4.6
0.7
0.1
0.7
5.10.53 Main data sources used are:
ƒ
NACE 70
o the number of permits granted yearly by the Malta Environment and Planning
Authority (MEPA),
o the ‘Census of Population and Housing’ carried out by NSO in 1995,
o architect advice on construction costs, and
o the ‘Household Budgetary Survey’ 2000 (HBS 2000).
ƒ
NACE 71 to 74
o SBS, and
o annual reports and financial statements.
5.10.72 The most important investment assets in Section K are dwellings in NACE 70. The
number of units added to and discarded from the dwelling stock is estimated on the basis of
the units for which a permit was issued by the MEPA. An adjustment is made to account for
those permits that are never taken up.
This is done by taking 93 per cent of the total
dwelling units that have been issued with development permits. This adjustment is based on
a study carried out by MEPA itself, which revealed that the remaining 7 per cent of permits
are in actual fact never taken up. In the intermediate years between the Census benchmark
256
National Accounts Unit
Gross National Income Inventory
year and the 2005 CPH, the total dwelling stock is calculated on the basis of these estimated
additions and discards.
5.10.73 Information about the size of each type of dwelling, for which a permit has been
granted, is being collected by NSO in conjunction with MEPA. This data is collected by
means of a sample designed by the NSO, stratified by type of dwelling. This exercise has
been carried out for the first time for the reference year 2004, and is to be carried out every
two years.
5.10.74 For the years between 1995 and 2005, information on the size in square metres of
the units for which a permit was granted was not available. Therefore, it is assumed that the
distribution of permits granted in a given year by size (number of rooms) and whether a
garage is attached to the dwelling or not, is based on the assumption that they follow the same
distribution as the most recently built dwellings described in the Census.
The same
assumption is made with respect to the use to which this dwelling is put – that is whether it is
used for renting purposes, whether it is owner occupied or vacant. Use of more recent
sources is made to estimate the distribution of new additions to the dwelling stock by
tenancy. Before the 2005 Census of Population and Housing was made available, use was
made of the HBS 2000 and the LSS 2002 for the distribution of main dwellings between
owner occupied and rentals and the Water Services Corporation database on the total number
of main dwellings. Now that the 2005 Census of Population and Housing is available, the
time series between 1995 and 2005 was updated accordingly.
5.10.75 Data on construction costs per square metre and per number of rooms were collected
by specific requests to qualified architects, with a distinction between houses and apartments
of different sizes. Construction costs refer to both the structure and finishing costs.
5.10.76 Data on repairs and maintenance works carried out by owner-occupiers was
collected from the 2000 HBS, which provides total expenditure by households broken down
by tenancy. Total expenditure on repairs and maintenance connected with dwellings by
households recorded in the 2000 HBS includes materials and services purchased for selfconstruction, which is classified as GFCF. A large proportion of expenditure on GFCF can be
easily singled out via specific questions on major repairs and maintenance in a detailed
questionnaire requesting information about households’ expenditure over the previous 12
months accompanying the 2000 HBS diaries.
Economic Statistics Division
257
Gross National Income Inventory
5.10.77 The expenditure recorded in these diaries further includes an element of expenditure
on repairs and maintenance that is to be classified as intermediate consumption for the owneroccupier and not as final household consumption. Therefore, to single out repairs and
maintenance classified as IC incurred by owner-occupiers, the following steps were
undertaken:
Step 1 Each item classified as expenditure on repair and maintenance in the 2000 HBS diaries
was investigated and a coefficient indicating that proportion to be allocated as GFCF was
estimated by expert assessment, case by case. This was done both for owner-occupiers and
renters, although the ESA clearly specified that maintenance and repairs usually carried out
by tenants should be treated as FHC. The rationale underlying this separation of costs into
FHC and GFCF also for tenants living in rented dwellings in spite of the ESA 95 definition,
is the fact that due to the very low rents charged for pre-1995 contracts, landlords refuse to
carry out major repairs and maintenance themselves. Subsequently, the tenants tend to incur
such major expenditure.
Step 2 The remaining expenditure for owner-occupiers was separated into IC and FHC.
5.10.78 Estimates for NACE categories 71-74 are based on the SBS as per paragraphs 5.10.6
– 5.10.9. Two extra-budgetary units classified in S.1311 operate in NACE 71 and 74. These
companies are covered by the annual reports and financial statements.
5.11L GFCF – NACE L. Public administration and defence
5.10.79 GFCF in Section L is estimated at Lm24.8 million, or 1.4 per cent of GDP at market
prices.
Separate estimates are made for government departments, extra-budgetary units
(EBUs), which are both classified in the central government sector (S.1311), and for local
councils which are classified in the local government sector (S.1313).
Box 5.10.10 NACE L. Gross fixed capital formation, 2001
Central government
Local government
258
GFCF
(Lm million)
20.7
4.1
% of GDP
1.2
0.2
National Accounts Unit
Gross National Income Inventory
5.10.80 Data on government departments are available on the Departmental Accounting
System (DAS) referred to in paragraph 5.10.12, whilst that of EBUs and local councils from
annual reports and financial statements or ad hoc questionnaires sent by the Government
Finance Unit.
5.11M GFCF – NACE M. Education
5.10.81 Investment activities in NACE M are included all in one industry.
Separate
estimates are made for 3 different type of producers involved in NACE M; non-market
producers, central government and NPISHs, and market producers. GFCF was equivalent to
Lm9.4 million in 2001 or 0.5 per cent of GDP at market prices.
Box 5.10.11 NACE M. Gross fixed capital formation, 2001
Central government
NPISH
Market producers
GFCF
(Lm million)
7.4
0.7
1.1
% of GDP
0.4
0.04
0.07
5.10.82 Government schools that fall directly under the supervision of the Education
Department are covered by the departmental accounting system (DAS) mentioned in
paragraph 5.10.12, whilst other autonomous institutions, such as the University of Malta, are
covered by annual reports and financial statements or ad hoc questionnaires sent by the
Government Finance Unit.
5.10.83 Church-owned schools are classified as NPISHs.
Data are available from an
exhaustive survey carried out by the Education and Labour Statistics Unit.
5.10.84 Estimates for market producers include secular private schools, English language
schools and other market producers in NACE 80.4. Different data sources are available:
ƒ
Secular private schools – An exhaustive questionnaire carried out by the Education
and Labour Statistics Unit
ƒ
English language schools – Ad hoc questionnaire carried out by the National
Accounts Unit and annual reports and financial statements
Economic Statistics Division
259
Gross National Income Inventory
ƒ
Other market producers – Annual reports and financial statements
The raising factor used in case of English language schools was the number of pupils, and in
case of other market producers were the number of full-time equivalent gainfully occupied.
5.11N GFCF – NACE N. Health and social work
5.10.85 Investment activities in NACE N are included all in one industry.
Separate
estimates are made for 3 different type of producers involved in NACE N; non-market
producers, central government and NPISHs, and market producers. GFCF was equivalent to
Lm18.5 million in 2001 or 1.1 per cent of GDP at market prices.
Box 5.10.12 NACE N. Gross fixed capital formation, 2001
Central government
NPISH
Market producers
GFCF
(Lm million)
16.6
1.8
0.09
% of GDP
1.0
0.1
0.01
5.10.86 Data on government departments is available on the departmental accounting system
(DAS) mentioned in paragraph 5.10.12.
There are three organisations financed by the
government (EBUs) in case of NACE 85, in which case annual reports and financial
statements or ad hoc questionnaires sent by the Government Finance Unit are used.
5.10.87 A considerable number of non-market producers are classified as NPISHs in this
NACE category. Data sources are various and from different units within NSO. Output was
used for raising purposes.
5.10.88 The private sector covers private clinics, hospitals and homes for the elderly.
Annual reports and financial statements are not exhaustive, thus output has been used for
raising.
260
National Accounts Unit
Gross National Income Inventory
5.10O GFCF – NACE O. Other community, social and personal service activities
5.10.89 Investment activities in NACE O are distinguished in 4 industries.
Separate
estimates are made for 3 different types of producers involved, i.e. non-market producers;
central government and NPISHs and market producers.
GFCF is estimated at Lm17.8
million or 1.0 per cent of GDP at market prices.
Box 5.10.13 NACE O. Gross fixed capital formation, 2001
Central government
NPISH
Market producers
Total
Total as a % of GDP
NACE 90
(Lm million)
3.5
na
0.08
3.6
0.2
NACE 91
(Lm million)
na
3.1
na
3.1
0.02
NACE 92
(Lm million)
0.4
1.7
4.4
6.4
0.4
NACE 93
(Lm million)
na
na
4.7
4.7
0.3
5.10.90 Main data sources used are:
ƒ
NACE 90
o the ‘Departmental Accounting System’ in case of non-market producers for
the central government sector;
o annual reports and financial statements
ƒ
NACE 91
o non-governmental organisations survey carried out by the Population and
Social Statistics Unit; and
o band clubs survey carried out by the Population and Social Statistics Unit.
ƒ
NACE 92
o the ‘Departmental Accounting System’ in case of non-market producers for
the central government sector;
o annual reports and financial statements
o museum survey carried out by the Population and Social Statistics Unit
o sports club survey carried out by the Population and Social Statistics Unit
5.10.72 The sources mentioned above are not exhaustive with the exception of S.1311.
Grossing up is necessary in each of the above NACE categories, the raising factors generally
being output or full-time equivalent gainfully occupied.
Economic Statistics Division
261
Gross National Income Inventory
5.11P GFCF – NACE P. Private households with employed persons
5.10.73 GFCF is not estimated for this activity as it is assumed to be zero.
5.11 Acquisition less disposals of intangible fixed assets
5.11.1
Estimates on intangible fixed assets relate to computer software and entertainment,
literary or artistic originals. Mineral exploration occurs quite rarely in Malta, and in the
eventuality this will be recorded as GFCF.
Estimates for computer software and
entertainment, literary or artistic originals were introduced only with the implementation of
ESA 95.
Computer software
5.11.2
Data sources are limited in case of software. Traditional sources such as the SBS, or
annual reports and financial statements tend to understate or omit expenditure on software
either because enterprises tend not to capitalise such expenditure or else due to the fact that
software is preinstalled and is thus disclosed as part of total expenditure on purchased
hardware. It is only since 2003 that the SBS included a question on intangible assets in
section 7, and again software is not being separately disclosed. This will be introduced for
SBS 2006.
5.11.3
Computer software is calculated from the supply-side. A separate estimate is made
for purchased computer software and own-account production of computer software.
Computer software is allocated across industries according to the level of investment in office
machinery and computers (CPA 30). Reliable demand side information is available for the
general government sector (S.13).
5.11.4
The value of purchased computer software is being calculated by using the
commodity flow method. Imports are added to domestic production of software and exports
262
National Accounts Unit
Gross National Income Inventory
and household consumption are deducted. The residual is equivalent to GFCF in purchased
computer software. The main sources used to calculate GFCF in purchased software are:
• Domestic production – For the period 1995 to 2003 domestic production is calculated
as follows; Turnover of enterprises operating in software consultancy and supply
NACE 72.2 as a percentage of total turnover of all companies operating in NACE 72
(Source: Business Register) multiplied by the total output of NACE 72 published by
the National Accounts Unit. As from 2004 this is no longer necessary since NACE 72
is being worked out a 3-digit NACE, and thus is taken directly from the production
approach. Secondary output of software produced by industries other than those in
NACE 72, and sold to third parties is also being included in the estimation of
domestic production.
• Imports and exports of goods – Only items that fall under CPA 72.21.20/HS 8524
.31+ .4 + .6 + .9 may be obtained from trade statistics.
• Imports and exports of computer and information services – This in principal should
include hardware consultancy, software implementation, information services (data
processing, database, news agency), and maintenance and repair of computers and
related equipment. This item is supplied by the Balance of Payments Unit, and a
breakdown is not available.
• Household consumption – The items taken into consideration from the HBS were the
following; Systems, applications, tools and similar software and Game software (on
CD Rom), cassette electronic games (CPA 72.20.10). These two items are included
in COICOP 9.1.3 and 9.3.1 in the Household Final Consumption Expenditure.
However, systems, applications, tools and similar software and game software (on CD
Rom), cassette electronic games (CPA 72.20.10), cannot be identified separately in
the Household Final Consumption Expenditure thus an estimate has to be made. For
the period 1995 to 2003 this estimate was linked to GDP growth whilst as from 2004
onwards, this estimate will be directly linked to COICOP 9.1.3 and 9.3.1.
5.11.5
The estimate of own-account GFCF of computer software is calculated using the
cost approach as suggested by the GNI Committee (Eurostat/C1/GNIC/015–Rev. 1). Ownaccount GFCF of software is derived from labour input data multiplied by a mark-up to
Economic Statistics Division
263
Gross National Income Inventory
reflect other production costs. The following variables are used to calculate own-account
GFCF of computer software:
•
an estimate of total labour costs of the people who do the actual design or
programming of computer software;
5.11.6
•
the time they spend on developing software;
•
other production costs (other than labour inputs)
An estimate of total labour costs is derived by multiplying staff numbers by the
average wages. The Labour Force Survey provides data on the number of persons employed
and the average wage by ISCO and by industry. Thus, own-account GFCF of computer
software is equivalent to the total wages paid to persons employed as computer specialist i.e.
in ISCO 213 across all industries with the exception of NACE 72. Given that the data on
average wages for ISCO 213 is available by industry, NSO does not use the average wage of
the computers specialists employed in NACE 72; instead the average wage of the computers
specialists employed in each specific industry is used. Only 50 per cent of the total wages
paid to persons employed as computer specialist i.e. in ISCO 213 are taken into consideration
when calculating own-account GFCF of computer software. It is assumed that computer
specialists do not work all the time on software development thus an adjustment factor needs
to be applied to the wages paid. It is necessary to estimate what needs to be added to
employment costs in the form of other inputs and profit to give the required basic price
valuation of own-account GFCF of software, thus a mark-up is added to wages to reflect
other production costs.
Box 5.11.1 GFCF on computer software, 2001
Lm
2001
Production for own use
Purchased Software
Total Computer Software Investment
Computer Software as a % of Total GFCF
264
1,857,926
9,718,304
11,576,230
3.2%
National Accounts Unit
Gross National Income Inventory
Entertainment, literary or artistic originals
5.11.7
Entertainment, literary or artistic originals includes estimates for films, television
and radio programmes, photography (as from 2004) and royalties paid.
Royalties paid
include estimates for literature and music. Most often in Malta authors prefer to sell their
copyrights to publishers and printers. However, none of these companies include such rights
as intangible fixed assets in the annual reports and financial statements and the SBS
(intangibles started to be first surveyed by the SBS as from 2003). This indicates that the
rights acquired do not meet the requirements set by IAS 3840. No companies are registered
under NACE 22.14, publishing of sound recordings in the business register, and thus no
estimate is made in case of music.
Box 5.11.2 GFCF on Entertainment, Literary and Artistic Originals, 2001
Lm
2001
Entertainment, Literary and Artistic Originals
2,036,443
Computer Software as a % of TOTAL GFCF
5.11.8
0.6%
The estimate for films or motion pictures and videos (NACE 92.11) is based on the
turnover of the industry which was obtained from the business register.
5.11.9
In Malta there are four television stations, the most important of which is the Public
Broadcasting Services Ltd. (PBS). For television productions, the estimate is equal to the
costs incurred to produce programmes for repeated use. An estimate was made for the other
three stations based on the information available in the annual reports and financial
statements of PBS.
5.11.10 Royalties paid as stated above refer to any royalties paid on literature, music,
television, radio, motion picture and video productions.
40
IAS 38 requires an enterprise to recognise an intangible asset, whether purchased or self-created (at
cost) if, and only if it is probable that the future economic benefits that are attributable to the asset
will flow to the enterprise, and only if the cost of the asset can be measured.
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Valuation
5.11.11
Mineral exploration is valued by the costs of actual test drillings and borings, and
the costs incurred to make it possible to carry out tests, such as aerial or other surveys.
Computer software is valued by purchasers’ prices when purchased on the market, and at its
cost of production plus a mark-up when developed in-house. Entertainment literary or artistic
originals are valued at the price paid by the purchaser when it is sold, or if it is not sold at the
basic price paid for similar originals or at production costs.
5.12 Additions to the value of non-produced non-financial assets
5.12.1 Land improvement in Malta generally refers to reclamation of land from sea to build
quays, wharves and jetties in the other supporting water transport activities (NACE 63.22).
However, data available refer to the construction of these quays, wharves and jetties and the
cost of land reclamation is not separately disclosed.
5.13
Changes in inventories
5.13.1 Changes in inventories are split in the four suggested categories in ESA 1995, i.e.
materials and supplies, work-in-progress, finished goods and goods for resale. However, this
breakdown is not explicitly shown in the published national accounts, given that only the
total figure is published. The published figure also includes a statistical discrepancy. The
level of GDP is determined from the output side, and thus the statistical discrepancy
represents the difference between the output and the expenditure approach.
5.13.2 The main data sources for the four suggested categories in ESA 1995 are:
•
Annual accounts and financial statements (for annual estimates)
•
SBS data (for annual estimates)
•
Quarterly survey on inventories carried out by the Short-term Business Statistics
(STBS) Unit (for quarterly estimates)
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Only value information is available from annual accounts and financial statements and the
quarterly survey carried out by the STBS Unit. On the other hand SBS data contains
information on quantities, values and the product breakdown. However, the SBS does not
cover all branches in the economy and most importantly, no estimates were made to cover
non-response in the years prior to 2003. Changes in inventories were grossed up to cover for
non-response by the National Accounts Unit in case of activities covered by the SBS. As
from 2003 such adjustments were not necessary, and thus changes in inventories were taken
directly from the SBS. Changes in inventories are mostly derived from the production
approach, especially with regards to NACE D, NACE F and NACE G.
5.13.3 For each category, a detailed product breakdown at P.90 level is available for changes
in inventories with a time lag of three years. In fact this product detail is used for SUT. Such
product detail is derived from the SBS. Other sources are used in case of industries which at
present are not covered by the SBS. These are generally service industries whose stocks
levels are relatively insignificant.
5.14
Acquisitions less Disposals of Valuables
5.14.1 Estimates for acquisitions less disposals of valuables were introduced only with the
implementation of ESA 95. Acquisitions less disposals of valuables are calculated from the
supply-side as suggested in the Phare 2000 project on GFCF. The method applied is as
follows:
Imports less Exports plus Domestic Production
less Consumption Expenditure Plus Margins
5.14.2 The main data sources used are:
ƒ
Imports and Exports of Jewellery and Related Articles (CPA 36.2) and Works of Art
(CPA 92.31.1)
ƒ
Production account of the Manufacturing of Jewellery and Related Articles (NACE
36.2)
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ƒ
HBS Data
ƒ
Turnover of Auctioneers
ƒ
Turnover of Artists, Sculptors etc.
5.14.3 Imports less Exports
ƒ
Jewellery and Related Articles – The data requested from the International Trade
Statistics Unit included items classified CPA 36.22 (using the CN-CPA
correspondence tables). In order to decide which items are final goods and which are
intermediate goods we consulted with an EU Expert on the Combined Nomenclature
[CN], and with the GNI Inventories of other countries. According to the expert’s
advice CN codes 7101 to 7105 might be considered as goods for further processing,
whilst CN 7113 TO CN 7114 may include both complete and incomplete goods. In
fact when we checked the imports of the two main manufacturers of jewellery in
Malta we identified CN 7114 19 00 00 as one of their inputs in production, thus in the
calculation of net imports of jewellery and related articles this particular code was
excluded. All other items classified in CN 7114 were included in the calculation as
per other countries’ GNI Inventories.
CN 7115 was also excluded from the
calculation given that according to the expert these relate to technical goods in need of
further processing, in fact, other countries didn’t include CN 7115 with in their
calculation.
ƒ
Data requested from the International Trade Statistics Unit included also works of art
(CPA 92.31.10) and collector’s items such as stamps and coins (CPA 36.21).
