Description of methods and sources for Albania - INSTAT

The European Union’s IPA 2009 programmeIPA 2009Multi-beneficiaryStatistical CooperationProgrammeProject 4 National AccountsService Contract number 60702.2008.003 – 2009.245Description of Sources andMethods for ALBANIAOctober 2012This project is funded bythe European UnionA project implemented byICON-INSTITUT Public Sector GmbH

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeTABLE OF CONTEXTIntroduction ....................................................................... 11Part A: Annual National Accounts at current prices ....... 12CHAPTER 1: STATISTICAL SYSTEM AND ARCHITECTURE OF NA ........... 121.1 Institutional framework ..................................................................................... 121.2 Approaches used ................................................................................................. 131.3. Accounts prepared............................................................................................. 141.4 Classifications...................................................................................................... 14CHAPTER 2: REVISION POLICY AND TIMETABLE FOR REVISING ANDFINALISING ESTIMATES ......................................................................................... 172.1 Revision policy..................................................................................................... 17CHAPTER 3: PRODUCTION APPROACH ............................................................. 213.0 GDP according to the production approach .................................................... 213.1 Reference framework ......................................................................................... 233.2 Valuation.............................................................................................................. 353.3 Transition from private accounting and administrative concepts to ESA95national accounts concepts................................................................................. 353.4 The role of direct and indirect estimation methods......................................... 523.5 The roles of benchmarks and extrapolations ................................................... 523.6 The main approaches adopted with respect to exhaustiveness....................... 523.7 Agriculture, hunting and forestry (NACE Rev.1: A) ...................................... 543.8 Fishing (B) ........................................................................................................... 583.9 Extracting industry (C) ...................................................................................... 593.10 Manufacturing (D)............................................................................................ 603.11 Electricity, gas and water supply (E) .............................................................. 623.12 Construction (F)................................................................................................ 633.12 Construction (F)................................................................................................ 643.13 Trade (G) ........................................................................................................... 653.14 Hotels and restaurants (H)............................................................................... 663.15 Transport, storage and communication (I) .................................................... 673.16 Financial intermediation (J) ............................................................................ 693.17 Real estate, renting and business activities (K).............................................. 723.18 Public administration and defense; compulsory social security (L) ............ 753.19 Education (M) ................................................................................................... 773.20 Health and social work (N) .............................................................................. 783.21 Other community, social and personal service activities (O) ....................... 793.22 Private households with employed persons (P).............................................. 803.23 Treatment of extra territorial organizations and bodies (Q)........................ 803.24 Taxes on products ............................................................................................. 803.26 Subsidies on products ....................................................................................... 82CHAPTER 4: INCOME APPROACH........................................................................ 84CHAPTER 5: EXPENDITURE APPROACH............................................................ 852/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme5.0 GDP according to the expenditure approach................................................... 855.1 Reference framework ......................................................................................... 855.2 Valuation.............................................................................................................. 885.3 Transition from private accounting and administrative concepts to ESA95NA concepts......................................................................................................... 885.4 The roles of direct and indirect estimation methods ....................................... 895.5 Roles of benchmarks and extrapolations.......................................................... 895.6 Main approaches taken with respect to exhaustiveness.................................. 905.7 Household final consumption expenditure....................................................... 905.8 NPISH Final Consumption Expenditure.......................................................... 925.9 Government final consumption expenditure.................................................... 935.10 Gross fixed capital formation .......................................................................... 945.11 Acquisitions less disposals of intangible fixed assets ..................................... 985.12 Additions to the value of non-produced non-financial assets ....................... 985.13 Changes in inventories...................................................................................... 995.14 Acquisitions less disposals of valuables........................................................... 995.15 Exports of goods................................................................................................ 995.16 Exports of services ............................................................................................ 995.17 Imports of goods................................................................................................ 995.16 Imports of services.......................................................................................... 100CHAPTER 6: BALANCING OR INTEGRATION PROCEDURE, ANDVALIDATING ESTIMATES ..................................................................................... 1016.1 GDP balancing procedure................................................................................ 1016.2 Other approaches used to validate GDP......................................................... 102CHAPTER 7: EXHAUSTIVENESS ADJUSTMENTS OF GDP BYPRODUCTION APPROACH .................................................................................... 1037.1. Introduction...................................................................................................... 1037.2 Input of labor, sources of information............................................................ 1037.3. Labor Input Method........................................................................................ 1057.4. Exhaustiveness adjustments by activity......................................................... 1117.5. The estimation of Output and Intermediate consumptions of NOE........... 112CHAPTER 8: TRANSITION FROM GDP TO GNI ............................................... 1148.0 Introduction and reference framework .......................................................... 1148.1 Income................................................................................................................ 1148.2 Definition and classification............................................................................. 1158.2.1. Compensation of employees...................................................................... 1158.2.2. Income from investment............................................................................ 115CHAPTER 9: FUTURE IMPROVEMENTS OF ACCOUNTS ............................. 1179.1 Introduction....................................................................................................... 1179.2 Improvements of sources and methodologies in national accounts during IPA2007 project ............................................................................................................. 1189.2.1. Improving the statistical sources and methodology for annual NationalAccounts estimations. .................................................................................... 1189.2.2. Elaboration of Supply and Use Tables (SUT-s) ...................................... 1223/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme9.2.3. Elaboration of institutional sectors accounts .......................................... 1239.2.4. Improve the methodology and the statistical measure of the nonobservedeconomy (NOE).............................................................................. 1259.2.5. Improvement of Quarterly GDP .............................................................. 1259.2.6. Estimation of regional accounts ............................................................... 1269.3 IPA 2008 Multi-Beneficiary Programme on Statistics .................................. 1269.3.1. Objectives ................................................................................................... 1269.3.2. Improve the estimation of production, intermediate consumption andgross value added for education and health in private sector for the year2009. ................................................................................................................ 1279.3.2.1 Identification of data sources and units belonging to NACE 80 and 85,private sector.................................................................................................. 1279.3.3. Evaluation of CFC using the PIM method .............................................. 130PART B PRICE AND VOLUME MEASURES........ 131CHAPTER 10: GENERAL PROCEDURES ............................................................ 131CHAPTER 11: GENERAL INFORMATION ON MAIN SOURCES USED ....... 13311.1 Production Price Index (PPI)......................................................................... 13311.2 Consumers’ Price Index (CPI)....................................................................... 13711.3 Construction Cost Index (CCI) ..................................................................... 14211.4 Unit Value index.............................................................................................. 144CHAPTER 12: METHODOLOGIES BY PRODUCT............................................. 14712.1 Method used for Output and Intermediate consumption by industries.... 14712.2 Method used for elements of GDP by expenditure approach..................... 149CHAPTER 13: METHODS FOR OTHER PARTS OF THE SYSTEM................ 15113.1 GDP by production approach........................................................................ 15113.2 Taxes and subsidies......................................................................................... 152PART C: QUARTERLY NATIONAL ACCOUNTS....... 155CHAPTER 15: ORGANIZATION AND INSTITUTIONAL ARRANGEMENTS....................................................................................................................................... 155CHAPTER 16: PUBLICATION TIMETABLE AND REVISION POLICY OFQNA............................................................................................................................... 15616.1 Publication timetable...................................................................................... 15616.2 Revision policy................................................................................................. 156CHAPTER 17: QNA COMPILATION APPROACH ............................................. 158CHAPTER 18: GDP AND COMPONENTS: PRODUCTION APPROACH ....... 15918.1 Data Sources.................................................................................................... 15918.2 Methodology.................................................................................................... 162CHAPTER 19: GDP COMPONENTS: EXPENDITURE APPROACH ............... 16919.1 Consumption ................................................................................................... 16919.2 Gross fixed capital formation ........................................................................ 17019.3 Exports and imports of goods and services .................................................. 17019.4 Changes in inventories.................................................................................... 170CHAPTER 20: GDP COMPONENTS: INCOME APPROACH ........................... 1714/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeCHAPTER 21: POPULATION AND EMPLOYMENT.......................................... 17221.1 Employment data............................................................................................ 17221.2 Problems and future improvement ............................................................... 172Annex A: Organizational Chart of INSTAT............................................................. 173Annex B:GDP revised figures by the Production and Expenditure Approachesduring the Twinning Project ................................................................................... 174Annex C: Main Classifications used .......................................................................... 176Annex D: Main Data Sources used............................................................................. 179D.1: Business Register of Albania (Br) ................................................................. 179D.2: Statistical Surveys and other Data Sources used for the ProductionApproach ........................................................................................................... 182Annex E: Methodology of the Household Budget Survey (HBS) ............................ 201Annex F: Inventories ................................................................................................... 202Annex G: Strategic Plan for National Accounts Development............................... 204Annex H: Data collected from Quarterly Surveys (STS)......................................... 209Annex I: Benchmarking process & Seasonal Adjustment process ......................... 215Annex J: IPA 2007 National Account structure ....................................................... 217Annex K: Statistical Annex......................................................................................... 218Annex L: Financial Annex .......................................................................................... 221Chapter 1: Identification data ............................................................................... 221Chapter 2: Annual Condition of Credits, Deposits and received and paid Interestin 2009 ................................................................................................................ 222Chapter 3: Production of Interim Financial Services: Loans from financialintermediaries resident to resident sector, and sector resident deposits infinancial intermediaries resident in 2009........................................................ 223Chapter 4: Investments in 2009............................................................................. 224Chapter 5: Data by prefectures ............................................................................. 225Annex M: Insurance Annex........................................................................................ 226Chapter 1 : Identification data .............................................................................. 226Chapter 2 : Economic indicators........................................................................... 226Chapter 3 : Investments in 2009............................................................................ 227Chapter 4 : Local units........................................................................................... 228Annex N: Non-observed Economy ............................................................................. 229Annex O: Quarterly improvements ........................................................................... 230Annex P: Regional Account ........................................................................................ 231Annex Q: SBS improvements ..................................................................................... 232Annex R: Chain link.................................................................................................... 2365/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeTable of TablesTable 1.1: Correspondence between NACE Rev.1 (4 digit level) and nomenclature atlevel 25 and 7, used in National Accounts................................................... 16Table 2.1.1: Timetable for revising and finalizing the accounts...................................... 17Table 2.1.3:Timetable for revising and finalizing the accounts (Expenditure Approach)..................................................................................................................... 18Table 2.1.4: Timetable for revising and finalizing the accounts (Year of Estimation).... 19Table 2.2: Sources of Information ................................................................................ 19Table 2.3: Discrepancies between preliminary and final estimations .......................... 20Table 3.1: GDP by the production approach, 2006 ...................................................... 21Table 3.1.1: Breakdown of GDP by Main Industries ...................................................... 22Table 3.2: Active enterprises by year of creation and economic activity, 2008........... 27Table 3.3:Table 3.4:Table 3.5:Number of Segments in population, sample size of segments with andwithout farming activities, and segments and farm operators from whichdata were collected....................................................................................... 30Output components in data sources and national accounts adjustments forenterprises, 2006 .......................................................................................... 37Intermediate consumption components in data sources and nationalaccounts’ adjustments for enterprises, 2006................................................ 38Table 3.6: Branches included in the same estimation of indicators.............................. 40Table 3.7: Indicators estimated with data from BS and SBS for the year 2006. .......... 41Table 3.8: Indicators estimated with data from VAT file in the year 2006.................. 42Table 3.9: Indicators estimated with integrated data from BS and SBS and VAT in theyear 2006...................................................................................................... 43Table 3.10: Indicators estimated for Missing data in the year 2006............................... 44Table 3.11: Indicators estimated for observed economy in the year 2006. .................... 45Table 3.12: Value added components in data sources and national accounts adjustmentsfor government, 2006................................................................................... 46Table 3.13: Intermediate consumption components in data sources and nationalaccounts’ adjustments for government, 2006 .............................................. 47Table 3.14: Type of expenditure..................................................................................... 49Table 3.15:Table 3.16:Output and intermediate consumption in data sources for banking services,2006 ............................................................................................................. 51Output and intermediate consumption in data sources for insurance services,2006 ............................................................................................................. 51Table 3.17: Size of adjustments in National Accounts, 2006 ......................................... 53Table 3.18: Agriculture, hunting and forestry, 2006....................................................... 55Table 3.19: Fishing, 2006 ............................................................................................... 58Table 3.20: Extracting industry, 2006............................................................................. 59Table 3.21: Manufacturing, 2006.................................................................................... 616/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeTable 3.22: Electricity, gas and water supply, 2006 ....................................................... 63Table 3.23: Construction, 2006....................................................................................... 64Table 3.25: Hotels and restaurants, 2006........................................................................ 67Table 3.26: Transport and communications, 2006.......................................................... 67Table 3.27: Financial intermediation, 2006 .................................................................... 69Table 3.28: Real estate, renting and business activities, 2006........................................ 72Table 3.29: Public Administration and defense; compulsory social security, 2006....... 76Table 3.30: Education, 2006 ........................................................................................... 77Table 3.31: Health, 2006................................................................................................. 78Table 3.32: Other community, social and personal service activities, 2006................... 79Table 3.34: Subsidies, 2006 ............................................................................................ 82Table 5.1: GDP by the expenditure approach, in Million LEK..................................... 85Table 5.2: Estimation method of indicators.................................................................. 89Table 5.3 NPISH Final Consumption Expenditure ..................................................... 92Table 5.4: General government final consumption expenditure,.................................. 93Table 5.5: Consumption of fixed Capital...................................................................... 94Table 5.6: The components of GFCF ........................................................................... 95Table 5.7: Detailed data for GFCF, for Orchards & Vineyards.................................... 96Table 5.8: Machinery and Equipment........................................................................... 98Table 5.9: Exports and Imports of services................................................................. 100Table 6.1 Differences in two approaches of GDP ..................................................... 102Table 7.1.1: Estimation of NOE (Illustration of Method for year 2001) (...continues). 107Table 7.1.1: Estimation of NOE (Illustration of Method for year 2001)....................... 108Table 7.2:Illustration of Expert method of Agriculture, hunting and forestry in theyear 2006.................................................................................................... 110Table 7.3: Illustration of Expert method of Fishing and Forestry in the year 2006 ... 111Table 7.4: Exhaustiveness adjustments by activity as included in published GDP 2006................................................................................................................... 112Table 7.5: Output and Intermediate consumption of NOE in 2006............................ 113Table 8.1 Transitions from Gross Domestic Product to Gross National Income ...... 114Table 9.1 Data sources for education......................................................................... 128Table 9.2 Data sources for health .............................................................................. 128Table 10.1: Value of GDP 2006 by branches at prices of previous year...................... 132Table 10.2: Published value of Deflators and Real Growth rates in 2006.................... 132Table.12.1: Price indices used to deflate the Services (excluding internal trade) ........ 149Table.12.2: Indices used to deflate Import and Export................................................. 151Table.13.1: Classification of taxes on products by type of deflators............................ 153Table 13.2. Subsidies of product at prices of previous year ......................................... 154Table 18.1: Benchmarking Process .............................................................................. 165Tab. A.1: Organizational Chart of INSTAT.............................................................. 173Table B.1:Table B.2:Gross Domestic Product by Expenditure Approach,( 1996 – 2004, at currentprices :2003 semi final;2004 preliminary )............................................... 174Gross Domestic Product by Expenditure Approach,(1996 – 2003,currentprices) ........................................................................................................ 1757/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeTab D.1: SBS Coverage............................................................................................ 188Tab D.1: Number of Segments in Population, Sample Size of Segments with andwithout Farming activities, and Segments and Farm Operators from whichData were collected.................................................................................... 194Tab F.1: Information on Inventories......................................................................... 202Tab E.2: Changes in Inventories, year 2002............................................................. 203Tab H.1: Data collected for Electricity..................................................................... 209Tab H.2: Data collected for Industries...................................................................... 210Tab H.3: Data collected for Construction................................................................. 211Tab H.4: Data collected for Transports .................................................................... 211Tab H.5: Data collected for Hotels ........................................................................... 212Tab H.6: Data collected for Wholesale Trade .......................................................... 212Tab: H.7: Indicators of volume on “retail trade” and “sale and repair of motorvehicles”..................................................................................................... 213Tab H.8: Deflators used for quarterly series............................................................. 214Tab I.1: Benchmarking process ............................................................................... 215Tab I.2: Seasonal Adjustment process..................................................................... 216Table K.1 Statistical annex 2009 ................................................................................ 218Table K.2: Statistical annex 2009 Part 2...................................................................... 219Table L.1: Financial Annex......................................................................................... 222Table L.1: Insurance Annex Part1............................................................................... 226Table L.2: Insurance Annex Part2............................................................................... 227Table L.3: Insurance Annex Part3............................................................................... 228Table N.1: NOE ........................................................................................................... 229Table O.1: Quarterly improvements ............................................................................ 230Table P.1: Regional Account Distribution .................................................................. 231Table Q.1: Cost Structure of the Enterprise................................................................. 232Table Q.2: Value of the turnover from construction distributed by districts............... 233Table Q.3: Regional distribution.................................................................................. 234Table Q.4: Investment table......................................................................................... 235Table R.1: Chain linking technique ............................................................................ 2368/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeABBREVIATIONS AND ACRONYMS1993 SNA System of National Accounts 1993AASAnnual Account StatementsASFArea Sampling SurveyASSAnnual Structural SurveyAktfrDivisions in 25 branches of activityBOABank of AlbaniaBoPBalance of PaymentsCARDS Community Assistance for Reconstruction Development andStability in the BalkansCOFOGClassification Of Functions Of GovernmentCOICOPClassification of Individual Consumption by PurposeCCIConstruction Cost IndexC GFinal consumption of general governmentC NFinal consumption of non-profit institutions serving households(NPISH)CECoefficient of Expansion of segmentCPACentral Product ClassificationCPCCentral Product ClassificationCPIConsumer Price IndexEAAEconomic Accounts for AgricultureESA 1995 European System of AccountsEUEuropean UnionFISIMFinancial Intermediation Services Indirectly MeasuredFSAFinancial Supervisory AuthorityFCFinal ConsumptionGACGeneral Agricultural CensusGDPGross Domestic ProductGDTGeneral Directorate of TaxationGFCFGross Fixed Capital FormationHBSHousehold Budget SurveyHFCEHousehold final consumption expenditureHSHarmonized SystemIMFInternational Monetary FundIOTInput-Output TableINSTATAlbanian National Institute of StatisticsISTATItalian National Institute of StatisticsILLSInput of Labour of LSMSLFSLabor Force SurveyLSMSLiving Standard Measurement Survey9/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeMAFMinistry of AgricultureMOFMinistry of FinanceMoUMemorandum of UnderstandingNANational AccountsNACE, Rev. 1 Nomenclature statistique des Activités économiques dans laCommunauté Européenne, Revision 1NADNational Accounts DirectorateNASSNational Agricultural Statistical ServiceNIPTIdentification NumberNIMNet Interest MarginNOENon-observed EconomyNPClassification of ProductsNPISHsNon-profit Institutions Serving HouseholdsNRCNational Registration CentreNVEClassification of Economic ActivitiesNOLNOE Non-observed input of labor in the non-observed enterprisesNUTSNomenclature of Units for Territorial StatisticsOLOEObserved input of labor in the observed enterprisesPPIProducer Price IndexPSIPrimary Sampling UnitPSU-sPrimary Sampling UnitsQGDPQuarterly Gross Domestic ProductQNAQuarterly National AccountSBSStructural Business StatisticsSDDSSpecial Data Dissemination Standard (IMF)SITCStandard International Trade ClassificationSMPSystem of Material ProductionSTSShort Term SurveySUT-sSupply and Use TableUVIUnit Value IndexVATValue Added Tax10/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeIntroductionThe Description of sources and methods is one of the main methodological manuals forNational Accounts in Albania. It has been done for the first time in the framework of IPA2007 in year 2010 and has been updated during the IPA 2008 and IPA 2009. Actually thisversion is the last one updated based on project work carried out during IPA 2009. Themain objectives of this project were: To improve the basis of the annual and quarterly constant price estimates in thebeneficiaries by leading to an increased quality and comparability of the NA dataused for a wide range of national and international needs. To update and extend the IPA 2007 description of the sources and methods for thepart of annual and quarterly constant price estimates by including more detail and theimprovements achieved during the current pilot project. To update the expert assessment of strengths and weaknesses prepared under the IPA2007 project for the part of constant price estimates by including the detailed resultsof the Pilot Project and the improvements achieved. This should also include anupdate of the recommendations how further improvements can be achieved.As has been mentioned above one of the objectives was the update of GNI. The mainchanges are related the transformation of GDP in GNI which has been described in chapter8: Transition of GDP in GNI. In the previous description it has been the experimentalestimations according to UN format and now it is updated with the new final estimation ofthis component.This chapter describes the transition of Gross Domestic Product (GDP) to Gross NationalIncome (GNI). This transition is realized through data on primary incomes betweenresidents and non-residents. Main incomes are compensation of employees received byresidents from non-residents and paid to non-residents from residents and property incomesreceived by residents and paid to non-residents. The principal data source for compilationof GNI is the balance of payments (BoP). The National Bank of Albania is responsible forcompiling the Balance of Payments and the Institute of Statistics uses the data in thecompilation of the GDP-GNI transition.Another important update is done in the Part C - Quarterly National Account, chapter 18.In the Albanian case, at the detailed level the series are consistent in current prices and inthe base year prices. INSTAT presented differently the annual national accounts andquarterly national accounts volume measures, creating some confusions for nonexperiencedusers. Therefore one major improvement was developing a methodology for achain volume series of QNA and to present the quarterly accounts in the previous year’sprices in order to be consistent with the annual accounts. The annual overlap technique isthe only method that automatically meets the time consistency criterion.11/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammePart A:Annual National Accounts at current pricesCHAPTER 1: STATISTICAL SYSTEM AND ARCHITECTURE OF NA1.1 Institutional frameworkINSTAT is the most important agency for the collection of Albanian macro economicstatistics. INSTAT undertakes most of the data collection and compilation, with the mainexceptions being that balance of payments (Bop), banking sector data is the responsibilityof the Bank of Albania (BOA), and government statistics is collected by the Ministry ofFinances (MOF) and agricultural statistics are collected by the Ministry of Agriculture andFood (MAF).Following the IMF recommendations, the Council of Statistics was created in 1999 for thepurposes of ensuring a good co-operation among the agencies. In the second meeting of theCouncil of Statistics it was adopted the decision of setting up a sub-committee for NA withrepresentatives from the main agencies which provide INSTAT with inputs for nationalaccounts: BOA, MOF, Ministry of Agriculture and Food, Ministry of Public Economy andPrivatization, Ministry of Public Work, Ministry of Transport.INSTAT has at its disposal the following instruments to plan, direct and monitor statisticalactivities in the country: the Law on Official Statistics the five-year Programme of Statistics the five-year Strategic Plan of INSTAT one-year operational Plan of INSTAT one-year Budget Plan of INSTAT quarterly progress reports on implementation of the Programme of Statistics Memorandums of Understanding between INSTAT and main counterpartsThe law on Official Statistics represents the foundation of the statistical system in thecountry. The Law was adopted on 5 February 2004 (N° 9180). The scope of the Law is toestablish the legal framework for the collection, organization, production anddissemination of official statistics in Albania. The Law on Official Statistics defines thestatus of the Programme of Official Statistics and the role and tasks of central statisticalbodies in the country. It is quite comprehensive and modern and lays a strong foundationfor the operation of the Statistical Institute in Albania.According to the Law on Official Statistics INSTAT is responsible to draft and ensure theimplementation of the Programme of Official Statistics. Article 6 of the Law states asfollows:“The Programme shall cover the statistical information necessary for the observation ofthe economic, social and environmental situation in the Republic of Albania, focusing onthe phenomena which are essential for decision makers and respecting citizens’ right toofficial data. To realize the Programme it is necessary to take into consideration therelation between the costs and burdens on one hand and the benefits on the other hand.”12/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeThe Programme of Official Statistics in force covers five years (2006 - 2011) and it hasbeen approved on January 31st 2008 by the Parliament upon the proposal of the StatisticalCouncil. INSTAT is responsible for proposing the Programme to the Statistical Council.The Programme includes central information on the development and production ofOfficial Statistics in Albania, e.g. descriptions of the main statistics and indicators institutions responsible for producing and disseminating results classifications adopted (regional) level at which the statistics and indicators are available frequency with which the statistics and indicators are available year when the statistics and indicators will be disseminated list of sources used to produce the statistics and indicatorsThe Programme of Official Statistics includes a general estimate of the annual operatingcosts of the Institute of Statistics for the years covered by the Programme. It does notinclude estimated costs of other statistical agencies (other authorities) which are specifiedin the Programme as authorized entities to undertake activities to produce official statistics.The Article 8 of the Law on Official Statistics states that INSTAT shall seek to concludeMemoranda of Understanding (MoU) with all Statistical Agencies and with holders ofadministrative records that are used in the production of the Programme of OfficialStatistics covering business arrangements and mutual obligations.INSTAT has undertaken some expansion and recruitments for a number of additionalpositions. This includes the implementation of restructuring at the top level, involving thecreation of five Directors’ positions reporting to the Director-General – including one fornational accounts, upgrading National Accounts from a Sector to a Directorate. TheNational Accounts Directorate (NAD) was also reorganized to follow the structurerecommended by the project of Technical Assistance from IMF, creating Annual Accounts,Quarterly Accounts and Development Sectors.Organizational chart of statistical body is given in Annex AThis institutional organization has been available since June 20th 20081.2 Approaches usedThe estimates of GDP are produced using a system of statistical sources and administrativedata which are mainly based on the concepts and framework of the SNA93 and consistentwith ESA95. The work is carried out in detail to the fullest extent possible, both to ensureproper reliability of the estimates and to provide a sufficiently detailed breakdown toreflect trends in the various sectors. Time series are available from 1996 onwards.The NAD produce, on a regular basis, annual estimates of production (value added andGDP) and expenditure approaches at current prices and at the prices of previous year. Thebasic approach and data sources are summarized below.13/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme1.2.1. GDP by the Production ApproachThere are two types of main data sources used for GDP estimations by productionapproach: statistical and administrative data. The main statistical sources are AnnualStructural Business Survey (SBS - for non financial and non-agriculture enterprises), thatcover the largest part of economic activities (Industry, Construction, Trade and Hotels,Transports, Telecommunications and one part of Services); Quarterly surveys onenterprises (Industry, Construction, Retail Trade, partial services ) carried out by INSTAT.Other surveys cover the activities of agriculture, forestry and fishing carried out byMinistry of Agriculture.Administrative data sources are annual accounting statements of enterprises, which arecollected by the General Directorate of Taxation; governmental data coming from Ministryof Finances, where data are related to the revenues and expenditures for all budgetaryinstitutions.Other data sources are: financial statements of monetary institutions that are collected bythe Bank of Albania; financial statements of insurance undertakings collected by theFinancial Supervision Authority; file of sales, collected by Tax Administration for thepurpose of value added tax (VAT).1.2.2 GDP by the Expenditure ApproachDuring the estimation of the household’s final consumption expenditure a lot of data isused, generally coming from Household Budget Survey, Retail Trade Survey, etc.Final consumption expenditure of general government is estimated using administrativedata from the Ministry of Finances.The estimation of gross fixed capital formation is based on a set of various data, where themost important is data from statistical surveys (SBS), customs statement, data from annualaccounting statements of enterprises, data from Ministries.Changes in inventories are estimated by using annual accounting statements of enterprises.The main source for estimation of exports and imports of goods and services is based onthe balance of payments compiled by Bank of Albania and statistics of foreign trade.1.3. Accounts preparedNo system of national accounts is created in Albania, but only the main variables of thissystem using the production account such as output, intermediate consumption and valueadded GDP.1.4 ClassificationsBelow is given an outline of the principal nomenclatures used to establish the nationalaccounts, as well as the relationship between these nomenclatures and the Europeannomenclatures mentioned in the SEC 1995.Nomenclatures used in the production approach14/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeGDP data by industrial activity (25 activities) is compiled by using the EuropeanClassification of Economic Activities (NACE Rev 1) of Eurostat. The NACE classificationused in Albania is the same as the original version of NACE classification of Eurostat.However the economic activities according the NACE REV 1 are regrouped in the level of25 main activities for the needs of NAD. Table 1.1 presents the way how NACE 4 digitlevel is grouped at the level of 25 economic activities.For the dissemination purposes, those 25 activities are regrouped into 7 major industrialactivities:1. Agriculture, Hunting and Forestry2. Total Industry• Extracting Industry• Manufacturing Industry3. Construction4. Trade, Hotels and Restaurants,5. Transport6. Post and Communications7. Other Services.The level of synthetic economic activities, known as level 25 or level 7, is a combination ofclasses and NACE groups, organized to reveal representative sets in the context of theeconomic analysis. Thus the activities of manufacturing industry are regrouped in order toeasily identify intermediate industries of goods, capital goods industries, and industries ofconsumer goods. This nomenclature is articulated well with those used in the analysis ofthe economic situation. (See the Table 1.1)Nomenclatures used in the expenditure approachThe classification of Individual Consumption (COICOP) and the classification of theFunctions of Government (COFOG) have been used in the national accounts. ThePRODCOM is not used for the PPI; actually Classification of Products by Activity (CPA)is used. The nomenclatures used for the exports and imports of goods are: the HarmonizedCommodity Description and Coding System (HS) and Standard International TradeClassification (SITC).The Harmonized Commodity Description and the Coding System(Harmonized System, or HS) or extended versions based on HS, such as the CombinedNomenclature used by our country provide such details. Classification using thesenomenclatures is based on the nature of the commodity.Commodity categories that are more apt for economic analysis are provided by theStandard International Trade Classification (SITC), which classifies commoditiesaccording to their stage of production.15/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme1Table 1.1: Correspondence between NACE Rev.1 (4 digit level) and nomenclatureat level 25 and 7, used in National AccountsLevel Descriptions of Level LevelNACE 4Descriptions of Level 257 725Rev.1Agriculture, hunting 1 Agriculture, hunting and forestry 0111-021and forestry & Fishing 2 Fishing 0501-052 TOTAL INDUSTRY 3…14 1010-413 Mining and quarrying of energy producing materials 1010-122.1 Extracting4 Mining and quarrying of except energy producing materials 1310-141511-1551562-1575 Manufacture of products based on cereals 1561, 156 Other manufacture of food products1582-162.2 Manufacture2010-2237 Manufacture of textile and leather products 1711-198 Manufacture of wood, paper, furniture; publishing and printing 3611-379Manufacture of coke, refined petroleum products and nuclearfuel 2310-2310Manufacture of chemicals, chemical products, rubber andplastic products 2411-2511 Manufacture of other non-metallic mineral products 2611-2612 Manufacture of basic metals and fabricated metal products 2710-2813 Manufacture of machinery and equipment 2911-3514 Electricity, gas supply 4011-4014/1 Water Supply 41003 Construction 15 Construction 4511-454Trade & Hotel and 16 Trade 5010-52Restaurants17 Hotel and restaurants 5510-555 Transport 18 Transport 6010-63Postand6 Communication 19 Post and communication 6411-6420 Financial activities 6511-6721 Renting21/1 Real estate, renting and business activities 7011-747 Other services 22 Public administration and defense, compulsory social security 7511-7523 Education 8010-8024 Health 8511-8525 Other community, social and personal service activities 9001-9916/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeCHAPTER 2: REVISION POLICY AND TIMETABLE FOR REVISING ANDFINALISING ESTIMATES2.1 Revision policy"Occasional" revisionsThe annual estimates of domestic product (GDP) and its components are subject to twotypes of revisions: routine and exceptional. The later follows the major methodologicalinnovations, which in turn may be due to changes in the concepts, definitions andclassifications used or to the availability or content of statistical sources. Recently Albaniacarried out a general revision of the national accounts data. The new series, published onDecember 2005, incorporated the results of the Twinning Project “Albanian Statisticstoward EU”, from January to December 2005, financially supported by EU and IMF. Theproject has been implemented with the technical assistance of ISTAT, the Italian NationalInstitute of Statistics, in partnership with Statistics Finland and the Hungarian CentralStatistical Office. As a result of the projects a consistent time series (1996-2003) of theGDP estimates at current price and at the price of the previous year was provided. Inparticular, it is important to highlight that for the first time INSTAT produced an officialfigure of the demand side estimates of GDP at the price of the previous year. Annex Bpresents the revised figures of GDP during this project.Routine revisionsRoutine revisions of the annual data are carried out since the (annual) first estimates ofGDP and its components are very often based on provisional data from the surveysnormally used or in some cases on sources other than those normally used.At present, the period elapsing before publication of the first (flash) annual estimate ofGDP (year t) is eleven months (end of November of the year t+1). Such estimate isreviewed after six months in order to obtain a semi-final one. On that occasion the previousyear estimates are also reviewed (t-1). The revision process is shown in the followingtables. Also these tables present the indicators produced in each phase of the estimationsunder production and expenditure approach.2Table 2.1.1:Timetable for revising and finalizing the accountsProvisional and final estimates of GDPDeadlineEstimated yearNovember ( t+11 month)Flash Estimate of Year tMay ( t+17 month) Semi-Final Estimate of Year t and FinalEstimate of year t-117/236