5.14.4 Domestic production of jewellery and related articles was derived from the production
approach whilst that of artists, sculptors etc. was derived from the business register.
5.14.5 Margins were calculated for auctioneers and antiques dealers. Only five auctioneers
were found in the Business Register whilst various companies deal in antiques. In order to
calculate margins their total turnover (as per Business Register) was multiplied by an
estimated ratio.
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5.14.6 Household consumption expenditure is deducted in the commodity flow method in
order to avoid double counting of some expenditure items already included in the expenditure
approach.
Box 5.14.1 GFCF on Acquisitions less Disposals of Valuables, 2001
Summary output
Output of manufacturers of jewellery (Nace36.2)
Add: Net Imports - (Imports less exports)
Add: Turnover - Artists etc.
Less: Consumption Expenditure (CPA 36.22, 92.31)
Add: Transfer Costs – (Auctioneers, Antiques)
Estimate of Valuables
2001
Lm
15,024,081
1,740,496
449,145
6,731,579
112,327
10,594,470
Valuation
5.14.7 The production of valuables is valued at basic prices. All other acquisitions of
valuables are valued at the purchasers’ prices paid for them including any agents’ fees of
commissions. They also include trade margins when bought from dealers.
5.15, 5.17 Exports of goods, Imports of goods
5.15.1
General Merchandise - The main source for merchandise trade data is the trade
statistics compiled by the International Trade Statistics Unit from Intrastat and from records
received from the Customs Department. Adjustments for coverage are subsequently made by
the BOP Unit for both imports (which are reported on a c.i.f. basis) and exports. Thus,
merchandise trade data are compiled on a f.o.b. basis.
5.15.2
The adjustments that are made to the trade on goods data are also based on
information obtained through the issue of ad hoc letters to various respondents.
5.15.3
Repairs on Goods - Data on repairs of goods are collected from the monthly survey
of private and public entities. It essentially includes information about income earned on
aircraft repairs carried out locally, as well as expenditure on aircraft and ship repairs carried
out abroad.
5.15.4
Goods procured in ports by carriers - Statistical data on goods sold in domestic ports
to non-resident carriers is derived from the trade statistics, whereas data on goods purchased
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Gross National Income Inventory
by resident entities in foreign ports is derived from the monthly survey of resident shipping
and airline companies.
5.15.5
Non-monetary gold - Data for non-monetary gold is derived from trade statistics.
Definition
5.15.6
Goods data conforms to the definitions set out in IMF BPM5. Imports and exports
are adjusted on a f.o.b. basis and merchandise trade statistics according to country of
destination are also compiled.
Deviation
5.15.7
There are no major deviations from IMF’s BPM5.
Estimation methods
5.15.8
Where shipment data (insurance and freight) is not available separately, the
shipment content of the merchandise import c.i.f. value is taken as 10 per cent.
5.16, 5.18 Exports of services, Imports of services
Specific features of data collection
5.16.1
Transportation - Data for transportation services is subdivided into three identifiable
categories, namely passenger, freight and other transportation.
5.16.2
Data on receipts and payments for passenger carriage is primarily retrieved from the
monthly BOP enterprise survey carried out for both shipping and airline companies
(including their representative agencies operating in Malta).
5.16.3
Data on revenue from freight is derived from the same survey. Freight payments are
retrieved directly from Intrastat or Customs data. Ninety per cent of shipment payments are
allocated to freight while the remainder are treated as insurance payments (and are included
in the Current Transfers Account). A statistical adjustment is made for freight on imports
carried by domestic carriers.
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5.16.4
Other transportation services are obtained from the BOP monthly enterprise survey
together with specific data requests sent to the public authorities such as the Malta
International Airport plc, Malta Air Traffic Services Ltd and the Malta Maritime Authority.
5.16.5
Travel - Data on gross earnings from tourism and data on gross expenditures by
residents travelling abroad are derived from Tourstat and Cruistat surveys conducted by the
Tourism Unit within NSO.
5.16.6
Other services - The primary source of data for other services is the monthly and
annual direct reporting survey.
Definition
5.16.7
The reporting of services transactions conforms to the definitions and guidelines set
out in IMF’s BPM5.
Deviations
5.16.8
There are no deviations from IMF’s BPM5.
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Chapter 6
The balancing or integration procedure, and
validating the estimates
6.1 GDP balancing procedure
6.1.1
The main tool used to balance the three independently produced GDP estimates are
annual supply and use tables (SUTs) at current prices. Supply and Use Tables are worked out
36 months after the end of the reference year when data is considered to be final. The
process of balancing the SUTs involves a number of manual steps. No automatic balancing
takes place. Balancing takes place in the SUT at a product level (P90).
6.1.2
There is no straightforward approach in the balancing procedure. However, the
difference between the supply table and the use table (by product) is first analysed. The first
products to be balanced are those that are relatively close to each other, no matter the value of
the products. Then the largest differences are also identified, both in terms of values and also
percentage differences. All industry breakdowns of output and intermediate consumption are
looked into once again to verify whether data has been correctly entered in the SUT table.
Some errors are detected at this input stage and corrected. However these are normally minor
ones.
6.1.3
Once the data verification stage is over, products are broadly split between ‘goods’
and ‘services’. Unclassified goods are allocated where there are discrepancies. This is also
done, to a lesser extent, with services.
In compiling these estimates various types of
adjustments are required and, in the light of information available, particular judgements are
made. For example, allowances for under coverage of an industry and for incorrect recording
of data on inquiry forms returned by businesses.
6.1.4
The SUT balancing exercise involves carrying out various comparisons, checks and
analyses on the detailed product data received.
Certain validation checks lead to
investigations and subsequent changes affecting either product supply or product demand,
and at times value added.
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6.2 Other approaches used to validate GDP
6.2.1
There are some other approaches used as alternative ways to validate GDP, besides
Supply and Use Tables. These approaches are all used together on a quarterly basis to feed
into the balancing process. National Accountants are involved in providing an economic
appraisal as well as examining all data sources closely.
Data is evaluated and further
assessed from a number of perspectives.
6.2.2
Estimates of current growth are comparable with figures that economists consider
sustainable. At a basic level, raw data is assessed against market expectations and whether
they truly reflect what is going on in the economy. At the same time, assessments are made
as to whether the movements in GDP data are consistent with movements in other data
produced by NSO, in particular employment data and prices data. It is likely that increases in
employment will be accompanied by growth in GDP, although GDP is not solely measured
using employment data. So employment data is given its due weight. Similarly, it is
expected that prices data impinge on GDP data, both at current and at constant prices.
6.2.3
In validating GDP, the National Accounts Unit is also analysing any significant
international events affecting data. For example worldwide events such as oil price increases
definitely have an impact on GDP and national accountants ensure that this impact is gauged
in the figures.
6.2.4
Additional information is sought from external reports and studies which are
produced by organisations such as the Chamber of Commerce, the Malta Tourism Authority,
the Central Bank of Malta, the Building Industry Consultative Council, the General Retailers
and Traders Union, the Malta Hotels and Restaurants Association, and others.
These
organisations may sometimes indicate output activity in their respective sectors, sales,
investment, prices and other data that may be used, with caution, to compare patterns
emerging from official statistics. One drawback of reports and studies by these organisations,
though, is that these might be concentrating on their members and therefore there might be
segments of the market that are not covered.
6.2.5
Recently, an analysis has been conducted on how GDP levels between 1995 and
2005 (based on ESA 95) have been revised from one quarterly news release to the next. Up
to the end of 2006, 12 news releases were published with GDP data (the first release was
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Gross National Income Inventory
published in December 2003), and an analysis of the figures showed that variances between
the GDP levels are within acceptable levels. Revisions were also identified and quantified,
both in absolute terms and in percentage changes, so as to identify which sectors are the most
prone to revisions. Data for 1995 to 2003 was finalised in the first half of 2007, in line with
the NSO’s medium-term plan on the implementation of ESA 95.
6.2.6
With each National Accounts news release, a set of methodological notes are
attached, explaining any major revisions in the data, and the impact of this revision on GDP.
One particular instance was with the introduction of the allocation of FISIM.
Other
explanations are given from time to time as deemed necessary. The news releases also
include a brief commentary explaining which industries contributed to an increase or a
decline in GDP.
GDP news releases are extensively reported in the media and also
commented upon by local economists and columnists in newspapers. In its news releases,
NSO makes it a point not to interpret figures or comment in any way that may tarnish the
independence and impartiality of the institution.
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Chapter 7
7.1
Overview of the allowances for exhaustiveness
Although National Accounts in Malta have been compiled since 1954, they were
only worked from the income and expenditure approaches. The Output approach has now
also been adopted in the framework of ESA 95. The NSO started actual implementation of
ESA 95 in 2001 but covers data from 1995 to 2006.
7.2
In order to ensure full coverage of the economic activity, the GDP must include all
activities carried out in the economy including those observed and also hidden activities. This
calls on for an estimation of the non-observed economy. In Malta the estimation of the nonobserved economy was attempted the first time for reference year 2000. The results of the
exhaustiveness exercise are fully included in the GDP except for certain types of illegal
activities, such as narcotics and prostitution, although these have also been quantified. In the
GDP it has been decided to calculate and include estimates for ‘soft’ illegal activities such as
copying of recorded media and the widespread local custom of lotteries (raffles).
7.3
The study of the non-observed economy was conducted in three ways:
•
A survey about fringe benefits, covering General Government and units where
government is a shareholder;
•
Interviews with interested parties especially in the illegal activities areas;
•
Study of:
o official reports e.g. Household Budgetary Survey and Structural Business
Statistics (SBS);
o unpublished official reports, e.g. Benchmarks of Economic sectors in use by
the Inland Revenue Departments;
o private reports e.g. The Salaries and Benefits Report.
7.4
The thorough scrutiny for non-exhaustiveness by each category of NACE has
brought to light past efforts for full coverage of the National Accounts. Adjustments in areas
traditionally regarded as understated such as agriculture, doctors, dentists, lawyers, taxis,
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Gross National Income Inventory
holiday flats and grossing up to official labour figures were all being done previously and no
further adjustment is needed.
7.5
Adjustments for output and GVA in the GDP have been identified using one of these
main methods:
Supply-based method:
7.6
This method is mainly utilised for sectors where the production of goods and
services is considered understated. This underreporting of production can be found by
comparing different data sources for production and consumption of goods and services.
Some of the recent data sources utilised in this approach are the: Agriculture Census,
Fisheries Census, SBS, Business Register and VAT records.
The labour input method:
7.7
This method was used extensively. It implied the raising of the results of surveys
and censuses to the level of national labour data provided by ETC, the national employment
agency and the Labour Force Survey. Estimates were also made for irregular non-registered
part-time ‘employment’ such as farmers, fisherman, football players, bandsman, and
domestic maids.
Expert judgement:
7.8
Where data was not available to the NSO, in particular for certain types of illegal
activities, estimates were based on data averages and information obtained from police,
NGOs and associations. At times data was arrived at after a wide internal discussion within
the NSO.
Income-based (Franz method):
7.9
This type of adjustment approach was mainly applied for sectors where it is a
common practice that profits and income of self-employed and companies are understated.
This approach builds on the assumption that earnings per self-employed should at least be
equal to the wages and salaries of employees. Where this condition was not true, the income
of the self-employed was raised to the level of the earnings of employees in the same
industry. However, it was not always possible to identify and compare the profits by the self-
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employed and compensation of employees in the same category. In these cases other
comparisons had to be made with the profits and wages and salaries of similar sectors or with
the averages for the whole economy.
Demand based:
7.10
The demand-based method was used extensively where output recorded by
producers was found to be much less than that consumed by the economy. The main source
of data used for this approach was the HBS survey held in 2000. Findings were used to
correct the output recorded by producers when this was found to be underreported.
Adjustments to ensure exhaustiveness
7.11
At present the exhaustiveness adjustments with respect to Output, excluding certain
types of illegal activities amounted to Lm149.8 million or 8.91 per cent of the GDP Output
Approach for the year 2000, whilst the adjustment in respect of GVA amounted to Lm96.5
million or 5.78 per cent of GDP. The following is a summary of the adjustment applied to
each NACE section.
Section A
7.12
Agriculture, hunting and forestry
Agriculture statistics are compiled according to Economic Agricultural Accounts
(EAA). Output and GVA are calculated by the Agriculture Unit within the NSO, and these
figures are based on the Output reported by farmers in a Census of Agriculture carried out in
2000 and other specialised censuses such as for pigs, cattle, poultry, commercial viticulture,
greenhouses and commercial fruit trees.
Results obtained from these censuses makes
possible the comparison of output from the census and sales through Agriculture markets.
The Agriculture Unit raises their reported Output by a raising factor based on Census figures
in order to ensure exhaustiveness. The individual raising factors are also discussed with
experts from the Ministry of Agriculture.
7.13
Own consumption of agricultural products has been accounted for in the National
Accounts and this is considered to be part of the official Output.
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Section B
7.14
Fishing
From the latest HBS conducted in Malta in 2000 it was found that consumption of
fish was much higher than the estimated output which is based on sales through the fish
market and sales from the census. This is a clear indication of underreporting and after
various considerations such as the retail profit margins, consumption by tourists, use as
intermediate consumption and exports, an adjustment was made to output.
7.15
Moreover, in 1997 a Census of Fisheries was held in Malta. Census results revealed
that fishermen keep a share of the catch for own consumption. The NSO estimates that about
2.33% of the total catch, is kept for own consumption.
Section C
7.16
Mining and quarrying
In the compilation of the GDP Output Approach, employment for mining and
quarrying is based on the Labour Force Survey for 2000. Employment figures from the ETC
were found understated by 124 gainfully occupied (per FTE). This was mainly due to
misclassifications in data and the inclusion of part-timers. An adjustment to output was
included in the GDP to cover these workers.
Section D
Manufacturing
Food Products
7.17
The Output and GVA of small enterprises (the 0-5 range) particularly in the
manufacturing of bread, fresh pastry and cakes was found underestimated.
After due
consideration, the output for these type of industries was raised in order to ensure
exhaustiveness.
Custom Tailoring
7.18
When comparing the output reported by registered tailors with the figure obtained
from the HBS 2000 for the amounts spent on the tailoring and repairs of garments, it was
concluded that 50 per cent of this output is generated by unregistered tailors. An adjustment
for output and GVA was included in the GDP.
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Reproduction of recorded media
7.19
The illegal reproduction of recorded media is a widespread practice in Malta and it is
therefore important to account for this activity in the GDP. Data from the HBS 2000 shows
that purchases by households of recorded media are much higher than that official reported.
It is assumed that around 50 per cent of total purchases are illegally produced items.
7.20
Intermediate consumption for the illegal reproduction of media was estimated to be
15 per cent of Output. Although this reproduction is an illegal economic activity, it was felt
that since this is common practice in Malta the adjustment for exhaustiveness should be
included in the GDP.
Furniture
7.21
It is believed that enterprises in the range of 0-5 employees operating in this NACE
category are likely to underreport their Output.
NSO estimates that these enterprises
underreport their output by 40 per cent, whilst another estimated 10 per cent of the output is
produced by unregistered entrepreneurs. The latter percentage is much smaller than the
former due to the fact that in Malta it is very difficult to operate a business without some
form of license or permit. These adjustments were included in the GDP.
Section F
Construction
Moonlighting
7.22
In the construction industry there are 3,853 employees in the private sector and
another 1,970 employed with the government. NSO estimates that 25 per cent (or 362 per
FTE) of these employees are engaged in part-time work not reported (moonlighting).
An
equal amount of employees per FTE (362) is assumed to work full-time in other sectors and
unofficially work part-time in the construction industry. Their individual output is calculated
at 75 per cent of the output per head of this industry. Appropriate adjustments to output and
GVA were applied.
Statistical Discrepancy
7.23
A Census of the construction industry was carried out in 1998, and the results
showed that employment data obtained from the ETC (the official employment agency of
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Gross National Income Inventory
government) is understated. The Census showed that the ETC data for the construction
industry is understated by 4.3 per cent. It is understood that this difference was mainly due to
misclassifications or foreign unregistered workers. As a result the employment data obtained
from ETC utilised to calculate the output for construction is being raised by 4.3 per cent.
Underreporting
7.24
The output of the 0 to 5 units in this industry is estimated understated by 10 per cent.
Output and GVA have both been raised by 10% to ensure exhaustiveness.
Section G
Wholes and retail trade; repair of motor vehicles, motorcycles and personal and
household goods
7.25
Due to strict regulations stipulated by law for the importation of new motor vehicles
in Malta, it is practically impossible for someone to import cars illegally or underreport any
importation of cars. However, when applying the Franz method for the companies selling
used cars it was found that operating surplus per FTE self-employed is lower than
compensation of employees per FTE employees. Thus the Output and GVA were raised in
order to ensure exhaustiveness.
7.26
For the Maintenance and Repair of motor vehicles two adjustments have been
identified. Based on the figure from HBS 2000 for maintenance and repair of vehicles and
adding the expenditure for non-private vehicles, we found that this estimated total
expenditure was much higher than that officially reported in the SBS (used to calculate output
for this sector). NSO assumes that half of this output is misreported while the other half is
output resulting from underground activities. Output and GVA have been raised accordingly
to cover misreporting and underground activities.
Retail Trade
7.27
NSO believes that retail trade services provided by establishments falling within the
0-5 range are prone to understate their output. NSO assumes that these establishments
underreport their output by 10 per cent. As a result, output and GVA are being adjusted
accordingly.
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Section H
Hotels and Restaurants
Tips
7.28
The adjustment for tips and service charge is done only to restaurants as the amount
of tips given to waiters at cafeterias and bars is negligible or usually none. This adjustment is
divided in two: a 5 per cent service charge and an estimated 1 per cent of total output in tips
given voluntarily. These adjustments are added to Market Output and Compensation of
Employees, as tips and service charge are earned as income by restaurants’ operators and
then end up as income for employees.
7.29
Although international tourist guidebooks suggest that tipping in restaurants should
lie in the region of 10 per cent of the bill, it seems that this is not regarded as standard
practice in Maltese restaurants. From practical experience this rate is much higher than the
average tips donated in Maltese restaurants. Tipping in restaurants by tourists does not seem
to follow the international trend. As a result the National Accounts Unit believes that a rate
of 6 per cent for tipping and service charge is considered to be realistic.
Section I
7.30
Transport, storage and communication
When applying the Franz method for minibuses it was found that the operating
surplus per FTE self-employed was much lower that the compensation of employees per
FTE. This clearly shows underreporting and therefore the output and GVA for self-employed
was raised in order to cover the difference.
7.31
Using tax audit data supplied by the Tax Compliance Unit (TCU), it was found that
the output and GVA for the garage hire sector were also underestimated.
Following
calculations based on the benchmarks supplied by TCU for Garage Hire, output and GVA
were adjusted and included in the GDP.
Section K
7.32
Real estate, renting and business activities
Trading in property is heavily regulated by government, in order to avoid
speculation and under declaration of values on contracts.
This includes the physical
verification by government architects on dubious values put down on contracts. This makes
it very difficult to engage in illegal activities or underreporting in the sale of property. The
NSO believes that no adjustment is required in this regard.
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7.33
However, there is still a tradition whereby a ‘middle man’ approaches buyers and
sellers in order to facilitate the sale, in return of a commission on the sale. Although this
activity is decreasing in popularity, earnings from commissions are included in the GDP.
7.34
Imputed rents for owner occupied homes are included in the GDP Output Approach
in order to ensure exhaustiveness (worked out for the Phare project on Dwelling Services).
These are calculated according to the user-cost method.
Renting services
7.35
Based on tax audit data supplied by the Tax Compliance Unit, the output for NACE
71.10 (Renting of Automobiles) was underreported. Using tax audit benchmarks the Output
and GVA for this category was adjusted accordingly.
Other business services
7.36
Data for this NACE category is very scarce and the only reliable source for use in
the GDP is the VAT data. Output and GVA can only be calculated at NACE 3-digit level
detail only. This poses a problem when it comes to identify Output and GVA per FTE for
totally different professions such as Lawyers and Accountants within NACE 74.1. As a
result tax audit data cannot be compared to our estimates. Moreover, the Franz method
cannot be applied as the Operating Surplus contains profits of companies since VAT data
doesn’t have a breakdown between sales/income of companies and self-employed.
7.37
However, by definition VAT data in this area is considered understated. From our
calculations it appears that the Intermediate Consumption to Output ratio is relatively high
(57 per cent) compared to other sectors of the economy, suggesting either over-reporting of
intermediate consumption or underreporting of output. On the other hand output per FTE
gainfully occupied for NACE 74 is not low compared to other sectors. Compensation of
employees per FTE employees is also in line with the figure for other sectors.
7.38
The above discussion suggests that any adjustments should be moderate and
reasonable. Therefore it was agreed that as an adjustment for underreporting Output and
GVA will be raised by a total 4 per cent. This figure has been raised in the following
manner:
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Register A
Adjustment to Output
NACE 74.1
5%
NACE 74.2
2.5%
NACE 74.3
1%
NACE 74.4
1%
NACE 74.5
-
NACE 74.6
-
NACE 74.7
2%
NACE 74.8
2%
Register B
20%
7.39
Register A contains companies having a turnover higher than the threshold
stipulated by law and therefore they have to submit annual audited financial statements.
Since these companies produce annual audited accounts, misreporting is considered to be less
for these large companies when compared to small companies.
Register B contains
companies falling below the threshold and therefore they are more prone to under report their
output. For this reason the output and GVA for small companies was raised by a factor of 20
per cent, while for large companies raising factors are more conservative. NACE 74.5 and
74.6 did not require any adjustment.
7.40
These adjustments were based on a deep analysis of the VAT data time series and
also based on discussions with experts from the VAT Department.
Section M Education
7.41
Expenditure data obtained from the HBS 2000 shows that during that year Maltese
residents spent Lm2.8 million in private tuition. NSO believes that most of the people
providing private tuition deliberately avoid registering and therefore this expenditure is not
reported. As a result, this expenditure is included as output for NACE 80.
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Section N
Health and social work
7.43 Data for medical and dental practice activities was obtained from a variety of sources
considered to be the most appropriate. Output was obtained from HBS 2000, intermediate
consumption was derived as a ratio to output (from VAT data) and employment from the
ETC. Expenditure data from the HBS 2000 was compared to the revenue benchmarks
provided by the Tax Compliance Unit (TCU), but further comparisons have to be done once
the HBS 2008 results will be available to the National Accounts Unit.
Membership organisations
7.42
The larger private organisations provide annual accounts.
The output of trade
unions which are not covered by annual accounts is estimated using the market output from
available information and the number of members. Activities of religious organisations and
political parties and other NPISHs are also covered through unofficial sources. NPISH’s
without employees are being calculated for the first time in Malta and are included in the
GDP Output Approach. These estimates are now fully exhaustive in advanced.
Recreational, cultural and sporting services
7.43
Two adjustments are included for underground activities related to gambling. An
adjustment is added to Output and GVA for underground ‘tombola’. This estimate was based
on registered plays with the Public Lotto and other information available to the NSO. It was
assumed that 50 per cent of the total Output from ‘tombola’ activities is deliberately not
registered.
7.44
Another adjustment to output and GVA was included for the ‘numbers game’. It was
estimated that 50 per cent of the estimated output from the ‘numbers game’ is generated from
sources deliberately not registered.
7.45
An estimated 1% of the reported Public Lotto Output is considered to be clandestine
lotto and therefore illegal activity. This adjustment has been added to the GDP.
Other services
7.46
The Output of funeral activities and related services obtained from the HBS 2000 is
believed underestimated because families in mourning tend to refuse to participate in the
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HBS. The NSO made an adjustment for this deficiency in the HBS, based on the number of
deaths and the average cost of a funeral.
7.47
Data obtained from the HBS 2000 shows that the expenditure of residents on
hairdressing activities is higher than that reported by hairdressers in the SBS. Similarly, when
comparing the expenditure by households on hairdressing services in the HBS 2000 with the
output obtained from the Business Register it appears that latter is lower. It is believed that
half this discrepancy is deliberately misreported by registered hairdressers, whilst the other
half is underground activity.
Section P
7.48
Private households with employed persons
The registered self-employed persons with the ETC in this NACE category are
heavily understated. It is a known fact that there are several people who provide services
related to this NACE category but do not register. These include mainly maids, who offer
their services to households and are paid on a per hour basis. These usually are employed for
a few hours a week. Thus, the difference between ETC employees and HBS expenditure was
assumed to be underground activity.
NPISH
7.49
Although nobody has pointed NPISH as a potential area of non-exhaustiveness, we
have extensively explored it. The Maltese GDP always included NPISH with full-time
employees, but those without employees, with voluntary workers or with part-time
employees, were not included. Following a series of surveys and other research, the output of
NPISH, which was not previously covered, was established and included in the GDP.
References and Data Sources
7.50
The following is a list of the major references and data sources utilised in the
exhaustiveness exercise:
Tax Compliance Unit, Benchmarks of Economic Sectors (2000), (unpublished document)
National Statistics Office, Malta, Industry Statistics (1998)
National Statistics Office, Malta, Demographic Review (2000)
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National Statistics Office, Malta, Agriculture (Based on various agricultural censuses)
National Statistics Office, Malta, Census of Fisheries (Census 1997)
National Statistics Office, Malta, Household Budgetary Survey (2000)
National Statistics Office, Malta, Census of Voluntary organisations (2000)
National Statistics Office, Malta, several Cultural Surveys (2000)
MISCO, The Salaries and Benefits Report (2000)
Databases:
VAT
Employment and Training Corporation databases (labour figures)
Business Register
Structural Business Statistics
Malta Financial Services Authority (Registry of Companies)
7.51
It is firmly believed that all the potential areas where non-observed economic
activity might be present have been identified and explored in detail.
All significant
adjustments have been quantified and included in the GDP Output approach. We also
included certain types of ‘soft’ illegal activities such as the illegal reproduction of media and
illegal gambling in our GDP estimates. In conducting this exhaustiveness exercise, all
possible sources of data and information have been explored by the NSO. Expert opinions
were also obtained for activities for which data and information are not available to the NSO.
Every effort was made by the NSO to ensure that the GDP is fully exhaustive.
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Chapter 8 The transition from GDP to GNI
8.0
Introduction and reference framework
Introduction
8.0.1
This chapter outlines the transition of Gross Domestic Product (GDP) to Gross
National Income (GNI) for Malta, which is calculated by adding net compensation to
employees and net property income from the rest of the world (ROW) and deducting net
taxes on production and imports paid to the ROW. The following table breaks down the
transition from GDP to GNI during the period 2000 to 2005.
Table 8.1: Transition from GDP to GNI for Malta
In Lm’000s
GDP at market prices
Compensation of employees received
from the rest of the world (+)
Compensation of employees paid to
the rest of the world (-)
Net Compensation of employees
Taxes on production and imports
paid to the Institutions of the EU (-)
Subsidies received from the
Institutions of the EU (+)
Property income received from the
rest of the world (+)
Interest
Dividends
Reinvested Earnings
Property income paid to the rest of
the world (-)
Interest
Dividends
Reinvested Earnings
Net Property income received from
the rest of the world
GNI at market prices
8.0.2
2000
1,715,029
2001
1,751,678
2002
1,831,251
2003
1,858,777
2004
1,861,293
2005
1,941,103
7,094
5,577
9,074
9,481
11,252
10,790
3,191
3,903
3,078
2,499
3,463
5,611
3,774
5,707
5,295
5,957
5,956
4,834
0
0
0
0
5,948
9,691
0
0
0
0
1,290
1,829
383,944
378,350
2,654
2,940
372,731
365,849
3,537
3,345
360,208
364,377
3,383
-7,552
328,373
327,547
546
280
318,403
308,764
11,499
-1,860
400,774
390,788
9,680
305
438,199
298,963
24,363
114,873
358,721
301,522
26,790
30,409
355,124
279,090
82,436
-6,402
338,946
235,658
69,414
33,874
337,994
237,893
69,240
30,861
427,429
302,516
119,809
5,104
-54,255
1,664,677
14,010
1,768,187
5,084
1,841,946
-10,573
1,853,911
-19,591
1,843,001
-26,655
1,911,420
The methods of calculation are discussed for each component below in sections 8.1
to 8.8.
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Reference Framework
8.0.3
The Balance of Payments (BOP) is the main source for items of relevance for GDP
to GNI transition variables. Other sources used include data from the Ministry of Finance,
the Ministry for Rural Affairs and the Environment Paying Agency, which provides data on
taxes paid to and subsidies on production received from the European Union as detailed
below. The Labour Force Survey, and data collected by the tax authorities are other sources
used to calculate compensation paid to (received from) non-residents (D.1) or dividends
received by households from the rest of the world.
Information on Basic Data Sources
8.0.4
As from January 1, 2004, a new BOP data collection system fully based on direct
reporting has been implemented in Malta. The basic data sources used by the BOP to
compile the components required for the transition from GDP to GNI calculations consist of:
1. An Enterprise Survey
8.0.5
The Balance of Payments Unit carries out monthly, quarterly and annual enterprise
surveys. The annual enterprise survey covers about 3,500 companies. The sample is not a
random sample but is stratified on the basis of:
1. Size of foreign exchange transactions carried out through the banking system
2. Size of foreign shareholding
3. Number of employees
4. Quantity of imports and exports
5. Information obtained from newspaper cuttings
6. Other sources, e.g. national accounts unit
8.0.6
Information on the size of foreign exchange transactions by company is obtained
monthly from the Partial Settlements System (PSS) described in section 2 below. Data on the
number of employees by company is obtained from the Business Register, which is compiled
by the National Statistics Office (NSO). Information on the quantity of imports and exports
by enterprise is obtained from the Trade Unit within the NSO. This information is used to
regularly update the enterprise sample base of this survey.
8.0.7
Another important criterion for a company to be included within the enterprise
sample base is whether it has a foreign shareholding or not. The list of enterprises with a
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foreign shareholding is obtained annually from the Registrar of Partnerships at the Malta
Financial Services Authority (MFSA). Information on new companies with a foreign
shareholding is also collected via the Structural Business Statistics Survey (SBS), which
includes a question on whether the enterprise being surveyed has a foreign shareholding or
not.
8.0.8
For 2004, the annual enterprise survey sample base of the financial institutional
sector has been expanded to cover exchange bureaux, banks, the Central Bank of Malta
(CBM) and the Malta Stock Exchange (MSE). Collective Investment Schemes (CISs) have
been included for the reference years 2006 onwards.
8.0.9
The sample base for the non-financial corporate sector is based on the Business
Register compiled by the NSO. These are indicated in table 8.2 below, which shows that a
census is carried out for enterprises whose turnover exceeds Lm100,000 (€232,920) and for
enterprises whose turnover falls below this threshold, but which have more than fifty
employees. Those enterprises with turnover and employment falling below the specified
thresholds are surveyed on the basis of a stratified sample representative of selected NACE
activities at the class level.
Table 8.2: Enlargement of BOP Enterprise Survey Sample Base
Criterion A
Criterion B
Data
Collection
Method
Turnover > Lm100,000
Turnover < Lm100,000
Census
Employment
>
50 Census
<
50 Stratified sample for
Employees
Turnover < Lm100,000
Employment
Employees
8.0.10
selected NACE Code
A filter question has also been included within the Structural Business Statistics
Survey (SBS) for calendar year 2004 asking enterprises whether they carry out financial
transactions or transactions in goods or services with non-residents. On the basis of this
information, only these companies (apart from the 700 companies selected on the basis of the
criteria described in paragraph 8.3.1) are targeted by the BOP Unit. The SBS covers around a
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third of the entire population such that in three years time all the population would have been
surveyed.
8.0.11
The population frame for the enterprise survey is also updated regularly using data
from the Central Bank of Malta on the transactions of residents with non-residents that pass
through the banking system. Large transactions are identified and used to update the nonfinancial enterprise population of the BOP.
8.0.12
From 2004 onwards, the design of all the questionnaires pertaining to surveys
carried out by the Balance of Payments Unit, are based on the stock-flow-income model. The
stock-flow-income model requests detailed information on changes in the international
investment position of enterprises by financial instrument as shown below:
Interests
Position
accrued
at
during
beginning
Interests
the
of period
received/paid
course
during the
including
Increase
Decrease
of the
course of the
interest
due to
due to
month
month
accrued transactions transactions
8.0.13
Market Exchange
price
rate
changes changes
Position
at end of
period
Dividends
including received/paid
during the
interest
Other
month
changes accrued
This model ensures that information collected on income flows adhere to the
concepts described in the BOP Manual and ESA 95.
2
The Partial Settlements System
8.0.14
The partial settlements system (PSS) captures cash-based transactions between
residents and non-residents that pass through the local banking system. This information is
collected by the CBM from banking institutions.
8.0.15
The Balance of Payments Unit has access to data collected via the PSS on receipts
from and payments to the rest of the world classified by the following sectors: companies,
non-profit institutions, personal and the public sector.
8.0.16
For transactions captured by the PSS that are above established thresholds, details
are made available to the Balance of Payments Unit by individual and by type of transactions,
when available. This detail in the information provided by the PSS database is used by the
BOP unit to filter out those companies present in the PSS data that are already covered by the
enterprise survey to avoid double-counting in the computation of BOP transactions. The
remaining transactions are vetted by the BOP staff and double-checked, where necessary with
the Central Bank.
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8.0.17
A system based on forms (External Transaction Act) that are filled in by persons
making payments in foreign currency via the banking system whose transactions exceed
established thresholds is used to complement data collected through the PSS.
3
Banking Institutions and the Central Bank of Malta (CBM)
8.0.18
Up until the end of 2003, information on the transactions of all resident banking
institutions with non-residents was collected via the profit and loss statements which they are
obliged to pass on to the Central Bank of Malta (CBM) each quarter. During this time
period, information on income flows earned from (paid to) non-residents by the CBM, is
collected from an ad hoc questionnaire sent by the BOP unit requesting specific variables.
8.0.19
As from 2004 onwards, detailed information by financial instrument, through the
questionnaires based on the stock-flow-income model as part of the new BOP collection
system, is available for all the resident banks as well as for the Central Bank of Malta. The
new design of the BOP questionnaires implies better information from the point of view of
concepts as required by international statistical standards such as the BOP Manual and ESA
95.
Cooperation between NSO and CBM
8.0.20
The CBM, through its Balance of Payments Unit, cooperates actively with the NSO
in the collection, vetting and compilation of balance of payments (BOP) data throughout the
year. In July 2003 a co-operation agreement was signed between the CBM and the NSO on
the collection and compilation of balance of payments and international investment position
(IIP) data. Under the agreement, the NSO became responsible for collecting data from
reporting agents in the non-financial sectors of the economy as specified in the European
System of Accounts 1995 and the 5th edition of the IMF BOP Manual (BPM5). The CBM,
on the other hand, became responsible for the collection of data from reporting agents in the
financial sector. This is achieved with the necessary cooperation of the Malta Financial
Services Authority (MFSA) and the Malta Stock Exchange. The CBM has an additional role
in the BOP compilation process. It collects data on cash-based transactions between residents
and non-residents, as recorded by local banks, on a monthly basis (see paragraphs on the
Partial Settlements System).
8.0.21
The CBM and the NSO have shared competency in the compilation of the
international investment position. In 1999, the CBM and the NSO undertook to align BOP
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and related data with international standards. By March 2000, data covering the years 1995
to 1999 were revised and reclassified in accordance with the BPM5.
Residency Criterion
8.0.22
The BOP unit defines a resident as ‘any individual, enterprise, bank or any other
organization that is ordinarily domiciled in Malta. Branches, subsidiaries and affiliates of
non-resident banks domiciled in Malta are also regarded as residents of Malta and overseas
branches and subsidiaries of Maltese banks are regarded as non-residents.
Ordinarily
domiciled is defined according to whether the entity has a centre of economic interest in
Malta, for instance when an enterprise engages in production of goods and services’.
8.0.23
Companies undertaking International Business Activities abroad (CIBAs), also
referred to as International Trading Companies, have been surveyed for the first time for the
period 2003. The degree of economic activity as well as whether they have a physical
presence in Malta are two of the features that are being identified. Local and foreign assets
and liabilities are being requested from them as well as local and foreign transactions. Once
a high percentage response is attained, one would be able to confirm whether net income
flows for CIBAs having no physical presence in Malta, amount to zero (or are almost zero).
Before these latter entities are considered for inclusion in the national reports (both for BOP
as well as for National Accounts), it has been agreed to have a second year of data so that one
would be in a better position to assess their contribution.
8.0.24
The BOP unit also takes into consideration any income flows paid to temporary
foreign workers in Malta (classified as non-residents) and foreign workers at Maltese
diplomatic posts abroad. Receipts earned by temporary resident workers abroad and resident
workers at foreign embassies in Malta are included in income flows earned from the rest of
the world.
Conversion to local currency
8.0.25
For transactions between residents and non-residents captured by the BOP annual
and monthly enterprise survey forms to be reported in Maltese Lira, the conversion into
national currency – as a result of the instructions in the reporting guidelines - is computed
using the official middle rate on the transaction day or the actual exchange rate used in the
transaction. Transactions between residents and non-residents, captured by the PSS system in
original currency, are converted by statistical authorities using the actual current exchange
rate. From 1st January 2008 onwards, Malta adopted the euro as its legal currency.
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8.1
Compensation of Employees
8.1.1
Compensation of Employees (D.1) is defined within the 1995 European System of
Accounts (ESA 95) as the total remuneration, in cash or in kind, payable by an employer to
an employee in return for work done by the latter during the accounting period (ESA 95 p.
4.02). Incoming flows concern payments by non-resident employers to resident employees;
outgoing flows concern payments by resident employers to non-resident employees. Total
compensation of employees received from (paid to) the rest of the world for the period 2000
to 2005 is shown below in table 8.3.
Table 8.3: Compensation of Employees Received from (Paid to) the ROW
Compensation of employees including
border; seasonal; and other workers
Credit
Debit
2000
2001
2002
2003
2004
2005
3,899
7,094
3,195
2,463
5,577
3,114
5,559
9,074
3,515
5,635
9,481
3,846
5,792
11,252
5,460
4,058
11,575
7,517
Sources and Methods
Incoming Flows from the Rest of the World
8.1.2
For the reference years up to 1999, incoming flows of compensation of employees’
information are collected from the annual and monthly enterprise survey. This data is
supplemented with data compiled from the PSS system, whereby any payments made by nonresidents to residents via the banking system in the form of compensation of employees, are
classified as such by the banks processing the transaction.
8.1.3
For the reference years 1999 onwards, the source used to calculate compensation of
employees received from abroad is the tax authorities (Inland Revenue). They provide an
annual time series of total emoluments from the employment of residents with non residents
declared as received by households in compensation of their services going back to 1999.
8.1.4
The Inland Revenue also provides a time series going back to 1999 of the total
personal emoluments of Maltese citizens employed in foreign embassies in Malta, with
separate information on income tax and social security contributions paid.
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Outgoing Flows to the Rest of the World
8.1.5
The annual enterprise survey described in Section 8.3 is used to calculate
compensation paid to non-resident employees by resident producer units.
The survey
contains a question on compensation of employees paid in a section requesting information
on business services and transfers and the methodological notes provided clearly specify that
any compensation of employees paid should include payments paid by employers on behalf
of employees to social security schemes or private insurance or pension funds as well as
compensation paid in kind. Furthermore, it is clearly specified that employees should include
seasonal or other short-term workers.
8.1.6
Data collected by means of the annual enterprise survey concerns payments made to
non-residents in the form of compensation paid to employees by the corporate sectors. The
PSS is then used to cover compensation paid to non-resident employees by individuals (other
than the corporate sector covered by the enterprise survey).