3 TableIPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeTable 2.1.2:Approach)Timetable for revising and finalizing the accounts (ProductionProduction ApproachDeadline November ( t+11 May ( t+17 month)month)Estimated year t Flash estimate of year t Semi-final estimate of year t andfinal estimate of year t-1Current prices Yes YesConstant prices(2000=100)YesAt prices of YesYesprevious yearNomenclatures 7 macro branches 25 national account branchesbase of calculation; 7 branchespublicizedIndicators Output; Intermediate Output;Intermediateavailable. Consumption; Value Added Consumption; Value AddedYes2.1.3: Timetable for revising and finalizing the accounts (ExpenditureApproach)Expenditure ApproachDeadline May ( t+17 months)Estimated year t semi-final estimate of year t and final estimate of yeart-1Current pricesYesAt prices of previous yearIndicators available.YesFinal Consumption of HH;Final Consumption of General Government;Final Consumption of NPISH;Gross Fixed Capital Formation;Net Exports of goods and services:- Exports of goods;- Exports of services;- Imports of goods;- Imports of services;Disposals.18/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeHere is another version of presentation to understand the idea:4Table 2.1.4:Timetable for revising and finalizing the accounts (Year of Estimation)Year ofEstimation2006 2007 2008 2009ReferenceyearMay NovemberMay NovemberMay NovemberMay November2003 Final - - - -2004 Semi - Final - - -final2005 - Prelimin SemiFinal - -ary final2006 - - - Prelimin SemiFinal -ary final2007 - - - - - Prelimin Semi -ary final2008 - - - - - - - PreliminaryThe sources used in each version of GDP are as follows.5Table 2.2:Sources of InformationRevisions Production Approach Expenditure ApproachPreliminary 1. Annual Structural BusinessSurvey SBS ( preliminaryfigures)2. Value Added Tax3. Administrative data (Ministry ofFinance, Ministry ofAgriculture, (MoA), Financialstatements of monetary andinsurance institutions)Semi final1. SBS (final figures)2. Annual Account Statements(AAS), limited data3. Value Added Tax4. Administrative data (Ministry ofFinance, of, Ministry ofAgriculture, MoA)5. Business Register1. LSMS2. Retail trade Survey3. Balance of payments4. AAS & SBS5. Administrative datafrom Ministry ofTransport , MoF, MoA6. Old survey on NPISH19/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeFinal6. Living Standard MeasurementSurvey (LSMS)7. Financial statements of monetaryand insurance institutions1. SBS (final figures)2. Annual Account Statements(Additional data for moreenterprises than in semi finalestimations)3. Value Added Tax4. Administrative data (Ministry ofFinance, Ministry ofAgriculture)5. Business Register6. Living Standard MeasurementSurvey (LSMS)7. Financial statements of monetaryand insurance institutions7. Directory of Custom8. Bank of Albania-Balance of payments1. LSMS2. Retail trade Survey3. Balance of payments4. AAS & SBS5. Administrative datafrom Ministry ofTransport , MoF, MoA6. Old survey on NPISH7. Directory of Custom8. Bank of Albania-Balance of paymentsThe table below shows the discrepancies between the preliminary and the final version ofGDP by production approach.6Table 2.3:Discrepancies between preliminary and final estimationsYear 2005 Year 2006Estimations GDP at Real Growth GDP at Real Growthmarket price of GDP market price of GDPPreliminary 794.781 5.6 861.716 5.4Final 814.797 5.7 882.209 5.420/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeCHAPTER 3: PRODUCTION APPROACH3.0 GDP according to the production approachThe compilation process of GDP by production approach can be summarized in two steps.In the first step gross value added at basic prices of all branches is estimated as thedifference between output at basic prices and intermediate consumption at purchases’prices less financial services indirectly measured FISIM. In the second step taxes onproducts are added (this step is launched because we don’t have an actual detailed level ofthe origin of the taxes) and subsidies on products are subtracted from the sum of grossvalue added of all branches to obtain GDP at market prices. The table below shows maincategories of GDP by the production approach.7Table 3.1: GDP by the production approach, 2006Main CategoriesIn Million LEKOutput at basic prices 1 525 496Less: intermediate consumption at purchasers’ prices 730 311Less: financial services indirectly measured FISIM 30 446Gross value added at basic prices 764 739Plus: taxes on product 121 188Less: subsidies on products 3 718Gross domestic product at market prices 882.209____________________________________________________________________GDP by production approach is prepared as an independent estimate covered by exhaustivedata sources (financial activities, post and communication, electricity, publicadministration, public education, public health, and for all activities with enterprises ofmore than 5 employees) and also sample surveys data sources for all sectors of theeconomy. The main data sources are available by the beginning of October each year andthe first estimations of annual GDP (preliminary data) by the production approach arefinalized by end of November at the level of 25 activities. Annex C illustrate in more detailthe main classification used in the process of compilation by production approach. A tableis provided below showing the breakdown of GDP for year 2006, according to theproduction approach by main industries, in millions of LEK:21/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme8Table 3.1.1:Breakdown of GDP by Main IndustriesIn Million LEKNo. Branches 20061 Agriculture, hunting and forestry 154,6482 Industry 88,207- Extracting Industry 5,894- Manufacturing Industry 82,3133 Construction 113,7244 Total Services 438,606-Trade, Hotels and Restaurants 166,125-Transport 43,350-Post and communication 31,614-Other Services 197,5175 FISIM (-) 30,446GROSS VALUE ADDED AT BASIC6 PRICES (1+..+ 5) 764,7397 Taxes on products 121,1888 Subsidies on products (-) 3,7189 GDP AT MARKET PRICES (6+7-8) 882,209GDP by expenditure approach is an independent estimate and is explained in the nextchapter.Market and non market producers, FISIMIn national accounts activities included in the production are divided into market and nonmarket activities. The process of determination of the market and non-market productionstarts with obligatory registration of all units in the National Registration Centre of Albaniaand by assigning the relevant activity code according to the Classification of Economic22/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeActivities (NVE). NVE is consistent with the European Classification of EconomicActivities (NACE Rev.1.1). Also, all units at this centre get an identification number(NIPT).FISIM are not allocated to direct users of financial intermediation services and the grossvalue added by activities is adjusted with total FISIM as a negative.3.1 Reference framework3.1.1 IntroductionActivities are divided into market and non market producers. Output of non-marketproducers is valued according to costs of production and is estimated to the sum ofintermediate consumption, compensation of employees, other taxes on production andconsumption of fixed capital.3.1.2 Output and production boundaryProduction boundaries in measuring output are included as well as if they are produced forthe market or for own final use. The value of the output of housing services produced byowners–occupiers and domestic services produced by paid staff of households are notincluded in market services.Also, illegal production is within ESA95 production boundary and is not included inestimation of GDP.3.1.3 Intermediate consumptionIntermediate consumption represents the value of products or services at purchases’ pricesused up during the production process. The use of fixed assets in work is not taken intoconsideration. It is highlighted during consumption of fixed capital.Other business cost, such as travel and accommodation on business trips andreimbursements of business costs to employees are collectively included in intermediateconsumption because the lack of data cannot be divided into direct cost and cashreimbursement. Expenditure by employers for training, education and similar businessexpenditure are estimated like intermediate consumption.3.1.4 Taxes on productsTaxes on product are levied on goods and services in proportion to value or quantity andare paid when produced, imported or purchased by the buyer. Like all taxes, taxes onproducts are also obligatory and unrequited to general government institutions. The presentsystem of taxes on products includes value added tax (VAT), excise, customs duties onimports and other taxes.23/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.1.5 Subsidies on productsSubsidies on products are non - reverse payments to resident market made by publicgeneral government units to the companies in the form of a certain amount of money perunit to support production of goods or services. They are more typical in agricultureproduction (water for irrigation), drinkable water, student treatment enterprises,passengers’ transport and transport of goods (railway) and schoolbooks. Subsidies inimports (energy) consist of subsidies of goods or payable services when the productsurpasses the border of economic territory or if the services were made to residentinstitutional units. Subsidies on imported energy were present until 2005.3.1.6 Data sourcesThe main data sources of GDP by production approach are annual accounting statements(profit and loss account, balance sheets data on stocks of assets, and inventory data),administrative data and statistical survey. Annual accounting statements and statisticalsurvey (structural business survey) are the primary and exhaustive databases for allactivities. The instrument used in the process of estimation is business register ofenterprises.In a more detailed level the data sources used by the production approach are described inAnnex D.3.1.6.1 Business register of Albania (BR)Only public enterprises existed in Albania until 1990. Since that period, however, thesituation has changed markedly and private enterprises already play a significant role in theeconomy. The tremendous growth in the number and output of these enterprises hasnecessitated the development and use of a statistical business register to estimate GDPaccurately in a cost effective way. This process began on the 1st January 1993 with theestablishment of a register that required all economic entities in Albania to register theirbusinesses. Another important milestone was the establishment of new law (no 7687 date16.03.1993 article 3) that obliged all tax offices to provide INSTAT with information onthe creation of new enterprises, changes and deaths, and which was underpinned with aMemorandum of Understanding between INSTAT and the General Directorate ofTaxation. Another important date in the development of the register was 18.07.1994 whenapproval was reached on applying the International Nomenclature of the EU for Economicactivities (NACE, at the 4 digit activity level)The reform of business registration procedures reduced to one day the time required toregister new businesses and combined all registration steps in a single procedure.A new Law on business registration reform, on May 3, 2007. Law 9723 "On the NationalRegistration Centre", establishes the National Registration Centre (NRC) as a new centralpublic institution.24/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeBusiness Register is based on administrative sources provided by General Directorate ofTaxation (GDT) and from 2007 also by National Registration Centre, NRC, as theimportant reform for simplified registration of new business registration procedures.The enterprises’ register includes all non-agricultural legal units (enterprises andinstitutions) that perform their activity inside Albanian territory and based on principle:legal unit = enterprises = local unit. The BR encompasses three types of units: businessentities, affiliates and other parts of business entities and affiliates of foreign businessentities, local units are not in business register. Census of enterprises that will be carriedout in 2010 also include local units of activities.A business entity is a BR unit that performs registered profit or non-profit activities oractivities defined by a key regulation or document in the territory of the Republic ofAlbania. Business entities are legal entities and natural persons.A number of administrative sources were considered (in 1993) to be used as the basis of astatistical register. These were:– The Court Register. Pursuant to law no. 7667 dated 28.01.1993 which created acommercial register for all legal persons in Albania. This excludes natural persons,including entrepreneurships.– Chamber of Commerce. Pursuant to law no 7804 dated 10.03.1994, the Chamber ofCommerce is obliged to maintain a commercial register but not cover all marketenterprises– Register of Taxation. All economic entities located and operating in Albania mustregister herewith and pay taxes to tax offices.Of these three primary sources, the tax register is considered as being the mostcomprehensive in terms of coverage (in principle it includes all legal units andentrepreneurships). As a result, this source was selected as the best source for building andupdating the statistical business register. In terms of registration process, economic entitiesare required to first register with the district court (for entrepreneurships) or the Tiranacourt (for legal units). The date of their registration is the date of the creation of theentrepreneurship or legal unit.Characteristics which are recorded for the legal units and local units in the BR are:– Identification number (NIPT);– Company name;– Registered office and full address (municipality, settlement, street name, streetnumber);– Geographic code;– The date of the act of foundation;– Data on the registration with the registry body (the body, date and consecutivenumber of entry);25/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme– Main activity code (NVE);– Legal organizational form;– Date of commencement of operations;– Founder’s name and surname (name, address);– Representative’s name and surname (name, address);– Origin of foundation capital’s code (domestic, foreign, mixed);– Countries of foundation capital’s code;– Type of ownership code (private, co-operative, mixed and governmental);– Telephone number, fax number, e-mails;– Size class according to the number of employees for some legal entities;– Date of cessation;– Type of change code;– Number of administrative decree;Active enterprises by year of creation are 71 658 enterprises in 2006, showed in the tablebelow. Public administration (NVE/ NACE 75), Non-profit organizations (NVE/ NACE 71and 99) are not included.26/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeYear ofCreation9Table 3.2: Active enterprises by year of creation and economic activity, 2008TotalProducersof GoodsAgriculture& FishingOf which:End of the yearTotal by branchesProducers ofIndustry Construction Services TradeHotels,Coffeeshops,RestaurantsNumber of EnterprisesOf which:Transport &Communicationa 1=2+6 2=3+4+5 3 4 5 6=7+8+9+10 7 8 9 10OtherServicesTotal 104,750 16,237 1,205 9,987 5,045 88,513 50,080 14,909 9,897 13,6272008 19,538 2,947 452 1,784 711 16,591 8,628 3,191 1,927 2,8452007 13,554 2,089 193 1,155 741 11,465 5,949 1,533 1,662 2,3212006 13,543 1,925 111 1,090 724 11,618 6,668 2,513 856 1,5812005 9,117 1,320 58 733 529 7,797 4,285 1,604 651 1,2572004 8,668 1,003 65 629 309 7,665 4,896 1,183 775 811÷2003 40,330 6,953 326 4,596 2,031 33,377 19,654 4,885 4,026 4,81227/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.1.6.2 Administrative data sources3.1.6.2.1 Annual accounting statements of enterprises, balance sheets (2006)Annual accounting statements as the most important basic data sources for GDP byproduction approach cover profit and loss account, and balance sheets data on stocksof assets (stocks of assets at the beginning of the year, purchasing and sales duringthe year, and stocks by the end of the year) and they have been collected since1996.INSTAT accomplished the data-entry of these data for the need of national accounts.Annual accounting statements of enterprises are collected by General Directorate ofTaxation. Balance sheets are collected for statistical purposes and for the purpose ofpublic disclosure of accounting statements. Annual accounting statements ofenterprises are submitted by different kinds of corporations, irrespective of theiractivity or their size and reporting for the Institute of Statistics is obligatoryaccording to the National Statistics Law. Periodicity is annual, data are in paperformat referring to the calendar year and data are available 9 (nine) months after theend of the year.Annual accounting statements of enterprises are submitted by different kinds ofcorporations, irrespective of their activity or their size. In 2006 the statements weresubmitted by about 7000 units.3.1.6.2.2 Financial statements of monetary institutions (2006)Financial statements of monetary institutions are collected by the Bank of Albania.Data are collected for the purpose of supervision of monetary institutions and formacroeconomic statistics. Reporting units are all banks, savings banks and savingsand loans undertakings. Data are monthly, quarterly and annual. They are provided toINSTAT on a quarterly basis 60 days after the end of the reference quarter in anelectronic format. Final annual data are available 6 (six) months after the end of theyear.3.1.6.2.3 Financial statements of insurance undertakings (2006)Data are collected by the Financial Supervision Authority. Data are collected for thepurpose of supervision:– of insurance market and its operators;– of securities market and its operators;– of private supplementary pensions market and its operators;– of other non-banking financial activities;28/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeReporting units are all insurance companies, reinsurance companies and pensioncompanies and the data are annual and final annual data are available 6 (six) monthsafter the end of the year.3.1.6.2.4 Other statistical and administrative data sources3.1.6.2.4.1 Farm Structure surveyTo obtain the agriculture statistical information in terms of market economy, it isnecessary to use the contemporary statistical methods for data collection. For thispurpose, in collaboration with the US experts of NASS (National AgriculturalStatistical Service) and Agricultural Department collection of the data throughSampling Survey using Area Sampling Survey (ASF) method was deemed as moreappropriate.The Area Frame sampling selection method is one type of multi-stage clustersampling.For purposes of performing a statistical survey on Albanian agriculture it wasnecessary to use this method because an up-to-date list frame with the names of allAlbanian farmers was not available, the first General Agricultural Census (GAC)was carried out in 1998, and also it was difficult to compile one since ruralpopulation was moving towards the cities and the list would need to be frequentlyupdated. Therefore, with the Annual Agricultural surveys segments were sampled,farmers in each one were listed, and farmers were sampled from each list andinterviewed.Stratification: Agriculture and livestock activities differ between regions of thecountry. To improve the data collected on new activities the land was first split intohomogeneous zones (strata) prior to sample selection. The stratification method usedincluded: Allocating land in strata (homogeneous zones) based on defined criteria (in ourcase land use intensity); Further allocating the strata into groups and then sub-groups which weresimilar based on the defined criteria.Multi-stage sampling: Each stratum was first split into Primary Sampling Units(PSU-s). Once the PSU had been defined and measured using GIS, they were thensplit into segments based on target sizes desired in each stratum. Sample PSU-s wasthen selected based on the number of segments located in each one. Use of thistechnique reduced significantly the mapping measurement efforts required.Analyses: The decisions on design were made on the basis of criteria of datareliability as well as the costs. This included the decisions made on defining the29/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmestrata, the number of sub-strata, size of segments, the method of sample selection,etc.The basic principle used in designing the new frame was not to exclude any piece ofland during the stratification process as well as not include it more than once in astratum. During the process of area measurement priority was attached to thestatistical rules to minimize sample and non sample errors. The primary criterion wasto accurately identify PSU-s /segments through physical boundaries to minimizenon-sample errors during data collection processDefining the Strata: Land use: intensity was used as the basic criteria in splitting thecountry into strata. Strata were identified using the following criteria:Stratum 1 -- Zones with land use intensity of 75% or higher;Stratum 2 -- Zones with land use intensity of 25 - 74.99%;Stratum 3 -- Zones with land use intensity under 25%;Stratum 4 -- Zones with land use which is essentially nil;Stratum 5 -- Military zones;Stratum 6 -- Major cities;Stratum 7 -- Lakes and other bodies of water.Strata 5 through 7 were not included as part of the frame when conducting theSurvey.Strata Boundaries: Main roads, secondary roads, railways, rivers, permanentstreams, temporary streams, telephone and high tension lines etc.The total segment sampling size set at 400 segments based on an assessment of thecapabilities of the Ministry to collect and process quality data and the requiredprecision of estimates.10Table 3.3: Number of Segments in population, sample size of segments withand without farming activities, and segments and farm operators from whichdata were collected(Issue) Stratum 1 Stratum2 Statum3 Stratum4 TotalSegments in population(number)14247(number)5372(number)13783(number)8111(number)41513Sample size of segments18210825951600a. with farming1699721217495b. data collected1699721217495Sample of Farm 1808 1004 1975 109 489630/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeThe Survey was initiated in late November and completed by the end of December.During the farm visits, data were collected on farm household demographiccharacteristics, livestock, areas planted in various crops, information on single,multiple and mixed plantings of crops, farm practices, fertilizer and equipment hirecosts, ownership of vehicles, farm equipment and appliances, and the production,sales and prices received for selected crops.The Survey was conducted by approximately 400 enumerators residing in or near thesample segments for which they were responsible for data collection.Immediately after the receipt of the first survey data, additional manual edit checkswere completed by central office staff in which districts and the data were entereddirectly from the forms into microcomputers using a customized data entry package.The data were then run through a comprehensive computer edit system used fordetecting data entry, coding and enumerator errors. Necessary corrections weremade on the forms and to the data set in the computers. The “cleaned” data werethen summarized in tabular forms. Preliminary tables describing the results of thesurvey were completed in February.Since 2004 the collected data was substantially increased, which made possible theestimation of national accounts. The added data are provided on:- The working days in farms from households specified for agriculture, livestockand fruit trees;- The working days out of the farm and income from these activities;- Data on the balance use production;- The expenditures in value specified for agriculture, livestock, agriculturalmechanic and other activities in the farm;- Income from the processing products;- Income for agro tourism development;- Data on growing of the plants;- Data on investments inside the farm and their financial sources;- Annual average prices for each agriculture product.The coefficient of expansion (CE) is composed by three partsCoefficient of expansion of segmentCEsegmentMmWhere M is the total number of segment on prefecture x on strata x;and m is selected number of segment on prefecture x on strata x31/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeCoefficient of expansion of the selected farmsCEfarmNnWhere N is the total number of farm with activity on selected segment on strata x ofprefecture;and n is the number of farmsRatio of farmer’s land in the selected segment of his total landRatio Segment areaTotal areaWhere Segment area includes land in segment and Total area is the total area of thefarmer.So the coefficient of expansion is:CECEsegmentCfarmRatio3.1.6.2.4.2 Other statistical and administrative data sources (VAT declaration)Value added tax (VAT) data are used as a supplementary source of data forenterprises which do not supply annual SBS or BS data. At present INSTAT onlyreceives from tax authorities the data items from VAT forms relating to the turnover.By the agreement with the Tax Administration, INSTAT obtained access toindividual data of monthly value added tax reports of VAT units. VAT database isalso important for the estimation of non-reporting units in accounting data sources.The Treasury Department of Ministry of Finances collects all public revenuesincluding taxes and social security contributions. Data shows current revenues ofcentral and local government and of social security funds and the data are availableon quarterly and annual basis.For import duties and taxes on import, data from the customs statements are used.The Customs Administration is also responsible for collecting excise duties and databy type of excise are available to INSTAT on a monthly basis. The customsstatement is also the source for VAT collected on imports.32/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.1.6.3 Statistical surveyFor the estimation of the output of individual activities, basic statistical surveys areused. The most important ones are surveys of large enterprises (quarterly), the annualStructural Business Survey (SBS, annual) a Retail Trade Survey (quarterly), a Surveyof Productive Enterprises (quarterly), the Survey of Construction Enterprises(quarterly) carried out by INSTAT. Other surveys cover the activities of agriculture,forestry and fishing carried out by the Ministry of Agriculture.For solving the problem of data sources on intermediate consumption a new surveywas designed in 2009 (annual data for 2008) to collect data in value terms for allinputs into individual activities. This data are not used till now.3.1.6.3.1 Annual Structural Business Survey (SBS)The main aim of structural business statistics is to show the structure of the businesssector with regard to economic data. Data for the total business sector, by branch andby size groups are present.The Albanian Structural Business Statistics are regulated by the Council Regulation(EC, EURATOM) No.58/97, 20 December 1996.The statistics comprise all active enterprises in Albania, of all legal forms(agriculture, forestry, financial, public and private education, public and privatehealth, and cultural activities are not included).The population consists of all enterprises that, according to statistical register, wereactive in December of the reference year. Reporting units are companies, enterprisesand other organizations. Periodicity is annual and the data refer to the calendar year.Preliminary results are available 11 months after the end of the reference year.The sample frame consists of all active enterprises in the Business Register (BR)classified into economic activities with at least 1 (one) employed, both the public andprivate sector is included: B (Fishing), C (Mining and quarrying), D(Manufacturing), E (Electricity, gas and water supply), F (Construction), I(Transport, storage and communication), G (Wholesale & retail trade; repair ofmotor vehicles, motor and personal and household goods), H (Hotels andrestaurants), K (Real estate, renting and business activities), O (Other community,social and personal service activity) and P (Private households with employedpersons).The sampling frame is divided into strata based on economic activity, so calleddomain strata. Principally the two digit level is used to create these strata. Thestratification is done in order to fulfill the SBS regulation. The sample of the year2006 includes 9 467 units, enterprises with 1-4 employed are surveyed by samplesurvey (3 339 enterprises) and enterprises with 5 and more employed are surveyed33/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmeexhaustively (6 128) enterprises or 11.6 percent of the sampling frame and theinformation is collected by face to face interviews. Survey non response rate is 10.1percent according to the number of units.All cases of non-contact; full refuse and partial refuse (for different tables andindicators) are considered as non- response or missing data.The treatment of partial non-response is done by using direct methods or theircombinations such as study of time series data of enterprise and branch; data frombalance-sheet file (profit and loss accounts); the information from other filesavailable in INSTAT such as business register, VAT file, file of production priceindex, average data of branch where the enterprise is included are analyzed and used,data from enterprises that have similar conditions are used and method of averagestructure, especially for expenditures, is usedImputation is done to cover the non-response of large enterprises. It is based on threemethods: historical trend imputation for units with data from previous year in profitand loss account or in business register or in other surveys conducted by INSTAT;cold deck with use of the previous year administrative data for units for which wehave data from administrative sources; mean value imputation for the rest of theresponsive large enterprises in the respective stratum. For the part left untreated reweightinessmethod is used.Variables used for grossing-up to the population are the weights for the turnoverindex, based on the turnover from the SBS statistics for the reference year 2006Initial weight of enterprise in the stratum is estimated P (i) initial = Ni / niWhere: Ni is the total number of enterprises in the stratum ini is the number of sample enterprises in stratum iNote: For the purpose of GDP estimations only individual data for each enterpriseare used.Other statistical surveys (retail trade, producer’s price indices, construction costindex, consumers’ price index and short term survey) carried out by INSTAT are notused in calculation of indicators at current prices by production approach. Thesesurveys are used for calculation of indicators at constant prices (producer’s priceindices, construction cost index and consumers’ price index), quarterly indicators(short term survey) and indicators by expenditure approach (retail trade). Thesesurveys are mentioned in more details in next Chapters.34/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.2 ValuationIn accordance with the basic accounting principle, data in annual accountingstatements which are used for the estimation of output and intermediate consumptioncomponents are on accrual basic and administrative sources which are on cash basicand therefore several adjustments are necessary in transfer from cash to accrual data.In principle output is valued at basic prices and this includes subsidies on products.Changes in inventories are not adjusted for any holding gains at industry level and bytype of inventory. All products included on intermediate consumption are valued atpurchasers’ prices.Output of market producer is measured as the sum of sales, changes in inventories offinished goods and work in progress, the value of products which are produced forown final use and with the value of subsidies on products. Changes in inventories offinished goods, goods for own final consumption and work in progress are measuredaccording to input costs. Goods for resale are valued at purchasers’ prices.Trade margin as trade output is estimated as the difference between total sales oftrade goods less the purchase value of sold goods for resaleIntermediate consumption products are at purchasers’ price. Uses of intermediategoods are usually estimated with purchases in the period plus withdrawals frominventories less increases of inventories.The main taxes on products are estimated with direct data sources on cash basis.VAT is estimated by monthly VAT reports submitted by the Tax Administration andannual data from Ministry of Finances. Import duties and taxes on import areestimated from customs statement. All excise duties due to payment by type ofexcise are shown in monthly reports by the Customs Administration as well as inannual data of budget statistics from Ministry of Finances. Subsidies on products areaccording to the budget statistics valued as accrual transactions in the period.3.3 Transition from private accounting and administrative concepts to ESA95national accounts conceptsTransition from private accounting and administrative concept to ESA95 nationalaccounts concepts is an important part of national accounts compilation andparticularly of GDP by the production approach. The estimation of GDP byproduction approach mostly depends on accounting statements’ data (profit and lossaccounts) as well as on annual structural survey, budget database from Ministry ofFinances and other data sources. It is important that questionnaires of annualaccounting statements are gradually improved following national accounts’35/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmedefinitions (intermediate cost survey, breakdown of output for domestic market andexport, etc.) This improvement has started in 2009 with some changes mentionedbefore and full changes of questionnaire are planned for improvement in 2010.3.3.1 EnterprisesNational accounts produce, on a regular basis, annual estimates of production (valuedadded and GDP) at current prices and at the prices of previous year.The basic approach can be summarized as follows:– The production-side estimates are mainly based on grossing up the enterprisefigures from the surveys using numbers of enterprises. Estimation of laborinput by combining sources from the labor demand side (businesses) anddemographic sources (census of population) or social statistics (livingstandard sample surveys) plays an essential role in producing the estimate ofthe non observed economy;– The aggregates for general government, financial institutions and some publiccorporations are estimated from budgets or balance sheets and from otheradministrative sources;– The main approach used to estimate output for agriculture is "price xquantity";3.3.1.1 OutputFor market producers production is composed of market production and productionfor own final use. Thus, production equals the value of produced goods and servicesin the period. Relevant output categories are shown in the following codes in annualaccounting statements for enterprises:– sales of goods and services on domestic market and export (data are in anaggregate format);– sales of trade goods on domestic market and export (data are in an aggregateformat);– additions to less withdrawals from inventories of finished goods and work-inprogress– value of goods for own final use;– current transfers from general government , subsidies;– purchase value of sold goods for resale36/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeThe following table shows all steps from accounting data to the final value of outputat basic prices in national accounts. The table shows the compilation process whichis applied to all branches for which gross value added is estimated. In the first step,total output according to the data source is estimated; it equals the total turnover lessthe purchase value of sold goods for resale. Turnover equals the sum of all sales ondomestic market and exports (items 1, 2 and 3 in Table), additions to lesswithdrawals from inventories (item 4), the value of goods for own final use (item 5)and all current transfers from the institutions of general government (item 6).In the next step output at basic prices according to data sources is further adjusted forexhaustiveness which is not shown in companies’ accounts. With these adjustmentsthe final figure of output at basic prices in national accounts is estimated.Exhaustiveness adjustments are explained in more detail in Chapter 6.11Table 3.4: Output components in data sources and national accountsadjustments for enterprises, 2006____________________________________________________________________Output components and adjustments1. Sales of goods and services on domestic market and export2. Sales of trade goods on domestic market and exportTotal turnover (1 + 2)3. Less: purchase value of sold goods for resale4. Additions to less withdrawal from inventories5. Value of goods for own final use6. Current transfers from general government, subsidiesOutput at basic prices according to data sources (1+2+3+4+5+6)Exhaustiveness adjustments (non observed economy)Output at basic prices in national accounts3.3.1.2 Intermediate consumptionIntermediate costs are shown in accounting data sources of companies:– materials and supplies;– services and other business costs, such as travel and accommodation onbusiness trip and reimbursement of the other business costs of employees;– other costsThe table shows steps and national accounts adjustments to data according to thebusiness accounts. In the first step intermediate consumption at purchasers’ prices is37/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmeestimated according to the data source. The next step includes positiveexhaustiveness adjustments (non observed economy).FISIM is not allocated pro-rata according to gross value added by each activity but isdeducted in the total of gross value added.12Table 3.5: Intermediate consumption components in data sources andnational accounts’ adjustments for enterprises, 2006____________________________________________________________________Intermediate consumption, components and adjustments____________________________________________________________________1. Materials2. Supplies and services3. Other costIntermediate consumption according to data sources (1+2+3)4. Positive exhaustiveness adjustments (non observed economy)Intermediate consumption in national accounts____________________________________________________________________3.3.1.3 The procedure for estimations of indicatorsThe following structure demonstrates a synthesis of the methodology used toestimate output, intermediate cost and value added of the non-financial enterprise.38/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeFigure1: Synthesis of the methodology used to estimate output, intermediate cost andvalue added in the non financial enterprisesIn order to maximize the available information a specific procedure has beenimplemented to integrate such databases. This procedure enables the inclusion of allavailable data and achievement of quality. This is applied to the following aktfr 1divisions, the classification used only for national accounts’ purpose. Branches thatare not included in the following table (aktfr 1 (Agriculture), 2 (Fishing), 20,(Financial activities) 22, (Public administration and defense, compulsory socialsecurity) 23 (Education) and 24 (Health) are estimated in a different procedure1 Divisions in 25 branches of activity39/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme13Table 3.6:Branches included in the same estimation of indicatorsAktfr Description Correspondencewith NACE. Rev 13 Mining and quarrying of energy producing materials CA4 Mining and quarrying of except energy producing materials CB5 Manufacture of products based on cereals DA (partly)6 Other manufacture of food products DA (partly)7 Manufacture of textile and leather products DB and DC8 Manufacture of wood, paper, furniture; publishing and printing DD, DE, DN9 Manufacture of coke, refined petroleum products and nuclear DFfuel10 Manufacture of chemicals, chemical products, rubber and plastic DG, DHproducts11 Manufacture of other non-metallic mineral products DI12 Manufacture of basic metals and fabricated metal products DJ13 Manufacture of machinery and equipment DK, DL, DM14 Electricity, gas and water supply E15 Construction F16 Trade G17 Hotel and restaurants H18 Transport I(partly)19 Post and communication I(partly)21 Real estate, renting and business activities K25 Other community, social and personal service activities O, PThe procedure for estimation of indicators is developed in two phases:3.3.1.3.1 First phase: Integration and verification of dataThe various databases, VAT file, Structural Business Survey and Profit and lossaccounts file, coming from surveys and balance sheets are reorganized integratingthree databases into one, to obtain a common format. It is also an opportunity forchecking the internal coherence of balance sheet data and survey data. For eachsource, the internal coherence of individual data is checked by ascertaining thataccounts are balanced, that data in different tables are consistent and that the maindata are economic items.External coherence of both sources is also checked for each year based on theidentity of current accounts available in both sources that means to make acomparison between indicators (turnover, number of employees, wage and salaries,purchases, etc) and balance sheets, VAT and structural survey. Balance sheets’(profit and loss accounts) data sources are considered more viable than other sources,40/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeIndicatorsand when the data are available in three sources retrieval of data from these sourceswas decided. If the data are only in structural survey and VAT file retrieval of datafrom structural survey was decided because VAT file has only the data on turnover.The internal discrepancies are reduced on a case-by-case basis automatically(through software of data-entry) or manually (by specialists of National Account).All adjustments performed on data of enterprises, brings them into compliance withaccounting rules of national accounts. At the end of this phase, the data from nonfinancialenterprises have made all possible adjustments before being subject tofurther improvement, processing and estimations.3.3.1.3.2 Second phase: Estimations of indicatorsEstimation of indicators, such as turnover, production, intermediate consumption andvalue added are based on groups created over two of the features:- Type of activity (based on the division with 25 branches);- Size of activity (the units in the register are stratified into three strata: smallenterprises with 1-4 employees, medium enterprises with 5-49 employees andlarge enterprises with 50 or more employees).Assessment of these indicators will be presented through tables, made from nationalaccounts separately for each resource of data. Estimations of indicators for thebranch of Construction (aktfr 15) are used as references.National account initially creates a table with estimations of indicators using only thedata from balance sheet (BS) and annual structural business survey (SBS). 214Table 3.7:2006.Nr ofEnterprisesIndicators estimated with data from BS and SBS for the yearNr ofEmployeesIn Million LEKTurnover Production IntermediateConsumptionGrossValueAddedStrataLarge 44 3793 14,178,154 14,396,795 10,625,622 3,771,173Medium 686 8970 32,842,651 33,436,941 23,916,506 9,520,435Small 678 1819 6,470,342 6,519,494 4,763,346 1,756,679Total 1408 14582 53,491,147 54,353,230 39,305,474 15,048,287After that estimations of indicators are made for data from business enterprisesrecorded in business register with active status, but which are not obtained in one of2 A large number of variables are in BS and SBS (e.g. wages , depreciation, interest etc) which for themoment are used for checking the internal and external coherence but, estimation of those indicatorsfor missing enterprises may be part of the future improvement41/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmethe above resources (BS or SBS). The survey does not cover all enterprises of theBR, so indirect methods are used for the evaluation of their indicators.For the part of business register not covered by surveys, some indicators based onadministrative data sources are estimated, such as file of VAT by the taxadministration (this file provides only data on turnover). Indicators like the numberof enterprises and the number of employees are calculated on the basis of BR. Otherindicators are estimated through imputation.Imputation of indicator’s production is calculated by multiplying the turnover of theVAT with the ratio estimated by the production and turnover of enterprises fromtable BS and SBS (enterprises with the same legal status and in the same economicactivity). That gives an estimate of the production of enterprises that are in the VATfile.Imputation of those indicators is realized as follows:Pr oduction _ BS & SBS _ iPr oduction _ VAT _ i Turnover _ VAT _ i *Turnover _ BS & SBS _ iInterm_Consump_BS & SBS _ iInterm_Consump_VAT _ i Production_VAT _ i Production_BS & SBS_iGross _ Value _ Added _ VAT _ i Pr oduction _ VAT _ i Interm _ Consump _ VAT _ ii Large;Medium;SmallThe following table represents indicators of enterprises from VAT for the branch ofconstruction.15Table 3.8: Indicators estimated with data from VAT 3 file in the year 2006.In Million LEKIndicators Nr of Nr of Turnover Production Intermediate GrossEnterp EmployeesConsumption ValueStrata riseAddedLarge 1 59 8,980 9,118 6,730 2,389Medium 33 283 983,294 1,001,087 716,049 285,037Small 142 370 1,881,914 1,896,210 1,385,430 510,780Total 176 712 2,874,188 2,906,415 2,108,209 798,2063 blue colors used to distinguish those data which are estimated by the imputationmethod42/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAt the end of this stage summary of data from three sources BS, SBS and VAT (tableBS and SBS and VAT) is carried out. For example, the number of enterprises can besummarized as follows:No _ ofEnterprises _ i No _ ofEnterprises _ BS & SBS _ i No _ ofEnterprises _ VATi Large;Medium;Small16Table 3.9: Indicators estimated with integrated data from BS and SBS andVAT in the year 2006.In Million LEKIndicators Nr of Nr of Turnover Production Intermediate GrossEnterpr EmployeeConsumption ValueStrata ise sAddedLarge 45 3,852 14,187,134 14,405,913 10,632,352 3,773,561Medium 719 9,253 33,825,945 34,438,028 24,632,555 9,805,473Small 820 2,189 8,352,256 8,415,704 6,148,776 2,266,928Total 1,584 15,294 56,365,335 57,259,645 41,413,683 15,845,962A separate estimate is made for the enterprise recorded on the BR but for which dataaren’t available from any of these three sources (these are considered “missing”enterprises). From BR, the “missing”, only the number of enterprises and the numberof employees are directly evaluated. To make estimation of other indicators theirimputation is done given the data that we know or estimate in the previous stage.The following procedure was chosen for carrying out imputations:- The number of employees insured through BR;- The units in the register are stratified into three strata: small enterprises with1-4 employees, medium enterprises with 5-49 employees and largeenterprises with 50 or more employees;- Performed numerical evaluation of the enterprise involved in missingenterprise (estimate indicator for number of enterprise);- At the end, estimate indicators that cannot be directly evaluated. Theirestimation would be through imputation:43/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme17Table 3.10: Indicators estimated for Missing 4 data in the year 2006.In Million LEKIndicator Nr of Nr of Turnover Production Intermediat GrossEnterpr EmployeeConsumption ValueStrata ise sAddedLarge 2 150 630,539 640,263 472,549 167,714Medium 11 120 517,504 526,868 376,854 150,014Small 490 823 4,990,982 5,028,896 3,674,269 1,354,628Total 503 1,093 6,139,026 6,196,027 4,523,672 1,672,356Imputation is realized as follows:Turnover_BS & SBS & VAT _ iTurnover_Missing_ i No_ofEnterpri ses_Missing _ i No_ofEnterpri ses_BS & SBS & VAT _ iProduction_BS&SBS&VAT_iProduction_Missing _ i Turnover_Missing _ iTurnover_BS&SBS&VAT_iInterm_Consump_BS & SBS&VAT_iInterm_Consump_Missing_ i Production_Missing_ i Production_BS & SBS&VAT_iGross_Value_Added_Missing_ = Production_Missing_i -Intermediate_Consumption_Missing_ii Large;Medium;SmallBased on an evaluation done on the total set of business registers, the latest tables arecreated with data from all sources by performing an evaluation in total. For example,the number of enterprises is estimated as follows:No _ ofEnterprises _ i No _ ofEnterprises _ Bal & SBS & VAT _ i No _ ofEnterprises _ Mii Large;Medium;Small4 blue colors used to distinguish those data which are estimated by the imputationmethod44/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme18Table 3.11: Indicators estimated for observed economy in the year 2006.Indicators Nr of Nr of Turnover Production Intermediateenterpri employeeConsumptionStrata se sGrossValueAddedLarge 47 4,002 14,817,673 15,046,176 11,104,901 3,941,275Medium 730 9,373 34,343,449 34,964,896 25,009,409 9,955,487Small 1,310 3,012 13,343,238 13,444,600 9,823,045 3,621,556Total 2,087 16,387 62,504,361 63,455,672 45,937,355 17,518,318The end of this stage is the end of the estimate of indicators for the part of observedeconomy as well.3.3.2 Government (Public administration, Health, Education and Culture)The main source of the data is the structure of the expenditure by the Ministry ofFinances (budget database). This structure is available in monthly interval periodsand the data are available in the official website of this ministry. The structure ismainly based on the government accounting system. Each expense is detailed intoevery element from the institute to the main reason of this expenditure using NACEand COFOG classification.The Output of the government is an important step to be taken into account in theestimation. The Output is derived by the fields expressed below and in a formulaform it can be expressed:3.3.2.1 Value addedOutput = Value added + Intermediate Consumption + DeprecationA cost method is used to measure the value added of the Government. First, is startedby analyzing the structure of the government. For estimation of value added, data areused for the compensation of employees which is the cost paid by the government tothe specific institute (budget database) It is supposed that the value of the valueadded by the government is the amount paid for the worker that made the final“product”.The only information on wages and social securities comes from the Ministry ofFinances. An additional questionnaire was made in 1998 for further informationabout the structure of the government, but that practice was interrupted and not triedin the further steps.45/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme19Table 3.12: Value added components in data sources and national accountsadjustments for government, 2006Value added components____________________________________________________________________1. Salary Bonuses and Other Staff Expenditures (article 600)2. Social Insurance and health contributions (article 601)Total value added (1 + 2)As well as in estimation of value added of government the calculated value of valueadded of Compulsory social and health securities (wages, salaries and socialinsurance) is added.3.3.3.2 Intermediate consumptionIntermediate consumption in the Government is the material amount and servicesmade to accomplish their duties. The intermediate consumption is made of the entireelements used to produce output, which are expenses to maintain the normal work.Intermediate consumption is the article 602 – “Goods and other services”. In themore detailed level of the article we can define the object of the purchase. All thesegoods and services represent the intermediate costs taken by the general governmentto produce the final output of the government. This entire group is treated asintermediate consumption.Although these data are available some improvement can be made. The code accounthas a good detailed level of the expenditure but it is needed to define our approach tothis data in a better way. It is pointed out that some articles in the account treated intothe intermediate consumption should be treated as value added. For example thedetailed level of the article 6029005 (Expenses for Honorarium) should beconsidered as value added and not as intermediate consumption. The main thing is todetermine which element of the account should be considered for intermediateconsumption and which for value added and this will be part of future improvements.46/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme20Table 3.13: Intermediate consumption components in data sources andnational accounts’ adjustments for government, 2006Intermediate consumption components____________________________________________________________________1. Goods and other services (article 602)Total intermediate consumption____________________________________________________________________As well as in estimation of intermediate consumption of government the valuecalculated of value added of compulsory social and health securities (wages, salariesand social insurance) is added.3.3.3.3 DepreciationDeprecation means the deprecation of tangible assets during one year. Thisestimation is done only at the end of the year. The process of collecting the data isnot available in a short term period. The data come from the annual accountingstatements (balance sheets) of the governmental institutions. The Ministry ofFinances makes additional estimation of the deprecation within the governmentinstitutions.In our process the valued added is adjusted by adding the value of the deprecation tothe actual values to give a total value of the value added.The estimation of deprecation for the government is defined by using the data of totaldepreciation as it is in financial statements (data from Ministry of Finances). Todefine a value of depreciation for each branch in public sector actual value of SalaryBonuses and Other Staff Expenditures are firstly divided by each public sectorcompared with the total Salary Bonuses and Other Staff Expenditures of the publicsector. Respective ratio is used to divide the value of deprecation into all sectorsassuming that the level of deprecation is the same as the level of wages and salariesmade by an institution during period (the sector with the higher wages and salarieshas the higher depreciation),. The estimation for the deprecation, in the cases ofmissing data (2007) is defined by using the previous year value of the deprecationmultiplied by the respective growth rate of deprecation during the last year(DeprecationT-1/ Deprecation T-2 ).The GVA of government has included the depreciation as it is in the financialstatements and not the consumption of fixed capital as required by ESA95, for theabsence of other data that are part of consumption of fixed capital (foreseeableobsolescence).47/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.3.3.3 The procedure for estimations of indicatorsBy analyzing in more detail the expenditure data from government budget comingfrom the Ministry of Finances we can see an enormous effect of data redundancyfrom some of the fields. Data redundancy is the effect of repetition of data indatabase. The reason we need to pay attention to this case is to avoid having adatabase overpopulated with data that repeat itself thousands of times. This process isbasically an IT process that involves the process of normalization of the database(reconstructing the database in a more dynamic and more effective way). For theNational Account purpose a relatively analytic database is established for furtherimprovement and implementation to the data source.The first step taken is by dividing the structure into a more analytic one. First astructure of the institution is built. A single institution is part of the same district, andis local or not, etc in the same way for each record. Only one district and one NACEcode group might be allocated to one single institution, but some institutions mayhave more than one NACE code and for this reason the institutions are grouped inthree institutional groups.- only one activity;- two or more activities;- non governmental institutionsThe institution into the fist group follows only one activity and the futureclassification using NACE is from the data of NACE group. For example: “MotherTheresa" University Hospital Center has as its main activity health care, section N ofNACE Rev 1.1. All the expenditure made by this institution is targeted at theimprovement of the health care process. This institution doesn’t have any othersecond activity (not a relevant one) and its output is mainly non-market oriented. Thegeneral government institutions are good cases of this group, because they have onlyone main activity and they firmly stick to it.The second group is made by institutions the main activities of which are different.All these institutions have a general government activity (NACE 75.11), but if welook into more detail at the expenditure, we can see that the kinds of activities aremore than one. We keep these data separated because they need a further study and afurther improvement. This group mainly includes local institutions likemunicipalities etc.The third group covers all non government institutions that are part of the data fromthe Ministry of Finances. These can be institutions that are partially owned by thegovernment like Vodafone, AMC, INSIG (telecommunication institution having thegovernment as share holder), other institutions that receive subsidies from thegovernment and governmental institution that are open toward market output. These48/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmedata come in a more secure way from annual balance sheets and the VAT data thatare provided on a monthly basis.The second step taken is grouping all expenditure in the database of budget (listed inthe table below) into three main groups (articles):- Salary Bonuses and Other Staff Expenditures (article 600);- Social Insurance and health contributions (article 601);- Goods and other services (article 602);and cross table of these groups with each activity.21Table 3.14: Type of expenditureClassSubClass ArticleSubArticle Analysis Description6 60 600 Salary bonuses and other staff expenditures6 60 600 60016001001-6001099 Salaries of permanent staff6 60 600 60026002100-6002900 Salaries of temporary staff6 60 600 60036003100-6003900 Bonuses6 60 600 6009 6009000 Other personnel expenses6 60 6016010000-6011000 Social Insurance and health contributions6 60 602 Other goods and services6 60 602 60206020100-6020900 Materials and general office supplies6 60 602 60216021001-6021099 Special materials and services6 60 602 60226022001-6022099 Services from third parties6 60 602 60236023100-6023900 Transport costs6 60 602 60246024100-6024200 Travel expenditure6 60 602 60256025100-6025800 Expenditure for maintenance of common6 60 602 60266026100-6026900 Expenditure for tenancy6 60 602 60276027100-6027900Compensation and expenditure for legalobligations6 60 602 60286028100-6028200 Expenditure related to loan borrowing6 60 602 60296029001-6029099 Other operating expenditure49/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.3.3 Financial services (Banking and Insurance services)The main data sources for estimating the production, intermediate consumption andvalue added for banking services are the balance sheets provided by the Bank ofAlbania, with which an agreement on exchange of data has been established. Thedata transmission includes: the centralized situation of the commercial banks and thebalance sheet of the Bank of Albania itself. Also, other data are used from FinancialSupervisory Authority, which receives annual financial statements for insurancemarket and its operators; securities market and its operators; private supplementarypensions market and its operators; other non-banking financial activities and passesthem in aggregated form.3.3.3.1 Output of banking servicesIn the case of financial activities of banking services their output is equal to the sumof actual service charges and the value of financial intermediation services indirectlymeasured (FISIM). In formal termsOutput of financial activities = FISIM + Actual services chargesThe service charges cover different kinds of revenues as commissions and fees. Thepaid commissions are considered as intermediate consumption expenditures.Financial intermediate services indirectly measure (FISIM) are estimated as servicecharge which is paid by the user of primary monetary services: deposits holdings aswell as credits (loan) lending services. FISIM is calculated as the difference betweenthe interests received and the interests paid. Yet, the estimations must be improvedlater on in accordance with the SNA’ 93 rules. The estimates of outputs includeincome of own capital. The data on own capital and its income are provided by theAlbanian National Bank.According to the Commission Regulation 1889/2002, FISIM is not allocated yet byuser sectors and user industries. The regulation demands FISIM allocation forservices of institutional sectors.So far, FISIM was not broken down by industries / institutional sectors but wasconsidered as intermediate consumption of a nominal sector with zero output andnegative value added (equal but opposite as to intermediate consumption).3.3.3.2 Intermediate consumption of banking servicesIntermediate consumption covers the expenses for water, energy, small repairs,different other kinds of administrative expenses including travel and transport of theemployees50/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme22Table 3.15: Output and intermediate consumption in data sources forbanking services, 2006____________________________________________________________________Components in data sources1. Bank services and commissions2. Other business and operating leasing services3. Financial services, netOutput in data sources (1 + 2 + 3)Plus: FISIMOutput in national accounts1. Costs of materials2. Services3. Bank servicesIntermediate consumption in data sources (1 + 2 + 3)3.3.3.3 Output of insurance servicesOutput of insurance activities covers both the direct insurance output plusreinsurance one. The output is calculated as difference between premiums receivedand claims paid. For the time being the estimates are made on a cash basis and not onan accrual one. Output of reinsurance activity is estimated by using data from thebalance of payments’ data.3.3.3.4 Intermediate consumption of insurance servicesIntermediate consumption for insurance activities is covering the same kind ofexpenses as explained above for banks and costs of insurance acquisitions as well,other expenditure on goods and services, other technical charges, other managementcosts, and reinsurance balance.23Table 3.16: Output and intermediate consumption in data sources forinsurance services, 2006____________________________________________________________________Components in data sourcesActual premiums payablePlus: premium supplementsLess: due claimsLess: increases in technical provisionsPlus: other insurance revenuesOutput in national accounts1. Materials and supplies2. Other technical charges3. Other administrative costs4. Reinsurance balanceIntermediate consumption in national accounts (1 + 2 + 3 + 4)51/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.4 The role of direct and indirect estimation methodsThe estimation of annual GDP by production approach is based on direct estimationmethods and indirect method is not used till now. The annual data sources arestandard and the same for each year.3.5 The roles of benchmarks and extrapolationsThe work is carried out by using all data sourcing available and for grossing upimputation method is used at the fullest extent of disaggregating, both to ensure goodreliability of the estimates and to provide a sufficiently detailed breakdown to reflecttrends in the various sectors (for agriculture, financial and non financial enterprisesbenchmark and extrapolation year are not used). The benchmark year (2001) andextrapolation are used only for estimation of dwelling activities (imputed rent) and inthe following years price and volume indexes are used for estimation of indicators.3.6 The main approaches adopted with respect to exhaustivenessTo ensure exhaustiveness of GDP estimates, the staffs at the office of nationalaccounts has used the so-called “expert” method to measure economic undergroundactivities, using existing data sources covering the period 1996-2003. The method isbased on experts’ opinions where they assess the share of non observed economy ineach branch of economic activity. This share is then used for grossing up data onoutput, intermediate costs and value added for each branchThe production approach to estimate GDP, the methodology currently adopted fornon observed economy estimations, suffers from a high degree of subjectivity. Forthis reason, INSTAT Albania envisages its improvement and moving to a newmethodology largely based on a statistical approach. At the end of 2005 INSTATfinalized the methodological revision of GDP for the period 1996-2002. The work onGDP revision already started in February 2004 when the co-operation and support byIMF and Twinning project 5 was intensified with many task forces in the area of nonfinancialnational accounts and pilot projects on exhaustiveness of GDP estimates.The main purpose of the revision was to improve the calculation of GDP at currentprices from the production and expenditure approach and particularly with criteria onexhaustiveness.5Twinning project was financially provided by European Commission andInternational Monetary Fund technically realized by ISTAT, Statistical Institute ofItaly, in partnership with Statistics Finland and the Hungarian Central StatisticalOffice in framework of SAA and CARDS assistance program.52/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeA separate estimate is made for the “non-observed” economy, comprising allbusiness activity undertaken by enterprises that are not recorded in the BusinessRegister (and therefore not in the SBS), nor in the VAT data. The method involvesthe comparison of the level of employment recorded in the observed economyestimates with data on labor supply recorded in the LSMS. The difference gives thenumber of employees outside the observed economy and implicitly includes anadjustment for under-reporting of employment in the data on observed economy.Estimates of value added per employee are made on the basis of similar ratios fromthe observed economy data, and applied at branch and size group level to the numberof workers in the non-observed economy. The accuracy of the LSMS at activity levelmay not be good enough to apply the methodology at activity level.All main exhaustiveness adjustments within the compilation of GDP by theproduction approach were already mentioned in the chapter 7. Total exhaustivenessadjustments of GDP 2006 are estimated at 228 450 million LEK or 28.7 percent ofGDP (without illegal activities). The purpose of Chapter 7 is to present mainmethods and sources of adjustments for non-response, misreporting, non-registeredactivities of households and other statistical deficiencies. Also, some currentproblems and weaknesses along with further steps on improvement of exhaustivenessare explained in this chapter. Exhaustiveness adjustments are explained in moredetail in Chapter 7.24Table 3.17: Size of adjustments in National Accounts, 2006Description Total ObservedIn Million LEKAdjusted*1,525,496 1,066,693 458,803Output at basic pricesLess: intermediate consumption at purchasers’prices 730,311 499,959 230,353Less: financial services indirectly measuredFISIM 30,446 30,446 0Gross value added at basic prices 764,739 536,288 228,450Plus: taxes on product 121,188 121,188Less: subsidies on products 3,718 3,718Gross domestic product at market prices 882,209 653,758 228,450* Non observed economy53/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.7 Agriculture, hunting and forestry (NACE Rev.1: A)3.7.1 IntroductionDuring the last decade, agriculture has represented between a fifth and a third of totalvalue added. The significance of this sector is also proved by the fact that more thanhalf of the population (55 percent) resides in rural areas, accounting for 51.4 percentof the households.Corporations, unincorporated enterprises (self-employed), individual farmers and insmall part NPISH as well are engaged in this production. Individual farmers arefarmers who do not need to register.3.7.2 Data sources and methodsFor calculation of production, intermediate consumption and value added forAgriculture, INSTAT uses information provided by Statistics Department at theMinistry of Agriculture Food and Consumers’ Protection, and Directorate ofFisheries Policy in the Ministry of Environment, Forests and Water Administration.This calculation is made by INSTAT, Agriculture Department.The methodology for the agricultural surveys, which are under the responsibility ofMinistry of Agriculture, is mentioned in paragraph 3.1.6.2.4.1. This methodologyused since 1994, started with 400 segments and then reached to 600 segments.Ministry of Agriculture (Department of Statistics) carries out two surveys per year.In December it carries out the annual survey and in July it carries out the survey onthe surface of the plant and some dairy products. The aim of these surveys is tocollect statistical data and information processing on: agricultural area used forplanting, productivity and production by the cultures and production of agriculturalcrops in volume, number of heads of livestock by type, productivity in the productionof milk and meat and live weight, etc. Also, the greenhouse survey, the outlier surveyand other data collected by village from Regional Directorate of Agriculture, areused. Hunting, forestry covers the conservation and development of forests, forexample forest plantations; logging and gathering of forest products such as berriesand mushrooms and hunting. Surveys also include data on expenses for seeds(quantity and prices), plants, and other costs of plantation, fuel, electricity, water,value of veterinary services or other services and value of material expenditures.Ministry of Agriculture also collects data for each agriculture product (weekly,monthly and annual prices), but INSTAT uses only annual average prices (collectedin annual survey) and from 2007 it uses monthly prices for estimation of quarterlyindicators.54/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeINSTAT does not conduct any survey for agriculture purpose and is responsible onlyfor census of agriculture and estimation of the national accounts’ indicators.25Table 3.18: Agriculture, hunting and forestry, 2006In Million LEKGross Value AddedOutputIntermediatePercentageTotal StructureConsumptionof TotalTotal 223.025 70.018 153.007 100.0 19.24Crop production 91.808 10.521 81.287 53.12 10.22Livestock production 86.099 44.555 41.544 27.15 5.22Agriculture services 13.212 6.974 6.238 4.08 0.78Hunting, Forestry 4.587 1.605 2.982 1.95 0.38Exhaustiveness 27.319 6.363 20.956 13.70 2.64Final gross value added of agriculture, hunting and forestry production is estimatedat 153 007 million LEK or 19.24 percent of the total gross value added in 2006.3.7.3 Output in data sources, corrections and adjustmentsThe aim of the agricultural indicators (production, intermediate consumption andvalue added) is to describe and analyze the formation of income from economicactivity in agriculture (income derived by the main activity and secondary activity).In this context, the main importance is measurement of production.A first step in this aspect is considered the drafting of the balance sheets’ quantity ofeach agricultural product and livestock (sources and use), along with data taken fromthe area and performance, to determine the production in quantity. Analysis of thenumber of heads of livestock is done for each category of live animals in particularfor subsidiary agriculture. Estimate for the number of heads is based on number ofheads for each category of cattle sheep and goat pigs, poultry.Agricultural production refers to different categories such as: wheat, maize, othercereals, potatoes, oilseeds, tobacco, other industrial plants, wines, forestry, freshvegetables, fruits, flowers, nursery plants, other vegetable products, orchards,vineyards, full-grown cattle, calves, pigs, horses, sheep, goats, and fowls.The National account production of this branch contains the following:– Crop production;– Livestock production;– Agricultural services55/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeBy the consultations with experts from Ministry of Agriculture, the price productiondoes not include taxes on products due to the lack of data for value added tax andother tax in this sector, which means the output at basic price, is equal to the one atproduction price. In particular:– Crop production is measured by using data on quantities and prices fordifferent kinds of vegetal products. The elaboration of production wasdirectly made: the quantity of production multiplied by the average price(there are no different prices for different uses).– Livestock production includes deliveries of live animals for slaughter orexport and change in livestock net of imports of animals for breeding. Thechange in livestock is broken down into gross fixed capital formation andchange in inventories. Gross fixed capital formation is equal to the variationover the year of breeding males over one year’s old, dairy cows, and nursecows. It also includes animal products such as: milk, eggs, honey, etc.Assessment of production of milk from cows is made on the basis of theiraverage annual number, resulting from the number of heads and the averageproductivity of milk per cow. The same reasoning is followed for theproduction of milk from sheep and goat. Number of heads referred to thesituation in the beginning of the year. (1 January).Assessment for theproduction of meat for each animal species is based on calculations made forthe number of heads, namely, the number of heads to slaughter for anyanimals and the average weight for the head of slaughter.– Agriculture services mainly refer to the irrigation data available fromMinistry of Agriculture as total sum for irrigation (the data are not availablein detail)Hunting and forestry covers the conservation and development of forests, forexample forest plantations; logging and gathering of forest products such as berriesand mushrooms and hunting.Estimates for forestry production cover:- expenditures for a forestation, up keeping of forests, other specific works;- the value of fallen trees;- revenues obtained from hunting and fishing for entertainment or sport;- value of forest fruits and plants picked and sold;- value of forest fruits and plants picked by the households for own consumptionThe data sources for hunting and forestry are the statistics available at the Ministry ofAgriculture and Food and the consolidated budget and no adjustments are made bynational accounts.The own-account production of agricultural goods for owns final consumption isincluded in the production of agriculture. This data are available from LSMS data56/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmeand data from balance of supply-use by Ministry of Agriculture on value of own –account production for final consumption.The questionnaire of survey on Agriculture production includes specifics itemsreferred to the work in progress. Thanks to these items a specific estimate of thiscomponent has been included in national accounts’ figures for adjustment of value ofproduction.Exhaustiveness adjustments are mostly estimated for misreporting of output for selfemployed(households) and are estimated by expert’s methods. The non observedeconomy of Agriculture sector is estimated by “expert method” due to lack ofsources’ information on labor market. The “expert method” is based on experts’opinions where they assess the share of non observed economy in each branch ofeconomic activity. These experts provide percentages that represent the value ofoutput and intermediate consumption under-estimated in NACE A branches(Agriculture, hunting, forestry) and NACE B (Fishing). The percentages are appliedin the observed output and intermediate consumption of these two sectors.Total output in agriculture, hunting and forestry is estimated at 223 025 million LEK,of which exhaustiveness adjustments at 27.319 million LEK or 13.70 percent of totalproduction in 2006.3.7.4 Intermediate consumption in data sources, corrections and adjustmentsIntermediate consumption for crop production includes the expenses made over theyear for seeds, chemical and natural fertilizers, electricity, water, paid services, fueland other materials. The adoption of the new questionnaire in 2004 of the surveyconducted by Ministry of Agriculture, allowed the quantification of these costs, andespecially the share of intra-unit consumption of feeding stuffs.To determine the exact value of intermediate consumption for livestock, initiated bythe elements of intermediate consumption specifying the cost that makes economicunit: Livestock food produced at the farm (in quantities and respective prices; thecalculations made at current prices and constant prices), food purchased by theeconomic unit, medicaments, veterinary services work from third parties and otherservices for livestock.Intermediate consumption for hunting and forestry covers expenses for seeds, plants,other costs of plantation, fuel, electricity, water, services, and material expenditures.The final value of intermediate consumption for total agricultural products isestimated at 73 360 million LEK in 2006.57/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.8 Fishing (B)3.8.1 IntroductionFishing activity takes place along the entire 450 km length of Albania’s coastline,including its 12 miles offshore territorial waters up to the international boundary.However for the most part it is concentrated along the continental shelf zone, whichon the Adriatic side in the north extends 25 miles, but only 2-4 miles on the side ofthe Ionian Sea. Fishing in Albania primarily includes marine fisheries, althoughlagoon and inland fishing does take place on a limited scale. During recent yearsAquaculture is being increasingly promoted with particular focus on carp fingerlingsand fish for general consumption (including sea farm). Individual fishermen do notregister because they are not obligated to register and they do not report their income.Gross value added of the fishing industry is estimated at 1 641 million LEK orslightly less than 0.21 percent of the total gross value added in 2006.26Table 3.19: Fishing, 2006In Million LEKGross Value AddedOutputIntermediatePercentageTotal StructureConsumptionof TotalTotal 4.062 2.421 1.641 100.0 0.21Fishing 3.333 2.077 1.256 76.54 0.16Exhaustiveness 729 344 385 23.46 0.053.8.2 Data sources and methodsData for fishing are taken by INSTAT from the Fishing Policy Division in theMinistry of Environment and are collected every month by the fishing districtinspectors which collect them directly from the boats. Other data provided by theFishing Division include the day number in sea, number of employees and number ofvessels, average prices, etc.An agricultural and environmental sector is responsible for calculation of indicatorsthat use national accounts for our purpose.3.8.3 Output in data sources, corrections and adjustmentsThe output is estimation used in the quantity of fish caught for each water categoryalso the respective price for each water category (water category is: marine fishing,lagoon, inland water, costal, aquaculture and mollusks).58/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeExhaustiveness adjustments are mostly estimated for misreporting of output for selfemployed(households) and are estimated by expert’s methods.Output in fishing is estimated at 4 062 million LEK in 2006.3.8.4 Intermediate consumption in data sources, correction and adjustmentsPercentage of the expense for each water category is taken; data comes from theFishing Policy Division estimate of expert. Expenses mainly include fuel, boatmaintenance, fishhook, fishnet etc.)Intermediate consumption in fishing is estimated at 2 421 million LEK in 2006.3.9 Extracting industry (C)3.9.1 IntroductionMining has a long tradition in Albania; however, this production has been graduallyabandoned and reduced in the 1990s to a rather small industry which is significantlysubsidized by the general government. Almost all mining production of chrome,copper, etc. is for export. From 2000 the subsidies of mining are completely reduced.Extracting industry is already part of private sector.Total gross value added of extracting industry in 2006 is estimated at 5.894 millionLEK or 0.74 percent of total gross value added.27Table 3.20: Extracting industry, 2006In Million LEKGross Value AddedOutputIntermediatePercentageTotal StructureConsumptionof TotalTotal 18.129 12.235 5.894 100.0 0.74Extracting industry of energyproducing materials10.031 6.796 3.235 54.89 0.41Extracting industry of exceptenergy producing materials6.447 4.768 1.679 28.49 0.21Exhaustiveness 1.651 671 980 16.63 0.1259/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.9.2 Data sources and methodsCoverage of accounting statements for enterprises is complete and output,intermediate consumption and gross value added are estimated under the sameprinciples, corrections and adjustment as for other industries.3.9.3 Output in data sources, correction and adjustmentsOutput in data sources for enterprises is equal to the value of sales, own accountproduction, changes in inventory of finished goods and work in progress. Output isadjusted for non-reporting and underreporting in data sources (exhaustivenessadjustments for output are estimated on the final value).Total output in extracting industry is estimated at 18 129 million LEK in 2006.3.9.4 Intermediate consumption in data sources, correction and adjustmentsIntermediate Consumption represents the value of products or services transformedor totally consumed during the production process. The use of fixed assets in work isnot taken into consideration. It is highlighted during consumption of fixed capital andpositive conceptual adjustment for FISIM is not done, because FISIM is not allocatedyet by each branch. Intermediate Consumption is equal by row and other materialplus other supplies and services.Intermediate consumption is estimated at 12.235 million LEK in 2006.3.10 Manufacturing (D)3.10.1 IntroductionPrivate sector produces 93.5 percent of total value added of the manufacturingindustry and the rest is produced by the public enterprises. With a 7.5 percent sharein total of gross value added in 2006 manufacturing is an important branchparticularly due to exports. In early 1990s production in the manufacturing industrywas reduced and the industry performance sustained the growth only until 1999 andtill now. Gross value added is estimated at 58.942 million LEK or 7.41 percent of thetotal gross value added in 2006.60/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAccording to gross value added, the most important industries are manufacture oftextile and leather products, manufacture of wood, paper, furniture; publishing andprinting, manufacture of basic metals and fabricated metal products and manufactureof food products and beverages.28Table 3.21: Manufacturing, 2006In Million LEKGross Value AddedOutputIntermediatePercentageTotal StructureConsumptionof TotalTotal 200.768 141.825 58.942 100.0 7.41Manufacture of productsbased on cereals10.352 7.919 2.433 4.13 0.31Other manufacture offood products17.552 13.071 4.481 7.60 0.56Manufacture of textileand leather products20.182 11.974 8.208 13.93 1.03Manufacture of wood,paper, furniture;13.368 8.881 4.487 7.61 0.56publishing and printingManufacture of coke,refined petroleumproducts and nuclear14.646 10.559 4.087 6.93 0.51fuelManufacture ofchemicals, chemicalproducts, rubber and6.442 5.107 1.335 2.27 0.17plastic productsManufacture of othernon-metallic mineral 24.581 18.905 5.676 9.63 0.71productsManufacture of basicmetals and fabricated 29.007 22.843 6.163 10.46 0.78metal productsManufacture ofmachinery and2.446 1.147 1.299 2.20 0.16equipmentExhaustiveness 62.192 41.419 20.773 35.24 2.6161/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.10.2 Data sources and methodsCoverage in data sources of manufacturing products is good for private enterprisesand complete for state enterprises (annual account statements and annual structurebusiness survey) Non-response is solved with the data of each branch and data ofmonthly VAT reports. (See the procedure above in 3.3 paragraphs).3.10.3 Output in data sources, correction and adjustmentThe final value of manufacturing output in national accounts at 200.768 million LEKin 2006 is estimated according to accounting statements (profit and loss accounts),annual structure business survey (profit and loss accounts) and administrative datasources (value added tax) as the sum of sales, changes in inventories (finished goodsand work in progress), own account production, trade margin and subsidies onproducts. These output components are standard and are estimated for all marketproducers.Output exhaustiveness adjustment for enterprises is necessary due to non-reportingand underreporting. These exhaustiveness adjustments are standard and are estimatedfor all industries.3.10.4 Intermediate consumption in data sources, correction and adjustmentConceptual corrections of intermediate consumption are standard and the same as forextracting industry, they do not include FISIM. Intermediate consumption inmanufacturing is estimated at 141.825 million LEK.3.11 Electricity, gas and water supply (E)3.11.1 IntroductionThe adverse impact of the electricity sector on the overall performance of Albaniaindustry is considerable. In fact, it is well known that energy plays an important rolein the economic development of every country and, during the last decade, Albaniahas faced a progressive growing need for energy. Unfortunately, the producingcapacity of the country has not changed enough in the face of the growing demandfor energy. The luck of energy in productive capacity was reflected in the importanceof import to cover the needs of households and enterprises.In this industry the production is mostly performed by large public enterprises whichare covered by data sources. Electricity production is adjusted to net figures byeliminating all intra industry transactions of electricity among primary production,transmission and redistribution.62/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeGross value added is estimated at 23.371 million LEK or 2.94 percent of the totalgross value added in 2006.29Table 3.22: Electricity, gas and water supply, 2006In Million LEKGross Value AddedOutputIntermediatePercentageTotal StructureConsumptionof TotalTotal 36.045 12.674 23.371 100.0 2.94Production of electricity 28.886 10.462 18.424 78.83 2.32Production of gas andwater supply3.11.2 Data sources and methods7.159 2.212 4.947 21.17 0.62Data sources coverage (annual accounting statements, annual structure businesssurvey) for enterprises is complete and output, intermediate consumption and grossvalue added are estimated under the same principles, corrections and adjustments asfor other industries.3.11.3 Output in data sources, corrections and adjustmentsThe total value of output in electricity, gas and water supply is at 36.045 millionLEK in 2006. Conceptual corrections of output are standard and the same as for otherbranches but are estimated at a net level by eliminating all intra transaction. Also alltransfers from government are excluded from output in this industry and shown asother subsidies on production (for 2006 government has not subsidized electricityproduction). For this industry only small coverage adjustments are necessary.3.11.4 Intermediate consumption in data sources, corrections and adjustmentsIntermediate consumption is estimated at 34 524 million LEK. Conceptualcorrections of intermediate consumption are standard and the same as for otherbranches, they do not include FISIM.3.12 Construction (F)3.12.1 IntroductionProduction in this industry is carried out by enterprises and own account constructionactivities of households. Self employed persons in construction recorded in businessregister are very low, because the most part of self employed are part of informalactivities. Construction in Albania is a growing business, offering great investmentopportunities, since the rapid urbanization in the past decade is causing a dramatic63/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmeincrease in the demand for new buildings. In addition, the biggest towns, particularlyTirana and Durres, are experiencing a considerable concentration of business: bothcities alone count for approximately 67 percent of all companies with foreignparticipation operating in Albania.Construction activities include a large number of small enterprises producingservices directly to households. Total gross value added of construction in 2006 isestimated at 123 277 million LEK or 14.30 percent of total gross value added.3.12 Construction (F)3.12.1 IntroductionIn this industry production is carried out by enterprises and own account constructionactivities of households. The number of self employed persons in constructionrecorded in business register is very low, because the majority of self employed arepart of informal activities. Construction in Albania is a growing business, offeringgreat investment opportunities, since the rapid urbanization in the past decade iscausing a dramatic increase in the demand for new buildings. In addition, the biggesttowns, particularly Tirana and Durres, are experiencing a considerable concentrationof business: both cities alone count for approximately 67 percent of all companieswith foreign participation operating in Albania.Construction activities include a large number of small enterprises producingservices directly to households. Total gross value added of construction in 2006 isestimated at 123 277 million LEK or 14.30 percent of total gross value added.30Table 3.23: Construction, 2006In Million LEKGross Value AddedOutputIntermediatePercentageTotal StructureConsumptionof TotalTotal 336.802 223.078 113.724 100.0 14.30Enterprises 151.429 110.975 40.454 35.57 5.09Exhaustiveness 185.373 112.103 73.270 64.43 9.213.12.2 Data sources and methodsFor enterprises’ data sources (annual account statements, annual business structurebusiness, VAT file) methods are the same as for other industries. Besides the mainactivity, data sources obtain other activities as well such as sales of constructionmaterial.64/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeOwn-account construction by households for all dwellings’ construction byhouseholds is not estimated yet, because the data from Household Budget Survey andLiving Standard Measure Survey are not solid data to be used for estimation of thispart.3.12.3 Output in data sources, correction and adjustmentsCoverage in basic data sources is not good and underreporting and misreporting isrelatively higher than other branches. Output equals the sum of sales on domesticmarket, changes in inventories (work in progress for this branch is significant), trademargin as the difference between the value of sale and the purchase value of soldgoods for resale (as mentioned in data sources like secondary activity), and ownaccount production which entirely consists of gross fixed capital goods.The final output value of the construction is estimated at 336 802 million LEK andinclude adjustment for misreporting (self employed persons) and underreporting andnone of them includes the own production of households.3.12.4 Intermediate consumption in data sources, corrections and adjustmentsConceptual corrections of intermediate consumption are standard and the same as forother branches, they do not include FISIM. Exhaustiveness adjustments arenecessary for coverage of non surveyed enterprises, misreporting and underreporting.Final intermediate consumption is estimated at 223 078 million LEK in 2006.3.13 Trade (G)3.13.1 IntroductionThe main activities of trade (wholesale, retail trade and repair services) are related tothe redistribution of goods. Primary output of this production is measured as thedifference between sales of goods (turnover) and the purchase value of sold goodsfor resale. Data sources turnover and the purchase value of sold goods for resale areshown separately and this allows direct estimation of trade margin as output ofwholesale and retail trade as well as trade output as secondary activity in all otherbranches. However, it is likely that this “statistical” contribution largely underevaluates the actual contribution of trade to the GDP growth, owing to the presenceof a large number of informal businesses in this branch, whose value added is verydifficult to be accounted properly.Wholesale and retail trade activities include a large number of small enterprises andtotal gross value added of this branch is estimated at 139 913 million LEK or 17.6percent of total gross value added in 2006.65/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeTable 3.24: Trade, 2006In Million LEKGross Value AddedOutputIntermediatePercentageTotal StructureConsumptionof TotalTotal 211.520 71.607 139.913 100.0 17.60Enterprises and selfemployed113.544 40.582 72.962 52.15 9.18Exhaustiveness 97.976 31.025 66.951 47.85 8.423.13.2 Data sources and methodsFor observed economy data sources and methods are the same as for other branchesmentioned below.3.13.3 Output in data sources, corrections and adjustmentsThe main part of output of this branch is trade margin and this value is adjusted forchange in inventories of goods bought for resale. Exhaustiveness adjustments arenecessary for small enterprises and for non-reporting and underreporting of output.The final output value of the construction in 2006 is estimated at 211 520 millionLEK and include adjustment for misreporting and underreporting.3.13.4 Intermediate consumption in data sources, corrections and adjustmentsConceptual corrections of intermediate consumption are standard and the same as forother branches, they do not include FISIM. Intermediate consumption in data sourcesis reduced for non-reporting as well as for other statistical deficiencies in a totalvalue of 71 607 million LEK in 2006.3.14 Hotels and restaurants (H)3.14.1 IntroductionThis branch mostly covers hotel services and restaurant services. Generalgovernment producers in this branch are homes for students and pupils which cover apart of their cost by general government financing.Gross value added is estimated at 26 212 million LEK or 3.30 percent of the totalgross value added in 2006.66/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme31Table 3.25: Hotels and restaurants, 2006In Million LEKGross Value AddedOutputIntermediatePercentageTotal StructureConsumptionof TotalTotal 52.155 25.943 26.212 100.0 3.30Hotels and restaurants 32.624 17.278 15.346 58.55 1.93Exhaustiveness 19.531 8.665 10.866 41.45 1.373.14.2 Data sources and methodsFor hotel and restaurants data sources (annual account statements, annual businessstructure business, VAT file) methods are the same as for other industries.For general government data, sources are provided by the Treasury Department ofMinistry of Finances and the method used for estimation of output is cost method.3.14.3 Output in data sources, corrections and adjustmentsThe main part of output of this branch is output for hotels and restaurants activitiesand this value is adjusted for change in inventories of goods and exhaustivenessadjustments are significant in this branch for small enterprises and for non-reportingand underreporting of output. Within these adjustments output is not corrected fortips for the absence of data.Total output of this branch is estimated at 52 155 million LEK in 2006.3.14.4 Intermediate consumption in data sources, corrections and adjustmentsConceptual corrections of intermediate consumption are standard and the same as forother branches, they do not include FISIM. Intermediate consumption in data sourcesis reduced for non-reporting as well as for other statistical deficiencies in a totalvalue of 25 943 million LEK in 2006.3.15 Transport, storage and communication (I)32Table 3.26: Transport and communications, 2006In Million LEKGross Value AddedOutputIntermediatePercentageTotal StructureConsumptionof TotalTotal 152.507 77.543 74.964 100.0 9.43Post and Communication 55.293 23.679 31.614 42.17 3.98Transport 51.307 31.258 20.049 26.75 2.52Exhaustiveness 45.907 22.606 23.301 31.08 2.9367/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.15.1 Communication3.15.1.1 IntroductionIn the few last years, communication has been one of the most dynamic sectors inAlbania. It is improved both in terms of diffusion on the territory and in the amountof information distributed throughout the country. This growth has been ensured as aresult of increased investment rates in the fixed line telephone system, as well as theever growing mobile market.This branch is almost entirely dominated by communication corporations (Vodafone,AMC, Eagle and ALBTELECOM) which represent a large part of total gross valueadded of communication in 2006.3.15.1.2 Data sources and methodsFor enterprises data sources (annual account statements, annual business structurebusiness, VAT file) methods are the same as for other industries.Gross valued added of this branch is estimated at 31 614 million LEK or 3.98 percentof the total of gross value added in 2006.3.15.1.3 Output in data sources, corrections and adjustmentsCoverage in basic data sources is good and adjustment for underreporting andmisreporting is relatively much lower than other branches. Output equals the sum ofsales, changes in inventories, trade margin as the difference between the value of saleand the purchase value of sold goods for resale (like secondary activities).Total output of this branch is estimated at 55 293 million LEK in 2006.3.15.1.4 Intermediate consumption in data sources, corrections and adjustmentsConceptual corrections of intermediate consumption are standard and the same as forother branches and the total value is estimated at 23 679 million LEK in 2006.3.15.2 Transport3.15.2.1 IntroductionThe large contribution of transport comes from the tendency to a vast use of theprivate road transport. On the other hand the railway transport has suffered adecrease of its volume of work in goods and in passengers, which has been a result of68/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmethe competition between this kind of transport and road transport. Railway transportis subsidized by general government.3.15.2.2 Data sources and methodsFor enterprise, data sources (annual account statements, annual business structurebusiness, VAT file, and budget database from Ministry of Finances) methods are thesame as for other industries. Gross valued added of this branch is estimated at 43 350million LEK or 5.45 percent of the total of gross value added in 20063.15.2.3 Output in data sources, corrections and adjustmentsCoverage in basic data sources is good for railway transport but is not good for otherkind of transport (road transport and supporting transport activities; travel agencies)and adjustment for underreporting and misreporting is relatively higher for transport.The output of transport is estimated as other branches on industry and exhaustivenessadjustments are significant in this branch for small enterprises and for non-reportingand underreporting of output.Total output of this branch is estimated at 97 214 million LEK in 2006.3.15.2.4 Intermediate consumption in data sources, corrections and adjustmentsConceptual corrections of intermediate consumption are standard and the same as forother branches and the total value is estimated at 53 864 million LEK in 2006.Exhaustiveness adjustments are necessary for coverage of non surveyed enterprises,misreporting and underreporting.3.16 Financial intermediation (J)3.16.1 IntroductionGross value added of this branch in 2006 is estimated at 40 076 million LEK or 4.07percent of the total of gross value added. Total output is estimated at 40 076 millionLEK and the final value of intermediate consumption is thus estimated at 7 702million LEK in 2006.33Table 3.27: Financial intermediation, 2006In Million LEKGross Value AddedOutputIntermediatePercentageTotal StructureConsumptionof TotalTotal 40.076 7. 