8.2
Taxes on production and imports
Sources and Methods
8.2.1
ESA 95 defines taxes on production and imports (D.2) as ‘compulsory, unrequited
payments in cash or in kind which are levied by general government, or by the Institutions of
the European Union, in respect of the production and importation of goods and services, the
employment of labour, the ownership or use of land, buildings or other assets used in
production’ (ESA 95 p. 4.14).
8.2.2
These flows become of relevance for GDP to GNI transition calculations when taxes
are paid by resident governments to non-resident governments. For Malta, this component
has become of importance for GDP to GNI calculations from 2004 onwards when Malta
became a member state of the European Union. In the reference year 2001, no taxes on
production and imports were paid to non-resident governments and the documentation found
hereunder refers to 2004 onwards, when Malta joined the EU began to fulfil its obligations in
terms of taxes paid to Institutions of the EU.
8.2.3
Data on taxes on production and imports paid to the Institutions of the EU is
obtained from the Ministry of Finance on a monthly basis. This data is subsequently checked
with the Departmental Accounting System (DAS), and incorporated into the general
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government accounts and in B.O.P statistics.
These taxes include the traditional own
resource (TOR) group and also include VAT own resource payments. Details are shown in
table 8.4.
Table 8.4: Taxes paid to Institutions of the European Union
TOR*
(Lm’000s)
VAT based own
resource
(Lm’000s)
Total Taxes
(Lm’000s)
2004:2
943.336
502.236
1,445.57
2004:3
1,449.965
753.354
2,203.32
2004:4
1,662.070
637.267
2,299.34
2005:1
1,619.607
781.010
2,400.62
2005:2
1,867.996
685.746
2,553.74
* Traditional Own Resources
8.2.4
These flows are included in the GDP to GNI calculations gross of reimbursement of
collection costs. The revenue collected in the form of traditional own resources (and passed
on to the EU, is correctly recorded. ESA 95 specifies that taxes on production and imports
should be recorded when the activities, transactions or other events occur which create the
liabilities to pay the taxes (ESA 95 paragraph 4.26). Accordingly, this revenue is paid to the
EU two months after it is collected, but recorded in the GNI calculations in the month when it
is due, that is when the activity that creates the liability to pay the taxes occurs. Traditional
own resource (TOR) funds make up around 68 per cent of total taxes on production and
imports paid to the Institutions of the EU.
8.2.5
The remaining 32 per cent, consisting of VAT based own resource payments to the
EU are adjusted for the advances paid in January by the Maltese Government to the EU for a
given year, and for the reconciliation balances at the end of December. Table 8.5 below
shows the extent of the adjustments carried out on the original data collected from the
Ministry of Finance.
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Table 8.5: Accruals adjustment for Taxes paid to Institutions of the European Union
TOR*
(Lm’000s)
Cash
Accrued
2004:2
VAT based own
resource
(Lm’000s)
Cash
Accrued
Total
(Lm’000s)
Cash
Accrued
943
502
502
502
1,445
2004:3
1,054
1,450
753
753
1,807
2,203
2004:4
1,132
1,662
637
637
1,769
2,299
2005:1
1,244
1,620
1,104
781
2,348
2,401
1,242
1,868
578
686
2005:2
1,820
2,554
* Traditional Own Resources includes agricultural and sugar levies, ECSC levies and
customs duties
8.3
Subsidies
Sources and Methods
8.3.1
Subsidies (D.3) are defined in ESA 95 as current unrequited payments that (non-
resident) general government or the Institutions of the European Union make to resident
producers, with the objective of influencing their levels of production, their prices or the
remuneration of the factors of production (ESA 95 p.4.30).
Subsidies granted by the
Institutions of the European Union cover only current transfers made directly by them to
resident producer units. This income component has become of relevance for the GDP to
GNI calculations as from May 2004 onwards, when Malta joined the EU.
8.3.2
In the reference year 2001, therefore, no subsidies on production and imports
received from non-resident governments were included in the GDP to GNI transition. The
documentation following paragraph 8.23 refers to 2004 onwards, when Malta became eligible
for subsidization of certain production activities.
8.3.3
Currently, the subsidies that resident producers are eligible for, under the European
Agriculture Guidance and Guarantee Fund (EAGGF). These payments are being made to
resident producers via the ‘Malta Paying and Receiving Agency’ at the Department of
Agriculture. Therefore, all relevant information is being collected monthly, directly from this
unit. The Paying Agency provides the total payments made to the beneficiaries of the
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subsidies with a distinction as to that proportion which is financed by the Government of
Malta and that which is financed by the EU.
8.3.4
A series of meetings have been held between representatives of the Paying Agency,
the Government Finance Unit (NSO) and the National Accounts Unit (NSO) during which a
form was drafted so that the Paying Agency could fill in the date when the claim was filed by
the beneficiary, the project description, the date the beneficiary received the payment and the
amount expected to be refunded from the EU and that expected to be refunded by the Maltese
government. This is the data being incorporated into the GDP to GNI calculations.
8.3.5
Currently, the time of recording conforms to that required by ESA 95, that is the
subsidy is recorded when the payment of subsidy is made to the beneficiary. This payment is
made to the beneficiary when the transaction or the event (production, sale, import, etc.)
which gives rise to the subsidy occurs (ESA 95 paragraph 4.39).
8.4
Interest
Introduction
8.4.1
Interest income flows are defined in ESA 95 as amounts that debtors become liable
to pay to creditors over a given period of time without reducing the amount of principal
outstanding. This form of property income is receivable by the owners of deposits (AF.2),
securities other than shares (AF.3), loans (AF.4) and other accounts receivable (AF.7).
Interest should be recorded on an accrual basis: recorded continuously over time to the
creditor on the amount of the principal outstanding whether or not it is actually paid and is to
be recorded before the deduction of any taxes levied on it and inclusive of grants for interest
relief (ESA 95 p.4.50; 4.51).
8.4.2
Table 8.6 below shows the credit and debit flows for income earned (paid) from non-
residents on debt. Interest earned on foreign currency denominated debt instruments is the
largest incoming flow of total income earned by residents from the rest of the world, standing
at 98 percent of total incoming GNI flows. Interest paid to the rest of the world on foreign
currency denominated debt interest contributes to an average of 73 percent of total outgoing
GNI flows between 2001 and 2005. The magnitude of the contribution of these flows
highlights the importance of their adequate coverage and adherence to BOP and national
Economic Statistics Division
297
Gross National Income Inventory
accounting statistical standards. Until the end of 2003, this information was not collected by
type of financial instrument hence the exclusion of this subdivision from the text.
Table 8.6: Interest received (paid to) the rest of the world, Lm’000s
2000
2001
2002
2003
2004
2005
Income on debt (interest) 79,387 62,059 82,761 90,179 83,935 102,536
378,350 363,581 361,851 325,837 319,099 409,170
Credit
298,963 301,522 279,090 235,658 235,164 306,634
Debit
8.4.3
Table 8.7 shows the International Investment Position (IIP) for Malta for the years
between 2002 and 2004. This information helps to put into perspective the weight of each
type of interest-bearing financial asset as a percentage of the total investment in such assets.
Table 8.7: International Investment Position in Assets and Liabilities for Malta
Interest bearing Financial Assets
Currency and Deposits (AF.2)
Debt Securities (AF.3)
Loans (AF.4)
Trade Credits (AF.7)
Interest bearing Financial Liabilities
Currency and Deposits (AF.2)
Debt Securities (AF.3)
Loans (AF.4)
Trade Credits (AF.7)
8.4.4
2002
100%
17%
41%
40%
2%
100%
54%
4%
40%
2%
2003
100%
12%
48%
37%
2%
100%
43%
3%
52%
2%
2004
100%
10%
53%
36%
1%
100%
43%
7%
48%
2%
The most important generators of interest income for Malta from the rest of the
world are investment in debt securities (AF.3) and loans (AF.4) and the largest investor in
both types of financial instruments is the banking sector as shown in table 8.10 below. As
from 2004 onwards, data collected on interest income earned by the banking sector is fully in
line with ESA 95 time of recording and valuation principles. Data on the banking sector is
collected in the form of a census. The banking sector is also a strong investor in foreign
currency and deposits as shown in Table 8.8.
8.4.5
The banking sector also plays a major role, in interest income paid to the ROW,
except for payment of interest on debt securities (AF.3), which are issued in the large part by
the ‘other sectors’. The same sources for outward interest flows are used as those for
298
National Accounts Unit
Gross National Income Inventory
incoming interest flows both in the case of the banking sector, as well as of ‘other sectors’.
‘Other sectors’ include the (a) non-bank financial enterprises (referring here to insurance
companies, insurance agents, Collective Investment Schemes (CISs) and exchange bureaux),
(b) non-financial companies and (c) the household sector.
Sources and Methods
8.4.6
The sources and methods for the interest income earned (paid) from (to) non-
residents is outlined for each type of interest-bearing instrument, together with tables showing
the IIP by type of investor (monetary authorities, general government, banks and other
sectors) in both assets and liabilities as published by the BOP.
8.4.7
From January 2004 onwards, the new BOP data collection system implies reporting
of data on the basis of the stock-flow-income model for foreign financial assets and liabilities
including related investment income such as interest. The new system of data collection
guarantees that interest flows are reported on accrual basis and, if applicable, before taxation,
for all relevant sectors. This is in conformity with international standards.
Deposits (AF.2) - Interest income flows received from (paid to) the rest of the world
8.4.8
Table 8.8 shows the IIP in currency and deposits by type of investor. Banks are the
largest holders of foreign currency assets and deposits and holdings by ‘other sectors’ placing
second. The general government is the only other institutional sector that also holds some
currency and deposits in foreign currency. However this is a very small amount compared to
that held by the ‘other sectors’ (and therefore shows up as zero in table 8.8).
Table 8.8: International Investment Position (IIP) in Currency and Deposits, Assets and
Liabilities
AF2 Currency and Deposits, Assets
Monetary Authorities
General Government
Banks
Other sectors
Currency and Deposits,
AF2 Liabilities
Monetary Authorities
General Government
Banks
Other sectors
Economic Statistics Division
2002
0%
0%
85%
15%
2002
0%
0%
100%
0%
2003
0%
0%
76%
24%
2003
0%
0%
100%
0%
2004
0%
0%
77%
22%
2004
0%
0%
100%
0%
299
Gross National Income Inventory
8.4.9
With respect to local currency and deposits held by non-residents (liabilities), banks
are the major creditors; non-residents also hold some currency and deposits with the local
monetary authorities but here again this is a negligible amount which shows up as zero in the
above table.
Banking Sector
Reference years before 2004
8.4.10
Until the end of 2003, interest income earned from (paid to) the ROW on foreign
currency and deposits by the banking sector is covered by their profit and loss statements.
The profit and loss statements are structured in such a way as to make a distinction between
income earned from residents and that earned from non-residents, and is reported gross of tax
(note that the banking sector here does not include the Central Bank of Malta (CBM), which
is included under the heading monetary authorities). Banks’ interest income is recorded when
due within the profit and loss statements (paragraph 8.3.14 – 8.3.15).
Reference years from 2004 onwards
8.4.11
As from 2005 onwards, the banks report directly to the BOP unit using the stock-
flow-income model described above in section 8.3. Data collected follows the accruals
concept. All the relevant interest flows are recorded gross of tax and are fully in line with
ESA 95 and BPM5 standards and definitions.
General Government
8.4.12
For the reference years up to 2003, information on interest income on holdings of
deposits abroad by the government is obtained from the partial settlements system. As from
the reference year 2004 onwards, all information related to the government’s transactions
with the rest of the world is collected from the stock-flow-income questionnaire that
constitutes an improvement over the previous system as regards compliance with the
methodological requirements of ESA 95.
8.4.13
The only exception to this rule is the collection of data on interest on loans paid to
non-residents by government.
This information is obtained directly from the Treasury
department. All transactions obtained from this source are recorded on a cash basis and net of
tax.
300
National Accounts Unit
Gross National Income Inventory
Monetary Authorities
8.4.14
Data on investment income earned by the CBM from the ROW is collected from an
ad hoc questionnaire received from the Finance department of the CBM. Until the end of
2003, total investment income is collected from the money and banking section of the CBM,
with no distinction being made on whether this was in the form of interest or on which type of
financial instrument this was earned. Data on investment income collected from this form is
on a cash basis and not accrued on a continuous basis. All investment income collected is
gross of tax.
8.4.15
For the reference years 2004 onwards, the CBM reports to the BOP unit via a stock-
flow-income questionnaire (Form BOP60), which ensures full conceptual consistency with
the BOP manual and the ESA 95, in that interest is collected by type of financial instrument
on a continuous accrual basis and gross of tax.
Other Sectors
Reference years before 2004
8.4.16
The category ‘other sectors’ includes the (a) non-bank financial enterprises (referring
here to insurance companies, insurance agents, Collective Investment Schemes (CISs) and
exchange bureaux), (b) non-financial companies and (c) the household sector.
For the
reference years before 2004, data for category (b) - non-financial companies - was collected
largely from the enterprise survey (described in section 8.3 above). Entities covered by the
survey, report interest earned from (paid to) the ROW gross of tax and in the time period in
which it was due (though not accrued on a continuous basis) as instructed by the guidelines
accompanying the BOP forms sent to the enterprises.
8.4.17
Transactions of households (and enterprises not covered by the enterprise survey)
passing through the local banking system are captured by the PSS. Estimates are made for
this reference period, by the BOP unit to account for this under coverage. These calculations
are based on studies carried out by the BOP unit.
Reference years from 2004 onwards
8.4.18
From 2004 onwards, information on interest income flows for non-bank financial
enterprises is in the large part collected from the enterprise survey via newly designed stock-
Economic Statistics Division
301
Gross National Income Inventory
flow-income questionnaires. Table 8.9 indicates the groups of financial enterprises that are
covered by direct reporting.
8.4.19
In addition to insurance companies and insurance agents, which were already
reporting via the enterprise survey up to the end of 2003, exchange bureaux and the Malta
Stock Exchange (MSE) started reporting for the reference year 2004 onwards through the
enterprise survey using the stock-flow-income model, and shall report interest flows on an
accruals basis and gross of tax.
8.4.20
As from the first quarter of 2006, CISs that have a Net Asset Value (NAV) greater
than two percent of the total NAV started reporting on a quarterly basis, whilst the rest report
annually as from 2006 onwards.
8.4.21
Interest income flows earned from (paid to) the ROW by the non-bank financial
sector, which is the second most important institutional sector after the banks with respect to
holdings of currency and deposits, is covered by the enterprise survey. The stock-flowincome design of the questionnaires ensures that interest flows are recorded gross of tax and
are on accrual basis.
Table 8.9: Reporting enterprises for the Non-Bank Financial Sector
Date of
Commencement of
Coverage Full Reporting
Non-Bank
Financial Sector
Insurance
companies
C
2004 onwards
Exchange Bureaux
C
2004 onwards
Insurance agents
Collective
Investment
Schemes (CISs)
Malta Stock
Exchange (MSE)
Central Bank of
Malta (CBM)
C
2004 onwards
Accruals
Reporting
2004
onwards
2004
onwards
2004
onwards
Periodicity
of
Reporting
M
M
M
2006
onwards
see note 1
2004
C
2004 onwards
onwards
M
2004
C
2004 onwards
onwards
M
2005
Banks
C
Second quarter 2004 onwards
M
(1) CISs that have a net asset value (NAV) greater than 2 percent of the total NAV
report on a quarterly basis; all other CISs report on an annual basis.
C = Census; M = Monthly;
302
C
First quarter 2006
National Accounts Unit
Gross National Income Inventory
8.4.22
In this new system, the PSS is still used as a data source, but it is used mainly to
cover the personal sector and those enterprises that are not part of the sample base of the
annual enterprise survey described in section 8.3.
8.4.23
For the reference period 1999 onwards, information on the total interest income
earned from the personal sector from non-residents is being collected from the tax authorities
and is updated on an annual basis. For reference years before 1999, the PSS is the source for
this variable.
Securities other than shares (AF.3): Interest Income received from (paid to) the Rest of
the World
8.4.24
Table 8.10 shows residents’ holdings of foreign currency denominated debt
securities by type of investor. The banking sector is the largest investor in this type of asset,
with little or no role played by the monetary authorities, the general government or ‘other
sectors’. The preferred type of financial instrument is bonds and notes, with only an average
of seven percent of total investment in debt securities being invested in money market
instruments.
8.4.25
The extent of investment in financial derivatives started to be collected as from the
fourth quarter of 2003, hence the reason why investment in this type of asset shows up as zero
for the years prior to 2004. Once again the banking sector is the largest investor in this type
of asset.
Table 8.10: International Investment Position in Debt Securities in Assets
Securities other than shares (AF.3)
Debt Securities, Assets
2002
Bonds and Notes
Monetary
Authorities
0%
General
Government
0%
Banks
92%
Other sectors
6%
Money Market
Instruments
Monetary
Authorities
0%
General
Government
0%
Banks
0%
Economic Statistics Division
2003
2004
0%
0%
0%
82%
7%
0%
79%
5%
0%
0%
0%
9%
0%
6%
303
Gross National Income Inventory
Other sectors
Financial Derivatives
Monetary
Authorities
General
Government
Banks
Other sectors
2%
2%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
8%
0%
Table 8.11: International Investment Position in Debt Securities, Liabilities
Securities other than shares (AF.3)
Debt Securities,
Liabilities
2002
Bonds and Notes
Monetary
Authorities
0%
General
Government
0%
Banks
8%
Other sectors
89%
Money Market
Instruments
Monetary
Authorities
0%
General
Government
0%
Banks
3%
Other sectors
0%
Financial
Derivatives
Monetary
Authorities
0%
General
Government
0%
Banks
0%
Other sectors
0%
8.4.26
2003
2004
0%
0%
0%
8%
84%
0%
2%
29%
0%
0%
0%
1%
0%
0%
0%
0%
0%
0%
0%
8%
0%
0%
68%
0%
Table 8.11 shows the amount of debt securities issued by residents that are owned by
non-residents. This table provides an indication of the amount of interest paid to nonresidents on this type of asset to non-residents by type of issuing sector. The largest issuers
of debt securities to non-residents are the ‘other sectors’. These are defined as the non-bank
financial sector and non-financial enterprises for the years up to 2003. Households are also
included as ‘other sectors’ but they do not issue debt securities.
304
National Accounts Unit
Gross National Income Inventory
8.4.27
The new data for 2004 on financial derivatives indicates that a substantial proportion
of non-residents holdings of debt securities are in the form of financial derivatives issued by
the banking sector. This information indicates that the banking sector pays in the larger part
interest on debt securities to non-residents. This type of information is collected from the
banks by means of the stock-flow-income questionnaires, which ensures good coverage and
compliance with international standards of this type of interest paid to non-residents.
Government, Monetary Authorities and ‘Other Sectors’
8.4.28
The sources and methods (both pre- and post-2004) used to calculate interest income
flows earned from (paid to) non-residents on financial assets of type AF.3 (securities other
than shares) are exactly the same as those used to calculate inward interest income flows
earned on financial assets of type AF.2 (deposits) for the following types of investors:
government, monetary authorities and other sectors (see relevant paragraphs).
Banking Sector
8.4.29
Interest income flows earned from the ROW on securities other than shares (AF.3)
by the banking sector (excluding the CBM, which is included under monetary authorities) is
compiled using banks’ profit and loss statements for the period for all reference years up to
the end of 2003. Data on interest collected from this source means that interest is recorded
when due and not accrued continuously over the relevant time period (see section 8.0.1.4).
However, as explained for interest income earned on currency and deposits by this
institutional sector, this poses a problem largely for the quarterly calculation of GNI, but not
for the annual calculation. Interest was recorded gross of tax.
8.4.30
As from the reference year 2004, interest income flows earned on this type of
instrument are collected from the newly designed BOP forms ensuring that they are correctly
valued on an accruals basis and gross of tax in accordance with ESA 95, given that the forms
are based on the stock-flow-income model.