702 32.375 100.0 4.07Banking services 36.846 6.894 29.952 92.51 3.77Insurance 3.230 807 2.423 7.49 0.3069/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.16.2 Banking services3.16.2.1 IntroductionThe Albanian banking system dominates the financial sectors, counts 16 banks, andis characterized by a high foreign bank participation and continuous growth. Theenvironment has become very dynamic, especially after the privatization of theSavings Bank (currently Raiffeisen bank). This has been shown in the increase of therange of products provided by banks, in their geographic expansion, and in theboosting of the lending activities. These developments have been associated by asteady decrease in the market concentration, which, however, remains the highestcompared to other countries in the region.3.16.2.2 Data sources and methodsBanking services include the Bank of Albania (central bank) and other commercialbanks, savings banks and other savings and loan undertaking units.The Bank of Albania is an autonomous and independent institution and it supervisesall other monetary intermediation units. All banking institutions provide annualfinancial statements to the Bank of Albania, which passes the data in an aggregatedform.Gross valued added of this branch in 2006 is estimated at 29 952 million LEK or3.77 percent of the total of gross value added.3.16.2.3 Output in data sources, corrections and adjustmentsThe procedure for calculation of output is mentioned in the 3.3.3 paragraph and totaloutput of insurance activities is estimated at 36 846 million LEK in 20063.16.2.4 Intermediate consumption in data sources, corrections and adjustmentsThe procedure for calculation of intermediate consumption is mentioned in the 3.3.3paragraph and total intermediate consumption of banking services is estimated at 6894 million LEK in 200670/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.16.3 Insurance activities and other financial activities3.16.3.1 IntroductionInsurance corporations, non-banking financial activities and pension funds aresupervised by the Financial Supervisory Authority (FSA) established in 2006, whichis a public independent institution. The FSA is responsible for the regulation andsupervision of non-banking financial system and the operators of the sector. Themain areas of their activity are regulation and supervision:of insurance market and its operators;of securities market and its operators;of private supplementary pensions market and its operators;of other non-banking financial activities;Insurance market is the largest and most developed market across non-bankingfinancial markets, whereas securities and private pensions markets are in their initialdevelopment stage. Albanian insurance market, despite challenges and issues, hasrecently been subject to a positive development trend and it presents a large potentialin terms of quality and quantity expansion. There were ten insurance companies inthe market in 2006, of which seven are non-life insurance companies, two are lifeinsurance companies and one company offers both non life and life insuranceproducts.The securities’ market continues to be prevailed by trading in the primary andsecondary market of the Government debt instruments (T-Bills and T-Bonds), whilethe securities stock market remains still undeveloped and mainly limited in the offexchangemarket registered with the Albanian Share RegisterWith the adoption of Law ”On Supplementary Pensions and Private PensionsInstitutions” as of 1995, the activity of the first companies in private pensions areacommenced in 2006. Regardless of this fact, the existing private pension’sinstitutions have a number of contributors, which stands at minimum levels requiredby legal framework. Three pension companies operate in the private andsupplementary pensions market. Range of activity in this market is limited.3.16.3.2 Data sources and methodsFinancial Supervisory Authority receives annual financial statements and passesthem in an aggregated form.In the standard data source for financial intermediation, auxiliary activities tofinancial intermediation are not included in the estimation of the indicators.Gross valued added of this branch in 2006 is estimated at 2 423 million LEK or 0.30percent of the total of gross value added71/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.16.3.3 Output in data sources, corrections and adjustmentsThe procedure for calculation of output is mentioned in the 3.3.3 paragraph and totaloutput of insurance activities is estimated at 3 230 million LEK in 20063.16.3.4 Intermediate consumption in data sources, corrections and adjustmentsConceptual corrections of intermediate consumption for banking services arestandard and the same as for other branches and the procedure for calculation ofintermediate consumption is mentioned in the 3.3.3 paragraph.Total intermediate consumption of insurance activities is estimated at 6 894 millionLEK in 20063.17 Real estate, renting and business activities (K)3.17.1 IntroductionIn this branch main activity is real rent and renting. Besides real estate and renting,production of business activities and institutional research of government are alsoimportant.Gross valued added of this branch in 2006 is estimated at 76 111 million LEK or9.57 percent of the total of gross value added.34Table 3.28: Real estate, renting and business activities, 2006In Million LEKGross Value AddedOutputIntermediatePercentageTotal StructureConsumptionof TotalTotal 120.642 44.531 76.111 100.0 9.57Real rent and imputedrent 66.002 19.048 46.954 61.69 5.90Business activities 41.681 20.420 21.261 27.93 2.67Exhaustiveness 12.959 5.063 7.896 10.37 1.003.17.1.1 Real estate and renting3.17.1.1.1 IntroductionThese activities cover the actual rent and imputed rent as well. As in other countriesin transition also in Albania the dwellings were very quickly included in the72/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmeprivatization process; they were rapidly bought by individuals thus becoming privateproperty. Therefore an estimation of the imputed rent was needed. The first estimatesof imputed rent (rent considered as being paid by the owners of dwellings) are basedon the data of stock of dwellings and estimates of the rent paid per square meter.The value of the imputed rent for 2006, is 58 611 million LEK.Almost of the total gross value added of this branch is estimated for housing services(services of owner occupiers). Housing services of owner occupiers is valuedaccording to similar market rental services. As approximately 94 percent ofhouseholds live in own houses and apartments and only 6 percent in rented services.Actual rent covers the rent for publicly-owned dwellings and the rent paid to privateowners who rent dwellings (also some information coming from the CPI compilationwas used).3.17.1.1.2 Data sources and methodsHousing services of owner occupiers (including holiday apartments) are estimated inthe benchmark year 2001 using data from Census of Population and Dwellings innumber of dwellings divided per renter, owner occupant and rent free and by eachdistrict. Also are used data from Household Budget Survey and Living StandardMeasure Survey for rent paid per square meter by renter. For up- dating figures after2001, are using the data from number of building permits for dwellings (squaremeter, number of new apartments and new country house).The data taken into account for the calculation of imputed rent are (year 2001):- number of dwellings inhabited and by owner occupied dwelling dividedby four stratum (coast, mountain, center and Tirana city);- number of dwellings inhabited by renter divided by four stratum (coast,mountain, center and Tirana city);- number of dwellings inhabited by renter on a free basis divided by fourstratum (coast, mountain, center and Tirana city);- average of square meter of dwelling for each stratum- total of rent paid by renterThe cost approach is not used yet for estimation of housing services of owneroccupiers.3.17.1.1.3 Output in data sources, corrections and adjustmentsBased on the data mentioned above firstly it is estimated the average price per squaremeter dividing total of rent paid by renter with the number of dwelling inhabited byrenter and dividing again by average meter square of dwelling (separately for eachstratum).73/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeImputed rent is estimated by multiplying the average of square meter of dwellingwith number of dwelling and multiplying again with average price for square meterpaid by renter, for each type (owner or renter) and for each stratum.Total output of this industry is estimated at 66 002 million LEK in 20063.17.1.1.4 Intermediate consumption in data sources, corrections and adjustmentsThe value of intermediate consumption is estimated at 19.048 Million LEK andconceptual corrections of intermediate consumption for rent are calculated by usingthe ratio of 29 percent (decided by foreign expert in the framework of IMF project)to the total value of output for imputed rent and rent paid by households.3.17.1.2 Business activities3.17.1.2.1 Data sources and methodsFor business activities and government producers (research and developmentinstitutions), data sources are the same as for other branches (annual accountstatements, annual business structure business, VAT file)Gross valued added of this branch in 2006 is estimated at 29 157 million LEK or3.67 percent of the total of gross value added.3.17.1.2.2 Output in data sources, corrections and adjustmentsConceptual output corrections for business activities are standard as for otherbranches. In business activities exhaustiveness adjustment are significant particularlyfor a large number of small enterprises.Total output of this industry is estimated at 54 640 million LEK in 20063.17.1.2.3 Intermediate consumption in data sources, corrections and adjustmentsIntermediate consumption conceptual corrections are standard and the same as forother industries. Exhaustiveness adjustments are necessary for coverage of nonsurveyedenterprises, misreporting and underreporting. The final value ofintermediate consumption is thus estimated at 25 483 million LEK in 2006.74/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.18 Public administration and defense; compulsory social security (L)3.18.1 IntroductionThe Government in Albanian Approach is divided into two parts: Centralgovernment and Local government.This is mainly an institutional division of the General Government and in practicehas no large impact on measurement of figures.6The general government is the main structure of the government. It is made ofimportant institutions (Ministry of Finance, Ministry of Defense etc) otherinstitutions like (Hospitals, Universities, etc.) or even other institutions (like charityfond, libraries etc).The Central Government includes the non-market institutions,since they provide a lot of services to the final consumer (to the household or to thegovernment itself) with less that 50 percent of the market price.The Ministry of Finance usually uses the data about the general government and theirstatistics are focused on this part of the data. It is a future plan to implement the localdata in a separated way. This data could be used just as reference of the original datawe receive (to have a reference to double check the original data).The Local Government is made from the institutions at a local level. They areinstitutions like city halls and municipalities. The Local Government has lately a6 Data from http://www.albic.net75/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmeslightly wider autonomy on the management of the expenditure. They manage theirexpenditure and present a monthly report.Some of these institutions, especially in small regions are treated as base receiver offunds even though they are not the final step. This case is taken into account andsome improvements to the data are made to establish the real final step and the realdestination is extrapolated from this data.The number of activities made by a specific local government is higher than the onemade by General Government. The structure of a local government involves morethan one activity, like construction of roads, reconstruction of buildings, socialbenefits, etc.Gross valued added of this branch in 2006 is estimated at 35 174 million LEK or4.42 percent of the total of gross value added.35Table 3.29:2006Public Administration and defense; compulsory social security,In Million LEKGross Value AddedOutputIntermediatePercentageTotal StructureConsumptionof TotalTotal 51.165 15.991 35.174 100.0 4.42Public administration 48.062 15.991 32.071 91.18 4.03Depreciation 3.103 - 3.103 8.82 0.393.18.2 Data sources and methodsThe only data source for these institutions is the Ministry of Finance. All theseinstitutions make annual accounting statements, but they are directly delivered to theMinistry of Finance, and are used only for the purpose of the ministry like internaldata, not for outsider of the Ministry of Finance.The main source of the data used by national accounts is the structure of theexpenditure by the Ministry of Finance (budget database). This structure is availablein monthly interval period and the data are available in the official web site of thisministry. The structure is mainly based on the government accounting system. Eachexpense is detailed into every element from the institute to the main reason of thisexpenditure.The actual data are based on cash basis. The accrual base, even though morepreferred, is not yet available76/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.18.3 Output in data sources, corrections and adjustmentsThe procedure for calculation of output is mentioned in the 3.3.2 paragraph and totaloutput of this branch is estimated at 51 165 million LEK in 20063.18.4 Intermediate consumption in data sources, corrections and adjustmentsThe procedure for calculation of intermediate consumption is mentioned in the 3.3.2paragraph and total intermediate consumption of this branch is estimated at 15 991million LEK in 20063.19 Education (M)3.19.1 IntroductionEducation in Albania comes from a highly centralized and controlled tradition. Priorto 1991, the administration of education at all levels was prescribed nationally inconjunction with economic planning. At present, the staffing, management,financing, building and up-keeping of schools remain to a large extent the domain ofcentral authorities or their district-level branches. Private education has recently beenintroduced. At the pre-elementary level, elementary and vocational secondary levels,there are several private institutions, which are self-financed establishments.36Table 3.30: Education, 2006In Million LEKGross Value AddedOutputIntermediatePercentageTotal StructureConsumptionof TotalTotal 28.749 4.070 24.679 100.0 3.10Public education 24.466 2.142 22.324 90.45 2.80Private education 4.283 1.928 2.355 9.55 0.303.19.2 Data sources and methodsThe main source for the public sector used by national accounts is the structure of theexpenditure by the Ministry of Finance (budget database). For the private sector therewas coved by the IPA 2008 project (Chapter 24). The depreciation of the privateeducation is defined by using the data from the annual accounting statements(consumption of fixed capital account) that are detailed for each institutional level.These values are adjusted with the value of public sector summed together.Total value added of this branch is estimated at 24 679 million LEK in 200677/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.19.3 Output in data sources, corrections and adjustmentsThe procedure for calculation of output for public education is mentioned in the 3.3.2paragraph and the estimation of output on private education is added. Conceptualoutput corrections for private education are standard as for other branches.Total output of this branch is estimated at 28 749 million LEK in 20063.19.4 Intermediate consumption in data sources, corrections and adjustmentsThe procedure for calculation of intermediate consumption for public education ismentioned in the 3.3.2 paragraph and the estimation of intermediate consumption onprivate education is added. Conceptual corrections of intermediate consumption forprivate education are standard as for other branches.Total intermediate consumption of this branch is estimated at 4 070 million LEK in20063.20 Health and social work (N)3.19.1 IntroductionThe health sector in Albania is the same as in the education sector. At present besidespublic sector the private sector has been introduced as well (dentist’s, laboratory test,small hospital etc).37Table 3.31: Health, 2006In Million LEKGross Value AddedOutputIntermediatePercentageTotal StructureConsumptionof TotalTotal 16.808 5.921 10.887 100.0 1.37Public Health 13.782 4.438 9.344 81.99 1.18Private Health 3.026 1.483 1.543 18.01 0.193.19.2 Data sources and methodsThe main source for the public sector used by national accounts is the structure of theexpenditure by the Ministry of Finance (budget database). For the private sector therewas coved by the IPA 2008 project (Chapter 24).Total value added of this branch is estimated at 10 887 million LEK in 200678/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.19.3 Output in data sources, corrections and adjustmentsThe procedure for calculation of output is the same as education sector and the totaloutput is estimated at 16 808 million LEK in 2006.3.19.4 Intermediate consumption in data sources, corrections and adjustmentsThe procedure for calculation of intermediate consumption is the same as educationsector and the total intermediate consumption is estimated at 5 921 million LEK in2006.3.21 Other community, social and personal service activities (O)3.21.1 IntroductionParticular activities such as refuse disposal, refuse sewage and sanitation areincluded in community personal and social activities, also membership organizationsactivities as well as sports cultural or any recreation activities for promotion political,education, religious, recreation, cultural ideas and activities.Gross valued added of this branch in 2006 is estimated at 18 291 million LEK or2.30 percent of the total of gross value added.38Table 3.32: Other community, social and personal service activities, 2006In Million LEKGross Value AddedOutputIntermediatePercentageTotal StructureConsumptionof TotalTotal 33.043 14.752 18.291 100.0 2.30Othercommunity…activities 27.878 12.658 15.220 83.21 1.91Exhaustiveness 5.165 2.094 3.071 16.79 0.393.21.2 Data sources and methodsCoverage in basic data sources is not good for this branch and adjustment forunderreporting and misreporting is relatively higher. Data sources are the same as forother branches (annual account statements, annual business structure business, VATfile)79/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.21.3 Output in data sources, corrections and adjustmentsConceptual output corrections for other community, social and personal serviceactivities are standard as for other branches. The output of this branch is estimated asother branches on industry and exhaustiveness adjustments is significant in thisbranch for small enterprises and for non-reporting and underreporting of outputTotal output of this industry is estimated at 33 043 million LEK in 20063.21.4 Intermediate consumption in data sources, corrections and adjustmentsIntermediate consumption conceptual corrections are standard and the same as forother industries. Exhaustiveness adjustments are necessary for coverage of nonsurveyed enterprises, misreporting and underreporting. The final value ofintermediate consumption is thus estimated at 14 752 million LEK in 2006.3.22 Private households with employed persons (P)Persons engaged in domestic services at households do not need to register.However, the number of persons performing domestic services to households is notindicated in the Business Register of Albania. The data for this part are absent and nofigures are estimated for this branch.3.23 Treatment of extra territorial organizations and bodies (Q)The data for this part are absent and no figures are estimated for this branch.3.24 Taxes on products3.24.1 IntroductionTaxes on production and imports in national accounts are divided into taxes onproducts and into other taxes on production. In Albania all taxes are not divided intotwo groups and are collectively estimated like taxes on products. Taxes on productsare levied on goods and services in proportion to value or quantity and are paid whengoods and services are produced, imported or purchased by the buyer. Like all taxes,taxes on products as well are compulsory and unrequited payments to institutions ofgeneral government.3.24.2 Data sources and valuationThe most important taxes on products (VAT, excise duties and all import duties andtaxes) are estimated by direct data sources at cash value. No adjustments are made toconvert taxes from cash into an accrual basis. VAT is estimated by monthly reports80/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmeprovided by the Tax Administration and the data from Ministry of Finance for annualestimation. Estimation of import duties and taxes on imports is based on customsstatements and the data from Ministry of Finance. Other taxes on products arecollected in the report on public finance revenues provided by Ministry of Financeand the Ministry of Finance makes an aggregation of the taxes from the abovesources.3.24.3 Types of taxes on productsThe following table shows all types of taxes on products which are included innational accounts. The most important are VAT, excise duties and import taxes andlevies, amounting to approximately 98.6 percent of the total value.Table 3.33: Taxes on products, 2006In Million LEKType of taxTotal Structure121.182 100.0703 Tax on internal goods and service 103.345 85.287030 V A T – Value added tax 74.268 61.297031 Excise 22.997 18.987032 Fee on specific service 1.369 1.137033 National fee on using of goods or permit for activities 3.835 3.167035 Local unit fee on using of goods or permit for activities 876 0.72704 Fees on commerce and international transactions 16.081 13.277040 Custom fees on imported goods 14.149 11.677042 Custom fee service and parcel 92 0.087049 Fee on imported used vehicle’s 1.840 1.52705 Road Taxes 1.133 0.94708 Other national fees 623 0.51A Value Added Type Tax (VAT) is a tax on goods or services collected in stages byenterprises and which is ultimately charged in full to the final purchasers. (ESA 95)The VAT is one of the most important taxes in Albania.As already mentioned the final purchasers are the final payers of this tax. They aresome restrictions to the persons that are subject to this tax. Transactions made bysmall businesses are not subject to this tax. Also some medicines are not subject tothese taxes.The Excise is another important tax for us. The Excise is paid for imported materialsand for produced material. The excise is mainly paid for products like tobacco,alcoholic drinks, domestic and imported fuel, café, etc.81/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme3.26 Subsidies on productsSubsidies are current payments without compensation that governments make toenterprises on the basis of their production activity or the quantity or value of thegoods and services they produce, sell or import.39Table 3.34: Subsidies, 2006In Million LEKTypeofsubsidiesTotal Structure3.718 100.0Drinkablewater 2.070 55.68Waterforirrigation 569 15.30Railwaytransportofgoods 450 12.10Passengertransport 87 2.34Schoolbooks 199 5.35Studenttreatmententerprise 343 9.23As for drinkable water, the subversion is given mainly to help the system of potablewater to our country. These subsidies are important to revitalize the system ofservices offered by the water supplier.Schoolbooks comprise the subsidies offered to elementary schools to subsidy someof the books distributed to the pupils.All other subsidies are directly connected to product and are well defined.We extract data from the file of the Ministry of Finances on the expenditure side.Subsidies are treated as separate codes of the Accounting System of the Governmentand we can easily extract that kind of data. We can even use the annual accounts thatevery business is obliged to deliver by the end of the first quarter of the year.The data are well detailed and are related to the specific institute that holds thesubsidies. Most of the subsidies are given to public corporations and therefore itcould be easily allocated to a particular NACE category.As regards the process of calculating the value added by the economy we subtract thevalue of the subsidies. This step is done because the subsidies are already declared inthe output and they are directly reflected to the value added. It is needed to clear thesubsidies from the value added to have a clearer view of the real facts.We have taken into account this specific type of subventions that is more likelydirectly connected to the products. The Ministry of Finances uses a wider range ofdata also representing data about subsidies that might not be connected directly to82/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmeproducts. All of the above mentioned subsidies are directly connected to theproducts. Behind the word “Subsidies” data not related to products can be hidden.83/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeCHAPTER 4: INCOME APPROACHNo estimation is available in relation to this approach84/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeCHAPTER 5: EXPENDITURE APPROACH5.0 GDP according to the expenditure approachGDP by the expenditure approach is measured as the sum of expenditure on goodsand services for final consumption and gross capital formation by units of thenational economy plus exports less imports of goods and services. Final consumptionis the sum of expenditure on goods and services by households, non-profitinstitutions serving households (NPISH) and general government.Table 5.1 shows the main components of GDP by the expenditure approach40Table 5.1: GDP by the expenditure approach, in Million LEK___________________________________________________________________Description 2006___________________________________________________________________1. Final Consumption (a+b+c) 771,105a)Final Consumption of the Households 680,323b)Final Consumption of General Government 89,411c)Consumption of NPISHs 1,3712. Gross Fixed Capital Formation 343,8823. Domestic Absorption (1+2) 1,114,9874. Net export (a-b) -208,067a. Exports of goods and services (f.o.b) 219,974b. Imports of goods and services (c.i.f) 428,0405. Change in inventories & statistical discrepancy -24,712___________________________________________________________________GROSS DOMESTIC PRODUCT (3+4+5) 882,209____________________________________________________________________5.1 Reference framework5.1.0 IntroductionThe main data source for household final consumption expenditure is the HouseholdBudget Survey. The first HBS was conducted in 1998. It covered only Tirana city,85/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmeand the second HBS, in 2000, covered Tirana and other urban areas, with 5,389households. In 2006-2007, HBS was conducted in a national coverage.Gross Fixed Capital Formation, General Government and NPISH final consumptionexpenditure are covered almost by the same data sources as GDP by the productionapproach.Exports and imports of goods and services are estimated according to customsstatement data and data of the balance of payments, prepared by the Bank of Albania.Data sources and their use are described in detail in individual chapters ofexpenditure components.5.1.1 Household final consumption expenditure (HFCE).Households are defined in parag. 2.75 of ESA95. Final consumption expenditure ofhouseholds is primarily made up of goods and services purchased in the market butalso includes consumption of household production for own final use, such as theservices of owner-occupied dwellings, and goods or services received as income inkind. It does not include social transfers in kind, intermediate consumption or grosscapital formation, acquisitions of non-produced assets, payments to NPISHs, taxesother than taxes on products, or voluntary transfers (see parag 3.76-3.77 of ESA95)Data sources are very limited for household consumption in Albanian NationalAccounts. Household Budget Survey (HBS), based on COICOP classification, wasconducted in 2006-2007 for the first time with national coverage (previous surveyscovered only urban areas or only Tirana) and seems to have followed good surveypractice. But this data is not used for the 2006 calculations. Household consumptionpublished for the 2006 is based on 2005 data, by extrapolating them with the growthrate of services to households.5.1.2 NPISH final consumption expenditureThere is a law in Albanian Republic, No. 8788, dated 7.5.2001, for Non-profitInstitutions. This law establishes the rules for foundation, registration, operation,organization and activity of non-profit organizations, which pursue the purposes andpublic interest.By this law, Non-profit Institutions are associations, foundations and centers, activityof which is developed independently and without being influenced by the state.Main data source of this component is a survey prepared in 1998. The sources andmethods of calculating NPISH final consumption expenditure are explained inparagraph 5.8.86/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme5.1.3 General government final consumption expenditureThe calculation of General Government Final consumption expenditures are derivedfrom the Production Account, for which the main data sources are expenditures andrevenues taken from the Ministry of Finance.5.1.4 Gross fixed capital formationGross fixed capital formation (GFCF) consists of expenditure on machinery andequipment, construction and other capital products. Different data sources are usedfor annual estimates of GFCF, such as statistics available at Ministries (Ministry ofAgriculture and Food, Ministry of Public Works), balance sheets, and foreign tradestatistics.Gross fixed capital formation is valued at purchaser’s price.This component of the expenditure GDP is outlined in paragraph 5.105.1.5 Changes in inventoriesAt present, independent estimates on the change in inventories are not available, butChanges in Inventories are published together with the statistical discrepancies.5.1.6 Acquisitions less disposals of valuablesNo estimation is available at the moment, for the Acquisitions less disposals ofvaluables.5.1.7 Exports and imports of goodsPrinciple data sources for exports and imports of goods are external trade statisticsaccording to the customs statements together with the coverage adjustments in BoPdata prepared by the Bank of Albania. BoP systematically summarizes the economictransactions of a country with the other neighboring countries, for a certain period oftime.5.1.8 Exports and imports of servicesPrinciple data sources for exports and imports of services are external trade statisticsaccording to the customs statements together with the coverage adjustments in BoPdata prepared by Albanian Central Bank.BoP, systematically summarizes, the economic transactions of a country with theother neighboring countries, for a certain period of time.In Albanian Balance of Payment, data are available for Exports of goods and services(P.6 in ESA95) and Imports of goods and services (P.7 in ESA95). They are dividedinto two main components or user categories each:P.6 Exports of goods and servicesP.61 Exports of goods87/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeP.62 Exports of servicesP.7 Imports of goods and servicesP.71 Imports of goodsP.72 Imports of servicesBut, for the moment we publish only P6 and P7.5.2 ValuationIn Albanian National Accounts, household final consumption and gross fixed capitalformation were estimated by purchaser's prices and these data do not need anyadjustments.The HBS is the basic source for estimating household consumption expenditure byCOICOP, but it was not used for the 2006 calculation. Household ConsumptionExpenditure for the year 2006 was calculated by extrapolating the 2005 data withannual growth of Services for households output.General government consumption expenditure is estimated as the sum of output bythe cost approach, output for own final use and other non-market output.In Albania, General Government Consumption in 2006 had the same value as theoutput estimated by the cost approach. Output estimated on the basis of the costapproach is equal with the sum of intermediate consumption, compensation ofemployees, other taxes on production and consumption of fixed capital estimated.Values of sales are not deducted from the total output.Gross Fixed Capital Formation was valued at purchaser’s prices, including allexpenditures that are necessary to make the asset ready for use.Inventories are not published as a different component, but in the experiments made,inventories are valued at average prices of the observed period. Figures in accountingdata of inventories (finished goods, work-in-progress, raw materials and otherintermediate goods, and goods for resale) at the beginning and at the end of theperiod are recalculated (deflated/inflated) by activity and by type of inventory to theaverage prices of the period. Changes in inventories are the difference between therecalculated inventory levels at the end and at the beginning of the year.As for the external trade statistics, estimates are made by the Bank of Albania.Imports of goods are estimated at cif prices, while Export of Goods and services areevaluated at fob prices. Cif/fob adjustments are made to adjust the data on imports ofgoods.5.3 Transition from private accounting and administrative concepts to ESA95NA conceptsThe Albanian National Accounts Directory ensures it receives enough data to makeany adjustment necessary for the transition from business accounting concepts toESA 95 national accounts concepts, ensuring a correct treatment within the accounts.88/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAll adjustments performed on data of construction enterprises, brings them intocompliance with accounting rules of national accounts. At the end of this phase, thedata from construction enterprises have made all possible adjustments before passedto further improvement, processing and estimations.Analyzing in more detail, the government final consumption expenditure data camesfrom government budget, from the Ministry of Finance, we can see an enormouseffect of data redundancy from some of the fields. It is the effect of repetition of datain database. In order to avoid having a database overpopulated with data repeatedmany time, many controls are made, base on an IT procedure, that is described indetailed on the output aproach.Conceptual adjustments made to Import&Export data from BOP are in compilancewith the IMF Manual.5.4 The roles of direct and indirect estimation methodsFor the reference year 2006, the expenditure approach is mainly based on directestimation methods, using sample surveys and administrative records.41Table 5.2:Estimation method of indicatorsIndicators in 2006Household final consumptionexpenditureNPISH final consumption expenditureGovernment final consumptionexpenditureGross Fixed Capital FormationExports of Goods and ServicesImports of Goods and ServicesEstimation MethodIndirect method, by extrapolating the2005 value based on the value index ofthe services outputIndirect method, by extrapolating the2005 value by the same growth rate of2005/2004Direct method using Administrative dataconcerning the expenditures of theGovernment from Ministry of FinanceDirect method using Administrative datafrom Ministry of Agriculture, data fromforeign trade, financial statement ofenterprises ( for construction)Direct method based on data from BoPsDirect method based on data from BoP5.5 Roles of benchmarks and extrapolationsBenchmark has an important role to play when undertaking a main revision. It isusually both convenient and useful to establish revised levels for the NA estimatesfor a benchmark year in the first place.89/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAs the data sources are not available, in 2006, Household and NPISH FinalConsumption Expenditure are calculated by extrapolations of the previous year data.For the expenditure approach of GDP, estimation is not a benchmarking year untilnow.5.6 Main approaches taken with respect to exhaustivenessAdjustments to the expenditure approach to ensure exhaustiveness are made forcalculation of Construction work in Gross Fixed Capital Formation.Construction Activity by production side in Albanian National Accounts is dividedinto:- Observed Output- Non- Observed OutputData for the Gross fixed Capital Formation in construction were provided byProduction Enterprises.The GFCF in construction is equal with the value of construction output multipliedby the share of revenues from construction activity in total revenues of constructionenterprises. This adjustment is made on the basis of data from financial statements ofenterprises.No exhaustiveness adjustments are made for other elements of expenditures.5.7 Household final consumption expenditureThis section describes the measurement of final consumption expenditure ofAlbanian resident households. Their consumption expenditures cover the purchasesof all goods and services, including housing services, to meet their requirements forday-to-day living. It does not include the purchase of dwellings or expenditure onvaluables (antiques and some jewelry), which are part of capital formation, nor doesit include any expenditure on goods or services for use in a business.In Albanian National Accounts, as in other countries, Household ConsumptionExpenditure is the main component of expenditure side, with the largest part, about78 % in 2006, to the total GDP.In 1998, HBS was conducted for the first time. It covered only Tirana city.Then, in 2000, the second HBS was conducted covering Tirana city and other urbanareas, with a coverage of 5,389 households.HBS was conducted in 2006-2007 covering the entire Albanian territory, with 5600households. It was not used until now for the estimation of HFC. Next year, when2008-2009 HBS will be conducted, the information will be incorporated in the HFCestimations.The actual methodology of the HBS is presented in the annex E.90/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeFor 2006 calculations of HFC, data sources were very limited and for this reason theestimation was based on the data from the previous year and the growth rate of theservices output for households (transport, trade). The base year for these calculationswas 2001 using data from the HBS 2000, but this covered only Tirana city and otherurban areas.For the 2004 data, given the lack of basic information, Twinning Projectrecommended to estimate final consumption of household by using the commodityflow approach. The starting point of the procedure used in the grossing up of theeconomic data relative to final household consumption is to assume the GDP (orOutput) measured by production approach.The equation that synthesizes the commodity flow approach can be expressed in thefollowing way, considering the rows in the input-output table:C = (X+ M) - (N + I + G + E)WhereC =Final consumption (Households, General Government and NPSHs)X = Output,M = Import,N = Intermediate consumption,I = Gross fixed capital formation,G = Change in inventories,E = Export.The next step consists in obtaining the household final consumption (FC) from C:FC = C – (GC + NPSHs)Where:GC = Consumption of General Government,NPSHs = Non Profit Organizations.By adopting this procedure it is possible to obtain an estimate of FC and to comparethis measure with the data obtained from other sources.In 2006, HCE is calculated by multiplying the year before (2005) with the annualgrowth of main services. This was the way used also for calculating the 2005 data ofHCE.For example: HCE 2005 (634470) * Value Index of main services (1.072) = HCE2006 (680322)All household expenditures series produced for the national accounts are calculatedper annum.91/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeFollowing the ESA, Household consumption includes a wide range of goods andservices received by households as income in kind. The main items are the use ofcompany cars for private purposes and free or subsidized accommodation or meals.For the moment, no estimates are available on this issue.Consumption expenditure by Albanian resident households can take place either inAlbania or the rest of the world. The consumption expenditure which takes place inthe rest of the world is regarded as an import of services to Albania.Correspondingly, consumption expenditure in e Albania by household residents inthe rest of the world is regarded as an Albanian export of services in the nationalaccounts. Thus, total final consumption expenditure in Albania by all households hasto have imports of added services and deducted exports in order to arrive at Albanianhousehold final consumption expenditure for the national accounts.In 2006 calculations no adjustments are made in order to shift from Domestic toNational concepts.5.8 NPISH Final Consumption ExpenditureAccording to the Albanian law, Non-profit Institutions are associations, foundationsand centers, activity of which is developed independently.These units mostly perform services to households and are not under governmentcontrol and financing. Sources of revenues mostly come from voluntarycontributions and membership fees. Also, these units can partly perform marketactivities by selling goods and services. Therefore, NPISH final consumptionexpenditure equals the output by the cost approach less any market and similarrevenue (market output and other non-market output).In 2006, NPISH Final Consumption Expenditure is estimated at 1,371 million LEK,in a 0.2 % of GDP.Main data source is a special questionnaire worked out for NPISHs in 1998.Following this period a survey on NPISHs has not been carried out. In general, thelast data are modified using the annual growth of total GDP at current prices.42Table 5.3NPISH Final Consumption ExpenditureIn Million LEKYear2005 2006Consumption of NPISHs (at current prices) 1,192 1,371Consumption of NPISHs (at constant prices) 1,096 1,151This component has many weaknesses as a result of missing data. It needs furtherdevelopments, such as a specific survey.92/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeIt is necessary to create a new special questionnaire, to take the new data on differentindicators, for all actors of NPISHs, and to re-estimate them.5.9 Government final consumption expenditureGovernment final consumption expenditure in Albanian National Accounts isestimated at 89.411 million LEK in 2006, or 10.1 per cent of GDP.The detailed figures of general government final consumption expenditure are shownbelow:43Table 5.4:General government final consumption expenditure,In Million LEK2006Public Administration 51,165Education 24,465Health 13,782GG final consumptionexpenditure 89,411The source used to estimate government final consumption expenditure is the AnnualStatement of Government taken from the Ministry of Finance. This means all generalgovernment units are covered.Data for output measured in terms of costs of production - are available from itemsby type on the cost side of the government accounts. Government expenses(expenditure side of the government accounts) are coded by type (kind oftransaction), by industry, by sector and by COFOG.Final consumption of general government is valued as the sum of the costs incurredto produce those individual and collective services; it is equal to the differencebetween the output of general government and the value of the residual sales.So far, only the total of residual sales was identified; no breakdown was made.Consumption of fixed capital is added to the output. It is taken from the AnnualFinancial Statement of Public Institutions (budgetary), provided by Ministry ofFinance, Department of Accounts, respectively from Table no. 7 (Consumption offixed Capital). It is necessary to underline that this Department doesn’t make therecapitulation of Annual Statement of Public Institutions on a yearly basis.The following table provides the data for CFC based on the sources of the Ministryof Finance:93/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme44Table 5.5:Consumption of fixed CapitalIn Million LEKBranchesYears:2005 2006 2007Public Administration 2,625 3,103 3,297Education 1,604 2,005 2,248Health 588 735 656Total 4,817 5,843 6,201According to new principles of ESA, government consumption expenditure alsoinclude government purchases from non-government producers supplied tohouseholds without any transformation as social transfers in kind. Data for thisadditional component are not yet identified in National Accounts.National Directorate also prepares a functional breakdown of final consumptionusing the ‘Classification of Functions of Government’ (COFOG) definitions. Thisanalysis is produced after the total has been calculated, but is not published yet.5.10 Gross fixed capital formation5.10.1 DefinitionGross fixed capital formation is measured by the total value of a producer’sacquisitions, less disposals, of fixed assets during the accounting period plus certainadditions to the value of non- produced assets (such as subsoil assets or majorimprovements in the quantity, quality or productivity of land) realized by theproductive activity of institutional units.5.10.2 Gross fixed capital formationData on Gross Fixed Capital Formation are obtained from different sources,according to the following breakdown: Livestock Ministry of Agriculture Orchards and vineyards Ministry of Agriculture Forestry Ministry of Agriculture (data processed onlypartially) Construction SBBS, Tax Authorities, Financial Accounts Mineral exploitations Financial Accounts Machinery and Equipment Customs data for the imports and exports ofgoods , Financial Accounts, SBS)GFCF in Albanian National Accounts is valued at purchaser’s price. All componentsare estimated from the supply side, using variations of commodity flow method.The exiting data for the components of GFCF in 2006 are:94/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme45Table 5.6: The components of GFCFIn Million LEKGross Fixed Capital Formation 2006TOTAL 343,882a) Livestock -614b) Orchards & Vineyards 3,351c) Forestry 189d) Construction 300,357e) Geological Prospecting 153f) Machinery & Equipment 40,447Due to the lack of information, the expenses for major repairs of construction werenot includedCapitalized production is valued appropriately at the cost of production.a) Livestock, Orchards & Vineyards and Forestry: data are collected by theMinistry of Agriculture and Food (MAF).- Livestock production includes deliveries of live animals for slaughter orexport and change in livestock net of imports of animals for breeding. Thechange in livestock is broken down into gross fixed capital formation andchange in inventories. Gross fixed capital formation is equal to the variationover the year of breeding males over one year old, dairy cows, and nursecows. Livestock calculations belong to January 1 – December 31 period ofeach year. It refers to the data taken from MAF, from which, balances forfarming production are created, also the balance of the number of livestock(we call it Changes of Livestock). Based on the number of livestock forcategories (Cattle, Sheep, Goat all up to 1 year old, perissodactyles and pigsup to 2 months of age) and the prices for these categories, the GFCF iscalculated at current and constant prices for each category.- Orchards & Vineyards: data available for expenditures are:95/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme46Table 5.7:Detailed data for GFCF, for Orchards & VineyardsNo.DESCRIPTION2006Million LEKTotal (A+B+C) 3,351A Growing trees 1,8961 Fruit Trees 9942 Olives 5113 Citrus 814 Pergola 1135 Vineyards (hectares) 197BConstruction supporting workC New Planted 1,2041 Fruit Trees 3212 Olives 2793 Citrus 464 Pergola 395 Vineyards (hectares) 5192515.10.2.1 Construction ActivityConstruction capital formation calculations are derived from the output of theconstruction industry.Construction output is composed by:- Observed construction which includes the output of construction enterprises.- Non-Observed construction which is the output calculated from the labor methodcalculation of non-observed economy.Non-observed construction estimation:Only value added of Non-Observed Economy (NOE) was calculated by using theinput of labor method.Production and intermediate consumption of non-observed activity in constructionwere calculated by applying the same ratio of intermediate consumption / output ofobserved construction.96/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeThe new calculation of output for non-observed economy takes into account that thecoefficient of NOE must be lower, considering the fact that this coefficient ensuesbetween 60 – 70 percent for most of construction enterprises.Observed construction estimation:According to the annual accounts of construction enterprises, the revenues are asfollows:a) Income from sales of own productionb) Income from sales of servicesc) Other sales incomeIt was identified the share of revenues from construction activity, “Income fromsales of own production” and income of sales of services, (which is pureconstruction) to the total revenues of all construction enterprises.All enterprises which have construction as their main activity are included for theestimation of output indicator on construction activity. This means that there aresecondary activities including construction activities. The coefficient of GFCF in thetotal of output was obtained by subtracting from output the component not defined asinvestment. This coefficient of construction activity compared with total activity’svalue of these enterprises is about 89 % percent.5.10.2.2 Machinery and equipmentMachinery and equipment are estimated with a commodity flow method:GFCF (Mach & Equip.)= Imports + Domestic production – Exports +estimated trade marginsImport and export of machinery and equipment are provided by the foreign tradesector of INSTAT, by NACE classification. Some proportions (by expert method)were decided in order to estimate the value of imported machinery and equipmentthat goes to GFCF. The calculations are made at level 4 of NACE, and then areaggregated at level 2 of NACE.In a survey of administrative sources on trade margins, a coefficient of the trademargins equaling 8.5 % was used. Trade margins are applied to the producer’s valuefrom Net imports and domestic production.97/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme47Table 5.8:Machinery and EquipmentYear 2006In Million LEKNaceDomesticProductionImports Exports Mach&Equipm. % Trade&transp.Marg. Total(1) (2) (3) (4=1+2-3) (5) (6=5*4) (7=6+4)28.3 - 32,147 - 32,147 0.085 2,733 34,88029 349,291 15,716,273 610,186 15,455,378 0.085 1,313,707 16,769,08530 - 1,948,163 130,436 1,817,727 0.085 154,507 1,972,23431 453,992 3,392,256 469,016 3,377,231 0.085 287,065 3,664,29632 18,419 2,133,627 148,646 2,003,401 0.085 170,289 2,173,69033 10,080 756,652 16,631 750,101 0.085 63,759 813,86034 - 10,755,677 93,000 10,662,677 0.085 906,328 11,569,00435 59,681 568,077 47,840 579,918 0.085 49,293 629,21136.1 1,678,859 1,406,533 627,607 2,457,785 0.085 208,912 2,666,69736.3 - 28,101 - 28,101 0.085 2,389 30,48936.4 - 114,025 81 113,944 0.085 9,685 123,629Total 2,570 36,852 2,143 37,278 0 3,169 40,4475.11 Acquisitions less disposals of intangible fixed assetsAt present GFCF does not include estimates of investment in computer software orfilm, music and other artistic originals.5.12 Additions to the value of non-produced non-financial assets98/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme5.13 Changes in inventoriesAt present, for year 2006, independent estimates on change in inventories are notavailable, but they are published in the same line, in item change in inventories andstatistical discrepancies.At the same time, for experimental purposes, and improve the estimation ofinventory a lot of calculations are made for the change inventory for the year 2002 inthe framework of the twinning project. The methods are presented in the annex F.The estimations were not of good quality and were not incorporated in the GDPcalculations by expenditures approaches. The change in inventories in 2006 is aresidual component.5.14 Acquisitions less disposals of valuablesNo estimation is available in relation to this topic.5.15 Exports of goodsIn accordance with the ESA’95 methodology the exports of goods are valued at FOBand converted from foreign currencies using monthly exchange rates. Main datasource for estimating export of goods is the balance of payments compiled by Bankof Albania.On the basis of the existing data, a methodology to compute export of goods, brokendown by origin of branch of activity has been developed. The sources of data usedare the customs statements for the export of goods.5.16 Exports of servicesExports of services are derived directly from the Bank of Albania’s BOP at currentprices. They are valued at FOB and converted from foreign currencies to nationalcurrencies, using monthly exchange rates.5.17 Imports of goodsImports of goods are derived directly from the Bank of Albania’s BOP at currentprices. They are valued at FOB and converted from foreign currencies using monthlyexchange rates.Since the information on imports from customs statements is in C.I.F., for purposesof registration of imports at F.O.B value, according to the Balance of Paymentsstandards, based on a study carried out by Bank of Albania, coefficients of transportand insurance cost as well as other elements of trade are estimated. According to thisstudy the transport cost of goods in imports is 6 percent of the total transaction cost,while the insurance cost is about 1 percent.On the basis of the existing data, a methodology to compute import of goods, brokendown by origin of branch of activity has been developed. The sources of data usedare the customs statements for the import of goods.99/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme5.16 Imports of servicesImports of services are derived directly from the Bank of Albania’s BOP at currentprices. Monthly exchange rates are used to convert the data from foreign currenciesto national currencies.The following table shows the Exports and Imports of services for the year 2006:48Table 5.9:Exports and Imports of servicesDescriptionImportIn Million LEK2006ExportServices -146,233 142,352a. Transport services -15,417 11,266i. Freight services -11,013 3,703ii. Passenger services -2,357 4,363iii. Other -2,047 3,200b. Insurance -3,507 356c. Travel -94,492 99,018i. Business -18,889 23,042ii. Personal -75,603 75,976d. Other Services -32,817 31,711i. Communication services -724 5,167ii. Construction services -203 227iii. Computer and Information -337 121iv. Technical assistance -1,963 -v. Government services n.i.e. -1,244 2,271vi. Financial services -1,975 2,491vii. Business, cultural and personal -8,722 2,507viii. Other -17,647 18,928100/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeCHAPTER 6: BALANCING OR INTEGRATION PROCEDURE, ANDVALIDATING ESTIMATES6.1 GDP balancing procedureA specific requirement of the Albanian National Account figures regards thenecessity to ensure coherency between the supply and the demand side estimates.The main purpose of GDP revision work is improvement and completion of datasources and methods for the two GDP approaches. The process from the flashestimates to final annual GDP figure for a particular year is split into several steps.The first stage is flash annual estimate of GDP by the production approach which isprepared at aggregated activity level (7 macro-branches) within eleven months afterthe end of the year and is based on preliminary data sources of Annual StructuralBusiness Survey and VAT. The estimates of GDP by expenditure approach are notmade in this phase.The second stage includes the semi-final annual accounts estimates of GDP byproduction approach within six months after the flash estimates. The semi-finalaccounts are based on more complete data sources and therefore almost entirely ondirect methods. Also, this step includes estimates of GDP expenditure approach.It is necessary to underline that we do not have the independent way of estimationsof GDP by expenditures. For this reason, GDP nominal level in this step isdetermined by the production approach. The value of GDP by expenditureapproach has to be equal to the value of GDP by production approach. At the sametime, we have estimated some components of GDP Expenditure side, such as HH’Final Consumption, Final Consumption of General Government and NPISH, GrossFixed Capital Formation, Net-export. As regards “changes in inventories”, we havedone some estimation in experimental way; however, due to lack of information,they are not taken into account. For this reason, changes in inventory are giventogether with statistical discrepancies as residuals to GDP by expenditure.Meanwhile, this component, changes in inventory + statistical discrepanciesrepresents differences between two approaches of GDP.These estimates are almost quasi-final and only minor improvements or furtherrevisions mostly regarding business activities are necessary at a later stage.The final accounts’ estimates are made after t + 36 months and are prepared at 25branches of NA classification. An important aspect in this step is improvement ofGDP with quality analysis of data sources and with additional elimination ofmistakes and inconsistencies in data sources. However, these are slightly moreimportant in the production activities, particularly in agriculture and other productionactivities due to changes in primary data sources and due to additional and moredetailed analysis of data sources. The differences between GDP by the production101/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmeand by the expenditure approach are not eliminated in the process of finalization ofestimates.Therefore, the practice to show or publish statistical discrepancies as the differencebetween GDP by the production and by the expenditure approach is used incompiling and publishing national account data. Statistical discrepancies arepublished together with changes in inventories. The table 6.1 shows the differencesbetween the two approaches of GDP.Albanian National Accounts sector, during the TWINING project, in cooperationwith ISTAT has tried to develop a simplified input-output system based on asymmetric table (IOT). This approach did not completely fulfill ESA95recommendations since it did not include the compilation of supply and use tablesthat are not possible to compile, given the current state of the art of basic statistics.Thus, this method is not used yet to make balancing procedure between the two GDPapproaches in Albania. INSTAT will start to develop a strategy in order to makeSUT and to collect the necessary data sources to do it in the future.49Table 6.1Differences in two approaches of GDPIn Million LEKProduction ApproachExpenditure ApproachAgriculture, 154,648Final Consumption ofHouseholds 680,323Industry 88,207Final Consumption of GeneralGovernment 89,411Construction 113,724 Consumption of NPISH-s 1,371-Trade, Hotels andRestaurants 166,125-Transport 43,350 Gross Fixed Capital Formation 343,882-Post and Communication 31,614-Other Services 197,517 Net export -208,067FISIM (-) 30,446Change in inventories &Taxes on products 121,188 statistical discrepancies *-24,712Subsidies on products (-) 3,718GDP 882,209 GDP 882,209* The item “Change in inventory and statistical discrepancies” represent thedifferences between the two approaches of published GDP.6.2 Other approaches used to validate GDPThe most important step to validate the estimates of GDP level and particularlyexhaustiveness was the introduction of Input Labor Method in year 2005.Thus, the labor input statistics are used for the validation of estimates of GDP by theproduction approach, which allows the analysis of data exhaustiveness by activitylevel.102/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeCHAPTER 7: EXHAUSTIVENESS ADJUSTMENTS OF GDP BYPRODUCTION APPROACH7.1. IntroductionTo ensure exhaustiveness of GDP estimates, the staff of National AccountsDirectorate has used the so-called “expert” method to measure economicunderground activities by using existing data sources covering the period 1996-2003.The method is based on experts’ opinions where they assess the share of NOE ineach branch of economic activity. This share is then used for grossing up data onoutput, intermediate consumption and value added for each branchThe production approach to estimate GDP, the methodology currently adopted forNOE estimations, suffers from a high degree of subjectivity. For this reason,INSTAT Albania plans to improve it and shift to a new methodology mainly basedon a statistical approach. This will be done with the help of two different projectsaimed to provide technical assistance to INSTAT in the field of National Accounts.The projects are funded by the EU Commission (through the CARDS programme)and by the IMF.The twinning project between INSTAT and the Statistical Institute of Italy (ISTAT),which was started in 2004, provides assistance for the improvement in estimation ofthe non-observed economy in Albania, by developing and testing a methodology forNOE estimation based on the Italian approach of the labor input method. The newmethod is used starting with the figures of years 2001-2002-2003.7.2 Input of labor, sources of informationEstimates of employment are used to achieve exhaustiveness in national accounts bytaking into consideration the non-observed economy. Information sources thatcontribute to estimate of labor input are classified on basis of statistical units thatprovide information of sources on labor demand (which are the Annual StructuralBusiness Survey and Annual Accounts Statements) and sources on labor supply(Census of 2001 and LSMS ).7.2.2. Sources of data for the supply of laborIn the benchmark year 2001 the main source of information on the labor market inAlbania was the Population and Housing Census of 2001. It gave quite a completeenumeration of population and employment in the country.The source of information of labor market for the following years 2002-2005 hasbeen the Living Standard Measurement Survey (LSMS). This is a sample survey(3660 households) covering all districts of the country. This annual multipurposesurvey is mainly oriented to measure the households’ living standard in the country.103/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeIt also provides the possibility to measure employment in the informal sector as wellas to define some categories of underemployment.The data obtained on labor from these sources are as follows:- Employment details for employees and self-employed (including employers,own account workers, unpaid family workers)The data are broken down by the economic activity according to NACE two digitclassifications. For the purpose of national accounts’ use the data are aggregated in 7macro branches in order to avoid the problem of misclassification of input labor byeconomic activities. (See Table 7.1.1, column 5). It is necessary to explain that“other service” macro branch does not include the financial sector, education, health,culture and public administration.7.2.3. Sources of data on the demand for laborThe sources of information on labor supply are annual Structural Business Surveyand Annual Account Statements (AAS). Structural Business Survey (SBS) is anannual establishment survey, conducted on a yearly basis since 1997. SBS covers allactive enterprises in Albania except public administration and the financial,educational, health, cultural and agricultural activities. Data on SBS and AAS areuseful to identify the number of employed persons by size of enterprises.The following data on employment are gathered from this survey:- Annual average number of employees, self-employed and total employment.A methodology was implemented to gross up the input of labor declared byenterprises. This procedure is coherent to that used to gross up the economicaggregates (output and intermediate cost). Firstly, the number of input labor andenterprises in SBS and ASS is calculated together by branch and dimensional class.In this way we have obtained the “Observed input of labor in the observedenterprises”(OLOE).Secondly, the average number of employed people by the number of enterprises iscalculated underlying the Structural Business and ASS by branch and dimensionalclass.The averages established above, have been used to gross up the number of employedto the number of enterprises considered as non-active by SBS and active in NationalAccount. In this way we have obtained the “Non-observed input of labor in the nonobservedenterprises” (NOLNOE)The sum of number of employed in observed and non-observed enterprises gives thenumber of employed persons underlying in National Accounts. (See Table 7.1.1, col.1, 2, 3, 4)104/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme7.3. Labor Input MethodThe NOE estimation represented one of the highest priorities of the project since theprocedure used until 2003 in Albania was completely subjective and was based oncoefficients that have been static during the period 1996-2003. In order to overcomethis major drawback we have adapted the Italian methodology to the AlbaniansituationThree important steps underlie the Italian method:‣ Obtaining estimates of labor input by integrating different sources ofinformation representing the supply and the demand for labor‣ Obtaining estimates of output per unit of labor input and value added per unitof labor input for same industry and size breakdown from regular or specialpurpose enterprise survey‣ Multiplying the labor input estimates by the unit ratios to get output and valueadded for industry and size of the production unit.Let us see more closely the implementation of Labor Input Method for the year 2001on a step by step basis.7.3.1. Comparison of the input labor estimatesThe number of hidden employments is obtained by integrating the two sources oflabor input from the supply and demand side. We have made a comparison by branchof economic activity, between the numbers of job positions obtained in Census orLSMS (ILLS) with the total of job positions obtained in National accounts. Theresults of comparison included ILLS> (OLOE+NOLNOE).We have assumed that the differenceΔI = ILLS – (OLOE+NOLNOE)is a further estimate of hidden labor (employed both by hidden and legal enterprises).(See Table 1, column 4)We obtain the number of hidden employment from the differences between thosetwo sources. These comparisons are made only for that economic activity of whichwe can estimate informal economy and not for whole economy. The analyses aremade for branches from C to I, O and P according to NACE classification. So theestimates of employment in national account include the number of employed fromSBS and the number of hidden employed, only for the branches for which we candraw comparisons and estimate informal economy.105/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme7.3.2. Productivity of labor inputProductivity measures based on VA per employed were calculated according to theNA Department for branches and for dimensional classes. (See Table 7.1.1, col. 10,11, 12, 13)From the Italian experience, the per capita value added made in undergroundeconomy is lower than the per capita value added of observed economy and for thisreason we have to use the per capita value added by small enterprises which is thelowest per capita value added.Another phenomenon exists in our economy, namely, per capita value added oflarger enterprises is the smallest and this happens because those enterprises intendto increase the intermediate costs and decrease the output.In regard with the above phenomenon, the use of the smallest per capita value addedin each branch was deemed reasonable in spite of the size of enterprise. Suchestimate allowed to distinguish the productivity of observed from non observedactivity (e.g., considering the productivity of the non observed activity equaling tothe productivity of the less efficient enterprise).So the productivity of hidden labor input (VA/ILNOE) is equal to the minimumproductivity of observed labor input (VA/ILOE) in each branch in spite of the sizeclass (See Table 7.1.1, column 14)7.3.3. The value of Non-Observed EconomyNow it is possible to calculate (by branch) the Total Value Added of NOETOTVANOE = VA/ILNOE * ΔIBy this procedure we may obtain an estimate of VA taking into consideration acomponent of NOE, defined as Underground Economy (See Table 7.1.1, col. 17)106/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme50Table 7.1.1:Estimation of NOE (Illustration of Method for year 2001) (...continues)CodeBranchesNumber of persons in NA Census Value Added of Formal Economy (000/LEK)LARGE MEDIUM SMALL TOTALof 2001LARGE MEDIUM SMALL TOTAL1 2 3 4=1+2+3 5 6 7 8 9=6+7+83-14 Industry 44,241 9,793 12,134 66,168 73793 17,624,700 5,163,664 7,402,244 30,190,60815 Construction 5,118 9,062 2,875 17,055 68661 3,793,817 10,273,046 3,166,758 17,233,62016,17 Trade, hotels 2,550 7,211 53,241 63,002 160771 2,249,724 7,395,942 44,546,335 54,192,00118 Transport 3,642 1,139 12,828 17,610 51934 2,633,703 1,094,391 17,051,017 20,779,11219Post-Communication5,906 63 77 6,046 6046 16,059,532 106,863 72,820 16,239,21521,25 Other services 5,305 3,466 6,507 15,277 26875 1,750,527 1,413,862 8,736,407 11,900,796Total 66,761 30,733 87,663 185,158 388,080 44,112,003 25,447,767 80,975,582 150,535,352107/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeCode51Table 7.1.1: Estimation of NOE (Illustration of Method for year 2001)BranchesIn Million LEKVA/ILOEVA/ILNOE Delta I TOTVANOELARGE MEDIUM SMALL TOTAL10=6/1 11=7/2 12=8/3 13=9/4 14=min(10,11,12) 15=5-4 17=14*153-14 Industry 398 527 610 456 398 7,625 3,03515 Construction 741 1,134 1,101 1,010 741 51,606 38,24016,17 Trade, hotels 882 1,026 837 860 837 97,769 81,83218 Transport 723 961 1,329 1,180 723 34,324 24,81719Post-Communication2,719 1,696 940 2,686 940 0 021,25 Other services 330 408 1,343 779 330 11,598 3,827Total 661 828 924 813 748 202,922 151,742108/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme109/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeThe estimation of Non-observed economy for the year 2006 is not done according tothis method due to lack of information on the supply side. No survey was done in2006 from the supply side that we could use for the calculation of labor input fromthe households. Estimations are based on the recommendations given by foreignmission, taken into account the trends and specific characteristic of differentbranches in Albania. Under these conditions, NOE has been estimated as a trendbetween the years 2001-2005. Future estimates of non-observed economy will beimproved by the establishment in 2007 of the LFS, a survey specifically designed forlabor statistics. Hence when we will start to use the figures of LFS we also intend torevise the estimation of NOE for 2006.7.3.4. Estimation of Non-observed economy in Agriculture and FishingThe NOE of Agriculture sector is estimated by “expert method” due to lack ofsources information on labor market. The “expert method” is based on experts’opinions where they assess the share of NOE in each branch of economic activity.These experts provide percentages that represent the value of output and intermediateconsumption under-estimated in branches of NACE A (Agriculture, hunting,forestry) and NACE B (Fishing). The percentages are applied to the observed outputand intermediate consumption of these two sectors. The way how the observedoutput and intermediate consumption in those branches are calculated, is shown inchapter 3. The non-observed value added is the difference between the non-observedoutput and non-observed intermediate consumption. The following table presents the“expert method”.52Table 7.2: Illustration of Expert method of Agriculture, hunting andforestry in the year 2006In Million LEKBranchesOutputIntermediateconsumptionValue AddedAgriculture, hunting andforestry (observed value)195,706 63,656 132,050Percentage of NOE (in %) 14 10Value of NOE 27,319 6,363 20,956110/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme53Table 7.3: Illustration of Expert method of Fishing and Forestry in the year2006In Million LEKBranchesOutputIntermediateconsumptionValue AddedFishing (observed value) 3,333 2,077 1,256Percentage of NOE 21.9 16.6Value of NOE 729 344 385The “Expert method” used in Agriculture and Fishing could be explained muchbetter by the following formula:-Agriculture, hunting and forestryNon-observed Output = Observed output * Percentage of non-observed outputNon-observed IC = Observed IC* Percentage of non-observed ICNon-observed Value Added = Non-observed Output – Non-observed ICWhere the percentages of non-observed output and IC are given by experts and areequal to 14 % for output and 10% for intermediate consumption- FishingNon-observed Output = Observed output * Percentage of non-observed outputNon-observed IC = Observed IC* Percentage of non-observed ICNon-observed Value Added = Non-observed Output – Non-observed ICWhere the percentages of non-observed output and IC are given by experts and areequal to 21.9 % for output and 16.6% for intermediate consumption7.4. Exhaustiveness adjustments by activityExhaustiveness adjustments by activity are shown in table 4. The higher value ofnon-observed economy was produced in the sectors of construction, trade and hotels.111/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme54Table 7.4:GDP 2006Exhaustiveness adjustments by activity as included in publishedBranches Value of NOE Structure (%)In Million LEKAS % of GrossValue Added atBasic PricesAgriculture and Fishing 21,342 9.3 13.8Industry 21,753 9.5 24.7Construction 73,270 32.1 64.2Trade, hotels 77,817 34.1 46.8Transport 23,301 10.2 53.8Post- Communication 0 0.0 0.0Other Services 10,967 4.8 5.6Total 228,450 100.0 28.77.5. The estimation of Output and Intermediate consumptions of NOEThe ratios of IC/Value Added of observed economy by branches and size ofenterprises were used in order to estimate the non-observed intermediateconsumption. The minimum ratio of IC/Value added of each branch was chosen afterthe calculation of these ratios despite the size of enterprises and multiplies them withthe non-observed Value Added. The minimum ratio was chosen because theenterprises operating in non-observed economy tend to increase IC and reduce ValueAdded. The output is estimated as a sum of non-observed IC and VA. It could beexpressed by the following formula: IC ( Obs ) i IC ( NOE ) min* VA ( NOE )i i VA(Obs ) iO (NOE) = VA ( NOE ) + IC ( NOE )iThe following table shows the value of output and intermediate consumption of nonobservedeconomy for year 2006.112/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme55Table 7.5: Output and Intermediate consumption of NOE in 2006In Million LEKBranchesOutputIntermediateConsumptionAgriculture and Fishing 28,048 6,707Industry 63,843 42,090Construction 185,373 112,103Trade, hotels 117,507 39,690Transport 45,907 22,606Post- Communication 0 0Other Services 18,124 7,157Total 458,802 230,352113/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeCHAPTER 8: TRANSITION FROM GDP TO GNI8.0 Introduction and reference frameworkThis chapter describes the transition of Gross Domestic Product (GDP) to GrossNational Income (GNI). This transition is realized through data on primary incomesbetween residents and non-residents (S.2). Main incomes are compensation ofemployees received by residents from non-residents and paid to non-residents fromresidents and property incomes received by residents and paid to non-residents. Theprincipal data source for compilation of GNI is the balance of payments (BoP). TheNational Bank of Albania is responsible for compiling the Balance of Payments andthe Institute of Statistics uses the data in the compilation of the GDP-GNI transition.The transition from GDP to GNI for year 2009 is described in Table 8.1.56Table 8.1 Transitions from Gross Domestic Product to Gross National IncomeYear 2009Gross domestic product 1 1,148,082Compensation of employees, net 2 = 3 - 4 20,709from the rest of the world 3 21,555to the rest of the world 4 845Property income, net 5 = 6 - 7 -37,853from the rest of the world 6 14,026to the rest of the world 7 51,879GROSS NATIONAL INCOME 8 = 1+2+51,130,9398.1 IncomeIncome covers two types of transactions between residents and non-residents:i. Compensation of employees who are paid to non-resident workers (seasonalworkers, border and others who work for a short-term) andii. Investment income (property income) in foreign assets and financialliabilities. The latter include the income and payment in direct investment,portfolio investment, other investments and income from reserve funds. Therevenues from the use of physical assets are not included in income, but bythe case they may be treated as other services, transport services or leasing.114/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme8.2 Definition and classification8.2.1. Compensation of employeesCompensation of employees includes salary, bonuses and other benefits, obtained bynon-resident individuals in an economy, for work performed for residents of thiseconomy.This category also includes payments made by employers on behalf of workers'insurance contributions or pension funds that represent benefits for employees.In this category of employees are included seasonal workers or those employed for ashort-term (less than a year) and border workers who have their center of economicinterest in their country of origin.As embassies and consulates are considered as non-resident units in economieswhich are located, compensation (salary, bonuses and other benefits) received by thelocal staff (the host country) employed in these institutions are classified as apayment from non-resident to residents.Personal expenses made by seasonal and border workers, in economies in whichthey work are recorded in the voice “Travels”. Fees, fines, social security funds paidby the workers in these economies are recorded as “Current Transfers”.In Albanian Balance of Payments records for these allowances and expenses arepresented gross as it is recommended in the Balance of Payments Manual.8.2.2. Income from investmentThis category covers income derived from ownership of residential units on foreignfinancial assets. The most common types of investments income are:i. Income on equity (dividend)ii. Income from debt (interest).Dividend represents distributed profit to shareholders in proportion with theircontribution in the capital of the company. It represents a payable income without thenecessity of an agreement signed between the creditor and debtor. Other types ofincome from capital can be mentioning the income from subsidiaries and otherenterprises (unincorporated) direct investment. Interest includes income from loansand debt securities. Interest is paid on the basis of an agreement between creditor anddebtor.Incomes from investments are classified as:• Interest on Reserves• Income from Capital• Other income from investments115/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme- Interest on ReservesInterest on reserves cover the receivable and payable income from interest onreserves invested in foreign assets in the form of deposits respectively by residentunits abroad and by non-resident units to resident financial institutions.- Income from CapitalTwo categories of income – “income from equity” and “debt income” – cover therevenues that a direct investor resident in one economy provides from ownership ofthe capital invested in an enterprise in another economy.- Other income from InvestmentsOther income from investment covers receipts and payments from interest on allclaims (assets) and liabilities to nonresidents, not included in other items. Thiscategory also includes income from life insurance and pension funds.116/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeCHAPTER 9: FUTURE IMPROVEMENTS OF ACCOUNTS9.1 IntroductionThere is a need for a long term plan for NA improvement, including tasks related tothe statistical infrastructure required to meet NA needs. This will require agreementand significant input from other Divisions of INSTAT and from other agencieswhich supply data for NA purposes. For example, to ensure that NA Divisiondevelops institutional sector accounts or supply-use tables, it is essential thatINSTAT adopts an appropriate economic statistical unit model and implement it inthe Business Register, including the creation of local units or establishments forindustrial statistics (and sub-national statistics) and an institutional sectorclassification. The plan needs to be practical, sequential and incorporate steps tosatisfy the needs for achieving at least the minimum Eurostat requirements.The last project of TA of IMF developed a summary outline of such a plan whichINSTAT needs to consider adopting and developing the additional details needed tobe implemented. The outline is included as Annex G. This requires a considerableamount of planning and commitment of resources, both within INSTAT and in otheragencies, over a number of years. This report provides a proposed plan which wouldachieve Eurostat requirements in 2016 if sufficient resources are consistently appliedduring this period and if relevant TA can be arranged at appropriate times. Most ofthe required NA developments depend on significant improvements of statisticalinfrastructure (Business Register, classifications, surveys, staff skills, quality control,planning etc.) and their development requires substantial planning, coordination andTA.Further improvement in exhaustiveness of GDP related to estimation of Nonobservedeconomy: Use of Labor Force Survey (LFS) carried out by INSTAT in 2008 (Labor Input method)Increase of labor input data using the information already available inGeneral Directorate of Taxation and Social Security Institute.Introduction of further methodological innovations in particular byimplementing a check procedure on economic data declared byenterprises in order to correct/estimate the underreporting of valueaddedIntroduction of the Tabular Approach of Eurostat for exhaustiveness.117/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme9.2 Improvements of sources and methodologies in National Accounts duringIPA 2007 projectINSTAT compiles and disseminates annual National Accounts aggregates basedon the European System of Accounts ( ESA95) which is the EU version of theworld level System of National Accounts of the United Nations (1993 SNA). Themost recent publication covers the years 1996 – 2008. Gross Domestic Product(GDP) and its components are estimated for the total economy by the productionand the expenditure approach at current and constant prices.Revisions to statistical information are an essential bridge between the timelinessand accuracy of data. Revisions reflect the availability of new information as wellas efforts to improve methodologies. In this framework, from March 2010,Institute of Statistics (INSTAT) is assisted from IPA 2007 National Project“Support for the alignment of the Albanian statistics with EU standards” and oneof the components is “National Accounts”. Main objectives foreseen in order toimprove and extend the national accounts, in the frame of general strategy andwithin the requirements of the topic 2:01 “Annual National Accounts” ofEUROSTAT Statistical Requirements Compendium and other relevant modules,are:‣ The implementation of new national accounts domains as institutionalsectors accounts,‣ Supply and Use Tables (SUT-s),‣ Regional Gross Value Added (GVA),‣ quarterly GDP by expenditure side,‣ the improvement of annual and quarterly estimation of GDP‣ Non-Observed Economy (NOE).In the framework of this project, main actions taken to improve national accounts(see Annex J) are:9.2.1. Improving the statistical sources and methodology for annual NationalAccounts estimations.9.2.1.1 Improvement of the sources.During this project are improved the statistical and administrative data sources.The major improvements accorded in the below mentioned subjects:9.2.1.1.1 Statistical Data sourcesThe main statistical data sources used in national account is the StructuralBusiness Survey (SBS). It provides information useful for annual GDP by118/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmeproduction and expenditure approaches, for SUT-s elements, for Non-ObservedEconomy and for regional GVA estimations. Due to this fact, improvements havebeen done in order to make possible estimation of:• Production, intermediate consumption and GVA for non-financial units;• Full-time equivalent employment• GFCF in line with the methodological requirements of ESA95,which means toinclude the intangible assets, the major repairs and the investments from ownaccountproduction;• Structure of the intermediate consumption necessary for the SUT-scalculation;• Regional accounts estimations;• Consumption of Fixed capital (CFC) by implement the PIMProposals have been included in the SBS questionnaire for the year 2009 and2010. (See Annex Q.)SBS has been improved also in the coverage, by including the private health andeducation services and by collecting the necessary indicators for the nationalaccounts estimations.Another useful data sources for national accounts development is the representedEnterprise census 2010. Several economic indicators for the year 2009 wereincluded in the census questionnaire from which it could be mention: number oflocal units, number of employed persons at local units and the main activity;indicators of production and intermediate consumption about the enterprises andespecially for NPISH; elements of GFCF for all the units.The results of the census will be useful to:• improve of institutional sectors classification, including the non-profit units;• estimate the production, intermediate consumption, GVA, investments andchange in inventory based on direct and complete data of enterprises;• estimate the final consumption of the Non-profit institutions servinghouseholds (NPISH) for the year 2009 and build up an estimation method forthe following years;• Estimate the regional accounts based on local units data.The enterprise census results will be used to build up a benchmark method for theestimation of same components of national accounts.119/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme9.2.1.1.1 Administrative Data sources9.2.1.1.1.1 Statistical AnnexAnnual financial statements of the enterprises have been one of the most importantadministrative data to estimate economic indicators. After the changes of NationalStandards of Accounting it was difficult to estimate the production and intermediateconsumption of the enterprises. In order to elaborate national accounts in cooperationwith the Ministry of Finance, Tax Authority and Albanian National AccountingCouncil, a new statistical annex (see Annex K) was part of the financial statements ofthe non-financial units consigned to Tax Authority. The statistical annex will be usedto check the consistency of the SBS data, to cover all the economic activities(including NOE estimations) and to estimate national accounts indicators as theoutput, intermediate consumption, value added and investment of the non-financialunits.9.2.1.1.1.2 Financial QuestionnaireThe FISIM calculations are regulated in Council Regulation (EEC) no. 448/98 of16 February 1998 and council regulation (EC) No 1889/2002. The former definesthe FISIM calculations of production and expenditure by institutional sector andthe latter implements them.The statistical units that are covered in the FISIM calculations are all financialinstitutions engaged in financial intermediation of loans and/or deposits where therate of interest is controlled by that very unit. The main financial institution thatproduces FISIM is banks.In order to evaluate the financial intermediation services indirectly measured(FISIM) and to allocate it to institutional sectors it is necessary to have specialinformation at level of units belonging to financial sector. For this purpose, in theframe of IPA 2007 project support for the alignment of the Albanian statisticswith EU standards, a special questionnaire (see Annex K) was elaborated tocollect information needed for improving the FISIM estimations in line withCouncil Regulation 448/1998.The data collected by the survey is for the years 2009 and 2010 and providesinformation about:‣ Stocks of loans and deposits for resident and non-resident sectors;‣ Paid and received interest;‣ Investment of banks;‣ Activity of local units.120/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeThe survey will be conducted at level of commercial banks registered and withactivity in Albania. The questionnaire comprises the following main categories ofinformation:Identification data: name of unit, address, ownership, legal form;Annual stock of loans and deposits and paid and received interest;Output of financial intermediation services: loans granted by residentfinancial intermediaries to resident sectors and resident sectors deposits toresident financial intermediaries.Investment dataActivity of local units9.2.1.1.1.3 Insurance questionnaireIn order to improve the estimation of production and intermediate consumption ofthe insurance enterprises it was necessary to conduct a questionnaire (see AnnexM) with special economic indicators for this activity. Also this new data sourcewill help to perform institutional sectors and regional accounts. The data will becollected for the years 2008, 2009 and 2010.9.2.1.2 Improvement of the Expenditure approach methodology.Actually, Expenditure approach is not calculated independently. Some of itscomponents are estimated directly, including Net-Exports, Government FinalConsumption, and Final Consumption of Non-Profit Institutions and of Grossfixed Capital Formation.Final consumption of households is estimated by extrapolation using a range ofindicators resulting from production approach.As a result in the process of consistency of GDP by production and expenditureapproach, changes in inventories and statistical discrepancy are combined asresidual and balancing item.Actually, in Albanian National Accounts the decisive factor for the size of GDP isonly the production approach, without having any control from the expenditureside, and it means as well that the expenditure approach needs improvement.In the framework of IPA 2007 project, National Accounts component, theimprovement of Annual GDP by Production and by Expenditure is one of theobjectives.The aim is to evaluate the main components of GDP by expenditure approach:Households final consumption (HFC), Gross Fixed Capital Formation (GFCF)and Government final consumption (GFC) independently from Production.The activity is focused on the estimation of the GDP in the independent way. Onthis purpose, main activities realized till now are:121/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAre analyzed the preliminary results of the Household Budget Survey (HBS)for the period November 2008 - October 2009 aggregated by COICOP andNACE 2 digits level, in rapport with the previous HBS results (September2006-August 2007). Based on the fact that there are differences in theconsumption structure from the two surveys and in relation with the imports,the analysis will continue and estimation of HFC for the year 2009 will beimproved. Analyze of the value of imports total economy and imports mainlyfor household consumption and the value of output for some specificactivities with impact in the level of the household consumption.Based on the improvements made last year in the SBS questionnaire,additional information was obtained for the GFCF estimation in line withESA 95 requirements (own account production for investment, major repairsto machinery and to constructions, investment in intangible assets).In order to estimate the GFC in line with ESA95 methodology, thegovernment revenues were analyzed and classified into national accountsindicators allowing the estimation of the market output. In this respect, theGFC for 2009 was estimated following the methodological requirements.9.2.2. Elaboration of Supply and Use Tables (SUT-s)In framework of IPA 2007 National Accounts component, Albanian NationalAccounts has started in experimental way to create S&U and I&O Tables. It isvery important in the case of Albania to have the SUT-s which is the frame for abetter and integrated estimation of GDP by production and expenditure approach.The main actions carried on until now are:• Identification of information and methodology that will be used;• Collection of detailed information from statistical and administrative datasources;• Analyze and integration of data in the SUT-s table for 2008 year and some for2009 in current prices;• Structure of I&O Table for 2008 and 2009 year.Until in the end of the project is planned to be done:• Elaboration of SUT-s in constant prices and the realization of the balancingfor 2009 year;• A methodological framework for the estimation in constant prices for allcomponents of the SUT-s;122/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme• A system of tables containing consistent and detailed information on the levelof volume and price changes of goods and services transactions;• Preparation of the specific publication which will include the results of theestimations, methodological notes and an economic analysis, based on theavailable information and results achieved in the elaboration of the SUT-s incurrent and constant prices.9.2.3. Elaboration of institutional sectors accountsIn the sector accounts, institutional sectors are distinguished not in terms of thenature of their production activity (such as agriculture, industry, services etc) butrather in terms primarily of the institutional form of the units that make them up.Thus companies, whether engaged in commercial non-financial or financialbusiness, are grouped in a different sector from households, even though the latterare in many cases also engaged in commercial production, and from governmentor other non-market producers such as voluntary agencies.Actually, Albania doesn’t compile Sector Accounts. So, in order to improve thenational accounts, IPA Project 2007 has foreseen several objectives, in the frameof general strategy and within the requirements of the topic 2:01 “Annual NationalAccounts” of EUROSTAT Statistical Requirements Compendium and otherrelevant modules. One of the objectives of the project IPA-2007, NationalAccounts component, consists on the development of institutional sectorsaccounts in Albania (in accordance with ESA 95), by elaborating the productionand generation of income accounts for financial (S12), non-financial (S11),households (S14), non-profit organizations serving households (S15) and fullSequence of Accounts for the government sector (S13), with full observance ofaccounting principle applied in the System of National Accounts (SNA-93) andEuropean System of Accounts (ESA-95).In this framework, main results obtained for this activity are: Classification of the economic units into institutional sectors based onESA 95 requirements. The first activity for the implementation of theinstitutional sectors accounts is represented by grouping the units from alleconomy in the defined 6 sectors. The first classification will be improvedbased on Enterprise census results. Analyzing of available administrative and statistical data sourcesnecessary for institutional sector accounts; The first classification of the government revenues in order to estimatetaxes on products and taxes on production carried out; Government Market output identified and estimated for the years 2008 and2009; Detailed analysis of financial indicators necessary for the estimation ofFinancial Intermediation Services Indirect Measured (FISIM) and for theestimation of the intermediate consumption. Based on this analysis, a123/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmespecial survey was designed and proposed to be carrying out incollaboration with the Central Bank of Albania. Presentation of the Czech System of National Accounts- compilation ofsector tables for non-financial institution (S.11) – filling in main datasources, transition from business accounts concept to NA concept, mainspecific adjustments, exhaustiveness adjustments, balancing adjustments. Analysis of the data collected for non-financial units for the year 2009By the first analysis made, a provisional estimation of institutional sectors accountsfor non-financial units is done. By the project was set that result should beconcentrate on production and generation of income accounts. For this purposes wasprepared special schemes in excel files. Determination of non-financial institutionalsector was done. All physical persons will be included into Households sector. Fornon-profit units for which was available data was provide 50% criteria test and manyof them seemed to be market producers. It was prepared set of data for non-financialsector as a total, as an example. For each kind of data source was prepared estimationof needed items: SBS1 (units with the turnover up to 2 mil LEK) – for estimation of Outputwas used total sales; Estimation of Subsides on production didn’t provide,will be provided as a conceptual adjustment using information fromgovernment side (balancing approach) SBS2 (enterprises with the turnover from 2 to 10 mil. LEK) – similarestimation as for SBS1 was done; SBS3 (enterprises with turnover over 10 mil. LEK) – other incomes wasincluded into calculation of Output. Other incomes include also fines andpenalties and other non-identified incomes. Assumption was given that 50%of other incomes is not a part of Output and belongs in other items in NA(D.75,…). For the future is needed more detailed information. Tax reports (Balance sheets) – similar estimation like for SBS3 was done. Tax reports (mini Balance) – similar estimation like for SBS2 was done. VAT payers (VAT declarations) – using ratio between Output and Turnoverfor small units was used for calculation of Output (Turnover fromVAT*ratio). Intermediate consumption was estimated using ratio P1/P2 forsmall units. Only non zeros in turnover data was taken into calculation (2839units) Social security administration – ratio between wages and GVA from smallunits was used to estimation of GVA. On the estimated GVA was appliedratio between Output and GVA to estimate Output. Intermediate consumptionwas calculated as a difference P1-GVA. Only non zeros data in wages wastaken into calculation (2319 units)124/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeFinally missing part of units in all data sources was estimated using Statisticalbusiness register (6776 units). Into calculation was takes data about numberof employees from BR and average productivity per employee calculated forSBS1, SBS2, VAT, Mini balance. Output was calculated using ratio P1/GVA.9.2.4. Improve the methodology and the statistical measure of the non-observedeconomy (NOE)The improvement the coverage of the non-observed economy in Albania will bebased on the Eurostat tabular approach to exhaustiveness of national accounts andthe OECD Handbook. The improvements will be based on the analysis of the datasources existing in the economy (statistical, administrative data sources, informationfrom different organizations, etc and the characteristics of this phenomenon inAlbania.) In the annex N are presented the types of non-observed economy that willbe estimated during this project.Another improvement will be the implementation Labour input using for the firsttime the data of Labour Force Survey.9.2.5. Improvement of Quarterly GDPQuarterly National Accounts (QNA) is focused in some further improvements thatconsist in:Estimation and publication for the first time quarterly series, not seasonaladjusted, in average prices of previous year, using chain-link method (annualoverlap technique). This estimation helps users to compare annual data withquarterly data with prices of previous year. (see Annex O )Another topic of the project is the estimation, in experimental way, of QGDP byexpenditure approach. For this purpose are:‣ Identified some of the data sources for the estimation of QGDP byexpenditure side.