8.4.31
For the reference years 2005 onwards, investment income relating to liabilities is
collected directly from the Malta Stock Exchange (MSE) questionnaire, if the securities are
listed on the MSE. If the securities are either unquoted or listed on a foreign exchange
market, information is collected directly from the company/bank in question.
Economic Statistics Division
305
Gross National Income Inventory
General Government
8.4.32
The same methodology used to calculate inward (outward) interest income flows
generated by deposits is used to calculate that earned (paid) on securities other than shares
(AF.3) owned by the general government (refer to the documentation on interest earned
(paid) by other sectors on deposits (AF.2) above for general government). The IIP of the
general government in this form of financial asset is negligible as shown in Table 8.10.
Monetary authorities
8.4.33
The same methodology (both pre- and post-2004) used to calculate inward (outward)
interest income flows generated by deposits is used to calculate that earned (paid) on
securities other than shares (AF.3) owned by the monetary authorities. These methods are
described in the documentation on interest earned (paid) by other sectors on deposits (AF.2)
above. The IIP of the monetary authorities in this form of financial asset is negligible as
shown in Table 8.10.
Other sectors
For reference years up to the end of 2003
8.4.34
The same methodology used to calculate inward (outward) interest income flows
generated by deposits is used to calculate that earned (paid) on securities other than shares
(AF.3) owned by other sectors. (Refer to the documentation on interest earned (paid) by
other sectors on deposits (AF.2)).
For reference years from 2004 onwards
8.4.35
Inward interest income flows generated by deposits is used to calculate that earned
(paid) on foreign securities other than shares (AF.3) owned by other sectors from 2004
onwards. (Refer to the documentation on interest earned (paid) by other sectors on deposits
(AF.2)).
8.4.36
As from 2005, in addition to the information obtained from the direct reporting
questionnaires, the information on interest paid by residents to non-residents on financial
instruments of type AF.3 is being collected directly from the Malta Stock Exchange (MSE)
questionnaire – if the securities are listed on the stock exchange. This data is used to crosscheck the information obtained from that reported by the enterprises to the BOP via the stockflow-income model, which is the prime source for this income flow.
306
National Accounts Unit
Gross National Income Inventory
Loans (AF.4): Interest income on loans received from (paid to) the rest of the world
8.4.37
The next important type of financial instrument that give rise to interest flows
between resident and non-residents are loans. Table 8.12 shows the IIP for assets and
liabilities in loans by type of investor (creditor). The major recipient of interest income on
loans is the banking sector (excluding the CBM, which is included under the heading
monetary authorities). ‘Other sectors’ are defined here to include the non-bank financial
sector, non-financial enterprises and households: they also have some money loaned to nonresidents.
Table 8.12: International Investment Position in Loans, Assets and Liabilities
Loans, (AF.4),
Assets
Monetary
Authorities
General
Government
Banks
Other sectors
Loans, (AF.4),
Liabilities
Monetary
Authorities
General
Government
Banks
Other sectors
8.4.38
2002
2003
2004
0%
0%
0%
0%
99%
1%
2002
0%
99%
1%
2003
0%
98%
2%
2004
0%
1%
0%
5%
88%
7%
4%
90%
5%
3%
93%
4%
For interest paid to non-residents on loans from the rest of the world, the banking
sector is the largest trader, with ‘other sectors’ placing second and the government third.
Banking Sector
8.4.39
Interest income flows earned by the banking sector from the ROW on loans
(excluding the CBM, which is included under monetary authorities) is compiled using banks’
profit and loss statements for the period up to the end of 2003.
8.4.40
For calculations from 2005 onwards, interest income flows earned on this type of
instrument are collected from the newly designed BOP forms ensuring that they are correctly
valued on an accruals basis and gross of tax in accordance with ESA 95, given that the forms
are based on the stock-flow-income model.
Economic Statistics Division
307
Gross National Income Inventory
General Government
8.4.41
The same methodology used to calculate outward interest income flows paid on
financial instruments of type AF.2 and AF.3 is used to calculate that paid on loans (AF.4)
held by the general government (refer to the relevant documentation on interest paid by
general government on AF.2 and AF.3 above). Incoming interest income flows are not
relevant for this type of investor.
Monetary authorities
8.4.42
The same methodology (both pre- and post-2004) used to collect data on inward
(outward) interest income flows on financial assets of type AF.2 and AF.3 is used for loans
held (issued) by the monetary authorities (refer to the documentation on interest earned (paid)
by other sectors on deposits (AF.2) above). Both incoming and outgoing flows on this
category of financial assets are not relevant for this type of investor up to now.
Other sectors
8.4.43
The same methodology (both pre- and post- 2004) used to calculate outward interest
income flows related to financial assets of type AF.2 and AF.3 is used to calculate that paid
on loans held by other sectors. Refer to the documentation on interest earned (paid) by other
sectors on AF.2 and AF.3 above. Incoming flows for this category of financial assets and this
type of investor are not relevant up to now.
Other Accounts Receivable (AF.7): Interest Income received on other accounts
receivable
8.4.44
Other accounts receivable’ (AF.7) is mostly made up of trade credits. The major
recipients (payers of) interest earned from (paid to) the ROW on trade credits are, by
definition, sectors other than banks, general government and the monetary authorities as
indicated in table 8.13 below. Interest flows generated by this type of asset constitute a very
small proportion of total interest flows received (paid) from the rest of the world as shown in
Table 8.7. Trade credits refer to short-term trade credit in which case interest income earned
(paid) from the rest of the world is not relevant. Long-term trade credit flows with the rest of
the world are not relevant for Malta.
308
National Accounts Unit
Gross National Income Inventory
Table 8.13: International Investment Position in Trade Credits, Assets and Liabilities
International Investment Position
Trade Credits (AF.7), Assets
2002
Monetary Authorities
0%
General Government
0%
Banks
0%
Other sectors
100%
Trade Credits (AF.7),
Liabilities
2002
Monetary Authorities
3%
General Government
0%
Banks
0%
Other sectors
97%
8.4.45
2003 2004
0%
0%
0%
0%
0%
0%
100% 100%
2003
5%
0%
0%
95%
2004
1%
0%
0%
99%
Sources and methods on any possible interest earned (paid) on trade credits by ‘other
sectors’ and the monetary authorities have been described in sections above, both for pre- and
post-2004 calculations.
8.5
Distributed Income of Corporations
8.5.1
Distributed income of corporations (D.42) may be in the form of dividends (D.421)
or withdrawals from the income of quasi-corporations (D.422). ESA 95 defines dividends as
income earned by owners of shares (AF.5). Dividends are recorded at the time they are due
to be paid as determined by the corporation.
8.5.2
Table 8.14 shows the total dividends received from (paid to) non-residents over the
period 2000 to 2005. No distinction is made between dividends received (paid out) related to
FDI and dividends related to portfolio investment to date hence the two categories of
dividends are shown together in table 8.14.
8.5.3
Dividends received on foreign equity constitute a very small proportion of total
income earned by residents from the rest of the world. The ratio of dividends received as a
result of both foreign direct investment and portfolio investment to total credit flows recorded
in the GDP to GNI transition calculations stands at an average of 4 per cent between 2000 and
2005.
Economic Statistics Division
309
Gross National Income Inventory
Table 8.14: Dividends and distributed branch profits
Lm’000s
Net
Credit
Debit
8.5.4
2000
(21,709)
2,654
24,363
2001
(23,253)
3,537
26,790
2002
(79,053)
3,383
82,436
2003
(68,868)
546
69,414
2004
(48,973)
1,600
50,573
2005
(107,524)
1,217
108,741
Dividends paid out by residents to the rest of the world are on the other hand
assuming greater importance in the GNI calculations for the Maltese economy. The ratio of
dividends paid out to total debit flows recorded within the GDP to GNI calculations has risen
from 6 per cent in 2000 to 23 per cent in 2005.
Sources and Methods
8.5.5
The IIP of Malta as at 2002 indicates that the major investors in equities (and
therefore recipients of dividends) are ‘other sectors’ (defined to include (a) the non-bank
financial sector, (b) non-financial enterprises, and (c) households) as well as the banking
sector (excluding monetary authorities).
‘Other sectors’ are also the largest debtors in
equities and hence the major distributors of dividends to the rest of the world, with the
banking sector (excluding monetary authorities) placing second. The IIP indicates that the
monetary authorities and the general government play no role whatsoever in the international
market for this type of financial asset.
Table 8.15: International Investment Position in Equities, Assets and Liabilities
Equities, Assets held
abroad
Monetary Authorities
General Government
Banks
Other sectors
2002
2003
2004
0%
0%
2%
98%
0%
0%
5%
95%
0%
0%
2%
98%
Equities, Liabilities with
the ROW
Monetary Authorities
General Government
Banks
Other sectors
2002
2003
2004
0%
0%
17%
83%
0%
0%
0%
100%
0%
0%
0%
100%
310
National Accounts Unit
Gross National Income Inventory
Dividends (D.421)
Dividends related to Foreign Direct Investment (FDI)
8.5.6
Direct foreign investors are defined as enterprises that have ten percent or more of
their equity belonging to foreign shareholders (see definition in section 8.0.1.6). The BOP
unit does not have a separate register of foreign direct investors. Annually, the enterprise
survey contains a question that asks companies specifically whether ten percent of their
equity belongs to foreign shareholders or whether they have more than ten percent
shareholding in a non-resident company. Information on new companies with a foreign
shareholding is also collected via the Structural Business Statistics Survey (SBS), which
includes a question on whether the enterprise being surveyed has a foreign shareholding or
not.
8.5.7
Two different forms are sent through the enterprise survey. The BOP 81 form is sent
to the enterprises that have the largest amount of transactions with non-residents and are
therefore captured monthly by the enterprise survey and the BOP 10SME form is sent to the
smaller enterprises that are only surveyed annually. Form BOP 10 collects monthly data on
dividends via a specific question, whilst the BOP 10SME collects the same information
annually.
For reference years up to the end of 2003
8.5.8
Dividends related to FDI both in Malta and abroad are collected from the enterprise
survey (see paragraphs 8.3.0 to 8.3.15). The survey provides information on dividends when
declared and gross of tax, as dictated by the guidelines accompanying the BOP forms. This
information is supplemented by data on dividends declared collected from the banking
sector’s profit and loss statements. All dividends are reported gross of tax.
For the reference years 2004 onwards
8.5.9
As explained in paragraphs 8.3.0 to 8.3.15 as from 2004 onwards, the sampling
frame of the enterprise survey has been enlarged to include all the categories of enterprises
(financial and non-financial) that have sizeable investment positions in equities. A larger
sampling frame ensures wider coverage of FDI enterprises. All dividends earned (paid out)
collected are when declared and gross of tax. In addition to the enterprise survey, the banking
sector is reporting via the newly designed stock/flow questionnaires, which implies a
guarantee of fulfilling international statistical requirements in principle.
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Gross National Income Inventory
Dividends related to Portfolio Investment (PI)
For the reference years before 2004
8.5.10
By definition, all dividends earned from (paid out) to the rest of the world that do not
belong to foreign direct investment enterprises in Malta or abroad are dividends earned on
portfolio investment. The enterprise survey was used as the major source of dividends earned
by non-bank enterprises up to the end of 2003. Dividends related to portfolio investment
earned (paid out) by the banking sector are collected from their profit and loss statements.
Dividends collected from the survey and from the banks’ profit and loss statements are valued
when declared and recorded gross of tax.
8.5.11
Dividends earned on portfolio investment from the rest of the world by households
are collected from the PSS, described in paragraphs 8.3.0 to 8.3.15. Dividends are collected
on a cash basis from this source and to the extent that tax paid on dividends earned are
withheld at source, then this flow is recorded net of tax.
For the reference years 2004 onwards
8.5.12
As explained in paragraphs 8.3.0 to 8.3.15 as from 2004 onwards, the sampling
frame of the enterprise survey has been enlarged to include all the categories of enterprises
that have sizeable investment positions in equities. This means wider coverage of both
financial and non-financial enterprises and hence that more dividends received (paid out) will
be captured and valued correctly within the framework of the survey.
8.5.13
As for households, the PSS is still the major source of information on dividends
earned.
Withdrawals from the income of quasi-corporations (D.422)
8.5.14
Withdrawals from the income of quasi-corporations refer to the amounts that
entrepreneurs withdraw for their own use from the profits earned by the quasi-corporations
that belong to them. Quasi-corporations are defined by the ESA 95 as entities that keep a
complete set of accounts and have no independent legal status. However, they have an
economic and financial behaviour that is different from that of their owners and similar to that
of corporations. Therefore, they are deemed to have autonomy of decision and are considered
as distinct institutional units (ESA 95 paragraph 2.13f).
312
National Accounts Unit
Gross National Income Inventory
8.5.15
Therefore, according to the above guidelines, the net operating surplus earned by
non-resident owners of land and buildings in Malta, is considered as a withdrawal by a nonresident from the income of a resident quasi-corporation. Similarly, the net operating surplus
earned by resident owners of dwellings situated outside the domestic economy should be
considered as an inflow. Until 2004, no calculations were included in the GDP to GNI
transition workings for this ‘imputed’ income flow. Within the context of this project it was
discussed that the national accounts should calculate this imputed flow, as this should not be
part of the balance of payments statement, but only part of the GDP to GNI transition
calculations. Work by the National Accounts Unit on this calculation is still at the very early
stages.
8.6
Reinvested Earnings on Foreign Direct Investment
8.6.1
Reinvested earnings on direct foreign investment (D.43) are defined in ESA 95 as
equal to the operating surplus of the direct foreign investment enterprises, plus any property
incomes or current transfers receivable, minus any property incomes or current transfers
payable, including actual remittances to foreign direct investors and any current taxes payable
on the income, wealth, etc., of the direct foreign investment enterprise (ESA 95 p.4.64). D.43
should be recorded when earned, and the concept of operating surplus should be in line with
the current operating performance concept (COPC). The COP concept refers to income from
normal operations of the enterprise and that do not include any realized or unrealized holding
(capital) gains or losses arising from valuation changes such as inventory write-offs (for more
detail see the IMF manual on balance of payments (BPM5 Chapter XIV p.285)
8.6.2
Reinvested earnings on Foreign Direct Investment (FDI) are the retained profits of
those enterprises that have direct foreign investors. The BOP unit does not have a separate
register of foreign direct investors. Annually, the enterprise survey contains a question that
asks companies specifically whether ten percent of their equity belongs to foreign
shareholders, or whether they have more than ten percent shareholding in a non-resident
company. Information on new companies with a foreign shareholding is also collected via the
Structural Business Statistics Survey (SBS), which includes a question on whether the
enterprise being surveyed has a foreign shareholding or not.
8.6.3
A direct foreign investment enterprise is an incorporated or unincorporated
enterprise in which an investor resident in another economy owns ten percent or more of the
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Gross National Income Inventory
ordinary shares or voting power (for an incorporated enterprise), or the equivalent (for an
unincorporated enterprise). These enterprises comprise those entities that are identified as
subsidiaries (investor owns more than fifty per cent), associates (investor owns fifty per cent
or less) and branches (wholly or jointly owned unincorporated enterprises), either directly or
indirectly owned by the investor’ (ESA 95 p.4.65).
8.6.4
Two different forms are sent: the BOP 81 form is sent to the enterprises that have the
largest amount of transactions with non-residents and are therefore captured monthly by the
enterprise survey and the BOP 10SME form is sent to the smaller enterprises that are only
surveyed annually. The survey does not contain a direct question on retained earnings, but
this is calculated indirectly as the difference between the profit and dividends declared. Form
BOP 10 SME asks for retained earnings specifically. The format of these questionnaires
prevailed up to 2003 and did not change from 2004 onwards.
8.6.5
Table 8.16 below shows both inward (debit entries) and outward (credit entries)
reinvested earnings and undistributed branch profits for the period 2000 to 2005. It is
apparent from this table that for Malta, inward FDI is much larger than outward FDI.
Table 8.16: Reinvested Earnings and Undistributed Branch Profits
2000
2001
Reinvested
earnings and
undistributed (111,933) (27,064)
branch profits
2,940
3,345
Credit
Debit
114,873
30,409
2002
(1,150)
2003
2004
(33,594) (57,820)
2005
(49,908)
-7,552
280
1,564
1,139
-6,402
33,874
59,384
51,047
Sources and methods
For reference years up to the end of 2003
8.6.6
Until the end of 2003, inward and outward reinvested earnings on direct foreign
investment of enterprises other than banks were asked for directly by means of a specific
question within the enterprise survey. The guidelines to the survey direct the respondents to
provide data on the ‘foreign shareholders’ share of retained profits, accumulated losses and
other reserves’ excluding any extraordinary gains or losses. These guidelines are in line with
the definition of profits in the BOP manual (COPC) as explained above in section 8.0.1.5.
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National Accounts Unit
Gross National Income Inventory
This data are collected annually. This information is supplemented by data on reinvested
earnings collected directly from the banks from their profit and loss statements.
For the reference years 2004 onwards
8.6.7
As from 2004 onwards, inward and outward reinvested earnings are still compiled by
the BOP Unit through the enterprise survey. The difference is that instead of asking directly
for reinvested earnings in Malta or abroad, this income flow is being calculated by the BOP as
the difference between total net profits valued using the COP concept (enterprises are directed
to do so by the guidelines accompanying the BOP forms) and dividends declared for a given
year (gross of tax) collected from the newly designed stock-flow-income questionnaires.
8.6.8
As explained in paragraph 8.5.6 above, the BOP does not have a separate FDI
register, but collection of data on reinvested earnings in Malta or abroad is restricted to banks,
non-bank financial and non-financial companies that are covered by the enterprise survey
described in paragraphs 8.3.0 to 8.3.15, capturing more enterprises (financial and nonfinancial) and ensuring better coverage of reinvested earning. Table 8.9 indicates which
groups of financial enterprises are covered by direct reporting.
8.6.9
For the non-financial sector, which was limited to the ‘top’ 700 companies,
additional respondents are chosen on the basis of criteria also described in section 8.3 above.
For the non-bank financial sector as from 2004 onwards, aside from insurance companies and
insurance agents, which already reported via the enterprise survey up to the end of 2003,
exchange bureaux and the Malta Stock Exchange (MSE) started reporting for the reference
year 2004 onwards through the enterprise survey using the stock-flow-income model and
shall report relevant flows on an accruals basis and gross of tax. As for reinvested earnings,
for net profits the COP concept is used and dividends are recorded as explained in paragraphs
8.3.0 to 8.3.15.
8.7
Property income attributed to insurance policy holders
8.7.1
Property income attributed to insurance policy holders (D.44) is defined in ESA 95
as total primary incomes received from the investment of insurance technical reserves. In the
context of GDP to GNI transition calculations, D.44 refers to the primary income received
from (paid to) the rest of the world from the investment of insurance technical reserves. The
magnitude of this flow is still not known and is being investigated. Although it is not likely
Economic Statistics Division
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Gross National Income Inventory
that households make life or non-life insurance contracts with non-resident insurance
enterprises directly, resident insurance companies tend to make re-insurance contracts with
non-resident enterprises to share risk. It is also unclear whether resident insurance companies
accept risks from non-resident companies, giving rise to imputed outflows of property income
attributed to insurance policy holders.
8.7.2
The BOP (CBM) unit collects information directly from insurance companies on
assets and liabilities, with technical reserves specified separately, via the BOP enterprise
survey forms. The National Accounts Unit is currently investigating how best to incorporate
this source into the GDP to GNI transition calculations.
8.8
Rents on land and sub-soil assets
8.8.1
Rents refer to rents (D.45) received from (paid to) the rest of the world on land and
sub-soil assets. It also includes rents receivable (payable) to owners of inland waters and
rivers for the right to exploit such waters for recreational or other purposes, including fishing.
Rents on sub-soil assets includes the royalties that accrue to owners of deposits of minerals or
fossil fuels who grant leases to other institutional units permitting them to explore or to
extract such deposits over a specified period of time. This flow is not relevant for Malta.