‣ Are treated some theoretical concepts,‣ Are collected and analyzed some data that can be used for estimation of someof the components of expenditure approach‣ Establishing a time series 2007-2009 of QGDP by expenditure sideFuture objectives are:‣ Design a specific methodology for the estimation of QGDP by expenditureside‣ Performing an experimental estimate of QGDP by expenditure approach125/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme9.2.6. Estimation of regional accountsThe proposal for breakdown of the Albania territory was prepared in relation withRegulation (EC) No 1059/2003 of the European Parliament and of the Council of 26May 2003 on the establishment of a common classification of territorial units forstatistics (NUTS).Regional breakdown of Albania is based on the Act No. 8653 on the formation ofPrefectures as administrative units. These units were become based for regionalpolicy in Albania and there is correspond to regions at level NUTS 3.The Council of Ministers, with act (decision) No. 1037, date 15.12.2010 -On theimplementation of the nomenclature “Albania in 3 (three) regions NUTS II”according to the nomenclature of the territorial units on statistics (NUTS) of theEuropean Union-, determine three statistical regions Level II: Durrës and NorthAlbania; Tirana and Elbasan; South Albania.These 12 approved regions were grouped into 3 non-administrative units as regionsat level NUTS II. Region at level NUTS I is Albania as a whole territory.Number of population for each non-administrative unit at level NUTS II (see annex P)is harmonized with thresholds in Regulation of EP and the Council No. 1059/2003,article 3, which arranged minimum size 800 thousand people and maximum 3million .At present time, INSTAT is working for the experimental estimation of Gross ValueAdded at regional level NUTS II in constant prices and growth rates of RegionalGDP9.3 IPA 2008 Multi-Beneficiary Programme on StatisticsThe IPA 2008 Multi-beneficiary project was initiated in April 2010. IPA 2008follows IPA 2007 and will have follow-up IPA projects (IPA 2009).The general objective of the IPA 2008 is the development of statistics in thecandidate and potential candidate countries from Balkan, including Albania, to theintegration into European Union. Main objectives of IPA 2008 project are:9.3.1. Objectives:Objective 1:Objective 2:• To significant improve the bases of the estimates of GFCF,changes in Inventories, CFC and Value Added of serviceindustries (Financial/insurance; Business services; Education /Health, private sector) and in the Beneficiaries.• This will lead to increase quality and comparability of the NAdata used for a wide range of national and international needs.• To update the description of the sources and methods used tocompile non-financial NA prepared under the IPA 2007 project by126/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmeincluding the improvements achieved during the current projectand extending, where appropriate, the description for the NA areascovered under the pilot project.It is important to stress that in the field of National Accounts, an important part of theIPA National project were similar with the objectives of IPA 2008 Multi-beneficiaryprogramme on statistics. Taking into accounts this fact, the activities of the IPA 2008Multi-beneficiary programme were defined in the way to avoid the overlap betweenthe two projects and to create the premises for the improvement of NationalAccounts estimations in Albania using the opportunities offered by the two projects.The outline project plan in the field of Albanian national accounts for improvementin conceptual harmonization with ESA 95 is summarized as follow:9.3.2. Improve the estimation of production, intermediate consumption andgross value added for education and health in private sector for the year 2009.In order to improve the GVA in services, this activity is focused to the estimation ofthe production, intermediate consumption and GVA for private units in health andeducation activities starting from the year 2008. The coverage of the available datasources to the total population of Units for Private Health and Education were takeninto account. The integration of this data sources into a final estimation were donetaking into account the structure followed by the production sector. This data wereused to extrapolate GVA, IC and Output following the production sectormethodology. The first draft evaluation was used to revise the final data for 2008 andthe semi-final data for 2009.Main steps undertaken on this activity are:9.3.2.1 Identification of data sources and units belonging to NACE 80 and 85,private sector.Main data sources used for the estimation of Private Health and Education:- SBS data ( Education and Health are not covered into SBS)- Balance sheets/Mini - Balance Sheets : Annual Balance data (Source TaxAuthorities)- Retrievable information:- Evaluation of Output ,IC ,VADD- Evaluation of Turnover, Wages- Size, Region and Nace 4- VAT declarations : Data are Monthly (Source Tax Authorities)- Retrievable information:- Total Turnover for Economy- No time stamp regulated- Size, Region and Nace 4127/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme- Social insurance data : Data are Monthly (Source Tax Authorities)- Retrievable information:- Total wages for the period- No time stamp regulated- Size, Region and Nace 4- Missing data : Data are Monthly (Source Tax Authorities)- Retrievable information:- Nr of active enterprises- Size, Region and Nace 4Below we can see the actual data sources available for Health and Education57Table 9.1Data sources for educationNACEBalancesheetsVATSocial Total WithInsurance DataMissingData 09TotalEconomy2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 20098010 9 13 31 - 10 9 62 104 112 126 48 48 160 1748021 17 23 11 1 11 13 18 26 57 63 17 15 74 788022 5 4 2 - 1 3 2 3 10 10 5 2 15 128030 8 7 1 - 2 4 - 3 11 14 3 4 14 188041 8 16 54 7 7 5 114 158 183 186 183 135 366 3218042 8 8 27 2 1 5 64 93 100 108 78 52 178 160Total 55 71 126 10 32 39 260 387 473 507 334 256 807 76358Table 9.2Data sources for healthNACEBalancesheetsMinibalanceSheetsMinibalanceSheetsVATSocialInsuranceTotal WithDataMissingData 09TotalEconomy2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 20098511 1 - - - - 1 - 3 1 4 - - 1 48512 18 22 70 5 16 9 105 204 209 240 119 130 328 3708513 11 19 243 33 6 6 436 712 696 770 305 307 1,001 1,0778514 6 4 26 7 - 2 55 96 87 109 49 40 136 1498520 - - 7 - - - 14 19 21 19 14 19 35 388531 - - - - - - 1 3 1 3 7 2 8 58532 - - 1 - 1 - 6 9 8 9 17 13 25 22Total 36 45 347 45 23 18 617 1,046 1,023 1,154 511 511 1,534 1,665128/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme9.3.2.2 Methodological evaluation.For evaluating the GVA, IC and Output there were followed the same procedure asthe production side of GDP estimations. The imputation procedures were based onthe Size class of the unit, Albanian Regions and on NACE 4 digit level.After identifying the main data source available, it was used the followingprocedures.- Balance sheets/Mini - Balance Sheets : Annual Balance data (Source TaxAuthorities)- Direct Evaluation of Output ,IC ,VADD- More details of the estimation method arepresented in chapter 3.- VAT declarations : Data are Monthly (Source Tax Authorities)- Indirect estimation of Output- Indirect estimation of IC- Indirect estimation of GVA- More details of the estimation method arepresented in chapter 3.- Social insurance data : Data are Monthly (Source Tax Authorities)- Indirect estimation of Output- Indirect estimation of IC- Indirect estimation of GVA- Missing data : Data are Monthly (Source Tax Authorities)- Indirect estimation of Output- Indirect estimation of IC- Indirect estimation of GVA- More details of the estimation method arepresented in chapter 3.The Social Insurance data were not integrated yet into the production approach. A newapproach was needed for this part. After discussing with our country expert there wasdecided to evaluate the Gross Value Added using the Ratio of the wages from balancesheets compared to the Gross value added from balance sheets for each unit. For each unitthere was used the specific ration at the level of detail as mentioned above. The structure ofthe Output was extrapolated from the balance sheets from the GVA.129/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeGross_Value_Added_Data_i/Size&NuGross_Value_Added_Sig_i/Size&Nuts4Wages_Sig_i/Size&Nuts4*Wages_Data_i/Size&Nuts4ProductionData_ _ i/Size&Nuts4Production_ Sig_i/Size&Nuts4Gross_Value_Added_Sig_i/Size&Nuts4*GrossValue _ _ Added_Data_i/Size&NuInterm_Consump_Sig_iProduction_Sig_i Gross_ Value_Added_Sig9.3.2.3 Final ResultsThe first evaluation was made for 2008 – 2009 period. The data were integrated intothe final publication of Health and Education for the year 2008 and as semi final datain the Health and Education in the year 2009.This evaluation showed the emerging of the private sector toward the public sector inthe health and education part.In Million LeksEducation HealthOutput 5,366 4,2782008 IC 2,442 1,904VADD 2,924 2,374Output 5,346 4,8172009 IC 2,081 2,006VADD 3,265 2,8119.3.3. Evaluation of CFC using the PIM methodDuring the IPA 2008 project was indented the implementation of a structure of datafor a first evaluation of the PIM method. The proposal of integrating this table intothe census of Non-Agricultural Enterprises was rejected. The structure wasincorporated inside the SBS questioner of 2009.The data received were inconsistent and not usable (Only 24.34% of the populationwas usable). The quality of data was inappropriate to evaluate an experimental PIMmethod.130/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammePART B PRICE AND VOLUME MEASURESCHAPTER 10: GENERAL PROCEDURESThe compilation of GDP by production approach at constant prices is the mostimportant one in determining the volume growth of annual GDP in Albania. TheGDP at constant prices is measured from production side as the GVA by industry,i.e., the total sum of value added of all the economic activities at constant prices plusnet indirect taxes on products at constant pricesTaking into account the availability of price / volume indices, different methods fordeflation were used; mainly the single extrapolation of value added with the volumeindex of output and not double deflation.As regards the compilation of constant prices, chaining index is used which meansthe use of prices of the previous year. Also we have implemented the constant priceswith the base year in order to support the estimation of quarterly GDP at constantprices which use the year 2005 for the base year index.GDP at constant prices from the expenditure approach is equal to the sum ofHousehold consumption expenditure at constant prices, government and Non-ProfitInstitutions Serving Household consumption expenditure at constant prices, Grossfixed capital formation and net exports at constant prices. Changes in inventories atconstant prices are derived as residual together with the Statistical Discrepancies.Constant price estimates can be derived by deflation or by extrapolation, but the mostcommon practice is to derive a constant price estimate by deflating the current priceestimates.The following table indicates the value of GDP of the year 2006, expressed in pricesof previous year, for output, intermediate consumption and value added by mainindustries.131/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme59Table 10.1:Value of GDP 2006 by branches at prices of previous yearIn Million LEKBranchesOutputIntermediateConsumptionValue AddedAgriculture, hunting andforestry 225,568 69,188 156,380Industry 251,561 163,758 87,803- Extracting Industry 16,984 11,496 5,488-Manufacturing Industry 234,577 152,262 82,315Construction 333,137 220,651 112,486Trade, Hotels and Restaurants 257,549 95,281 162,268Transport 93,990 52,077 41,912Post and Communication 55,700 23,853 31,846Other Services 276,266 89,376 186,890Fisim 26,911 -26,911Total GVA at basic prices 1,493,771 741,095 752,674Taxes on product 110,314Subsidies -3,940GDP at market prices 859,048The following table gives in % the deflators and real growth rates aggregated intomain branches:60Table 10.2: Published value of Deflators and Real Growth rates in 2006In Million LEKBranchesDeflatorsRealGrowthRatesAgriculture, hunting and forestry -1.1 3.1Industry 0.5 12.1- Extracting Industry 7.4 -1.6- Manufacturing Industry 0 13.2Construction 1.1 10.5Trade, Hotels and Restaurants 2.4 2Transport 3.4 2.3Post and Communication -0.7 12.7Other Services 5.7 5.2Gross value added at basic prices 2 5.7Fisim 13.1 14.5Taxes on products 9.9 5.9Subsidies -5.6 12.9GDP at market prices 2.7 5.4132/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeCHAPTER 11: GENERAL INFORMATION ON MAINSOURCES USEDThe main data sources used for the annual estimation of GDP at constant prices are:Production Price Index (PPI), Consumer Price Index (CPI), Construction Cost Index(CCI) and Unit Value Index (UVI)11.1 Production Price Index (PPI)11.1.1 Composition of Producer (output) price indices and their purposeThe total producer (output) price index is composed of two sub indices: theproducer’s price index on the domestic market and the producer’s price index in thenon-domestic market (export price index).- PurposeProducer’s price indices measure changes in the level of producer’s prices ofmanufactured goods produced in Albania and sold by producers in the domestic(Albanian) and/or non-domestic market.- Output price indices of the domestic market measure changes in the level ofproducer’s prices of manufactured goods produced and sold by producers in thedomestic (Albanian) market.- Output price indices of the non-domestic market measure changes in the level ofproducer’s prices of manufactured goods sold by producers in foreign (non-Albanian) markets.11.1.2 HistoryIn 1999, INSTAT calculated the first official PPI in Albania considering the 1998 asa base year. This index covered the following activities:- Forestry, A:02- Fisheries, B:05- Extracting industry, C:10-14- Processing industry, D:15-36The observation units were the economic enterprise with their main activitiesregistered in the relevant field of coverage. For the period from October 1998 to June1999, this sample was composed of 211 enterprises. In 1998, within the four-digitNEA categories, the enterprises were selected using the following criteria:1. Business figure2. Total number of employees3. Total sales per employeeThe first revision of index was done in May 2000 based on the results of the 1998Annual Structural Survey (ASS). This revision identified 400 additional enterprises,including the energy sector. For each enterprise a sample of products was selectedand their prices are added on a monthly basis. A criterion for the selection of these133/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmeproducts is the value of their sale, which accounts for more than 10 percent of thetotal sales of the enterprise. In the cases when the enterprises have a considerablenumber of products, the highest sale value is used as the selection criteria. Thisselected product represents the entire relevant group. The base year used for thesecalculations is 1998. The figures about the sales represent the first type of theweights used for the PPI calculation. These weights used for the aggregation of theelementary indexes of the products at the four-digit NEA level and at the eight-digitlevel according to the Product Classification.The PPI calculation on the basis of the economic activity is made by using anothertype of weights, which represent the total sales at a four-digit NEA level. The sourceof the data for the calculation of these weights is the results of the 1998 ASS.It is important to stress out that these weights were not the sum of the individualweights for the products and enterprises included in the PPI sample; rather, they werethe total prices for the whole four-digit industry, including the sales of the enterprisesthat were not selected in the PPI enterprise sample.The second revision of PPI was in 2007. The previous index was a “fix base index”(further reading chapter 15 F in PPI-manual), and the weights for sections / chapters /transactions were fixed over time (set when compiling the base year). Theimplication of this is that the weights will not correspond to the current situation,rather to that situation that was present when compiling index numbers for the baseyear. A lot of products or product groups that were popular in 1999 disappeared andsome new ones are more popular today. Another drawback was that item substitutionbecomes hard to manage at practical level. So, in 2007 Sweden experts suggested tochange the method of calculation in order to be more realistic and more compatiblewith the EU requirements. The new method is the “chain – index”. The base periodof index is 2005 = 100.11.1.3 Classification and data publicationOutput prices of the manufactured goods are collected according to the Classificationof Products by Activities (CPA)11.1.4 Data collectionPrices which are the basis for calculating output price indices are collected with thequarterly survey of producer price. This survey collects information for: Output Prices of Manufactured Goods of the Domestic Market with which wemonitor output prices on the domestic market Output Prices of Manufactured Goods of the Non-Domestic Market with whichwe monitor output prices on the non-domestic market.Output prices of manufactured goods are collected on monthly basis withquestionnaires sent to selected enterprises from the fields of manufacturing, miningand quarrying, energy and water supply. Each questionnaire is individually preparedfor the enterprises. The questionnaires include only the representative productsselected by enterprises. Each representative product has a six-digit code from the134/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeNomenclature of Industrial Products, a five-digit code ID, a description of productand a unit of measure for which the price is stated.Enterprises fill in prices in the questionnaires every quarter with the information foreach month by a face to face interview of enumerator with contact person ofestablishment. Enumerators send the questionnaire to the Statistical Office of theRepublic of Albania by the 20th of the current quarter.In 2009 the calculation of the output price index covered 378 enterprises whichreport monthly for around 588 products: 20 of the enterprises report both prices forthe domestic market and for non-domestic markets, 128 report only for non-domesticmarkets and 230 only for the domestic market.11.1.5 CalculationThe calculation of individual price indicesFor each current month compared to the base month (i.e. December of the previousyear), individual indices of particular representative goods are calculated directlyfrom data on prices.ptIt / dpdpt = price for a certain product in the current period tpd = price for a certain product in the base period d- The calculation of aggregate indices at higher levelsFrom individual indices we calculate with weighted arithmetic mean aggregateindices, i.e. class and group indices, division, subsection and section indices, mainindustrial group indices and the total index according to the following formula:It / dnpptii1dini1w* wdidiWhereby:It/d ... index of classes, groups, etc., or the total indexpti ... price of product i in the current monthpdi ... price of product i in Decemberwdi ... weight for an individual product in Decembern ... number of products135/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeEach aggregate index (December of the previous year = 100) calculated in this wayand all other indices derived from this index and calculated with weights of theweight base period and with the same coverage of products are Laspeyres' indices offixed type.Since January 2007 indices have been linked through the new index reference periodyear 2005 (2005 average = 100). All indices are now derived and calculated throughthe 2005 average in the following ways:Monthly base index shows price changes in current month compared to theaverage of the year 2005.Jan 09 / 05 = (Jan 09 / DEC 08 DEC 08 / 05) 100Quarterly index shows price changes in current quarter compared to theprevious quarter.Q.I. 09 / Q.IV.08 = (Q.I.09 / 05 Q.IV.08 / 05) 100To provide data in the form of longer time series, the indices for the total arerecalculated and published from 1999 with new base year 2005 = 100.11.1.6 Price conceptOutput (producer) prices of manufactured goods of the domestic market are prices atwhich producers sell their products in largest quantities on the domestic market - ExWorks. The price does not include VAT (value added tax) and similar deductibletaxes and duties directly linked to turnover. The price includes rebates and discountswhich the producer approves to the buyer.Output (producer) prices of manufactured goods of the non-domestic market areprices at which producers sell their products in largest quantities in foreign markets.The price does not include VAT (value added tax) but includes rebates and discountswhich the producer approves to the buyer.Reporting units give the price in the currency in which the transaction wasconducted. For calculating the index, the prices, which are not in EURO, areconverted into the national currency on the basis of the reference exchange rate ofthe European Central Bank on the 15th (or 16th) day of the month.11.1.7 Base price periodPrices of the base period are the basis for a comparison with the prices of the currentperiod. The price base period is December of the previous year.11.1.8 The weighting systemThe output price index is a combination of the output price index of the domesticmarket and the output price index of the non-domestic market.The weighting system is designed on the basis of the 2005 structure of sales value ofmanufactured goods on the domestic market and on foreign markets on a separate136/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmebasis. The basic source of data is annual structural survey. In designing the weights,SBS- sales value data are recalculated on December 2008 by producer price indicesDecember 2008 / 2007. Weights are changed every year.11.1.9 Quality AdjustmentsWhen speaking about quality adjustments one usually refers to the whole concept ofitem replacement. There are a lot of methods for handling the replacement; here wewill look at a few of them. The choice is in most case dependent of what data isavailable. Mainly there are two categories:Explicit valuationImplicit valuationExplicitWhen doing explicit quality adjustments one needs to quantify the quality differencein terms of price. For PPI, as it is an output price index, the preferred way to doquality adjustments is by adjusting for differences in production cost.The quality adjustments in the index should be done by adjusting the base price(December previous year).ImplicitWhen using implicit methods for item substitution one does not have to estimate thedifference in quality in terms of price. Instead you rely on “the law of one price”,stating that all differences in price at a given point in time are due to differences inquality. This might not seem like a truth in many cases and it is probably not (it liesin the assumptions of a fully competitive market). However, having nothing else torely on, the “law of one price” might be acceptable to use when substituting items forthe same establishment within the same product group.11.1.10 PublicationThe PPI is published on 5 th of each quarter for the previous quarter.The following publications include PPI and are regularly published. Quarterly publication “Producer Price Index Quarterly bulletin “Statistics” In “Statistical Yearbook”.On the website of INSTAT, www.instat.gov.al., at the 8 th of each quarter11.2 Consumers’ Price Index (CPI)11.2.1 General backgroundThe Consumers’ Price Index (CPI) measures the change of the prices of a fixedbasket of goods and services from base period to the current period. The base periodis now December 2007 and will be changed in the next base revision.137/236

61IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeThe Consumers’ Price Index is used for different purposes: As a measuring of inflation rate in Albania. As a deflators for the National Account As a deflator for calculations of volume indices For compensation of change in the cost of living of households As a base for wage negotiations and other agreements As a target variable, especially for macro-economic policy, Monetary policy of the central bank of Albania11.2.2 HistoryThe first official Consumers’ Price Index was calculated in December1991 having asthe base period December 1990. In 1991 the Institute of Statistics (Directorate ofStatistics under Ministry of Finance) also calculated the CPI for December 1989 andDecember 1990. Monthly CPI has been calculated from 1992 onward. The result ofthe Household Budget Survey (HBS), carried out by INSTAT in 1993 was used forrevising the consumers’ basket of the CPI. In 1993 the CPI was calculatedconsidering the December 1993 as base period. The basket of items has 221 itemsand the expenditure was classified in 8 main groups. In 2000, INSTAT produced anew HBS and those results were used on revision of the basket of CPI. December2001 was considered as a base period where 262 items were included in the basket ofthe items.CPI in December of each years300.0250.0200.0150.0100.050.00.01988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008For the first time the expenditure was classified in 12 main groups by COICOPclassification. Last revision of the CPI was in 2007. The result of HBS 2006-2007was used for construction of the weights of items. The basket of items included now138/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme272 items and expenditure was classified in 12 main groups by COICOPclassification. December 2007 is considered as a base period. For the first time, CPIcovers the entire territory of Albania (urban and rural). The plan of next revision isforeseen in 2010.11.2.3 Structure of CPIClassificationWe use the international COICOP classification of consumers’ goods and services toorganize the list of items for consumption. Based on this classification theexpenditures are classified in 12 main groups such as:1. Food and non-alcoholic beverages2. Alcoholic beverages and tobacco3. Clothing and footwear4. Rent, water fuel and power5. Furniture household and maintenance6. Medical care7. Transportation8. Communication9. Recreation and culture10. Education11. Hotels, coffee-house and restaurant12. Other goods and serviceUnder the main groups there are some subgroups at two levels.IndicesThe Consumers’ Price Index is calculated in the above hierarchy: Total index (CPI) Index by 12 main groups Index by subgroups Index by productThis hierarchy of CPI is calculated at national level and for each region.11.2.4 CoverageGeographical coverageAlbania has 12 prefectures and CPI is using 11, where Kukës is covered by Dibërprefecture. The weights are constructed taking into consideration urban and ruralconsumption. The prices are collected only in the urban area. Prices are collected indifferent types of outlets. To draw the sample of outlets, we are based on two criteria:139/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme Type of outlets and LocationsBased on the type of outlets, we collect price in specialized shops, mini markets,open markets and different kinds of services. Based on the location, we collect pricesin the centre of the central city and in suburban areas.Product coverageThe basket of items has 272 different goods and services. The selection of the goodsand services is based on the results of the Household Budget Survey. The lastHousehold Budget Survey is carried out during October 2006-September 2007. Wego throw the following steps.1. First, a frame is constructed including 375 detailed goods and services ofthe COICOP classifications in the 6-digit level.2. Next, we calculate the proportion of consumers’ expenditure of each itemto the total expenditure of the whole list of items. All items with a shareequaling or more than 0.05 % are selected.3. Items are aggregated to the 5-digit level of COICOP. In the aggregationprocess, weights for item not selected are attached to the relevant items.In some cases these weights have to be distributed on several items.4. We make sure to have in the basket of items at least one article or servicein the 5-digit level of COICOP classification.5. We also make sure to have in the basket of items products from old list,even if some of them do not fit the criteria of 0.05 %. Also, we excludefrom the list some goods and services for which it is difficult to collectthe price even if they fit the criteria11.2.5 Price collectionsPrices are collected only in the urban area. The regional statistical offices of 11 citiesused to collect the prices are Berat, Dibër, Durres, Elbasan, Fier, Gjirokastër, Korçë,Lezhë, Shkodër, Tiranë and Vlorë. The time of collection of the price is during 10-25 th day of each month. In each city, prices for each item are collected in 8 -10outlets. We collect about 18000 individual prices every month. The sample size ofoutlets is about 500. We used a standard form for collection of the price. The pricecollectors enter the prices in the Excel format form and calculate the relative pricefor each item. The data is transmitted to the Institute of Statistics (INSTAT) on the30 th of each month.140/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme11.2.6 Calculation of CPICalculation of the weightsWe have three types of weights. The weights are product weights for each region,geographic weights and national product weights. The regional product weights areused for calculation of the index at regional level. The geographic weights andnational product weights are used to calculate the index at national level. Weightsare the proportions of the item expenditure to the sum of the expenditure.CEiWi where W is the weight of the product and CE is consumers’CEiexpenditure.Calculation of indexThe CPI is calculated at national level and also at regional level. The first step is tocalculate the relative price for each item in each region. We use the geometric meansof price ratios between current with previous month for calculation of relative prices.PRtt1,ijnk1 PtijkPt1ijk 1/ nRelative Price is used in monthly chaining which gives the relative price from thebase period:t1tPR0,ij PR0,ijPRt1,ijThe regional CPI is calculated (but is not published).RCPI PR,ti, 0rij*it0 ijTo calculate the national CPI the relative prices are aggregated geographically toform product indices on items for the entire Albania:ttI0,i rij PR0,ijwhere rij 1 : i(for all cases)jjAggregation over items then gives the national CPI of Albania:ttCPI0 wi. I0,iwhere wi. 1Definitionsii141/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeP pricePR relative priceI indexCPI Consumers’ Price IndexRCPI Regional Consumers’ Price Indext time period tt=0 base periodr geographical weightsw item weightsj numbering of regionsi numbering of items11.2.7 Imputation of the pricesFor the seasonal items which disappear from the market place during one or moremonths of the year the relative price is imputed with the relative price of the groupwhere this item is included. The same methodology can also be used for non seasonalitems that disappear from the market place on a temporary basis.11.2.8 PublicationThe Consumers’ Price Index is published on 8 th of each month for the previousmonth.The following publications include CPI and are regularly published. Monthly publication “Consumers’ Price Index Quarterly bulletin “Statistics” Monthly bulletin “Conjuncture” Yearly publication “Albania in Figures” “Statistical Yearbook”with the monthly publications, the CPI is also published in the website of INSTAT,www.instat.gov.al., at the 8 th of each month.11.3 Construction Cost Index (CCI)11.3.1 Theoretical view about Construction Cost Index (CCI)The first official CCI in Albania was calculated in 1993.The situation in the country during 1997 caused problems in collecting the necessaryinformation for calculation of CCI, and as a result, there was a gap of information forCCI.The improvement of the sample size of enterprises, a basket of items and referenceperiod was performed in 1999, and now CCI is calculated by considering the fourthtrimester of 1999 as a base period.142/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme11.3.2 Units of observationThe observation units for CCI were the construction companies. The CCI takes intoconsideration an apartment building of 6 floors.To select the construction companies we have taken into consideration some aspectssuch as:The location of firmsThe volume of worksThe total number of construction companies included in the sample was 23, most ofthem are located in Tirana.The results of Annual Structural Survey are used to select the sample size.11.3.3 Basket of itemsThe total number of items selected for CCI basket is 57. According to the costestimate, the expenditures of the object construction were grouped in:Direct expenditureComplementary expenditureAnticipated profitSet up stock siteThe direct expenditures are further classified in:Materials (construction, electric, hydro-sanitary materials)Salary feesTransport feesMachinery fees.11.3.4 Estimation of item weightsThe weight of items was defined as a ratio of value (quantity * price) for one item tothe total value of all items.11.3.5 Price CollectionThe prices are collected on a quarterly basis.The prices are collected by experts of the statistical office of district, and they arereported to INSTAT as an average price.143/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme11.3.6 Relative Price CalculationThe relative prices are directly used in the index calculation.The relative prices are calculated by the expert of the statistical office of the district.In order to calculate the relative price for the items, the prices in the current trimesterare divided with the prices of previous trimester.The relative price should be rounded to four decimal places.11.3.7 Calculation of CCIThe formula used to calculate the CCI derives from the classical Laspeyres indexformula:I(t) = Sum [P(i,t)*Q(i,o)] / Sum[P(i,o)*Q(i,o)]Where:I(t) is the price index between the current period t and the base period 0.P(i,t) is the price of item i in the period tQ(i,o) is the quantity of item i in the period 0The Microsoft Excel file is used for calculation of the CCI11.3.8 Imputation of the missing pricesThe relative prices for the items that could not be priced are imputed every month byusing the average relative price of the groups.11.3.9 PublicationThe CCI is published on 23 rd of each quarter for the previous quarter.The following publications include CCI and are regularly published. Quarterly publication “Consumer Price Index Quarterly bulletin “Statistics” “Statistical Yearbook”with the monthly publications, the CPI is also published in the website of INSTAT,www.instat.gov.al., at the 23 rd of each quarter.11.4 Unit Value index11.4.1 PurposeExternal trade unit value indices measure the dynamics of the price of imports andexports.144/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme11.4.2 Source of dataThe only source of data for external trade unit value index calculation is data fromcustoms statements.11.4.3 Method of data collectionINSTAT receives the data from the customs statements on a monthly basis from theCustoms Administration.For external trade unit value index calculation only data on the statistical value ofexported and imported goods in LEK, data on quantity in supplementary unit at themost disaggregated level of the Combined Nomenclature are used.11.4.4 CoverageThe calculation of external trade unit value indices includes all customs statementscovered by external trade statistics according to the special trade system. Exports andimports of goods for which the variability of unit values in the base year, measured withthe coefficient of variation, exceeded the predefined limit, are excluded from thecovered current and base period.11.4.5 Definitions and the compilation methodThe unit value is the average value (not the price of a determined product) perquantity in supplementary unit of all products classified under the same eight-digitcode of the Combined Nomenclature. The selection of appropriate quantity (quantityin supplementary unit) used in the calculation of the unit value of the individualproduct depends on the coefficients of variation (the coefficient of variation for theunit value calculated by using data on quantity in supplementary unit) and thenumber of quarters with positive value of this product for the base year. In caseswhen not only one product but more products of various kinds or various quality areclassified under the same eight-digit code of the Combined Nomenclature, therelative change of the unit value can reflect the change of price as well as the changeof composition or quality of goods. Nevertheless, the aggregated external trade unitvalue indices, calculated for larger groups of goods, are approximate for monitoringprice developments in external trade and as deflators.In calculating external trade unit value indices statistical values of goods in LEK aretaken into account. The statistical value of goods is the value of goods on theAlbanian border (insurance and freight costs are added to or subtracted from thetransaction value depending on delivery terms). External trade unit value indices arecalculated as chain indices by the Paasche (I P ) formulas.The formula for calculation is:I PP1V10V1P:145/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeP 1 - unit value at the eight-digit commodity level of the Combined Nomenclature inthe current yearP 0 - unit value at the eight-digit commodity level of the Combined Nomenclature inthe base yearV 1 – statistical value in LEK at the eight-digit commodity level of the CombinedNomenclature in the current yearV 0 – statistical value in LEK at the eight-digit commodity level of the CombinedNomenclature in the base yearThose individual items from customs statements of the current and base year: in which the data on quantity or statistical value are missing;the products of CN where frequency (the number of quarters with valuepositive) =0.5the products of CN with 2/3>coefficient of variation>3/2are eliminated from the calculation.11.4.6 Goods’ classificationsAggregated indices for publication are calculated at the 21 sections of the CombinedNomenclature. External trade unit value indices are also calculated at the section ofthe Standard Classification of Activities (NACE based classification), only forNational Accounts purposes.11.4.7 PublishingQuarterly:Annually:First ReleaseStatistical Yearbook146/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeCHAPTER 12: METHODOLOGIES BY PRODUCTIn Albanian system of National Accounts the compilation of GDP at constant pricesis done by industries and not by products. This chapter provides a detaileddescription of methods used for measuring output and intermediate consumption atconstant prices by the industry in Albania. According to Eurostat’s ”Handbook OnPrice and Volume Measures in National Accounts” the method that can be used forthe estimation of prices and volumes is the Method B.12.1 Method used for Output and Intermediate consumption by industries12.1.1 Agriculture and FishingIn general, for each product in agriculture and for each year, the data on output andintermediate consumption in quantity and in prices are available. The estimates of theOutput and the Intermediate Consumption at prices of the previous year are obtainedby multiplying the quantity at time t with prices of time t-1.The value of output and intermediate consumption at current prices are:Output (t) = Production (t) * Price (t)IC (t) = IC (t) * Price (t)And the output and intermediate consumption at prices of previous year are:Output p-1 t = Production (t) * Prices (t-1).IC p-1 t = IC (t) * Prices (t-1).12.1.2 IndustryThe deflation of Output and Intermediate ConsumptionA methodology for a separate deflation of output for domestic use and for export canbe applied if the PPI includes only the prices of output devoted to the domesticmarket and excludes the prices of exported goods. In our case the exported goods areincluded in PPI and for this reason the following methodology is used by this way:Calculation of Output and Intermediate Consumption, at prices of previousyear, for each branchesGiven the existing following information:PPI = production price index;OUT = output;IC = intermediate consumption;147/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeBy branch of economic activity, at aggregated level of 25 branches ( i ), and for aunit of time ( t ) we can obtain the value of output and Intermediate Consumption (bybranch, i) at prices of previous year, using a respective producer’s price index,adopting the following formula:OUT p-1 i ,t= [(OUT p i,t / OUT p-1 i,t-1 ) / PPI i,t ] * OUT p-1 i,t-1IC p-1 i ,t= [(IC p i,t / IC p-1 i,t-1 ) / PPI i,t ] * IC p-1 i,t-1In the industrial economic activities, PPI is used to deflate output and intermediateconsumption as well, due to lack of information on deflators for the later component.12.1.3 ConstructionThe volume of the value added within construction activity is obtained by deflatingthe value of the output of production and intermediate consumption by the total ofconstruction cost index (CCI). The formula is the same as in the deflation process ofthe industry sector, but using CCI as deflator.OUT p-1 i ,t= [(OUT p i,t / OUT p-1 i,t-1 ) / CCI i,t ] * OUT p-1 i,t-1IC p-1 i ,t= [(IC p i,t / IC p-1 i,t-1 ) / CCI i,t ] * IC p-1 i,t-112.1.4 Internal tradeAs regards internal trade activity, the output and intermediate consumption weredeflated with CPI for goods as follows:OUT p-1 i ,t= [(OUT p i,t / OUT p-1 i,t-1 ) / CPI i,t ] * OUT p-1 i,t-1IC p-1 i ,t= [(IC p i,t / IC p-1 i,t-1 ) / CPI i,t ] * IC p-1 i,t-112.1.5 ServicesOther market services are mainly deflated by using appropriate components of CPI.The price indices used to deflate the output of other services are listed in thefollowing table 12.1.5.148/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme62Table.12.1:trade)Price indices used to deflate the Services (excluding internalCodeBranchesPrice Index used for Deflation processOutput18 Transport CPI CPIAuxiliary activities CPI CPI19 Post and Communication CPI CPI20 Financial activities:Net Interest- BanksMargin (NIM) CPISum of- InsuranceVadd+IC CPIReal estate, renting and21 business activities :- Real estate CPI CPI- Business activities CPI CPI- Research Institutions CPI CPIPublic administration anddefense, compulsory social Sum of22 securityVadd+IC CPISum of23 EducationVadd+IC CPISum of24 HealthVadd+IC CPI25Other community, social andpersonal service activities CPI CPIIntermediateconsumption12.2 Method used for elements of GDP by expenditure approachValue AddedAs residual ( Out-IC)As residual ( Out-IC)As residual ( Out-IC)As residual ( Out-IC)Average WageIndexAs residual ( Out-IC)As residual ( Out-IC)As residual ( Out-IC)Average WageIndexAverage WageIndexAverage WageIndexAs residual ( Out-IC)12.2.1 Final consumption of HouseholdsHousehold consumption expenditures at constant prices are derived by deflating thecurrent price estimate in total by the consumers’ price index (CPI) in total. The CPI149/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmeis the only source with comprehensive data on changes in the purchasers’ prices onconsumers’ goods and services.Final consumption expenditure by government and NPISHsa) Final consumption expenditure by GovernmentGovernment consumption expenditures at constant prices are equal to output atconstant prices derived by production approach. The output in constant prices is thesum of value added at constant prices and intermediate consumption at constantprices. Value added is deflated with average wages’ index and intermediateconsumption with CPI.b) Final consumption expenditure by NIPSHsFinal consumption expenditure of Non-Profit Institutions Serving Households(NPISHs) is deflated with CPI.12.2.3 Gross fixed capital formationGross fixed capital formation at constant prices is calculated as a sum of all itscomponents at constant prices. The components of GFCF and the indices with whichthey are deflated are as follows: Livestock Volume Index Orchards and vineyards Volume Index Forestry Volume Index Construction Construction Cost Index Geology Volume Index and PPI Machinery and Equipment UVI and PPI for domestic production150/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme12.2.4 Import and Export on goods and servicesImports and exports are deflated using unit-value indices. They are presented asfollows:63Table.12.2:Indices used to deflate Import and ExportIn Million LEKVolumeIndexPriceIndex UVI Description Data SourceImport- Goods XUnit ValueIndexINSTAT- Services X CPI INSTATExport- Goods XUnit ValueIndexINSTAT- Services X CPI INSTATCHAPTER 13: METHODS FOR OTHER PARTS OF THE SYSTEM13.1 GDP by production approachThe measurement of value added at constant prices by industry is an important partof national economic accounting. Information on value added at constant prices byindustry is necessary to research on national economic growth and changes ofindustrial structure.The value added at constant prices is defined as the difference between output (atbasic prices) and intermediate consumption (at purchasers' prices) at constant prices.Since a single indicator method was used for value added at constant prices,according to Eurostat’s ”Handbook On Price and Volume Measures in NationalAccounts”, the method that can be used for the estimation of prices and volumes isthe method B.Making the differences between Output and Intermediate Consumption for eachbranch, we have now estimated the Value Added by branches, with the prices of theprevious year:VAD p-1 i ,t= OUT p-1 i ,t- IC p-1 i ,tAfter the process of calculation of each branch of National Accounts, we cansummarize the value of Output, Intermediate Consumption and Value Added,estimated at prices of previous year:151/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme∑ VAD p-1 i ,t= ∑ OUT p-1 i ,t- ∑ IC p-1 i ,tTo find the growth rate, the last calculation is:∑ VAD p-1 i ,t/ ∑ VAD p-1 i ,t-113.2 Taxes and subsidies13.2.1 TaxesThe following methodology has been applied for estimation of taxes on product, atprices of previous year.Considering that the taxes on products are composed by origin of products indomestic and imported taxes, the process of deflation is done by taking into accountthis characteristic. For the taxes on domestic products PPI is used to deflate taxes,whereas those by imported products are deflated with UVI. The present system oftaxes on products includes value added tax (VAT), excise, customs duties on importsand other taxes. In the table below, we have given the different taxes by products(import, domestic) regrouped by kind of deflation.152/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme64Table.13.1:Classification of taxes on products by type of deflatorsTaxes on domestic productsdeflated by PPIExcise duty on tobaccoExcise duty on alcoholicbeveragesExcise duty on domestic liquidfuelsTax on lottery prizesTax on gamblingTax on slot-machinesTax on casinoTax on tonnage of vehicles peraxeTax on circulation of foreignvehiclesTax on carbon in gasolineTax on plastic packagesTax for the place of sellingTax for new constructionTax for accommodation offoreigners in hotelsTax on hotels and restaurantsTax on butcher’s shopsTaxes on publicityTaxes on signsTax on lightOthersTax on the use of woodTax on domestic liquid fuelconsumptionVAT on domestic goods andservicesAnnual road tax for VAT payersStamp taxesPerimeter taxOther local dutiesOther non classifiedTaxes on imports deflated byUVIVAT on imported goods andservicesExcise duty on imported alcoholicbeveragesExcise duty on imported liquidfuelsExcise duty on coffeeExcise duty on other alcoholicbeverages for alcoholic prod.Taxes and duties on imports (VATexcluded)Penalties on importsPenalties on exportsTariffs of customs servicesTax on importing used carsTax on transit goodsOtherOvertax on rateable importsTax on imported liquid fuelconsumption153/236