316
National Accounts Unit
Gross National Income Inventory
Chapter 9
9.1
FISIM: calculation, allocation and impact on GNI
As well as charging customers directly for banking services, financial intermediaries
also provide services for which no explicit charges are made. The latter are known in
national accounts as the Financial Intermediation Services Indirectly Measured (FISIM). In
the case of FISIM, the service income is generated by paying or charging different rates of
interest, to borrowers and lenders. The intermediaries pay lower rates of interest than would
otherwise be the case to those who lend them money, and charge higher rates of interest to
those who borrow from them.
9.2
FISIM was allocated to the sectors/industries in the Maltese National Accounts at
the beginning of 2006 (for the period 1995-2005 annually and quarterly), and published for
the first time in March 2006. Previously, using a simplifying assumption, all FISIM had been
recorded as intermediate consumption of a notional industry.
9.3
A Council Regulation of 16th February 1998 defined basic principles of calculating
sector allocating FISIM in national accounts. EU Member States agreed on methods to
calculate the sector allocation of FISIM and these were legislated for in Commission
Regulation (EC) No. 1889/2002 of 23rd October 2002. The legislation required that the
approach be changed in order to improve the measurement of GDP.
9.4
This regulation specified the following methods to be applied:
(i) Calculation and allocation of FISIM among domestic user sectors using the
reference rate:
(a)
Internal Reference Rate (IRR) for allocating domestic FISIM to be
determined as the ratio of interest receivable on loans between “Other
monetary financial institutions” (S.122) and “Other financial intermediaries,
except insurance corporations and pension funds” (S.123), to stocks of loans
between S.122 and S.123.
(b)
External Reference Rate (ERR) to be used to calculate import and export of
the new FISIM is the average inter-bank rate weighted by the ratios of loans
and deposits between S.122 and S.123 on the one hand and non-resident
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Gross National Income Inventory
financial intermediaries on the other, which are included in the balance sheet
of financial intermediaries.
(ii)
Allocation of FISIM among industries’ intermediate consumption based on
the stocks of loans and deposits for each industry, or, if this information is not
reliable, on the output for each industry.
9.5
FISIM in the Maltese National Accounts was allocated using part (ii) of the
regulation i.e. FISIM intermediate consumption is apportioned for each industry based on its
output. Therefore FISIM is not anymore recorded as entirely as intermediate consumption,
but can also be final consumption and exports. This implies that imports of FISIM can also
occur. To the extent that FISIM are recorded as final consumption and net exports, GDP and
GNI levels will increase. As FISIM are allocated to user sectors, certain parts of interest
payments are reclassified as payments of services. This reclassification has consequences for
the values of output and intermediate consumption as well as for the values of imports,
exports and final consumption.
9.6
There is also a change in the way FISIM is estimated. Previously FISIM was
measured as total property income received minus total interest payments minus the value of
any income received from the investment of own funds (as such income does not arise from
financial intermediation). Now the calculation of FISIM is based on the construction of three
different matrices highly consistent with each other. One is the matrix of stocks of deposits
and loans by institutional sector, of the FIPS (FISIM Producing Sector), a second is the same
matrix for interest flows on deposits and loans, and a third is a matrix of interest rates.
9.7
The total production of FISIM is equivalent to sum of the FISIM output of ‘Other
monetary financial institutions’ (S.122) and ‘Other financial intermediaries, except insurance
corporations and pension funds’ (S.123) by domestic sector and exported. For the purposes
of this calculation, other credit granting institutions are not being considered due to lack of
technical data. Regarding collective investment schemes, negotiations with the Central Bank
of Malta are underway to make use of the appropriate data in the future.
FISIM output by domestic sector
9.8
318
FISIM output by domestic sector is equal to:
National Accounts Unit
Gross National Income Inventory
Accrued interest1 – (Stock of loans x Internal Reference Rate)
+ (Stocks of deposits x Internal Reference Rate) – Accrued interest2
(i) Accrued interest1 is equal to the interest received by local Deposit Money Banks (DMB)
on loans granted to residents.
(ii) Stock of loans are those granted by local DMBs to residents.
(iii) Accrued interest2 is equal to the interest paid by DMBs on deposits by residents.
(iv) Stocks of deposits are those held by residents in local DMBs
9.9
The source of the interest receivable and payable is the profit and loss statement of
the DMBs, which is supplied quarterly by the Central Bank of Malta (CBM). Since this data
is not available by institutional sector, this was linked to the stock of loans and deposits
(which are available by institutional sector) for the sector breakdown. In particular, the
following specific items are extracted from the quarterly Profit and Loss statements supplied
by the CBM (Refer to sample P&L statement on next 8 pages for item codes).
(i)
Interest and fee income on loans and advances: items 1.3.1.1 + 1.3.2.1 + 1.3.3.1
+ 1.4.3 + 1.5.2 + 4.4.1
(ii)
Interest on other deposits: items 2.4.1.1 + 2.4.2.1 + 2.5.1.1 + 2.5.2.1
(iii)
Interest on other borrowed money: items 2.2 + 2.3.1.1.2 + 2.3.2.1.2 + 2.3.1.2.2 +
2.4.1.2 + 2.4.2.2 + 2.5.1.2 + 2.5.2.2
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Gross National Income Inventory
DEPOSIT MONEY BANKS - P&L
FINANCIAL YEAR-END-TO-DATE BASIS
Item code
INTEREST RECEIVABLE AND SIMILAR INCOME ON:
1
Claims on the Central Bank of Malta
1.1
Funds placed under reserve requirements
1.1.1
Purchase/resale agreements/term deposits
1.1.2
Securities other than shares
1.1.3
Other deposits
1.1.4
Claims on the Eurosystem and other central banks
1.2
Claims on MFIs
1.3
Overseas branches, subsidiary, parent and other related credit institutions
1.3.1
Loans
1.3.1.1
Deposits
1.3.1.2
Current/Cheque
1.3.1.2.1
Savings
1.3.1.2.2
Time/with agreed maturity
1.3.1.2.3
Purchase/resale agreements/term deposits
1.3.1.3
Securities other than shares
1.3.1.4
Other credit institutions
1.3.2
Loans
1.3.2.1
Deposits
1.3.2.2
Current/Cheque
1.3.2.2.1
Savings
1.3.2.2.2
Time/with agreed maturity
1.3.2.2.3
Purchase/resale agreements/term deposits
1.3.2.3
Securities other than shares
1.3.2.4
Money Market Funds
320
1.3.3
Loans
1.3.3.1
Others
1.3.3.2
National Accounts Unit
Gross National Income Inventory
Claims on general government (incl. public non-market units)
1.4
Treasury Bills
1.4.1
Government securities
1.4.2
Loans
1.4.3
Others
1.4.4
Claims on other remaining sectors
1.5
Securities other than shares
1.5.1
Loans
1.5.2
Others
1.5.3
INTEREST EXPENSE PAYABLE ON:
2
Borrowings from Central Bank of Malta
2.1
2.1.1
Loans
Sale/repurchase agreements
2.1.1.1
Other loans
2.1.1.2
Standby loan facility
2.1.2
Borrowings from the Eurosystem and other central banks
2.2
Liabilities with MFI's
2.3
Overseas branches, subsidiary or parent and other related credit institutions
In Maltese Lira
Deposits
2.3.1
2.3.1.1
2.3.1.1.1
Current/cheque
2.3.1.1.1.1
Savings
2.3.1.1.1.2
Time/with agreed maturity
2.3.1.1.1.3
Loans
2.3.1.1.2
Sale/repurchase agreements
2.3.1.1.2.1
Other loans
2.3.1.1.2.2
Debt securities issued
In Foreign currency
Economic Statistics Division
2.3.1.1.3
2.3.1.2
321
Gross National Income Inventory
Deposits
2.3.1.2.1
Current/cheque
2.3.1.2.1.1
Savings
2.3.1.2.1.2
Time/ with agreed maturity
2.3.1.2.1.3
Loans
2.3.1.2.2
Sale/repurchase agreements
2.3.1.2.2.1
Other loans
2.3.1.2.2.2
Debt securities issued
Other Credit Institutions
In Maltese Lira
Deposits
2.3.1.2.3
2.3.2
2.3.2.1
2.3.2.1.1
Current/cheque
2.3.2.1.1.1
Savings
2.3.2.1.1.2
Time/with agreed maturity
2.3.2.1.1.3
Loans
2.3.2.1.2
Sale/repurchase agreements
2.3.2.1.2.1
Other loans
2.3.2.1.2.2
Debt securities issued
In Foreign currency
Deposits
2.3.2.1.3
2.3.2.2
2.3.2.2.1
Current/cheque
2.3.2.2.1.1
Savings
2.3.2.2.1.2
Time/with agreed maturity
2.3.2.2.1.3
Loans
2.3.2.2.2
Sale/repurchase agreements
2.3.2.2.2.1
Other loans
2.3.2.2.2.2
Debt securities issued
Money Market Funds
2.3.2.2.3
2.3.3
In Maltese Lira
2.3.3.1
In Foreign currency
2.3.3.2
322
National Accounts Unit
Gross National Income Inventory
Liabilities with general government
In Maltese Lira
Deposits
2.4
2.4.1
2.4.1.1
Current/cheque
2.4.1.1.1
Savings
2.4.1.1.2
Time/with agreed maturity
2.4.1.1.3
2.4.1.2
Loans
Sale/repurchase agreements
2.4.1.2.1
Other loans
2.4.1.2.2
Debt securities issued
In Foreign currency
Deposits
2.4.1.3
2.4.2
2.4.2.1
Current/cheque
2.4.2.1.1
Savings
2.4.2.1.2
Time/with agreed maturity
2.4.2.1.3
2.4.2.2
Loans
Sale/repurchase agreements
2.4.2.2.1
Other loans
2.4.2.2.1
Debt securities issued
Liabilities with other remaining Sectors
In Maltese Lira
Deposits
2.4.2.3
2.5
2.5.1
2.5.1.1
Current/cheque
2.5.1.1.1
Savings
2.5.1.1.2
Time/with agreed maturity
2.5.1.1.3
of which: equity/index linked deposits
Loans
2.5.1.1.3.1
2.5.1.2
Sale/repurchase agreements
2.5.1.2.1
Other loans
2.5.1.2.2
Debt securities issued
Economic Statistics Division
2.5.1.3
323
Gross National Income Inventory
2.5.2
In Foreign currency
2.5.2.1
Deposits
Current/cheque
2.5.2.1.1
Savings
2.5.2.1.2
Time/with agreed maturity
2.5.2.1.3
of which: equity/index linked deposits
2.5.2.1.3.1
2.5.2.2
Loans
Sale/repurchase agreements
2.5.2.2.1
Other loans
2.5.2.2.2
2.5.2.3
Debt securities issued
NET INTEREST INCOME
3
OTHER NON-INTEREST INCOME:
4
DIVIDEND INCOME RECEIVABLE:
4.1
Dividend from subsidiary companies
4.1.1
Dividend from associated companies
4.1.2
Dividend from trading equity investments
4.1.3
Dividend from available-for-sale equity investments
4.1.4
Dividend from held-to-maturity investments
4.1.5
4.2
TRADING PROFITS:
Gain/(loss) on disposal of trading financial instruments
4.2.1
Fair value movements in trading financial instruments
4.2.2
4.3
NON-TRADING PROFITS:
Gain/(loss) on disposal of held-to-maturity investments
4.3.1
Fair value movements in available for sale investments
4.3.2
Fair value movement in originated loans and receivables
4.3.3
Revaluation gain/(loss) on disposal of available-for-sale instruments transferred from equity
4.3.4
Gain/(loss) on disposal of available for sale investments
4.3.5
Gain/(loss) on disposal of shares in subsidiary companies
4.3.6
Gain/(loss) on disposal of shares in associate companies
4.3.7
Gain/(loss) on disposal of tangible fixed assets
4.3.8
OTHER NON-INTEREST INCOME (n.e.s.)
Fees, commissions and charges on services provided
324
4.4
4.4.1
National Accounts Unit
Gross National Income Inventory
Trading gain/(loss) on foreign exchange dealings
4.4.2
Fees on foreign exchange
4.4.3
Other foreign exchange gain/(loss)
4.4.4
Other income
4.4.5
OTHER NON-INTEREST EXPENSES:
5
Staff expenses
5.1
Directors' remuneration
5.1.1
Wages, salaries and allowances
5.1.2
Retirement Benefits
5.1.3
Other staff expenses
5.1.4
Other operating expenses
5.2
Rents
5.2.1
Fees and commissions payable
5.2.2
Other administrative expenses
5.2.3
Other operating expenses
5.2.4
Other expenses
5.3
Depreciation
5.3.1
Provisions for contingent liabilities, commitments and other charges
5.3.2
Other expenses
5.3.3
Amortisation
5.4
Treasury bills
5.4.1
Held-to-maturity
5.4.2
Available-for-sale
5.4.3
Intangible assets
5.4.4
Goodwill
5.4.4.1
Other
5.4.4.2
NET IMPAIRMENT LOSSES
6
Write-downs
6.1
Loans to credit institutions
6.1.1
specific provisions
6.1.1.1
general provisions
6.1.1.2
bad debts written off
6.1.1.3
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Gross National Income Inventory
Loans to customers
6.1.2
specific provisions
6.1.2.1
general provisions
6.1.2.2
bad debts written off
6.1.2.3
Investments
6.1.3
in treasury bills
6.1.3.1
in held-to-maturity debt security instruments
6.1.3.2
in available-for-sale debt security instruments
6.1.3.3
in available-for-sale equity instruments
6.1.3.4
in subsidiary companies
6.1.3.5
in associate companies
6.1.3.6
Recoveries and reversals
6.2
Loans to credit institutions
6.2.1
specific provisions
6.2.1.1
general provisions
6.2.1.2
bad debts written off
6.2.1.3
Loans to customers
6.2.2
specific provisions
6.2.2.1
general provisions
6.2.2.2
bad debts written off
6.2.2.3
Investments
6.2.3
in treasury bills
6.2.3.1
in held-to-maturity debt security instruments
6.2.3.2
in available-for-sale debt security instruments
6.2.3.3
in available-for-sale equity instruments
6.2.3.4
in subsidiary companies
6.2.3.5
in associate companies
6.2.3.6
Exceptional items
7
Exceptional Income
7.1
Exceptional expenses
7.2
PROFIT (LOSS) BEFORE TAX FOR THE PERIOD
8
TAX ON PROFITS
9
326
National Accounts Unit
Gross National Income Inventory
PROFIT (LOSS) AFTER TAX FOR THE PERIOD
10
Other statistical information
Number of directors
Executive
Non-executive
Number of employees
Number of top level management
Number of middle level management
Number of first level management
Number of clericals
Number of non-clericals
Number of part-timers
Number of branches in Malta
Number of branches in non-European Economic Area1 countries (specify country)
country 1
country 2
country 3
country 4
country 5
Number of subsidiaries in Malta
Number of subsidiaries in other countries (specify country)
country 1
country 2
country 3
country 4
country 5
Number of ATMs
Number of representative offices
Economic Statistics Division
327
Gross National Income Inventory
Memorandum Items:
1. Other non-interest income
1
(i). Gains on disposal of trading financial instruments (item 4.2.1. above splitting gains and losses
1.1
(ii). Losses on disposal of trading financial instruments
1.2
2. Taxation for the period
2
(i). Tax on ordinary activities
2.1
(ii). Tax on exceptional items
2.2
(iii). Deferred tax
2.3
(iv). Deferred tax on exceptional items
2.4
3. Report the following items relating to resident credit institutions2
(i) Non-interest income of which:
3.1
fees and commissions receivable
3.1.1
valuation gains/losses on holdings of shares and other equity
3.1.2
gains/losses on disposal of shares and other equity
3.1.3
dividend income receivable
3.1.4
prorated share of an associate's earnings
3.1.5
other receivable income
3.1.6
(ii) Operating expenses of which:
3.2
fees and commissions payable
3.2.1
other operating expenses payable
3.2.2
(iii) Specific provisions on loans
3.3
(iv) Dividends payable
3.4
4. Report the following transactions with 'non-residents'
(i). Interest and fee income on loans (incl. repos)
4.1
(ii). Interest and fee income on deposits
4.2
(iii). Interest and fee income on securities
4.3
(iv). Interest payable on deposits
4.4
(v). Interest payable on loans
4.5
(vi). Trading gains/(loss) on foreign exchange dealings
4.6
(vii). Trading fees in foreign exchange dealings
4.7
5. Administrative fee charged on loans not exceeding Lm40,000 for the acquisition of
dwellings/land for own use or on loans for the construction, extension or completion of selfowned dwellings (report the rate in per cent.)
5
328
National Accounts Unit
Gross National Income Inventory
9.10
Accrued interest receivable and payable is not available broken down between
resident and non-resident. However, interest income receivable between residents and nonresidents is being supplied by the CBM in the memorandum items of the profit and loss
statement (item 4.1), whilst interest payable was split on ratios based on resident and nonresident stock of deposits.
9.11
Data on loans and deposits, assets and liabilities is also supplied monthly by the
CBM. As from October 2003, data is also available by institutional sector.
9.12
For the quarterly calculation of FISIM, the stock position of loans and deposits as at
the end of the quarter under review is taken. The same applies for the accrued interest on
loans and deposits. On the other hand for the annual calculation of FISIM the annual average
stock position of loans and deposits is taken.
Calculating the Internal Reference Rate
9.13
The source for this data is the table on Financial Market Rates derived from the
CBM Quarterly Review. The average of four Interbank Market Offered Rates is taken:
overnight, 1 week, 1 month and 3 month rates. For quarterly rates the average of these four
rates for the quarter under review are used. For annual rates, the average of the quarterly
rates is taken.
FISIM output (exported)
9.14
FISIM output (exported) is equal to:
Accrued interest1 – (Stock of loans x External Reference Rate)
+ (Stocks of deposits x External Reference Rate) – Accrued interest2
(i) Accrued interest1 is equal to the interest received by local Deposit Money Banks (DMB)
on loans granted to non-residents.
(ii) Stock of loans are those granted by local DMBs to non-residents.
Economic Statistics Division
329
Gross National Income Inventory
(iii) Accrued interest2 is equal to the interest paid by DMBs on deposits by non-residents.
(iv) Stocks of deposits are those held by non-residents.
9.15
Data on the stock of loans and deposits is available broken down by institutional
sector from the CBM. However, a small adjustment was done before using this data. This
involved distributing an item under Assets (Loans), which is equal to ‘Other remaining
sectors’ on all other institutional sectors. The accrued interest expense payable on deposits
by non-residents and the accrued interest income receivable on loans granted to non-residents
were split by institutional sector based on loans to and deposits by non-residents.
Calculating the External Reference Rate
9.16
As a first step in calculating the external reference rate, the NSO is assuming that the
loans and deposits are distributed as follows: Euro area (45%), UK (45%), USA (10%). The
quarterly money market rate for the UK is taken from the IMF’s International Financial
Statistics, whilst the rates for the Euro area and the USA are taken from the Monthly Bulletin
of the European Central Bank (ECB). The annual external reference rate is the average of the
four quarters.
Impact on GNI
9.17
The effect of FISIM allocation is not to be taken into account for purposes of the
fourth own resource. Thus revised GNI figures, which include the effect of FISIM allocation,
are corrected in the GNI questionnaire. The calculation of this correction is straightforward.
It is exactly that amount of FISIM included in final consumption expenditure of the total
economy. In other words that part which is allocated to households’ expenditure, NPISH
expenditure and General Government expenditure. Only the impact on GNI that is due to the
allocation of FISIM is included in the transition item, and not the impact due to any changes
in the level of total FISIM.
330
National Accounts Unit
Gross National Income Inventory
9.18
This requires that the calculations on FISIM allocation have been done correctly
and consistently for all aggregates concerned, including D.4 (property income to and from the
rest of the world). Only the impact on GNI that is due to the allocation of FISIM is included
in the transition item, not the impact due to any changes in the level of total FISIM.
9.19
The table below shows a numerical breakdown of FISIM allocation to all
aggregates concerned:
Table 9.2: FISIM included in final consumption expenditure
Year
Unit
Consumers'
Expenditure
NPISH
Expenditure
Government
Expenditure
Total
2002
2003
2004
2005
2006
Lm’000s
Lm’000s
Lm’000s
Lm’000s
Lm’000s
13,409
13,897
11,815
14,829
15,209
537
409
132
242
167
1,621
1,934
1,571
1,319
1,235
15,567
16,240
13,518
16,390
16,611
Economic Statistics Division
331
Gross National Income Inventory
Chapter 10
10.0.1
Main classifications used
Not having the output approach was, in a sense, a blessing in disguise for Malta with
regards to classification. This is because the National Statistics Office, having started work
on the output approach in 1999, immediately adopted the classifications given in ESA 95.
Therefore, the national classifications used for the production approach were based on ESA
95 right from the start. The NSO made sure that the definitions used in ESA 95 were
rigorously applied.
10.1 Classifications used for the production approach
10.1.1
The classifications used for the new production approach are in line with those
recommended in ESA 95. All industries are grouped at an A60 level of detail, but the
following industries are not applicable to Malta:
02 Forestry, logging and related service activities
10 Mining of coal and lignite; extraction of peat
12 Mining of uranium and thorium ores
13 Mining of metal ores
73 Research and development
10.1.2
The following is a detailed list of activities as used for the production approach:
Box 10.1 Number of economic activities specified in the Maltese National Accounts
NACE Rev.1: A60 specifications
Market
Nonmarket
(S.13)
Nonmarket
(S.15)
01 Agriculture, hunting and related service activities
02 Forestry, logging and related service activities
05 Fishing, operation of fish hatcheries, fish farms; service
activities incidental to fishing
10 Mining of coal and lignite; extraction of peat
11 Extraction of crude petroleum and natural gas; service
activities incidental to extraction
12 Mining of uranium and thorium ores
13 Mining of metal ores
332
National Accounts Unit
Gross National Income Inventory
14 Other mining and quarrying
15 Manufacture of food products and beverages
16 Manufacture of tobacco products
17 Manufacture of textiles
18 Manufacture of wearing apparel; dressing and dyeing of
fur
19 Tanning and dressing of leather; manufacture of luggage,
handbags, saddlery, footwear
20 Manufacture of wood and of products of wood and cork,
except furniture
21 Manufacture of pulp, paper and paper products
22 Publishing, printing and reproduction of recorded media
23 Manufacture of coke, refined petroleum products and
nuclear fuel
24 Manufacture of chemicals and chemical products
25 Manufacture of rubber and plastic products
26 Manufacture of other non-metallic mineral products
27 Manufacture of basic metals
28 Manufacture of fabricated metal products, except
machinery and equipment
29 Manufacture of machinery and equipment n.e.c.
30 Manufacture of office machinery and computers
31 Manufacture of electrical machinery and apparatus n.e.c.
32 Manufacture of radio, television and communication
equipment and apparatus
33 Manufacture of medical, precision and optical
instruments, watches and clocks
34 Manufacture of motor vehicles, trailers and semi-trailers
35 Manufacture of other transport equipment
36 Manufacture of furniture, manufacturing n.e.c.
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
1
4
1
37 Recycling
1
40 Electricity, gas, steam and hot water supply
1
41 Collection, purification and distribution of water
1
45 Construction
50 Sale, maintenance and repair of motor vehicles and
motorcycles; retail sale of auto fuel
51 Wholesale trade and commission trade services, except of
motor vehicles and cycles
52 Retail trade services, except of motor vehicles and cycles;
repair services of goods
55 Hotel and restaurant services
60 Land transport and transport via pipeline services
61 Water transport services
62 Air transport services
63 Supporting and auxiliary transport services; travel agency
services
Economic Statistics Division
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Gross National Income Inventory
64 Post and telecommunication services
65 Financial intermediation services, except insurance and
pension funding services
66 Insurance and pension funding services, except
compulsory social security services
67 Services auxiliary to financial intermediation
70 Real estate services
71 Renting services of machinery and equipment without
operator and of personal goods
72 Computer and related activities
73 Research and development services
74 Other business services
75 Public administration and defence services; compulsory
social security services
80 Education services
85 Health and social work services
90 Sewage and refuse disposal services, sanitation and
similar services
91 Membership organization services n.e.c.
92 Recreation, cultural and sporting services
93 Other services
95 Private households with employed persons
99 Services provided by extra-territorial organisations and
bodies
Total number of NA-aggregated activities
10.1.3
28
A more detailed breakdown than A60 is also available for a number of industries:
Box 10.2 Activities for which the MNA provides more detailed industry breakdowns
NACE Rev.1/A60
15 Manufacture of food products and beverages (2 sub-divisions)
Split between:
1) Nace 15.1 to Nace 15.8 Manufacture of food products
2) Nace 15.9 Manufacture of beverages
35 Manufacture of other transport equipment (2 sub-divisions)
Split between:
1) Nace 35.1 Building and repairing of ships and boats
2) Nace 35.3 Manufacture of aircraft and spacecraft
3) Nace 35.2/4 Not applicable to Malta
36 Manufacture of furniture, manufacturing n.e.c. (4 sub-divisions)
Split between:
1) Nace 36.1 Manufacture of furniture
2) Nace 36.2 Manufacture of jewellery and related articles n.e.c.
3) Nace 36.5 Manufacture of games and toys
4) Nace 36.6 Miscellaneous manufacture n.e.c.
5) Nace 36.3/4 Not applicable to Malta
334
National Accounts Unit
Gross National Income Inventory
10.1.4
Products are classified at P90, which is a national classification recommended by
our expert but which can be easily integrated into the P60 ESA classification.
Box 10.3 Local P90 classification
01A01
01A02
01Β01
01Β02
01C01
01C02
01D01
01D02
01D03
01D04
01D05
01D06
01D07
02A01
05A01
10A01
11A01
12A01
13A01
14A01
15A01
15A02
15A03
15A04
15A05
15A06
15A07
15A08
15B01
16A01
17A01
18A01
19A01
20A01
21A01
22A01
23A01
24A01
Ηard and soft wheat and other cereals
Potatoes
Tomatoes
Growing all other vegetables
Wine grapes
Growing of fruit
Farming of cattle, dairy farming
Farming of sheep, goats, horses, asses, mules and hinnies cattle, dairy farming
Farming of swine
Farming of poultry, etc
Production of eggs
Other farming animals and agricultural services
Growing crops combined with farming animals and services
Products of forestry, logging and related services
Fish and other fishing products, services incidental to fishing
Coal and lignite; peat
Crude petroleum and natural gas; services incidental to oil and gas extraction
Uranium and thorium ores
Metal ores
Other mining and quarrying products
Production, processing of meat
Production, processing of fish
Processing and preserving of fruit and vegetables
Vegetables and animal oils and fats
Dairy products
Grain mill products, starches
Prepared animal feeds
Bread products, etc
Manufacture of beverages
Tobacco products
Textiles
Wearing apparel; furs
Leather and leather products
Wood and products of wood and cork (except furniture), articles of straw and
plaiting materials
Pulp, paper and paper products
Printed matter and recorded media
Coke, refined petroleum products and nuclear fuel
Chemicals, chemical products and man-made fibres
Economic Statistics Division
335
Gross National Income Inventory
25A01
25A02
26A01
26A02
27A01
28A01
29A01
30A01
31A01
32A01
33A01
34A01
35A01
36A01
37A01
40A01
40A02
40A03
41A01
45A01
50A01
50A02
51A01
52A01
52A02
55A01
55B01
55B02
55B03
60A01
61A01
62A01
63A01
64A01
64B01
65A01
66A01
67A01
70A01
71A01
72A01
73A01
74A01
75A01
336
Rubber products
Plastic products
Glass and glass products
Non-refractory and refractory ceramic products, etc
Basic metals
Fabricated metal products, except machinery and equipment
Machinery and equipment n.e.c.
Office machinery and computers
Electrical machinery and apparatus n.e.c.
Radio, television and communication equipment and apparatus
Medical, precision and optical instruments, watches and clocks
Motor vehicles, trailers and semi-trailers
Other transport equipment
Furniture; other manufactured goods n.e.c.
Recovered secondary raw materials (Recycling)
Electrical energy
Natural gas
Steam and hot water
Collected and purified water, distribution services of water
Construction work
Trade services of motor vehicles
Repair and maintenance of motor vehicles
Wholesale and commission trade except of motor vehicles
Retail trade services of personal and household goods
Repair of personal and household goods
Hotel and Camping services
Restaurant services
Bars
Canteens and catering
Land transport and transport via pipeline services
Water transport services
Air transport services
Supporting and auxiliary transport services
Post and courier services
Telecommunication services
Financial intermediation services
Insurance and pension funding except compulsory social security
Services auxiliary to financial intermediation
Real estate services
Renting services of machinery and equipment
Computer and related services
Research and development services
Legal, accounting book-keeping services, etc
Public administration and defence services, compulsory social security
National Accounts Unit
Gross National Income Inventory
80A01
80B01
85A01
85B01
90A01
91A01
92A01
93A01
95A01
99A01
10.1.5
Public education services
Private education services
Public health and social work services
Private clinics and Private Doctor activities on health
Sewage and refuse disposal services, sanitation and similar services
Membership organization services n.e.c.
Recreational, cultural and sporting services
Other services
Private households with employed persons
Services provided by extra-territorial organisations and bodies
All government transactions including those by extra-budgetary units and Local
Councils are ESA 95 coded.
10.2 Classifications used for the income approach
10.2.1
The table below shows the classifications used for the income approach to GDP.
Box 10.4
Code Description
Components
D.1 Compensation D.11 Wages and salaries
of Employees
(including income in kind)
D.12 Employer's social
contributions (actual and
imputed)
D.2 Taxes
D.211 Value added tax (VAT)
D.3
Subsidies
Main Data Source
LFS, ETC, Misco,
Quarterly Returns
LFS, ETC, Misco,
Quarterly Returns
International Trade
Unit, NSO
D.212 Taxes and duties on imports International Trade
excluding VAT
Unit, NSO
D.214 Taxes on products excluding International Trade
VAT and import taxes
Unit, NSO
D.29 Other taxes on production International Trade
Unit, NSO
D.31 Subsidies on products
Government
Departmental
Accounting System
D.39 Other subsidies on
Government
production
Departmental
Accounting System
Economic Statistics Division
337
Gross National Income Inventory
10.2.2
Other classifications are not applicable as the income approach is not estimated
independently.
10.3 Classifications used for the expenditure approach
10.3.1
The table below shows the classifications that are used for the expenditure approach
to GDP in Malta. The main components of each classification and main data source for these
are also shown:
Box 10.4
Code Description
P.3 Final
P.3
consumption
expenditure P.3
P.5
Components
Household final
consumption expenditure
NPISH final consumption
expenditure
P.3
Central government final
consumption expenditure
Local government final
consumption expenditure
Gross capital P.511 Acquisitions less disposals
formation
of tangible fixed assets
P.512 Acquisitions less disposals
of intangible fixed assets
P.513 Additions to the value of
non-produced non-financial
assets
P.52 Changes in inventories
P.53
P.6
P.7
338
Exports of
goods and
services
Imports of
goods and
services
P.61
Acquisitions less disposals
of valuables
Exports of goods
P.62
Exports of services
P.71
Imports of goods
P.72
Imports of services
Main Data Source
HBS, Quarterly returns
Financial Statements
and Surveys
Quarterly returns
Quarterly returns
Financial Statements,
SBS
Financial Statements,
SBS
Financial Statements,
SBS
Financial Statements,
SBS
International Trade
Unit, Customs
Department
Balance of Payments
Unit, Central Bank of
Malta
International Trade
Unit, Customs
Department
Balance of Payments
Unit, Central Bank of
Malta
National Accounts Unit
Gross National Income Inventory
10.3.2
Coverage of the household final consumption expenditure is consistent with the
classification of individual consumption by purpose (COICOP) at two-digit level in
compliance with the recommendation by ESA.
Household final consumption expenditure classified by
COICOP
Food and non-alcoholic beverages
Alcoholic beverages, tobacco and narcotics
Clothing and footwear
Housing, water, electricity, gas and other fuels
Furnishings, household equipment and routine maintenance
of the house
Health
Transport
Communication
Recreation and culture
Education
Restaurants and hotels
Miscellaneous goods and services
Total
10.3.3
PFCE in Exp. by Exp. by
domestic tourists Maltese
market in
abroad
Malta
237,374 15,984
2,338
44,868 17,778
2,602
80,800
2,953
433
110,602
0
0
112,924
1,300
191
29,831
1,156
174,659 26,225
60,250
1,155
143,518 29,089
16,429
3,177
186,601 149,464
83,402 12,466
1,281,258 260,747
153
9,694
168
4,316
0
24,483
1,547
45,925
Coverage of the NPISH sector is consistent with the classification of the purposes of
non-profit institutions serving households (COPNI). Organisations are classified by division
and class. The NPISH sector covers organisations in the following areas:
ƒ
Health
ƒ
Recreation and Culture
ƒ
Education
ƒ
Social Protection
ƒ
Professional, Labour and Political Organisations
ƒ
Environment Organisations
ƒ
Services n.e.c.
Economic Statistics Division
339
Gross National Income Inventory
10.3.4
Coverage of the central government’s final consumption expenditure is consistent
with the classification of the functions of government (COFOG), as shown below. COFOG
is used at level 1 at the moment; however this will be available at level 2 during 2007.
•
01 - General public services
• 01.1 - Executive and legislative organs, financial and fiscal affairs, external affairs
• 01.2 - Foreign economic aid
• 01.3 - General services
• 01.4 - Basic research
• 01.5 - R&D General public services
• 01.6 - General public services n.e.c.
• 01.7 - Public debt transactions
• 01.8 - Transfers of a general character between different levels of government
•
02 - Defence
• 02.1 - Military defence
• 02.2 - Civil defence
• 02.3 - Foreign military aid
• 02.4 - R&D Defence
• 02.5 - Defence n.e.c.
•
03 - Public order and safety
• 03.1 - Police services
• 03.2 - Fire-protection services
• 03.3 - Law courts
• 03.4 - Prisons
• 03.5 - R&D Public order and safety
• 03.6 - Public order and safety n.e.c.
•
04 - Economic affairs
• 04.1 - General economic, commercial and labour affairs
• 04.2 - Agriculture, forestry, fishing and hunting
• 04.3 - Fuel and energy
• 04.4 - Mining, manufacturing and construction
• 04.5 - Transport
• 04.6 - Communication
• 04.7 - Other industries
• 04.8 - R&D Economic affairs
• 04.9 - Economic affairs n.e.c.
•
05 - Environmental protection
• 05.1 - Waste management
• 05.2 - Waste water management
• 05.3 - Pollution abatement
• 05.4 - Protection of biodiversity and landscape
• 05.5 - R&D Environmental protection
• 05.6 - Environmental protection n.e.c.
340
National Accounts Unit
Gross National Income Inventory
•
06 - Housing and community amenities
• 06.1 - Housing development
• 06.2 - Community development
• 06.3 - Water supply
• 06.4 - Street lighting
• 06.5 - R&D Housing and community amenities
• 06.6 - Housing and community amenities n.e.c.
•
07 - Health
• 07.1 - Medical products, appliances and equipment
• 07.2 - Outpatient services
• 07.3 - Hospital services
• 07.4 - Public health services
• 07.5 - R&D Health
• 07.6 - Health n.e.c.
•
08 - Recreation, culture and religion
• 08.1 - Recreational and sporting services
• 08.2 - Cultural services
• 08.3 - Broadcasting and publishing services
• 08.4 - Religious and other community services
• 08.5 - R&D Recreation, culture and religion
• 08.6 - Recreation, culture and religion n.e.c.
•
09 - Education
• 09.1 - Pre-primary and primary education
• 09.2 - Secondary education
• 09.3 - Post-secondary non-tertiary education
• 09.4 - Tertiary education
• 09.5 - Education not definable by level
• 09.6 - Subsidiary services to education
• 09.7 - R&D Education
• 09.8 - Education n.e.c.
•
10 - Social protection
• 10.1 - Sickness and disability
• 10.2 - Old age
• 10.3 - Survivors
• 10.4 - Family and children
• 10.5 - Unemployment
• 10.6 - Housing
• 10.7 - Social exclusion n.e.c.
• 10.8 - R&D Social protection
• 10.9 – Social protection n.e.c.
Economic Statistics Division
341
Gross National Income Inventory
Gross Fixed Capital Formation (GFCF) by type of fixed asset, by kind of activity and by type
of product
10.3.5
The implementation of ESA 1995 brought about a major overhaul as regards
classifications in the compilation of GFCF. Previously, GFCF was classified by type of asset
and by type of producer. Assets included dwellings and other construction works and
machinery and equipment.
The latter was further subdivided into transport equipment,
machinery except electrical, electrical machinery and appliances and other machinery and
equipment. Three types of producers were distinguished, private enterprises, government
enterprises, and the general government. For each producer the data was further subdivided
into construction and machinery and equipment.
10.3.6
With the implementation of ESA 1995 some new estimates were introduced in the
calculation of GFCF. These included cultivated assets, computer software and entertainment,
literary or artistic originals. The classification for GFCF by type of fixed assets is subdivided
into 7 categories of tangible fixed assets and 4 categories of intangible fixed assets at the
most disaggregated level in ESA 1995. The identified tangible fixed assets in the MNA
include dwellings (AN.1111), other buildings and structures (AN.1112), transport equipment
(AN.11131), other machinery and equipment (AN.11132), livestock for breeding, dairy,
draught, etc. (AN.11141), and vineyards, orchards and other plantations of trees yielding
repeat products (AN.11142). Intangible fixed assets are subdivided into two items in the
MNA; computer software (AN.1121), and entertainment, literary or artistic originals
(AN.1123).
Mineral exploration (AN.1121) occurs quite rarely in Malta, and in the
eventuality this will be recorded as GFCF.
10.3.7
In the MNA, the breakdown by activity of GFCF is generally based on the activity
breakdown in the production approach. This means that GFCF is available at the A60 level
of detail. GFCF is also subdivided by type of producer, i.e. market or non-market producers,
the latter being further subdivided into central government (S.13111), local government
(S.1313), and non-profit institutions serving households (S.15).
10.3.8
For supply and use tables’ purposes, a detailed product breakdown is also available.
The same product breakdown used in the production approach is used to classify GFCF by
342
National Accounts Unit
Gross National Income Inventory
product i.e. the national classification P.90 (refer to Box 10.3). This product breakdown
allows the compilation of the Pi6.
10.3.9
All the above-mentioned details on GFCF is summarised in an investment matrix
(refer to box 10.5). The investment matrix allows various cross-classifications such as;
activities by products, activities by type of asset, type of producer by type of asset, type of
producer by type of product, and activities by type of producer.
Box 10.5: Investment Matrix
Activities (Nace Rev.1.1)
A.60
Classification of
Assets
CPA
Code
CPA
Description
AN.11
P.90
P.90
Market
Producers
Non-market
S.13
Non-market
S.15
Categories of inventories
10.3.10 Prior the implementation of ESA 1995, changes in inventories was merely the
residual between income and expenditure approach. Today changes in inventories are being
calculated separately. Inventories are split in the four suggested categories in ESA 1995, i.e.
materials and supplies, work-in-progress, finished goods and goods for resale. However, this
breakdown is not explicitly shown in the MNA. For each category, a detailed product
breakdown at P.90 level is available for changes in inventories.
10.4 Classifications used in the transition from GDP to GNI
10.4.1
•
The following items are added to the GDP in order to arrive at the GNI:
Compensation of employees received from the rest of the world (D1)
Economic Statistics Division
343
Gross National Income Inventory
•
Compensation of employees paid to the rest of the world (D1)
•
Property income received from the rest of the world (D4)
•
Property income paid to the rest of the world (D4)
10.4.2
All these variables are classified according to ESA by the National Accounts unit.