65 TableIPA 2009 Multi-beneficiary StatisticalCooperation Programme13.2.2 SubsidiesThe following methodology has been applied for estimation of subsidies at previousyear prices.Applying the hypothesis for the same branches, the changes of volume of subsidiesfollow the same changes in the volume of value added of the economic activitieswhich have subsidies, and the existing information is given as follows:S = Subsidies on products;i = branches;t = current year;t-1 = previous year;IVOL = volume index of value added of economic activity.p = current prices;p-1 = prices of previous year;For each branch, it is calculated the value of subsidies at prices of previous year, bythe respective volume index.The formula used is as follows:SUB p-1 i ,t= [(SUB p i,t / SUB p-1 i,t-1 ) / IVOL i,t ] * SUB pThe following table describes the process of estimation of Subsidies at prices ofprevious year.In this context, the columns 1 and 2 include all data of subsidies at current prices,results of the process of estimation at current prices. The Value Index is calculated inthe column 3. The results of the volume indexes of value added respectively forbranches taken in estimations are reflected in the column 4. The calculations areshown in the column 5 that contains the value at prices of previous year, multiplyingthe data on column 1 by column 4.13.2. Subsidies of product at prices of previous yearIn Million LEKSubsidies of products at prices of previous year:2006/05Code2005 20062006 atIndexof NADescriptionprices ofAt currentbranchValue Volume 2005Pricesa b 1 2 3=2/1 4 5=1*41 Agriculture, hunting and forestry 577 569 0.986 1.031 59514 Electricity, Water supply 1,744 2,070 1.187 1.241 2,16416 Trade 311 199 0.640 1.029 32017 Hotel and restaurants 332 343 1.033 0.979 32518 Transport 525 537 1.023 1.023 537Total 3,489 3,718 1.0656 1.129 3,940i,t-1154/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammePART C: QUARTERLY NATIONAL ACCOUNTSCHAPTER 15: ORGANIZATION AND INSTITUTIONALARRANGEMENTSQuarterly National Account Section at the Institute of Statistics in Albania (INSTAT)is responsible for the estimation of quarterly gross domestic product (QGDP) byproduction approach. This section is created when the National Accounts Directoratewas also reorganized to follow the structure recommended by the IMF project during2008. Based on these recommendations, three subdivisions are established, namely: Annual Accounts Section Quarterly Accounts Section Development SectionEach of these sections has a senior position reporting to the Director of NationalAccounts. Quarterly National Account Section has two persons, the head of thesection which reports to the Director of National Account Directorate and aninspector who reports to the head of the section. For estimation of Quarterly GDP,experimental works started in 2005 but they practically started in 2007 where a lot ofwork is done for the improvement of sources and methodology used in the estimationof the Quarterly GDP.155/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeCHAPTER 16: PUBLICATION TIMETABLE AND REVISIONPOLICY OF QNA16.1 Publication timetableIt is important that INSTAT is reliable to all users, and in order to achieve thisobjective, it is necessary to give the data it has in a short period of time, especially toprovide them to the customers within a well defined date. It is also important that theseries provided will not have many changes of their data; on the contrary, it has togive detailed explanations why it has happened. For the moment, INSTAT (QuarterlyNational Account Sector) produces only Quarterly GDP by production approach.This publication is done for the first time in December 2008, for the third quarter of2008. Quarterly GDP is planned to be published 90 days after the reference quarterhas finished. For the third publication which includes the first quarter of 2009, it hasto be published on 30 June 2009. All data necessary to estimate the respectivequarter need to be collected approximately 60-70 days in advance.16.2 Revision policyRevision Policy is very important to the compilation of the Quarterly NationalAccount. They should be available as soon as new basic data becomes available. Itgives to users all data which are timely and accurately possible. Preliminary data arecollected and later they are revised when larger and better sources of informationbecome available.The frequency and the cause of these revisions are as follows:16.2.1 QuarterlyAs additional data become available for the last quarter, some other data orimprovement of existing data comes with respect to the previous quarter. This giveseffects to the series, because of data changes and the season’s effect of last quarterdata provided.16.2.2 AnnualWhen annual GDP is published, it will also influence the quarter’s series. It happensbecause annual GDP is based, except on quarterly data, on annual sources too. Asexplained below, quarter indicators are benchmarked with annual respective valueadded, so they will produce effects on quarterly series. Annual changes occur as aresult of updated annual resources. The first revision based on new annual data tookplace with the publication of the first quarter of 2009, which is published in June ofthis year, because in May 2009 we published the final GDP of 2006 and the semifinalGDP of 2007. As it can be seen, we have changes in two years which willproduce effects on all Quarterly GDP series. It means that, there will also be changesin the publication of the first quarter of 2009, which come from changes in annualdata. So, the changes in these two years will produce effects on the quarterly series156/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmefor 2006 and 2007, and of course, for 2008, which is the latest year. Some changeswill give their effects for the year 2005, because of the seasonal effects.16.2.3 Methodological revisionsHowever, note that revisions of this nature are, as far as possible, incorporated tocoincide with the annual cycle of revisions outlined above. For example, if new dataare available, this will be reflected also in the quarterly revisions. In Albania,because of new data sources, some branches have started to estimate in NACE 2classification the same needs to be done in a quarterly one. These changes will bealso reflected on those of the series.In addition, each of the above causes for revisions, and/or the addition of a new pointin the current quarterly series, has the potential to alter seasonal factors and thus maylead to a revision in the seasonally adjusted series.157/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeCHAPTER 17: QNA COMPILATION APPROACHQuarterly National Accounts are a harmonized system of quarterly time series dataadopting the same principles as the Annual National Accounts. Quarterly NationalAccounts data will have a time-series character, which means that they are identicalover time and will apply to same estimation principles of the annual seriesestimations. This is necessary, because they are working on the basis of the sameconcept over time that makes different periods comparable. Comparison of differentperiods gives us the possibility to provide a long time series; when the time seriesconcepts need to be as longer as possible.As we mentioned above, Quarterly National Accounts and Annual NationalAccounts need to be consistent in principle. This means that both series will be basedon the same base year prices and on the same deflator rate. Also, the quarterly datawill be measured by annually based benchmarking techniques. Quarterly NationalAccounts are less completed that annual ones, because the later uses more accurateand timely data sources, like balance-sheets, annual surveys etc. Actually, theQuarterly National Accounts in Albania are based only on estimating quarterly GDPof production approach.158/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeCHAPTER 18: GDP AND COMPONENTS: PRODUCTION APPROACH18.1 Data SourcesTo estimate Quarterly GDP, we first need to have all the available data to be used forthis evaluation. This is the most important part of the process, because the results ofthe Quarterly GDP will be based on the quality of data. In general, the entire dataconsist of volume and value data. For a quarterly GDP, the most useful providers ofdata are: General Directorate of Taxes Economic Statistics Directorate (INSTAT); Social Statistics Directorate (INSTAT); Bank of Albania (BoA); Ministry of Finance (MoF); Albanian Financial Supervisory Authority; Ministry of Agriculture and Food (MAF);18.1.1 General Directorate of TaxesThis Directorate provides data from the VAT format of declaration, data which areprovided monthly in electronic form to INSTAT. From the declaration format, weget turnover and identification information for each of the enterprises. Based on thedeclaration tax authority law “Law no. 9920, dated 19.05.2008 "On Tax Proceduresin the Republic of Albania", this monthly information is given only from bigenterprises, (which are those with an annual turnover higher than 8 million LEK),which for 2008 was nearly 10.000 enterprises. The data becomes available nearly 65-75 days after the quarter has finished. After these data are available, differentanalyses are made by the analysts.18.1.2 Economic Statistics Directorate (INSTAT)A lot of data are collected from the Economic Statistics Directorate that INSTATproduces. It conducts quarterly surveys of a number of industries. In theory, the datashould be more suitable for annual and quarterly NA purposes. Because theircoverage is very small, their quality is very low especially in some industries.The estimation method currently used in the STS-survey takes into consideration thenumber of employees and the value of turnover. All enterprises with 10 and moreemployees are included following the example of the enterprises with 1-4 and 5-9employees, based on size class. The enterprises that have realized less than 5 percentof the total turnover on group activities (division, 2 digit level by NACE) areexcluded from this example.Data that come from this Directorate can be grouped in: Balance of electric power Short term statistics.159/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeIndices of volume on “retail trade” and “sale and repair of motorvehicles”Foreign tradeDeflators Balance of electric powerFrom this survey we can get data for the electric power separated by sources andusers, in volume and value. Actually, for this branch of the economy we have aspecific case of investigation. We estimate this by the direct method. So the value ofoutput is equal with the value invoiced to the consumers. To estimate the output atconstant prices, we create a volume index which is based on the total KW powerproduced in the country and the total KW power imported. This series can be used toproduce the output at constant prices. The total value of the imported KW power isconsidered as an intermediate consumption; in addition to that there is also thedomestic IC. To estimate the domestic IC we suppose that it is constant per each KWin the short run. So, from the latest annual data where we have a domestic IC we finda ratio of IC per KW which we use to estimate the current domestic IC. In this waywe estimate the total IC as a sum of both. For the deflating IC, we create a priceindex from the imports to deflate the import part, and for the domestic part we createan index from the IC/KW series. All data needed above are available nearly 70-80days after the quarter has finished. For a detailed description of data collected fromthe balance of electric power, see Annex H Tab H.1. Short term statisticsThis survey covers some of the economic branches such as: industries, construction,trade, hotel, transport and communication. Volume and value data based on quarterlyfrequencies are collected in the survey. For a detailed description of the collecteddata, see the Annex H, Tab H.2 – Tab H.5. Indices of volume on “retail trade” and “sale and repair of motor vehicles”In this survey, we have collected some data such as those of non-specialized storewith food, beverages, tobacco, total sale and repair of motor vehicles, etc, which arebased on the “NACE 4” classification. For a detailed description of data collected seethe Annex H, Tab H.6. Foreign tradeThe data related to the foreign trade comes from the General Customs Directoratewhich is based on the Combined Nomenclature classification. These are grouped bycountries where they are imported from or exported to. This data has a monthlyfrequency of collections. In general, we use some of this data to create the volumeindexes in comparison with the data coming from other sources, or in the case ofelectricity, in order to estimate the electricity imported and exported for each month.Deflators160/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeFrom this Directorate we get also all deflators which will be used to create our seriesat constant prices. These deflators are CPI (consumers’ price index), PPI (producer’sprice index), NIM (net interest margin), CCI (construction costs index) and UVI(unit value index). Some of these indexes are collected on a monthly basis, such asCPI and UVI, and the others are collected on quarterly basis, but for the interest ofour estimation all these indexes are taken on a quarterly basis. As mentioned above,at Quarterly National Account we work in 25 branches and for each of them we havea specific deflator. In some branches we use a total one, for example in publicadministration, health, education, we use a total CPI. In some others, such as post &telecommunication, we use the respective CPI. And for all other industries, we use arespective PPI. CCI is used only for the construction area, and NIM for financialactivity and FISIM. The deflators are all available 65 days after the end of therespective quarter. A detailed level of deflator used is given in the Annex H, TabH.7.18.1.3 Social Statistics Directorate (INSTAT)This Directorate provides quarterly employment data separated for Agriculture,Administration and non Agriculture sectors. For the moment, because this data is notdetailed, we use it only for comparisons purposes.18.1.4 Bank of Albania.Bank of Albania provides us with data of Banking Sector related to the financialactivity and FISIM (Financial Intermediation Services Indirectly Measured). Thisdata is grouped in data of the banks of second level and data of the Central Bank ofAlbania. From these two groups, we calculate the total incomes from interests, totalexpenditure for the interests and incomes from other activities. This data becomeavailable nearly 65 days after the respective quarter has finished.18.1.5 Ministry of FinanceThe Ministry of Finance provides us with administrative data which are allocated forpublic administration, health, education, and taxes and subsidies. These data aregiven on a monthly basis. Based on the area of data, it is respectively classified inone of the groups above. This data is available nearly one month after the respectivequarter has finished18.1.6 Albanian Financial Supervisory AuthorityIn the financial activity, it is also important to include the insurances which arecollected by Albanian Financial Supervisory Authority. This institution provides uswith the data regarding gross written premiums and gross paid claims, also somevolume data for the number of policies and the number of paid claims. Each of thedata above is separated in life insurance and non life insurance. To date, we have notincluded this data but we have started to make some steps in creating data series. The161/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmereason why we have not included this data has to do with the kind of deflators thatcan be used.18.1.7 Ministry of Agriculture and Food (MAF)This Ministry provides data for INSTAT classified in products’ level, which are lateraggregated and estimated from the agriculture sector of INSTAT. This data is givenon a quarterly basis and is available to the needs of our sector 55-60 days after therespective quarter has finished. This data is available to the agricultural sector ofINSTAT after 25-30 days and this sector is responsible for a quarterly estimation atcurrent and constant prices.18.2 MethodologyThe methodology used considers the development of quarterly series of GDP atcurrent and constant prices. The series in constant prices are based upon fixed,2005=100, prices. The basis for this methodology is to follow the presentmethodology for the annual accounts GDP as closely as possible, and to ensure thatthe annual movements derived from the quarterly series exactly match the publishedannual series at both current and constant prices. The method used to estimate QGDPis considered as an indirect method. When a direct method is used, we estimateoutput and intermediate consummation separately, and we produce from them thevalue added as a difference. When an indirect method is used, we have only somequarterly indicators which can provide value or volume indicators, from which weproduce value added. We get annual value added and quarter indicators, based onwhich we make benchmarking process. Therefore, these are used as outputindicators.VAT data instead of STS data are used by most of branches. This data has proven tobe more reliable than INSTAT’s STS and it has greater coverage and response rates.This is not the ideal situation because changes in administrative procedures couldquickly change and invalidate quarterly movements. Based on an analysis conducted,it was found that activity classifications change over time, some months of data aremissing for continuing enterprises and large data entry errors were fairly common.With regard to the classification issue, we have concluded to solve this problem byusing the classification that the enterprises have at their balance sheet if this oneexists.For example, for 2008 we have the balance sheet of 2007 which means that by theend of this year the enterprises will have this classification. For those enterpriseswhere the balance sheet do not exist, we see if the data in the annual surveys is there,and if it is there we put this classification, and if not, we leave the existingclassification at the declaration format of Tax Authorization. For the period that theannual data do not exist, we put the classification of the quarterly survey if theenterprise exists, and if not, we leave it unchanged. When these forms ofclassifications were applied to the VAT data, the volatility of data for most industrieswas significantly reduced.162/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeOther problems are related to the errors of the data provided and the missing months,which can be identified properly if the analyses are conducted on the individuallevel. After these analyses are conducted, the enterprises can be arranged in groupsbased on NACE 4 classification, and then on the classification used by Quarterly andAnnual National Account concept, 25 industries in total.The next step has to do with the benchmarking process. Benchmarking deals with theissue of combining a series of high-frequency data with a series of lower-frequencydata for a certain variable into a consistent time series. Based on this process, thetotal of four quarter indicators is equal with the total of annual value added, but theprocess does not change the ratio of indicator.The indirect method is based on the assumption that the value added/output rate isconstant during the period that we make the estimation. This procedure is done atcurrent and constant prices. When quarterly indicators are of value oriented, wedeflate those with the respective index, and later go through the benchmark processwith two series, both at constant prices.When both quarterly value added series, at current and constant prices are produced,we make the aggregation of these series in 7 branches of the economy. The next stephas to do with the seasonal adjustment. We eliminate seasonal effects from bothseries. After this process, we cannot have exactly the same value between annual andquarterly periods for a specific year, because of seasonal adjustments’ process.18.2.1 Sequence of compilationThe general way applied in Albania during the indirect method is as follows:a) Data-set and balance of quarterly data at current and constant pricesfrom different sources for the appropriate recent year.b) Development of time series for quarterly data so as different periods arecomparable.c) Benchmark of the non-seasonally adjusted series to the relevant annualseries.d) Elimination of the seasonality from aggregated quarterly seriese) Comparability of seasonal series.It should be underlined that there is no requirement for the sum of seasonallyadjusted quarters to be equal to the annual total for any particular year. Under normalcircumstances, there will be enough variation in seasonality and/or trading dayeffects to explain a gap between the two.18.2.2 Series expressed in 2005 pricesThe series in this release are expressed in the average prices of the year 2005.ItiPA v e r a g etiiP2 0 0 5i163/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeWhere:I => price indexP => pricet => yeari => quarterThis formula is used in all indexes’ series to produce those in base year 2005=100.Consumers’ Price Index (CPI) covers the entire Albanian territory and productweights are different for each region. The Consumers’ Price Index of Albania is aLaspeyres type index.It0iWhere:tI => price index0PiPt ; iQ0 ; iP Q P *P Q P Q P0 ; i 0 ; i t ; i0 ; i 0 ; i i0 ; i 0 ; i 0 ; iit ; i => price of item i in period tPt ; i => price of item i in period 0Q => price of item i in period 00 ;iProducer’s Price Index (PPI) is weighted together to give index numbers for each 6-digit product group, and then are aggregated to give index numbers for the 2-digitNACE and so on to give the export, domestic and total PPI. For calculation of indexLaspeyres type is used and is calculated as the case of CPI:For Financial activity as we mentioned above, we use the net interest margin (NIM),which is calculated as:Returns from interests Expenditures on interestsNIM= average assets that yield returns average assets that yield returns18.2.2 BenchmarkingThe aim of benchmarking is to ensure that the quarterly accounts are consistent withannual accounts. The consistency between annual and quarterly data should apply toboth current and constant price data, where the constant price data are expressed inprices of the same base year as the annual data. It has to be underlined that thebenchmarking alters the original figures, and consequently the volume growth of theaggregates, influencing in this way the chain-linked adjusted results. More detailedexplanation can be given in the table below. In column 1, we have a specific year T;in column 2, we have value added for year T for a specific economy activity; in164/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmecolumn 3, we have four quarterly indicators for year T, which can be differentvolume or value indicators for each activity (for example turnover that is widely usedin our case). After the benchmarking process, we produce respective quarter valueadded which have the characteristics that the sum of four quarter is equal with annual.value added.V T =i4i1Vq66Table 18.1:iBenchmarking Process(1)Year(2)AnnualValue Added(3)Quarter(4)Quarterindicator(5)QuarterValue Added(6)Sum of 4QuartersTq 1 Iq 1 Vq 1i4Tq 2 Iq 2 Vq 2T V T VqiTq 3 Iq 3 Vq 3i1Tq 4 Iq 4 Vq 4It is necessary to mention that this process is based on Proportional Denton Methodwhich eliminates the step problem. The step problem arises because ofdiscontinuousness between years and is more evident in comparisons between thefirst quarters and the fourth quarter. Proportional Denton Method from the other sideeliminates this problem by smooth changes from one quarter to the next one. Itminimizes the sum of squared differences of the relative adjustments of twoneighboring quarters.A numerical example is given in Annex I, Tab I.1.18.2.3 Seasonal adjustmentOne of the major characteristics and issues of quarterly national accounts isseasonality. This can be achieved in two ways:Direct and indirect seasonal adjustmentThe level at which a series is seasonally adjusted is important since it has thepotential to affect the quality of that seasonally adjusted series. The individualcomponent series of the main economic variables can be seasonally adjusted andthen summed to derive totals. This is called an indirect seasonal adjustment.Alternatively, the main economic variables can be seasonally adjusted at the totallevel, independently of the seasonal adjustment of their components. The adjustmentof the total of an aggregate series is called a direct seasonal adjustment. The indirectapproach has the advantage of retaining additivity but this applies only to the currentprice series. Although the indirect approach conceptually provides additivity forvolume series, additivity is lost by chain-linking.165/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeThe direct approach will often give better results if the component series showsimilar seasonal patterns. At the most detailed level, the irregular factor may belargely compared with the seasonal factor and therefore may make it difficult toperform a proper seasonal adjustment. In a small country such as Albania, irregularevents can have a strong impact on particular data. However, if the component seriesshow the same seasonal pattern, aggregation often reduces the impact of the irregularfactors in the component series. This is particularly relevant for Albania, where manyeconomic series are affected by seasonal fluctuations in the primary industries.“INSTAT” institute has decided to apply the direct seasonal adjustment method,because in countries like Albania it is better to work based on an aggregate level.This happens because the economy is changing at a rapid pace.To eliminate the seasonality effect, specific software “Demetra” is used, which isbased on some statistical tests like X 12 ARIMA, Tramo – seats, etc.A numerical example is given in Annex I, Tab I.2.18.2.4 Chain linking techniqueQuarterly accounts have to be both time consistent with the annual accounts (forexample the sum of quarterly values of the GDP must be equal to the annual value ofGDP) and respect the accounting identities (for example, the sum of quarterly valuesof the GDP expenditure components should be equal to the corresponding quarterlyvalue of GDP).Time consistency is a fundamentally univariate problem since it involves only onevariable, albeit at two frequencies (annual and quarterly). Accounting coherence andtime consistency combined exhibit a multivariate dimension, since they involveseveral variables linked by a contemporaneous constraint (in the case above, this isquarterly GDP which "constrains" the sum of the quarterly component values), witheach of the variables subject to their own univariate temporal constraint.In the Albanian case, at the detailed level the series are consistent in current pricesand in the base year prices. INSTAT presented differently the annual nationalaccounts and quarterly national accounts volume measures, creating some confusionsfor non-experienced users. Therefore one major improvement was developing amethodology for a chain volume series of QNA and to present the quarterly accountsin the previous year’s prices in order to be consistent with the annual accounts.When annual re-weighting is done two successive years have to be linked by usingone of the following techniques:annual overlap: the average annual prices of the previous year are used as weightsfor each of the quarters in the current year, with the linking factors being derivedfrom the annual data;166/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeOne-quarter overlap: one quarter of the year (e.g. the fourth quarter) is compiled atboth the average prices of the current year and the average prices of the previousyear. The ratio between the estimates for the linking quarter provides the linkingfactor.Over-the-year: all quarters are compiled at the average prices of both the currentyear and the previous year. The year-on-year growth rates are calculated and thenlinked together.The details of these techniques are clearly illustrated in the chapter on price and volumemeasures in the IMF Quarterly National Accounts Manual. The techniques are usuallyassessed using the following criteria:Time consistency – i.e. the simple mean of the quarterly volume indices is equal tothe independently estimated annual index.Smooth transition between two successive years – i.e. no step is introduced betweenthe figure for the 4th quarter of a year and the figure for the 1st quarter of thefollowing year. The principle underlying this criterion is that the focus of theanalysis is on quarter-on-quarter changes.The annual overlap technique is the only method that automatically meets the timeconsistency criterion. For the other two techniques an additional benchmarking step isneeded.The one-quarter overlap technique provides the smoothest transition between each link(connecting the 4th quarter of one year to the 1st one of the following year). In contrast, theannual overlap may introduce a step between each link. In practice, the two approachesdiffer only in the first quarter (transition period), while the quarter-on quarter growth ratesfor quarters 2 to 4 are the same (before benchmarking).Priority should be given to the measurement of quarter-on-quarter growth rates. This is at thecore of business cycle analysis. In the light of this, at the European level, the one-quarteroverlap and the annual overlap techniques are to be preferred to the over-the-year method.The one-quarter overlap and the annual overlap techniques tend to give similar results whenapplied to real national accounts time series that do not show an extreme pattern. However,the former outperforms the latter in situations with strong changes in relative quantities andprices (step problem). On the other hand, the one-quarter overlap technique is morecomplicated in practice since an additional benchmarking algorithm has to be run.By taking into account that the Albanian QGDP is calculated by using the indirect approach7the chaining linking could be applied by following two alternatives:temporal disaggregation is applied to annual ‘chain-linked’ estimates.temporal disaggregation is applied to annual estimates at average prices of theprevious year.With the second method no discrepancy item has to be distributed among quarters andtherefore has been chosen to chain-linking the Albanian QNA, by using the following steps:7 The indirect approach is based on the temporal disaggregation of annual aggregates on the basis of appropriate infra-annualindicators. The indicators also permit the extrapolation of the quarters for the current year.167/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmeat the most detailed compilation level, construct long time series of non-seasonallyadjusted traditional constant price data with a fixed-base yearaggregate these detailed constant price data using the annual chain-linked Laspeyresframework:o for each year, revalue all detailed constant price data to the constant averageprices of the previous year;o add together these revaluated data measured at the average prices of theprevious year to construct the various aggregates and sub-aggregates at theconstant average prices of the previous year;o construct long time series with a fixed reference year by chain-linking theaggregates and sub-aggregates at the constant prices of the previous year,using the annual overlap technique.168/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeCHAPTER 19: GDP COMPONENTS: EXPENDITUREAPPROACHAs we mentioned above, for the moment this sector produces only Quarterly GDP byproduction approaches. With regard to the expenditure approach, we have not startedto do something concretely. Calculations of the expenditure side are now consideringonly the expenses on final goods and services. Gross domestic product byexpenditure side is the sum of total consumption, gross fixed capital formation,change in inventories and net export of goods and services.QGDP e = C + I + (E X – I M ) + DWhere:C => total consumption which includes:I => Gross fixed capital formationE X – I M => net export or (export – import)D => change in inventories19.1 ConsumptionTotal consumption includes: Final consumption of households (CH) Final consumption of general government (C G ) Final consumption of non-profit institutions servinghouseholds (NPISH), (C N )19.1.1 Final consumption of householdsFor C H, sources data are very poor and those that exist (HBS and LSMS data) areonly annual. So it is difficult for the moment to estimate it in a quarterly form untilquarterly surveys will be conducted. Anyway, something can be done to estimate it.We can use the volume indexes on retail trade to benchmark the annual C H and tohave a quarterly series in this respect19.1.2 Final consumption of general governmentTo estimate C G, administrative data provided by the Ministry of Finance can be used.These data are provided on the basis of quarterly frequencies so this part ofconsumption can be conducted. Government consumption is the sum of:Compensation of government employees + purchases by government of materialsand other intermediate consumption items + consumption of government for fixedcapital + the purchases of goods and services by the government for the benefit of +other taxes on production - partial payments by households or companies for servicesprovided by government.169/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme19.1.3 Final consumption of non-profit institutions serving householdsEstimating C N in quarterly frequencies is actually difficult. It is necessary to create anew special questionnaire, to take the new data on different indicators for all actorsof NPISH, and to estimate them.19.2 Gross fixed capital formationGross fixed capital formation is valued at purchaser’s price. To estimate this part inquarterly frequencies different data sources can be used from the Ministry ofAgriculture and Food and foreign trade statistics. Gross fixed capital formation caninclude:• machinery and equipment• livestock, forestry• constructionMachinery and equipment: From imports, we can get all the machinery andequipments and their destination. In general, Albania does not produce them so wecan assume they are all imported.For livestock, forestry etc, there exist some data, like the number of trees or livestockchanges, but in general they are provided by the Ministry of Agriculture and Food inannual frequencies. To conduct this estimation, it is necessary to have more datacollected.With regard to construction, it is difficult to make a correct estimation because thereare a lot households producing for their own use. Some data are taken at annual levelby LSMS and SBS for the total economy.19.3 Exports and imports of goods and servicesThese data exist in quarterly frequencies so net export can be estimated. The exportsand imports of goods and services are valued at FOB and converted from foreigncurrencies using monthly exchange rates. This data can be divided in economicactivity. The sources of data used are the customs statements for the import- exportof goods and the balance of payments for services.19.4 Changes in inventoriesSome data from balance sheet exist in order to estimate changes of inventories atannual level. We do not have data in quarterly forms, so it is necessary to collectthese data and to develop some estimation methods.170/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeCHAPTER 20: GDP COMPONENTS: INCOME APPROACHIt is difficult to collect data for this GDP estimation method in quarterly frequency171/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeCHAPTER 21: POPULATION AND EMPLOYMENT21.1 Employment dataThe Business Register is the main source for the number of employees butsometimes it doesn’t correspond with the data that the enterprises declare in the STS,VAT, Balance sheets, etc.Another employment data source is also the employment sector at INSTAT. Itobtains data from the Ministry of Labor that produces some employment data basedon regular reports supplied to district offices and compiled by INSTAT. Also, datafor public sector units appear to be very poorly produced or they actually report onbudgeting or established positions rather than actual employment.There are alternative ways that employment data may be produced, fromadministrative data. In particular, the social insurance data provide monthlyinformation for all registered employers. INSTAT (Employment Sector) shouldinvestigate how these data could be used to compile timely and accurate employmentdata (as well as for updating the BR).Another source is also LFS but for the moment it is only in annual frequencies so itcan’t be available in the interest of the Quarterly National Account.21.2 Problems and future improvementAs noted above, for quarterly development it is crucial that INSTAT investigates thecollection of quantity data to supplement or replace price deflation. But as it isalready known, it is important that volume indicators are at a very detailed level. It isimportant for INSTAT to use more administrative data collected by other agencies,which can give comparisons series.172/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAnnex A: Organizational Chart of INSTAT67Tab. A.1:Organizational Chart of INSTAT173/236

68 TableIPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAnnex B: GDP Revised Figures by the Production and Expenditure Approaches During the Twinning ProjectB.1: Gross Domestic Product by Expenditure Approach,( 1996 – 2004, at current prices :2003 semi final;2004 preliminary )In Million LEKYearBranches1996 1997 1998 1999 2000 2001 2002 2003 20041 Agriculture, hunting and forestry2 Industry121,757 106,982 113,327 117,614 125,595 130,796 137,319 151,942 154,51332,835 28,973 28,322 32,320 37,529 39,449 39,592 54,928 61,415- Extracting Industry3,256 3,062 2,787 3,672 4,136 4,664 4,281 4,084….- Manufacturing Industry 29,578 25,911 25,535 28,647 33,393 34,785 35,311 50,844 ….3 Construction4 Trade, Hotels and Restaurants5 Transport6 Post and Communication17,011 20,172 19,335 26,943 39,979 56,450 69,165 87,047 103,58690,954 90,574 103,612 132,328 132,513 136,445 136,934 139,654 384,96216,223 19,435 33,260 39,196 37,976 46,362 42,160 48,685 ….3,067 4,862 5,440 8,897 9,762 16,240 18,637 20,919 ….7 Other Services55,783 67,183 88,751 97,196 109,058 122,679 139,066 149,246 ….8 FISIM (-) 8,058 11,148 20,731 21,424 18,508 17,895 19,252 20,073 18,7299GROSS VALUE ADDED ATBASIC PRICES (1+..+ 8) 329,572 327,032 371,315 433,069 473,905 530,527 563,621 632,349 685,74710 Taxes on products23,164 28,020 48,059 49,578 63,936 67,166 73,711 86,714 94,95111 Subsidies on products (-) 1,622 1,410 2,365 2,066 4,863 7,410 5,994 5,015 4,834GDP AT MARKET PRICES(9+10+11)351,113 353,642 417,009 480,581 532,977 590,282 631,338 714,049 775,864174/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme69Table B.2:Gross Domestic Product by Expenditure Approach,(1996 – 2003,current prices)DescriptionIn Million LEKYear1996 1997 1998 1999 2000 2001 2002 2003Expenditure Approach1 Final Consumption (a+b+c) 356,389 361,407 409,246 408,103 416,329 429,561 481,215 531,314a) Final Consumption ofHouseholds319,688 319,725 361,550 356,169 359,405 365,652 407,258 450,731b) Consumption of NPISHs 229 306 340 408 490 700 800 914c) Final Consumption ofGeneral Government36,472 41,376 47,356 51,526 56,434 63,209 73,157 79,6692 Gross Fixed Capital Formation 91,243 89,127 103,736 146,301 209,467 272,949 298,985 367,0113 Net export (a-b) -72,151 -84,626 -97,362 -77,321 -105,583 -119,983 -154,037 -171,642a)Exports of goods and services(f.o.b)38,782 33,739 44,376 74,588 93,453 107,524 122,044 141,290b)Imports of goods and services(f.o.b)110,934 118,365 141,738 151,910 199,036 227,507 276,081 312,9314Change in inventories &statistical discrepancies-24,367 -12,267 1,389 3,497 12,764 7,755 5,175 -12,635GROSS DOMESTICPRODUCT (1+2+3+4)351,113 353,642 417,009 480,581 532,977 590,282 631,338 714,049175/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAnnex C: Main Classifications usedClassifications used for the Production ApproachClassification of Economic Activities (NVE)Classification of Economic Activities (NVE) is a national version and is harmonizedwith NACE Rev.1. It was introduced for the first time in 1994 with theGovernmental Regulation and after six months of test period was fully used for allministries, governmental institutions, local and general government etc. Since 1995,NVE is the mandatory national standard for statistics and other administrative datacollections and dissemination (Business Register, VAT Register etc.).The current version of NVE; it is harmonized with NACE Rev. 1.1 down to thefourth digit.Breakdown of activities according to NVE, used for the output, intermediateconsumption and gross value added calculation is shown in the TableLevel of activity detail for the production approachNVE Description of NVEAAgriculture, hunting and forestry01. Agriculture, hunting and related service activities02 Forestry, logging and related service activitiesBCFishingExtracting industry10 Extraction of coal and lignite; extraction of peat11 Extraction of crude oil, natural gas, service activities for extraction of oil andgas, expect geology research12 Extraction of uranium and thorium minerals13 Extraction of metal minerals14 Other extracting industryDManufacturing15 Manufacture of food products and beverages16 Manufacture of tobacco products17 Manufacture of textiles18 Manufacture of apparels; dressing and dyeing of fur176/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeLevel of activity detail for the production approach (continued)NVE Description of NVE19 Tanning of leather; manufacture of leather goods20 Manufacture of wood, except furniture21 Manufacture of pulp, paper and paper products22 Publishing, printing and reproduction of recorded media23 Manufacture of coke and refined petroleum products24 Manufacture of chemicals and chemical products25 Manufacture of rubber and plastic products26 Manufacture of other non-metallic mineral products27 Manufacture of basic metals28 Manufacture of fabricated metal products, except machinery29 Manufacture of machinery and equipment30 Manufacture of office machinery and computers31 Manufacture of electrical machinery and device32 Manufacture of radio, television, communication equipment33 Manufacture of medical, precision and optical instruments34 Manufacture of motor vehicles, trailers and semi-trailers35 Manufacture of other transport equipment36 Manufacture of furniture; other manufacturing37 RecyclingEElectricity, gas and water supply40 Electricity, gas, steam and hot water supply41 Collection, purification and distribution of waterFGConstructionWholesale and retail trade; repair of motor vehicles50 Sale and repair of motor vehicles; sale of automotive fuel51 Wholesale trade and commission trade52 Retail trade; repair of personal and household goodsHIHotels and restaurantsTransport, storage and communication60 Land transport61 Water transport62 Air transport63 Supporting transport activities; travel agencies177/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme64 Post and telecommunicationsLevel of activity detail for the production approach (continued)NVE Description of NVEJFinancial intermediation65 Financial intermediation66 Insurance and pension funding67 Activities in support of financial intermediationKReal estate, renting and business activities70 Real estate activities71 Renting of machinery and equipment72 Computer and related activities73 Research and development74 Other business activitiesLMNOPublic administration and defense; compulsory social securityEducationHealth and social workOther community, social and personal service activities90 Sewage and refuse disposal and similar activities91 Activities of membership organizations92 Recreational, cultural and sports activities93 Other service activitiesP Private Households with employed personsClassification of Products of Activities (NP)The Classification of Products (NP) was introduced with the Government Regulationin 1997 as a national standard. The current version of NP is down to the six digits.Classification of Products (NP) is a national level and is harmonized with NACERev.1 to the first fourth digit and other two digits are part of products.It was introduced for the first time in 1996 with the Government Regulation and aftersix months of test period178/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeD.1: Business Register of Albania (BR)Annex D: Main Data Sources UsedHistory of the Business Register of AlbaniaOnly public enterprises had existed in Albania until 1990. Since that period,however, the situation has changed markedly and private enterprises already play asignificant role in the economy. The tremendous growth in the number and output ofthese enterprises has necessitated the development and use of a statistical businessregister to estimate GDP accurately and in a cost effective way. This process beganon the 1st January 1993 with the establishment of a register that required alleconomic entities in Albania to register their businesses. Another importantmilestone was the establishment of a new law (no 7687 dated 16.03.1993 article 3)that obligated all tax offices to provide information to INSTAT on the creation ofnew enterprises, changes and deaths, and which was underpinned with aMemorandum of Understanding between INSTAT and the General Directorate ofTaxation. Another important date in the development of the register was 18.07.1994when approval was reached on applying the International Nomenclature of the EUfor Economic activities (NACE, at the 4 digit activity level)The reform of business registration procedures reduces to one day the time requiredto register new businesses and combines all registration steps in a single procedure.A new Law on business registration reform of May 3 rd , 2007. Law 9723 "OnNational Registration Centre" establishes the National Registration Centre (NRC) asa new central public institution. The National Registration Centre began to operate inSeptember 2007.This reform provides several important benefits for Albanian businesses as well asforeign investors:– Simpler, faster and much less costly process for the registration of a newbusiness;– Simultaneous tax registration, social insurance, health insurance labordirectorate and INSTAT registration using a single application procedure;– Application windows will be located all over Albania;– Free public access to Commercial Registry information via internetUnits of the BRSThe enterprises register holds all non-agricultural legal units (enterprises andinstitutions) that perform their activity inside the Albanian territory and based on theprinciple: legal unit = enterprises = local unit179/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeThe BR encompasses three types of units: business entities, affiliates and other partsof business entities, and affiliates of foreign business entities.A business entity is a BR unit that performs registered profit or non-profit activitiesor activities defined by a foundation regulation or document within the territory ofthe Republic of Albania. Business entities are:– Legal persons: these are entities that obtain the status of legal persons withthe entry into the constitutive register/record or by law. Legal persons canacquire rights and assume obligations, can be owners of movable propertyand real estate, and can sue or can be sued;– Individuals: these are individual private entrepreneurs (sole proprietors) andother individuals who permanently and independently perform variousexclusively profit activities in the free market.Each business entity has its own form of organization (legal organizational form),which is based on one of the legally determined organizational forms. Businessentities are entered in the BR on the basis of registration with the primary registerbody (courts, chambers, etc.) or are created and entered into the BR on the basis oflaw (governmental bodies).Parts of business entities are parts of legal entities and parts of individuals'businesses. They are organizational, legal, business, accounting, production ortechnological units that perform various activities as business entities in the samelocation or the same or different activities at an address other than the business entityheadquarters. They can be registered with the primary register body, they can bereported by business entities themselves or there is a public interest for them to bekept in the PRA.Affiliates of foreign business entities are parts of foreign legal persons that performactivities within the territory of the Republic of Albania, are registered or there is apublic interest for them to be kept in the PRA. Primary register bodies for theregistration of these units are the district courts.Sources of the BRA number of administrative sources were considered (in 1993) to be used as the basisof a statistical register. These were:– The Court Register. Pursuant to Law No. 7667 dated 28.01.1993 whichcreated a trade register for all legal persons in Albania. This excludes naturalpersons, including entrepreneurships.180/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme– Chamber