Compensation of employees is split between that paid to and that received from the rest of the
world. For example property income is split into interest, distributed income of corporations,
reinvested earnings on direct foreign investment, property income attributed to insurance
policy holders, and rents.
344
National Accounts Unit
Gross National Income Inventory
Chapter 11
11.0.1
Main data sources used
Chapter 11 serves as a guide to the system of statistical surveys and other data, such
as administrative and fiscal data sources, used as the basis for the national accounts in Malta.
To support adoption of the ESA 95, the NSO has embarked on an extensive programme for
strengthening its system of statistics that included among other actions the improvement of
the data collection system. Thus, new surveys were introduced and the coverage of others
was extended.
11.0.2
Compilation of Maltese national accounts relies on a number of statistical surveys,
censuses, and data prepared within the NSO, as well as administrative data supplied by other
agencies.
11.0.3
The Business Register (BR) is used as a common sample frame for all enterprise
surveys and is essential in estimating GDP using the production approach. Malta’s BR was
created in 1997 based on information from the VAT Register supplemented by secondary
sources provided by the Malta Financial Services Authority (MFSA). It is maintained on an
ongoing basis by the Business Statistics Unit of the NSO, and its updating relies mostly on
information from the Structural Business Statistics (SBS), the monthly updates from the VAT
Department, and the information on financial and insurance and renting companies provided
by the Central Bank of Malta (CBM). Currently (mid-2005), the BR includes about 51,000
units
consisting
of
large
and
small
enterprises,
as
well
as
self-employed
persons/unincorporated enterprises, covering the vast majority of the economic activities of
Malta.
11.0.4
The main administrative source for statistical information on the local kind-of-
activity units is therefore the Business Register. A group of companies may be broken down
into different units operating in different economic activities (industries) and data submitted
to the BR is normally at this level of detail. There are however instances where one company
operating in various economic activities for which it has separate accounts is also partitioned
on the basis of these separate accounts. A case in point is Enemalta Corporation, which is
one unit in the BR, but which has three separate divisions: Electricity (NACE 40), Petroleum
Economic Statistics Division
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Gross National Income Inventory
and Gas (NACE 51). So, where numerical information to make this partition possible is
available, especially for large enterprises, this is taken into consideration.
Statistical surveys
11.0.5 SBS is the major survey undertaken annually. The SBS covers NACE categories:
- 14 to 37 and 45 are available since 1995 in NACE Rev.1 and Rev.1.1 and by ISIC back to
the 1950s
- 50 to 52 are available since 1999 in NACE Rev.1.1
- 55, 60.2, 62, 63 and 65 to 67 are available since 2000 in NACE Rev.1.1
- 70, 71, 72 74, 92 are available since 2001 in NACE Rev.1.1
Until 2002 the SBS covered all companies listed in the BR (census). As from 2003 the
census was replaced by a sample. The 2003 SBS covers all units listed in the BR employing
10 employees or more, these amounted to 11,000 units, and a sample of units employing 9 or
less. All the units surveyed are also questioned for foreign affiliate purposes (BOP). The
information collected refers to the operating accounts and balance sheets of the units. The
response rate was around 67-68 percent (no of responding units) but superior in terms of
turnover (over 80 percent), which constitutes a good source data for national accounts
compilation. Information from the Malta Financial Statistical Register is used to impute for
non-responses.
11.0.6 The Household Budgetary Survey (HBS) is conducted by the NSO every five years.
The last HBS was carried out between the 1st March 2000 and the 28th February 2001. It
covered a national representative sample of 2,586 households throughout Malta. The sample
was randomly divided into seven batches or sub-samples. Each batch consists of about 900
households. Corrections for sampling error were made and the standard error on household
annual expenditure was estimated to 1.5 per cent.
11.0.5
The Labour force survey (LFS) is carried out on a quarterly basis with a specific
reference week for the quarter using a random sample of 2,500 households spread across the
country. The methodology of survey follows the recommendations of the International
Labour Organisation (ILO) and accords to definitions of employments and unemployment
outlined by Eurostat for EU member countries. The economic activities of the interviewed
persons (aged 15 and over) are classified according to the NACE classification and the
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Gross National Income Inventory
reference period is a calendar week. The coefficient of variation in the sampling is around
1.67 per cent, and the response rate ranges between 70 and 80 per cent. The extrapolation of
data is based on the population census of 1995. Due to the small sample, the survey does not
provide reliable information at a disaggregated level. For this reason, the National Accounts
Unit (NAU) uses it in conjunction with the data from the Employment and Training
Corporation (ETC).
11.0.6
The Short-Term Business Statistics (STBS) survey represents the main source data
for compiling quarterly accounts for the manufacturing sector. The information collected
include the employment, wages, local and export sales, and investment covering all activities,
similarly to the SBS. Timely response is a problem and the response rate varies by indicator;
however, adjustments are made using the trade data and fixed ratios between various
indicators (e.g., export sales in total sales) since for these, reporting is close to 100 per cent.
Estimated data are replaced in the following quarters with actual reported data.
11.0.7
The Agricultural census is undertaken every 10 years by the Agriculture Unit (AU)
of NSO, the last one being conducted in 2001. However, every 2 years, a Farm Structure
Survey (FSS) is conducted (last one in 2003; the next ones are planned for 2005 and 2007).
This survey uses a sample covering about 18 percent of the respective population derived on
the basis of the economic size of farms. The response rate is 95 per cent. Updates to the
sampling frame are based on the monthly returns from the Ministry of Agriculture. The AU
also conducts an annual survey on livestock.
11.0.8
In addition, data from a series of surveys, enquiries and registers from either the
NSO or outside agencies are used for national accounts purposes, as appears in the
description of source data in the rest of this chapter.
Administrative data
11.0.9
Monetary and banking statistics are provided by the CBM. This covers annual and
quarterly financial statements of the CBM and the commercial banks, as well as those of the
insurance companies.
Economic Statistics Division
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Gross National Income Inventory
11.0.10 BOP data are produced by a unit within the NSO in accordance with the fifth edition
of the Balance of Payments Manual (BPM5).
11.0.11 The Treasury Department makes available its database (DAS) to NSO. The local
councils provide a copy of their quarterly management accounts.
11.0.12 Quarterly customs statistics on imports and exports of goods are used for compiling
trade and BOP statistics by specialized units in NSO.
11.0.13 VAT Department provides quarterly data to the NSO. The register is organised into
Register A, including large companies (over €10,000 sales), and Register B, covering small
companies. In spite of its usefulness, several weaknesses can be noted with regard to this
register: (i) classification used is not fully aligned with the NACE assigned to enterprises by
NSO; (ii) accrual problem because of staggering and different periods of reporting and (iii)
coverage – timeliness.
11.0.14 ETC, the official employment agency provides a database which includes all
enterprises and their employees, full-time and part-time.
11.0.15 The range of price statistics available at the NSO is limited.
For the current
compilation of the national accounts, extensive use is made of the harmonised index of
consumer prices (HICP), and unit value indices for trade. In view of compilation of GDP
volume measures by production, the scope of price and volume indices could be further
extended to employing the producer price index (PPI) (currently under development), the
industrial production index (IPI), as well as other indices for the activities not covered by the
PPI/IPI.
11.0.16 Another data source is the benchmarking exercise carried out by the Tax
Compliance Unit. This unit (outside NSO) was assigned the task of benchmarking the
turnover of the businesses involved in car hire, car leasing and provision of chauffeur driven
cars, for the year 2000.
11.0.17 For the most part, the source data approximate the definitions, scope, classifications,
valuation, and time of recording required. Where feasible, the NAU undertakes the necessary
348
National Accounts Unit
Gross National Income Inventory
adjustments to approximate the NA concepts. Main areas where adjustments are made
concern:
- Supplementary source data are sought and adjustments are made to capture all types of
transactions in the economy, such as payments in kind and other non-monetary transactions,
which are important for NA estimation.
One notable example is the compensation of
employees paid in kind. For this estimate and for other fringe benefits, the NAU uses, as a
benchmark information, from the annual ‘Wages and Salaries Report’ conducted by a private
survey company (Misco Ltd.);
- In estimating the quarterly accounts, the NAU compilers use alternative sources where
accounting data are not available on a quarterly basis or their level of detail is insufficient;
- Classification of the units in the VAT Register is not fully in-line with the NACE used in
national accounts. Before using the tax information extracted from the Register, an
identification/coding cross-checked is done against the BR recordings;
- Adjustments are made to trade data to capture transactions recorded by two different
databases (Intrastat and Extrastat). This is a follow-up to Malta’s joining the EU.
11.0.18 The coverage of total economic activities in terms of value added by the data sources
is good. The exercise for the estimation of non-observed economy conducted in 2000
contributed to the increase of the activity coverage bringing it closer to exhaustivity.
11.0.19 Given the ongoing transition phase in setting up a functional system of data
collection, production and dissemination of Malta’s statistics, bottlenecks in certain areas
exist, preventing thus a smooth flow of data. Availability of source data varies according to
the sector of activity, most problematic being service area and construction. Source data are
incorporated into the national accounts as they become available.
Economic Statistics Division
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Gross National Income Inventory
11.1 Statistical surveys and other data sources used for the production
approach
Main Source Data for the Annual Accounts (for the Final Estimates)
NACE Rev. 1
Section
Agriculture, hunting
and forestry
Fishing
Quarrying
Manufacturing
Electricity, gas, and
water supply
Construction
Wholesale and retail
trade, repair of
motor vehicles, and
personal and
household goods
Hotels and
restaurants
Transport, storage,
and communications
350
Production Approach
Main source
Agriculture Unit, NSO (economic agricultural accounts)
Adjustments for rents.
Trade data - imports of input goods and data from
specific surveys (for intermediate consumption)
LFS and ETC data
Fish report on organized fish markets
Trade data
Census of fisheries
Survey of fish farms
2000 HBS
VAT data
LFS and ETC data
LFS and ETC data
Benchmark estimates based on 2000 SBS and 2001
Census of industrial production.
Financial statements for large enterprises from MFSA
SBS
STBS manufacturing survey
BR combined with ETC (employment)
Financial statements of Enemalta Corporation, Water
Services Corporation and Malta Desalination Services
Ltd
Financial statements for large companies from MFSA
Employment data from the ETC and LFS
SBS and VAT data
Benchmark estimates for small enterprises
Adjustments for unrecorded part-time self-employed
Financial statements of large companies from MFSA
SBS
Employment data from the ETC and LFS
Transport Unit
Hotels census (annual)
HBS (every 5 years)
Tourism expenditure survey
VAT data
SBS (catering)
Employment data from the ETC
Census on bus and minibus companies by NAU
Tax Compliance Unit (2000) – Benchmark exercise for
Assessment
of coverage
Good
Good
Poor
Good
Good
Satisfactory/
poor
Satisfactory
Good/
Poor for
restaurants
Good
National Accounts Unit
Gross National Income Inventory
turnover (Taxis)
Licensed stock of vehicles from Licensing Department
Trade data (freight transport)
Financial statements of large companies from MFSA
Benchmark estimates for small ones
Post and telecommunication companies
BR
Financial
Financial statements of banks from CBM insurance
intermediation
enterprises survey by NSO
MFSA
Real estate, renting, Financial statements of large companies from MFSA
and business
LFS and ETC data; SBS – for small enterprises
activities
BR
Malta Environment and Planning Authority (MEPA)
Census of population and housing of 1995 (for imputed
rentals)
Public
Departmental accounting system (DAS) of Treasury to
administration and
which NSO has access.
defence; compulsory Survey of extra-budgetary units by NSO
social security
Management accounts from Local Councils
Education/
DAS from Treasury for public sector
Education Unit, NSO for private sector
HBS (driving lessons, private tuition)
Health and social
work
Other community,
social and personal
service activities
Private households
with employed
persons
Net taxes less
subsidies on
products
Financial statements of large companies from MFSA
DAS from Treasury for public sector
HBS
Ad-hoc enquiries with private clinics
DAS from Treasury for public sector
SBS
Financial statement of large enterprises from MFSA
Annual reports of non-government organisations
engaged in these activities
Employment data from the ETC and LFS
ETC and LFS employment data (small scale activity)
DAS from Treasury
Good
Satisfactory
Good
Good
(public)/
Poor(
private)
Good
(public)/
Poor(
private)
Satisfactory
Poor
Good
Note: The assessment of coverage relates to each of the NACE industries, and not for the first
main source mentioned in the respective NACE industries.
Economic Statistics Division
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Gross National Income Inventory
11.2 Statistical surveys and other data sources used for the income
approach
Income Approach
Main source
Indicator
Compensation of
employees
Other taxes on
production
Other subsidies on
production
Operating surplus
11.3
DAS by Treasury for central government, extrabudgetary units survey and management accounts from
local councils.
Survey on wages, salaries and fringe benefits in private
sector by a private company (Misco)
Financial statements of large companies from MFSA
SBS (small) enterprises
DAS by Treasury
DAS by Treasury
Assessment
of coverage
Good
Good
Good
Residual
Statistical surveys and other data sources used for the expenditure
approach
Indicator
Household final
consumption
expenditure
Final consumption
expenditure of
NPISHs
Government final
consumption
expenditure
Acquisitions less
disposals of tangible
fixed assets
352
Expenditure Approach
Main source
Assessment
of coverage
Satisfactory
2000 HBS complemented by retail trade data
Tourist information from Malta Tourism Authority
Trade Unit, NSO (imports of goods)
Industrial report – sales of locally produced goods
Department of Agriculture (final consumption of own
production)
CBM – adjustment for tourist expenditure
Annual financial statements
Good
Non-governmental organisations survey – by
Demography Unit, NSO
Youth organization survey, Band clubs survey, Museum
survey, Church school survey, Sports organisation
survey, and Radio stations survey by Education and
culture Unit, NSO
DAS from Treasury
Good
Survey of extra-budgetary units by NSO
Management accounts from Local Councils
Financial statements of large enterprises from MFSA
Satisfactory
Survey by NAU on investment data
Agricultural Census of 2001 (livestock, trees)
SBS complemented by VAT returns
National Accounts Unit
Gross National Income Inventory
Acquisitions less
disposals of
intangible fixed
assets
Changes in
inventories
Acquisitions less
disposals of
valuables
Exports and imports
of goods
Exports and imports
of services
Trade statistics – asset breakdown
1995 Census of population and housing (dwellings)
Annual reports and financial statements of the Public
Broadcasting Services Ltd.
LFS (for number of employees engaged in the
production of software)
Commodity flow method
Annual reports and financial statements of companies
SBS
Trade data – production breakdown
Trade data
Annual reports and financial statements of certain
companies
HBS
Commodity flow method
Balance of payments (BOP) Unit, NSO
Annual international trade in services survey by BOP
Unit in collaboration with CBM
Satisfactory/
Poor
(software)
Satisfactory
Satisfactory
Good
Good
Sources for quarterly GDP
11.3.1
In Malta, a number of intra-annual source data support compilation of quarterly
accounts. For some, weaknesses exist, particularly with regard to their timeliness, but
alternative sources and methods are used to compile the accounts.
Main Source Data for the Quarterly Accounts
NACE Rev. 1
Section
Agriculture, hunting
and forestry
Fishing
Quarrying
Manufacturing
Electricity, gas, and
water supply
Production Approach
Main source
Agricultural Unit, NSO (fruits and vegetables)
Quarterly reports from major companies
Trade data - imports of input goods, and exports;
Data from specific surveys
Fish report on organised fish markets
Trade data
Quarterly reports from the Aquaculture Centre
LFS and ETC data
STBS combined with revisions based on annual data.
STBS
LFS and ETC data
DAS from Treasury
Quarterly data from Enemalta and Water Services
Corporations and Malta Desalination Services
Economic Statistics Division
Assessment
of coverage
Good
Good
Poor
Good
Good
353
Gross National Income Inventory
Construction
Wholesale and retail
trade, repair of
motor vehicles, and
personal and
household goods
Hotels and
restaurants
STBS
Employment data from ETC and LFS
VAT data
Malta Environment Planning Authority (MEPA)
Benchmark estimates for small businesses
STBS
Trade data (imports)
Employment data from the ETC and LFS
Satisfactory/
Weak
(STBS)
Satisfactory
Quarterly survey by Tourism Unit, NSO
Tourism expenditure survey by NSO
CBM and ETC data
Transport, storage,
Quarterly data from large companies
and communications Employment data from the ETC and LFS
Financial
Quarterly data from CBM
intermediation
Malta stock exchange report (quarterly)
Real estate, renting, LFS and ETC data
and business
Duty on documents (on contracts of sale of property)
activities
Malta Environment and Planning Authority (MEPA)
Public
Departmental accounting system (DAS) of Treasury to
administration and
which NSO has access.
defence; compulsory Survey of extra budgetary units.
social security
Accounts of local councils
Education
DAS from Treasury for central government
Employment data from ETC and LFS
Health and social
DAS from Treasury for central government
work
Data from large companies
Employment data from ETC and LFS
Other community,
Quarterly data from large companies engaged in these
social and personal
activities
service activities
ETC for other community services
Private households
ETC and LFS employment data
with employed
persons
Net taxes less
DAS from Treasury
subsidies on
products
11.4
Satisfactory
Good
Good
Satisfactory
Good
Good/satisf
actory
Good/satisf
actory
Satisfactory
Poor
Good
Statistical surveys and other data sources used for the transition
from GDP to GNI
11.4.1
The basic data sources used by the Balance of Payments to compile the components
required for the transition from GDP to GNI calculations consist of:
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1.
An Annual Enterprise Survey
The annual enterprise survey, based not on a random sample but on a deliberate choice of
resident enterprises carrying out large amounts of transactions with non-residents, the
majority of which are foreign direct investment companies.
As from 2004 onwards, the annual enterprise survey sample base of the financial
institutional sector has been expanded to cover exchange bureaus, banks, the Central
Bank of Malta (CBM), more insurance companies, insurance agents, collective
investment schemes (CIS) and the Malta Stock Exchange (MSE). In addition, the system
of reporting by the enterprises to the NSO has been improved to one where the entities
report online. Plans are on the way as regards the expansion of the sample base for the
non-financial corporate sector.
2.
An International Transaction Reporting System (ITRS)
The ITRS captures cash-based transactions between residents and non-residents that pass
through the local banking system. This information is collected by the CBM from
banking institutions.
3.
Banking Institutions and Central Bank of Malta’s Profit and Loss Statements
Economic Statistics Division
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Gross National Income Inventory
Appendix: Note on Employment Data
The official employment data compiler, the Employment and Training Corporation (ETC)
does not provide employment data, at least until now, classified by NACE. Therefore the
National Accounts unit just takes the total employment figure (for full-timers) from ETC and
this figure is broken down based on the classifications resulting from the quarterly Labour
Force Survey (LFS), which are classified by NACE. Data for part-time employees is taken
directly from LFS, since ETC records on part-timers may not be accurate due to the lack of
regular updating of the register.
The full-time employment figures worked on by the National Accounts unit show data at an
A60 level of detail, and the methodology used for the number of full-timers, part-timers and
the compensation of employees is in accordance with ESA 95. The NA unit relied on various
sources for arriving at the employment figure, choosing the best source in each activity. The
sources relied upon include Employment and Training Corporation (ETC) data (the official
data source), SBS data, STBS data, direct company data from questionnaires, enquiries and
annual financial reports, and LFS data where none of the previous sources where available.
For full-timers, since ETC is not available by NACE, we took the LFS at an A60 level of
detail for the four quarters of the year and average out, to eliminate fluctuations resulting
from sampling. The average figure is then calculated as a percentage of the total LFS figure
and applied to the total ETC figure. However, for part-timers, we rely fully on the average of
the four quarters as resulting from LFS figures due to the unreliability of ETC figures. As a
short-term measure, in order to arrive at the full-time equivalent figure, we divide part-timers
by a constant factor derived from the Population Census of 1995. This constant is equal to
2.1448 and is extracted from a table specifically requested by the NA unit. This is, however,
not applied across the board. Several categories are treated differently such as farmers,
fishermen, football players and band musicians.
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Economic Statistics Division
1