of Commerce. Pursuant to Law No 7804 dated 10.03.1994, theChamber of Commerce is obligated to maintain a commercial register but notto cover all market enterprises– Register of Taxation. All economic entities located and operating in Albaniamust register in this register and pay taxes to tax offices.Of these three primary sources, the tax register is considered as the mostcomprehensive in terms of coverage (in principle it includes all legal units andentrepreneurships). As a result, this source was selected as the best source forbuilding and updating the statistical business register. In terms of registrationprocess, economic entities are required to first register in the district court (forentrepreneurships) or Tirana court (for legal units). The date of their registration isthe date of the creation of the entrepreneurship or legal unit.Business Register is based on administrative sources provided by GeneralDirectorate of Taxation (GDT) and from 2007 also by the National RegistrationCentre, NRC, as the important reform for simplified registration of new businessregistration procedures.Contents of the BRACharacteristics which are recorded for the legal units and local units in the BR are:– Identification number (NIPT);– Company name;– Registered office and full address (municipality, settlement, street name,street number);– Geographic code;– The date of the act of foundation;– Data on the registration with the registry body (the body, date andconsecutive number of entry);– Main activity code (NVE);– Legal organizational form;– Date of commencement of operations;– Founder’s name and surname (name, address);– Representative’s name and surname (name, address);– Origin of foundation’s capital code (domestic, foreign, mixed);– Countries of foundation’s capital code;– Type of ownership code (private, co-operative, mixed and governmental);– Telephone number, fax number, e-mails;– Size class according to the number of employees for some legal entities;– Date of cessation;– Type of change code;– Number of administrative decree;181/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeMaintenance and updatingThe sources for BR maintenance are administrative registries and records.The sources for updating of variables are: administrative (information from NRC,information from General Directorate of Taxation, VAT file and annual account ofenterprises), statistical (newly Created Enterprises’ survey, annual Structure Survey,quarterly survey (STS), Production Price survey (PPI) and other surveys.Updated variables are: activity status (active or inactive), main economic activity,size by the employed, address, communication variable (telephone, fax, mobilephone, e-mail).The updating of Economic activity and Size by the employed is realized once a yearbased on Eurostat recommendations (No. 2186/93). Other variables like Status,Addresses and Communication variable are updated more than once a year.Enterprises’ economic activity is based on Nomenclatures for Economic Activities,NACE Rev 1.1Definition and classification of the main activityAccording to the Law on the BR, the principal economic activity is the registeredeconomic activity or the economic activity defined by a regulation or an act offoundation. If the business entity performs more than one economic activity, theprincipal economic activity must be established. It is usually the activity indicated bythe business entity in the administrative registration form.DisseminationData from the BR are used for administrative (for government institutions, Chamberof Commerce, Tax Administration, municipalities, banks, insurance companies,customs), statistical, analytical, commercial and other purposes.D.2: Statistical Surveys and other Data Sources used for the ProductionApproach2.1 Annual accounting statements of enterprises, balance sheets (2006)Organization of data collection, and purposes of collectionAnnual accounting statements of enterprises are collected by the General Directorateof Taxation. Balance sheets are collected for statistical purposes and for the purposeof public disclosure of accounting statements. Reporting is obligatory according tothe National Statistics Law.182/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeReporting unitsAnnual accounting statements of enterprises are submitted by different kinds ofcorporations, irrespective of their activity or their size. In 2006 the statements weresubmitted by 8.000 units with the following legal status:PeriodicityAnnual Data refer to the calendar year.Variables collectedAll variables from the profit and loss account are collected from the balance sheet.For the purpose of GDP calculation the following variables are used:– inventories of raw material at the beginning and at the end of year;– inventories of unfinished products at the beginning and at the end of year;– inventories of finished products at the beginning and at the end of e year;– inventories of goods for resale at the beginning and at the end of year;– sales of goods and services on domestic market;– sales of goods and services abroad (for export);– sales of goods for resale on domestic market;– own-account production;– subsidies on products;– other operating revenues;– value of sold goods purchased for resale;– costs of material (acquisition of materials, increase or decrease of inventory);– costs of services;– labor costs (wages and salaries, social security contributions, costs of otherinsurance, other labor costs);– depreciation;– other operating costs;– operating result (profit or loss);– number of employees;– investments (purchases and sales) by type (land, new buildings, existingbuildings, transport equipment, other machinery and equipment, othertangible fixed assets, intangible fixed assets)2.2 VAT declarations (2006)Organization of data collection and purpose of collectionVAT declarations are collected by the Tax Administration for administrativepurposes. Declarations are submitted to the Tax Administration by the VAT unitswith different frequencies; the large majority of units submit the declarations onmonthly basis, others on quarterly basis. Data are available to INSTAT each quarterapproximately 60 days after the end of the quarter. The database received byINSTAT contains data from all individual declarations, including the tax number.183/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeReporting unitsReporting units are all business entities, liable to VAT.PeriodicityThe data refer to month, quarter or year.Variables collectedVAT declarations show more variables and for the purpose of GDP calculation, theuse of all this data is needed. In the absence of all data, as national accounts for thecalculation of GDP by production approach are used only taxable supply, exports ofgoods, except and other supplies with the right to deduct input VAT, exempt supplywith no right to deduct VAT, intra-community supplies of goods, average total ofturnover.Methods used to allow for missing dataNot relevant.Adjustments made for conceptual differences from national accounts conceptsNot relevant.Further adjustments made to the dataNot relevant.2.3 Financial statements of monetary institutions (2006)Organization of data collection and purpose of collectionFinancial statements of monetary institutions are collected by the Bank of Albania.Data are collected for the purpose of supervision of monetary institutions and formacroeconomic statistics.Reporting unitsReporting units are all banks, savings banks and savings and loans undertakings.PeriodicityData are monthly, quarterly and annual. They are provided to INSTAT on a quarterlybasis 60 days after the end of the reference quarter. Final annual data are available 6months after the end of the year.Variables collectedBalance sheet items and profit and loss accounts items are collected at a fine level ofdetail. A unified reporting system of accounts is used by all monetary institutions.The main items of profit and loss account used in national accounts are:184/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme– interest receivable and similar income;– interest payable and similar expenses;– income from securities;– commissions (fees) receivable;– commissions (fees) payable;– income from financial operations;– expenses from financial operations;– other operating income;– labor costs;– costs of materials and services;– depreciation and revaluation of operating expenses relating to intangible andtangible assets;– other operating expenses;– operating result (profit or loss)Methods used to allow for missing dataAll units are covered; no data are missing.Adjustment made for conceptual differences from national accounts conceptsNot relevantFurther adjustments made to the dataNot relevant2.4 Financial statements of insurance undertakings (2006)Organization of data collection, and purpose of collectionData are collected by the Financial Supervision Authority. Data are collected for thepurpose of the supervision:– of insurance market and its operators;– of securities market and its operators;– of private supplementary pensions market and its operators;– of other non-banking financial activities;Reporting unitsReporting units are all insurance companies, reinsurance companies and pensioncompanies.PeriodicityAnnualVariables collected185/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeBalance sheet items and profit and loss account items are collected at a fine level ofdetail, described by the chart of accounts for insurance undertakings. Profit and lossaccount consists of technical account for non-life insurance, technical account for lifeinsurance and non-technical account. The main items from the profit and lossaccount which are important for national accounts are:– earned premiums;– investment income;– other technical income;– claims incurred;– change in other technical provisions;– change in the equalization provisions;– operating costs;– labor costs;– reinsurance commissions;– investment charges;– other technical chargesMethods used to allow for missing dataAll units are covered; no data are missing.Adjustments made for conceptual differences from national accounts conceptsNot relevantFurther adjustments made to the dataNot relevant2.5 Annual Structure Business Survey (SBS)IntroductionThe main purpose of structural business statistics is to show the structure of thebusiness sector with regard to economic data. Data for the total business sector bybranch and by size groups are present.Structural business statistics are regulated by the Council Regulation (EC,EURATOM) No.58/97, of 20 th December 1996.Reporting unitsThe statistics comprise all active enterprises in Albania of all legal forms (financial,educational, health, and cultural activities are not included).The population consists of all enterprises that according to statistical register, wereactive in December of the reference yearReporting units are companies, enterprises and other organizations.186/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammePeriodicityAnnualResults’ availabilityResults are available 11 months after the end of the reference year.Sampling frameThe sample frame consists of all active enterprises in the Business Register (BR)classified into economic activities B,C,D,E,F,I,G,H,K,O and P with at least 1employed. Both public and private sector are included.The sampling frame is divided into strata based on economic activity, so-calleddomain strata. Principally the two digit level is used to create these strata. Thestratification is done in order to fulfill the SBS regulation.187/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme70Tab D.1:SBS CoverageSection Subsection Division DescriptionIndustryB BB 05 FishingC 10-14 Mining and quarryingCA 10-12 Mining & quarr. of energy prod. materials.CB 13-14 Min. & quarr. of non energy prod. materialsD 15-37 ManufacturingDA 15-16 M. of food prod. beverages & tobaccoDB 17-18 M.of textiles and textile productsDC 19 M.of leather and leather productsDD 20 M.of wood and wood productsDE 21-22 M.of pulp, paper & pap.prod. publ.& print.DF 23 M.of coke, ref.petroleum & nuclear fuelDG 24 M. of chemicals, chemical productsDH 25 M.of rubber and plastic productsDI 26 M.of other non-metallic productsDJ 27-28 M. of basic metals & fabr. metal prod.DK 29 M.of machinery and equipment n.e.c.DL 30-33 M.of electrical and optical equipmentDM 34-35 M.of transport equipmentDN 36-37 Manufacturing n.e.c.E EE 40-41 Electricity, gas and water supplyF FF 45 ConstructionI II 60-64 Transport and CommunicationTradeWholes. & retail trade; repair of motorG GG 50-52 vehicles,motorc.& personal & househ.goodsServicesH HH 55 Hotels and restaurantsK KK 70-74 Real estate, renting and business activitiesO OO 90-93 Other community, soc.& pers.service activit.P PP 95 Private households with employed persons188/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammePopulation and sample sizeEnterprises with 1-4 employed are surveyed by sample survey (3 483 enterprises)Enterprises with 5 and more employed are surveyed exhaustively (6 104 enterprises)The sample includes 9 587 units or 11.6 percent of the sampling frame.The information is collected by face to face interviews.Survey response rateThe survey response rate is 89 percent according to the number of units.Main features of survey methodologyThe Annual Structural Business Survey is part of the National Statistical Program.This statistical activity has begun in 1998 and aims to satisfy the demands for betterstatistical information of the trade market. The objective of this survey is thecollection and processing of the information from enterprises acting in the entireterritory of the country in Industry, Construction, Transport and Communication,Trade and some Service activities.The questionnaire used for data entry of enterprises is compiled in two parts:– the general part, with general data for all enterprises;– the specific part which contains specific features for each economic activityThe questionnaire is reviewed each year to improve the quality and quantity of dataand to ensure a better implementation of Eurostat’s requirements.Each November users take general information for main variables and eachDecember INSTAT releases the publication “Results of Structural Survey ofEconomic Enterprises”General data are also published in the Statistical Yearbook.Method used to impute for missing dataAll cases of non-contact; full refuse and partial refuse (for different tables andindicators) are considered as non- response or missing data.The partial non-response is treated by using direct methods or their combinationssuch as the study of time series data of enterprise and branch; data from balancesheetfile (profit and loss accounts); the information from other files available inINSTAT such as business register, VAT file, file of production price index, averagedata of branch where the enterprise is included, are analyzed and used; data fromenterprises that have similar conditions are used and method of average structure,especially for expenditures is usedImputation is done to cover the non-response of large enterprises. It is based on threemethods: historical trend imputation for units with data from previous year in profitand loss account or in business register or in other surveys conducted by INSTAT;189/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmecold deck with use of the previous year administrative data for units for which wehave data from administrative sources; mean value imputation for the rest of theresponse large enterprises in the respective stratum. For the part left untreated reweightinessmethod is used.Variable used for grossing-up to the populationThe weights for the turnover index are based on the turnover from the SBS statisticsfor the reference year 2007Initial weight of enterprises in the stratum is estimated P (i) initial = Ni / niWhere: Ni is the total number of enterprises in the stratum ini is the number of sample enterprises in stratum iNote: For the purpose of GDP estimations only individual data for each enterpriseare used.Main variables collectedThis survey has included all variables from the profit and loss account, identificationpart, investments, etc. For the purpose of GDP calculation the following variables areused:– sales of goods and services in domestic market;– sales of goods and services abroad (for export);– sales of goods for resale in domestic market;– own-account production;– subsidies on products;– other operating revenues;– value of sold goods purchased for resale;– costs of material (acquisition of materials, increase or decrease of inventory);– costs of services;– labor costs (wages and salaries, social security contributions, costs of otherinsurance, other labor costs);– depreciation;– other operating costs;– operating result (profit or loss)– number of employees;– tangible assets by type– intangible assetsFurther adjustments made to the survey dataNo further adjustments to the survey data are made.190/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme2.6 Farm structure surveyTo obtain the agriculture statistical information in terms of market economy, it isnecessary to use the contemporary statistical methods of data collection. For thispurpose, in collaboration with the US experts of NASS (National AgriculturalStatistical Service) and Agricultural Department, collection of data through SamplingSurvey using Area Sampling Survey (ASF) method was considered as moreappropriate.This methodology used since 1994, started with 400 segments and then with 600segments.MethodologyThe Area Frame sampling selection method is one type of multi-stage clustersampling.To perform a statistical survey on Albanian Agriculture it was necessary to use thismethod because an up-to-date list frame with the names of all Albanian farmers wasnot available and also it was difficult to compile one since rural population wasmoving toward the cities and the list would need to be frequently updated. Therefore,with the Annual Agricultural survey, segments were sampled, farmers in each onewere listed, and farmers were sampled from each list and interviewed.Steps followed in designing the frameStratification: Agriculture and livestock activities differ between regions of thecountry. To improve the data collected on new activities the land was first split intohomogeneous zones (strata) prior to sample selection. The stratification method usedincluded:1.Allocating land in strata (homogeneous zones) based on defined criteria (in ourcase, land use intensity):2.Further allocating the strata into groups and then sub-groups which weresimilarly based on the defined criteria.Multi-stage sampling: Each stratum was first split into Primary Sampling Units(PSU-s). Once the PSU had been defined and measured by using GIS, they were thensplit into segments based on target sizes desired in each stratum. Sample PSU-s wasthen selected on the basis of the number of segments located in each one. The use ofthis technique significantly reduced the required mapping measurement efforts.Analyses: The decisions on design were made on the basis of criteria of datareliability as well as the costs. This included the decisions made on defining thestrata, the number of sub-strata, size of segments, the method of sample selection,etc.191/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeBeing careful in designing the frame The basic principle used in designing the newframe was to not exclude any piece of land during the stratification process as well asnot include it more than once in a stratum. During the process of area measurementimportance was attached to the statistical rules to minimize sample and non sampleerrors. The primary criterion was to accurately identify PSU-s /segments throughphysical boundaries in order to minimize non-sample errors during data collectionprocess.Designing the FrameDefining the Strata: Land use: intensity was used as the basic criteria in splittingthe country into strata. Strata were identified by using the following criteria:Stratum 1 -- Zones with land use intensity of 75% or higher;Stratum 2 -- Zones with land use intensity of 25 - 74.99%;Stratum 3 -- Zones with land use intensity under 25%;Stratum 4 -- Zones with land use which is essentially nil;Stratum 5 -- Military zones;Stratum 6 -- Major cities;Stratum 7 -- Lakes and other bodies of water.Strata 5 through 7 were not included as part of the frame when conducting theSurvey.Strata Boundaries:- Main roads- Secondary roads,- Railways,- Rivers- Permanent streams,- Temporary streams,- Canals,- Telephone and high tension lines etc.The frame was designed in each prefecture by using the following steps:1. Strata identification on maps2. Splitting strata into PSU-s; two important elements are homogeneityand the real identifying boundaries.3. Numbering the PSU-s in serpentine grids from North and East.4. Digitizing and processing of information on the computer, was doneby using the same procedure as with PSU-s.5. Selecting the sample PSU-s for later splitting into segments:192/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeSample Segment Identification on map and groundThe total segment sampling size set at 400 segments based on an assessment of thecapabilities of the Ministry to collect and process quality data and the requiredprecision of estimates.As a first step, this total sample size had been chosen; the first step in allocating thesample to strata was the calculation of standard deviations by strata for arepresentative number of crops and livestock.The second step was the allocation of the 400 sample segments between strata usingthe Newman optimum allocation procedure.The last step was the allocation of segments by strata between Prefectures (definingthe number of segments for each prefecture). The sample segments were thensummed across Prefectures to insure a minimum sample 20 - 30 at Prefecture level.Segment selectionIn a PSU worksheet required for each Prefecture which lists each area (hectare) thecalculated number of segments for each PSU, and the accumulated number ofsegments for each stratum. The samples of PSU-s were defined by using systematicselection with random start. The sampling interval was defined by dividing theaccumulated segment number for each stratum (total segments) by stratum number ofsample segments.Identification of segments in mapSegment location was identified by using 1:100000 maps and the procedure is thesame as with PSU-s.Digitizing and processing of segmentsDigitizing and processing of segments was done by using the same procedure as withPSU-s.Identification of segments in ground and list of farmersAfter identification, the selected segments in the map defined whether farmingactivities or dwelling units were located in them. A complete list of farmers wasprepared which was used as the secondary sample and then selected the 6 farmerswith randomly systematic activities.193/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme71Tab D.1: Number of Segments in Population, Sample Size of Segmentswith and without Farming activities, and Segments and Farm Operators fromwhich Data were collected2008(Issue) Stratum 1 Stratum2 Statum3 Stratum4TotalSegments in PopulationSAMPLE SEGMENTSa. Total(number)14247182(number)5372108(number)13783259(number)811151(number)41513600b. with farming1699721217495c Data Collected169 97 212 17 495Sample of Farm 1808 1004 1975 109 4896The Survey was initiated in late November and was completed by the end ofDecember. During the farm visits, data were collected on farm householddemographic characteristics, livestock, areas planted in various crops, information onsingle, multiple and mixed plantings of crops, farm practices, fertilizer andequipment hire costs, ownership of vehicles, farm equipment and appliances, and theproduction, sales and prices received for selected crops.Training, Data Collection and SummarizationPrior to data collection, emphasis was placed on providing adequate enumeratortraining and quality control in an effort to reduce non-sampling errors. The trainingwas held in November /December with the participation of District and PrefectureChiefs of Statistics and those training the enumerators. In addition, the Prefectureand District Chiefs of Statistics were provided training on the manual editingrequirements for completed questionnaires prior to their return to the central offices.The Survey was conducted by approximately 400 enumerators residing in or near thesample segments for which they were responsible for data collection. The Districtand Prefecture Chiefs of Statistics were responsible for conducting quality controlchecks on completed questionnaires. Where errors were noted, the enumerators wererequired to re-interview the sample farmer(s) and make the necessary corrections.Immediately upon receipt of the first survey data, additional manual edit checks werecompleted by central office staff in which districts and the data were entered directlyfrom the forms into microcomputers using a customized data entry package. Thedata were then run through a comprehensive computer edit system used for detectingdata entry, coding and enumerator errors. Necessary corrections were made in theforms and the data set in the computers. The “cleaned” data were then summarizedin tabular forms. Preliminary tables describing the results of the survey werecompleted in February.194/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeInterpretation of DataAn understanding of the data and their limitations is needed for correct interpretationfor policy and planning purposes. Some of the limitations are outlined below.For the Annual Agricultural Survey, the sample size was large enough to givereasonably reliable estimates at the national level for most data items. In addition,for frequently occurring items, reasonably accurate prefecture level estimates areavailable. However, for non-frequent items (such as areas planted in minor crops),estimates are provided at the national level only.Due to the sampling method used -- weighted area frame – the Estimates providedare valid only for crop farms (i.e., farms which controlled agricultural land that mayor may not have been planted in crops). Thus, livestock only farms are notrepresented by the sample, for these cases special surveys are conducted. In addition,growers of specialty crops (such as greenhouse operators) are not included in theframe.A point system was initiated to define a “farm operation as follows.Land: 1 decares (1/10 hectare) = 50 pointsCattle: 1 animal = 25 pointsGoats/sheep/pigs: 1 animal = 15 pointsHorses/Donkeys/Mules: 1 animal = 20 pointsChickens/other fowls: 1 bird = 2 points.An operation was defined as a farm if its land/livestock holdings resulted in a totalpoint count of 50 or more.Because the Survey was a recall survey covering all planted lands, reference to totalland in the tables includes multiple planted parcel areas unless otherwise specified inthe tables.For example, if farm operator first planted wheat in a 1.0 hectare parcel and afterharvesting the wheat, then planted this same parcel in maize, the total land plantedwill usually include both wheat and maize areas.Finally, it should be noted that a customized computer program was used to generatethe information provided in this report.QuestionnaireSince 2004 the collected data were substantially increased, which made possible theestimation of national accounts. The added data are provided on:- The working days in farms from households specified for agriculture, livestockand fruit trees.- The working days out of the farm and income from these activities.- Data on the balance use production.- The expenditures in value specified for agriculture, livestock, agriculturalmechanic and other activities in the farm,- Income from the processing products,- Income for agro tourism development,195/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme- Data on growing of the plants,- Data on investments inside the farm and their financial sources.Terms and Definitions UsedCrop farm, farms which controlled agricultural land that may or may not haveplanted crops in this land. Control could be established through title to land, leasingor renting, by other means or through any combination of the above.Household is composed of the total number of people sharing revenues from thefarm operation. The household may consist of more than one family and may includenon-family members who permanently reside with the household members and aresubjected to decisions taken by the same head of the family.Family consists of members of a household who maintain a separate socialrelationship from the other household members (Example: A household includes ahusband and wife and their grown son and his wife. The son and daughter-in-lawhave two small children but are subjected to decisions made by the father. In thiscase, the household consists of two families since the son maintains a separate socialrelationship.)Head of family is the person who is considered in charge of the household. He/shemay not be the same person as the farm operator.Farm operation consists of land either partly or entirely used for agriculturalproduction (for crop and/or livestock production). Each farm operation is considereda separate technical unit and may be operated by one person (with or withoutassistance from other persons). When two or more families and/or households jointheir operations together, this is considered a single farm operation.Farm operator is the person who makes the day-to-day decisions for the farmoperation.Farms with corps, crop farms which either had field crops planted or had control oftree crops in parcels during this crop season; do not include crop farms with fallowland and scattered trees only.Farms with field crops, crop farms which had field crops planted -- wheat, maize,potatoes, alfalfa, etc. during the crop season.Farms with tree crops (parcels) are crop farms which had control over parcels inwhich tree crops were planted during the crop season.Farms with tree crops (parcels and scattered trees) are crop farms which hadcontrol over parcels in which tree crops were planted or had scattered trees duringthe season.Farms planed in a specific crop: a crop farm is defined as being planted in a specificcrop if that crop was planted in any of the farm’s parcels.Farms harvesting a specific crop: Farms actually harvesting a crop. Total farmsharvested may be less than total farms planted in a specific crop due to drought,abandonment of the farm, etc.Crop parcel is an area of land which was planted in crops one or more times duringthe crop season. For example, under one crop or crop mixture a single time during196/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programmethe season or two crops or crop mixtures at different times during the season (seedefinitions for Mixed Cropped and Multiple Planted below).Fallow parcel are parcels not planted during the cropping season but which wereplanted and crops harvested in previous years.Mixed cropped parcel: When two or more crops were inter-planted (mixed) witheach other in a crop parcel during the crop season.Multiple planned parcels: When two or more crops or crop mixtures were planted inthe same crop parcel during the crop year.Forage crops: Three types of forage crops are identified in the Annual AgriculturalSurvey -- alfalfa, maize for forage, and other forage crops. Other forage cropsinclude hasell (wheat grown for forage crop only), rye, oats and cabbage for forage,clover, and grass cut for hay.Crop farms with livestock are crop farms classified with livestock if they had one ormore cattle, goats, sheep, pigs, chickens, other fowl, donkeys/mules, or horses unlessotherwise specified.Livestock farms: Crop farms were classified as specific livestock farms if theyowned or managed one or more animals of species (i.e., cattle, goats, sheep, pigs,etc.).A death includes livestock deaths from natural causes, disease and predators butexcluding “still” deaths (livestock born dead).Home slaughter is livestock killed on the farm for home consumption.Livestock sales are livestock sold, gifts out, and/or traded away.Livestock purchases are livestock bought, gifts in, and/or traded for.Scattered trees are trees growing around a parcel or the dwelling unit which areplanted with low density (i.e., a few pergola or citrus trees growing near the house).Gross income is the value of sales with production costs still included.Family labors are members of the farm household who worked on the farm duringthe year.Farm populations are people permanently residing in crop farm households.The coefficient of expansion is composed by three partsCoefficient of expansion (CE) of segmentCE of segment = M/mM – Total number of segments on prefecture x in strata xm – Selected number of segment on prefecture x in strata xCoefficient of expansion of the selected farmsCE of farm = N/nN – Total number of farms with activity on selected segment in strata x of prefecturexRatio of farmers’ land in the selected segment of his total landRatio = segment area / total area197/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeSegment= Land is in segmentTotal = Total owned by a farmerSo the coefficient of expansion is:CE = CE of segment * CE of farmer * segment area / total area.2.7 Quarterly Business Survey (STS)IntroductionQuarterly Business Survey is based on the National Statistics Law and the AnnualProgram of Statistical Surveys. The overall objective of STS is to show thedevelopment of economy in short term period and from methodological aspect toproduce estimates of change over time for the total population of enterprises.Reporting unitsReporting units are companies, enterprises and other organizations.PeriodicityQuarterlyResults availabilityResults are available 90 days after the end of the reference quarter.Sampling frameThe last STS cover only enterprises with at least 10+ employees and the useestimation method “keeping identical enterprises”. The largest enterprises represent70 percent of total annual turnover in the covered activities.The estimation method currently used in the STS-survey is based only on valuesfrom enterprises included in the sample on two consecutive sample occasions.Estimates based on identical enterprises showed only the change for the enterprisesincluded in both sampling, not the change for all enterprises with at least 10employed. To produce estimates showing change over time for all enterprises with atleast 10 employed a better method would be to produce a total for each quarter basedon all enterprises in the sample and then use these totals to produce estimates ofchange over time.The sample frame consists of all active enterprises in the Business Register (BR)classified into the economic activities C,D,E,F,51(exl.51.1),55.1,60.1,61,62,63,64,72and 74.2 with at least 1 employed. Both public and private sector are included.The sampling frame is divided into strata based on economic activity, so-calleddomain strata. Principally the two digit level is used to create these strata. Thestratification is done in order to fulfill the STS regulation.198/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeMain features of survey methodologyThe main objective of this new survey design was the increase of the degree ofcoverage to include the total population (in covered activities).In this framework, a decision was taken for a pilot survey on fourth quarter 2007.The pilot survey was conducted in parallel regarding this fourth quarter. The regularsurvey started in the first quarter of 2008 (and onwards).The purpose for the pilot survey was:- To analyze the estimates produced by the pilot survey and to comparethem with estimates from the current survey;- To produce a link between the new and old survey design.- A link between the new and old method produced by using the pointestimates regarding the fourth quarter 2007 from the two surveys (pilotand regular).- And to see the feasibility of collection of information from smallenterprises on quarterly basis.- The two activities 72 and 74.2 are not included in pilot surveys.Population and sample sizeThe sample consisted of 2 426 enterprises (excl.72 and 74.20) and the sample size ineach stratum was decided by guidance from Neyman allocation (using number of theemployed as auxiliary information).The information is collected by interviewers through face to face interviews.The survey design in 2008 followed the design of pilot survey of 2007. As regardsthe coverage of problems coming from pilot survey on Construction and Wholesalethe sample is increased for those two activities in 2008, in 2008 the sample totaled(3075 enterprises).The enterprises with 1-4 and 5-9 employees, and all enterprises with 10 and moreemployees are included by sample, based on size class; the enterprises that haverealized less than 5 percent of total turnover on group activities (division, 2 digitlevel by NACE) are excluded from sample.CoverageIndustry, (sections C, D and E, 10-41);Construction (section F, 45);Wholesale trade, (section G, 52.-52.9); Hotels, (section H, 55.1);Transport and Telecommunication, (section I, 60.1; 61.1; 62; 63; 64),Informatics services, (Section K, 72 and Architectural and Civil EngineeringServices, (Section K, 74.20).199/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeMethod used to impute for missing dataImputation is done to cover the non-response of large enterprises. It is based on threemethods: historical trend imputation for units with data from previous quarters; colddeck with use of the previous year, administrative data for units for which we havedata from administrative sources; mean value imputation for the rest of the responselarge units.Variable used for grossing-up to the populationThe weights are different for the turnover, production, value added index anddomestic and non domestic turnover. The weights for the turnover index are based onthe turnover from the SBS statistics for the reference year 2005. The weights for theproduction and value added index are based on value added from the SBS statisticsfor the reference year 2005. The weights for the domestic and export turnover arebased on the data from the STS statistics for the reference year 2007.Main variables collectedThe following variables are covered each quarter:- turnover on domestic market;- labor costs;- number of employeesRetail trade survey: Methodological explanationsIndices on Retail trade and Sale and Repair of Motor vehicles from first quarter 2008are calculated with 2005=100 as a base year. Weights are calculated on the basis ofRetail trade and Sale and Repair of Motor Vehicles survey in 2005, conducted byINSTAT.The turnover is estimated on CPA (Classification of Products by Activity)classification level. The main groups are in accordance with the main groups used inthe Consumers’ Price Index.Main activities included in the survey are:• Retail trade activity, group 52-NACE-Rev 1 (excluding 52.6 and 52.7)• Sale and repair of motor vehicles, group 50 NACE Rev 1.Sample: The enterprises with 5 and more employed are exhaustive whereas theenterprises with 1 - 4 employed are surveyed by sample survey.Data collection: the data is directly collected to the enterprises; in a face to faceinterview, by the interviewer.The response rate was 94.4 %.200/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAnnex E: Methodology of the Household Budget Survey (HBS)The Household Budget Survey was carried out by INSTAT during the periodOctober 2006-September 2007. That is the reason why this data is not used for 2006calculations.The survey covered about 5600 households all over Albania. The sample was basedon a two-stage cluster design, the first stage was done by stratification: thestratification was based on 12+1 prefectures of Albania*, first stage units are theenumeration areas, and second stage units are the households. The selectionprocedure in both stages was a random sample stage, so it was representative atprefecture level and urban-rural level. The total number of selected households wasdivided into 4 sub-samples, one for each 3 months distributed geographically duringthe whole year, to take into consideration the seasonal changes. About 475households are interviewed each month, distributed in all selected areas, to be surefor the representation for all months of the year.Data collection was based on two phases of collection of information: Filling a diary from the households for 14 days, where expenditures forpurchasing products/services of consumption are recorded and when it wasnecessary filling of a 14 day self-consumption dairy, where only the productsproduced and consumed by household itself, during 14 days are recorded,estimated with the price that would be paid in the nearest shop. A face to face interview by interviewers through a questionnaire whichincludes questions on expenditures of higher value and rare frequency ofpurchasing grouped and divided according to specific topics. The samequestionnaire also includes questions on socio-demographic data of thecomponents of the family that will serve the family budget analysis accordingto typologies of families.The data is classified according to COICOP Classification in 12 main groups.Another HBS is ongoing. It started in November 2008 to last till December 2009.Supposedly, the periodicity of HBS will be every year.201/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAnnex F: InventoriesBelow, is presented the method used to estimate this component by main type ofinventories, following the rules of estimation for year 2002:This preliminary estimate was performed by sing data available from the annualfinancial statements (balance sheets) of enterprises on the state of stocks. They areestimated as the difference between values at the end and at the beginning of theperiod at the average prices of the period. Estimates are prepared for four types ofinventories: Raw materials and supplies, Work-in-progress, Finished goods andGoods for Resale.Following ESA95 recommendations, the average pricing method has been applied inorder to transform opening and closing stocks of inventories at average prices duringone year.Annual Statement of accounts of enterprises (Balance Sheets) gives us informationon Inventories by type as follows:72Tab F.1:Information on InventoriesChanges in inventoriesBeginning of End ofPeriod PeriodMaterials and supplies X XWork in progress X XFinished goods X XGoods for resale X XThe following formula was followed in the valuation of the changes in inventories atcurrent average prices. The annual average prices for the year t were divided by theDecember indices of the year t-1 as (start stock) and December t as (end stock)indices.indindQ31.12. year(t)ind* End stock indQ31.12. year(t1)*Start stock Change in Inv.in current average prices.Main indices used for the average prices of types of Inventories are:- Raw Material : PPI and UVI for the respective activity;- Finished goods, stock to producers, PPI is used ;- Goods for Resale, stock to trade activity: mainly CPI.- Work in progress, stock to construction activity: Construction Cost IndexWe can calculate Changes in Inventories at current average prices by type, for onlythe enterprises on which we have information. In order to estimate Changes in202/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeInventories for the total economy, to secure exhaustiveness, we have made someestimations, calculating the following ratios:1- Total Turnover (From NA calculations) / Balance sheet turnover2- Total Intermediate Consumption / Balance Sheet Intermediate ConsumptionBased on the ratios listed above, we calculated Inventories at Average Prices forTotal Economy, multiplying the estimated ratios with Balance sheets inventories inaverage prices. Ratio no 2 is used for the Raw Material Inventories and the other oneis used for other types of inventories.Estimates are carried out by branch of NA activities, but not by enterprise size. Themethod is based on adjustment coefficients between the balance sheet data andNational Accounts’ corresponding aggregates. For different types of inventories,different adjustment coefficients are applied: for the raw materials the coefficient isdeveloped from the intermediate consumption; for the work in progress and finishedgoods the coefficient is developed from the output. Opening stock and the closingstock have different coefficients as well. The opening stock is considered as a resultof the economic behavior of the previous year; therefore the adjustment coefficient ispicked up from the previous year. For the closing stock the data for the current yearis used. Below are presented data derived by an exercise developed for the year2002:73Tab E.2: Changes in Inventories, year 2002Data from Balance sheets (mln.LEK) In average prices (mln.LEK)Year 2002Raw Materials 2,460Work-in-progress 1,030Finished goods -81Goods for resale 4,294Total 7,704Year 2002Raw Materials 892Work-in-progress 1,030Finished goods -908Goods for resale 2,748Total 3,761We have to mention that these are experiments and no data is published due to lackof information.203/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAnnex G: Strategic Plan for National Accounts DevelopmentDevelopment PlansPhase 1 -2008-mid-2009Proposed Outcomes - Improved Annual GDP(P) and GDP(E), QGDP(P), RegionalGDP (simple method), new table of national saving, net lending/borrowing,disposable income, PPP weighting dataMain Requirements/Tasks Develop QGDP(P)Compile table of national saving, income, net lending, etc. from existing dataDevelop annual estimates of final consumption expenditure of households,using the Household Budget Survey and other dataImprove the annual estimates of gross fixed capital formationApply the simple method of employment by region to national GDP tocompile first estimates of GDP by regionImprove INSTAT processes for compiling short term statistics – betteranalysis, improve survey response rates, make maximum use ofadministrative data, etc.Technical Assistance Needs – IMF project 2008, TAIEX project on regional GDPto advise on NUTS2 classificationPhase 2 – 2009-2011Proposed Outcomes – Annual GDP(I), estimates of change in inventories, estimateof gross fixed capital formation by industry and type of asset, estimates for NPISH’s,institutional sector accounts for government and financial corporation sectors, begindata collection for Supply-Use Tables (SUT) development, regional GDP (improvedmethod). Note – completion of this phase will satisfy the UN StatisticalCommission’s MRDS.Main Requirements/Tasks Analyze data from SBS and balance sheets for income measure of GDP.Reconcile against administrative sources including Tax Authority data ontaxable profits and personal income, social insurance data and employmentdata.204/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAnalyze data from SBS and balance sheets on change of inventories. Assesswhether the range of price deflators is sufficient to develop methodology forestimating holding gains – if not develop new deflators. If deflators aresufficient, develop methodology for estimating holding gains.Analyze data from SBS and balance sheets on gross fixed capital formation.Reconcile the demand-side data with the present supply-side estimate ofGFCF, by asset type. Also, analyze data by industryIncrease coverage of NGO’s on the Business Register – apply appropriateclassifications to these units (institutional sector, industry, etc.). Collect datafrom the NGO’s. Compile value added for these units and final consumptionexpenditure for the subset of NGO’s which are NPISH’s.Adopt a statistical units model of enterprise, establishment, local unit (orsimilar as applicable for Albania).Adopt or develop new classifications – NUTS2 & 3 for regional analysis,legal status of enterprise, institutional sector (standard SNA/ESAclassification unless needs are different in Albania).Implement censuses to update the structure of all enterprises, applying thenew units model, and new classifications.Develop new methods to regularly update structural and size informationabout all enterprises on the Business Register (e.g., using social insurancedata)Redevelop ASBS questionnaires for new requirements for data from the newstatistical units Develop institutional sector accounts for government and financialcorporation sectorsDevelop strategy for SUT developmentRe-develop ASBS strategy and questionnaires to periodically (e.g., five-yearones) collect detailed product data needed for SUTApply comprehensive method to estimate regional GDP205/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeTechnical Assistance Needs – IPA2007 will provide TA for the implementation ofcensuses of enterprises (agriculture and non-agriculture) and extensive TA on NA. Itis essential that the classifications, statistical units’ model, strategy development forSUT and revised SBS be included in the IPA2007 project. Additional TA may beneeded for regional GDP methodology and institutional sector account development.Phase 3 – 2010-2012Proposed Outcomes – SUT, QGDP (E), institutional sector a/cs for non-financialcorporations and householdsMain Requirements/Tasks Assess data needs for SUT. Decide on a reference year (e.g., a year of HBS?).Decide on level of industry and product detail (EUROSTAT specifies 60industries and products).Collect data as required for SUT (also, need to decide on strategy for annualcompilation of SUT after this initial “benchmark” SUT is completed)Compile SUTRevise annual NA to reconcile to the SUT benchmarkAssess data needs for QGDP (E). Develop methodology. Note that it may bepossible to develop QGDP (E) earlier than this phase, given the experiencewith QGDP (P), but this depends on resources and progress during Phase 2. Develop institutional sector a/cs for non-financial corporations andhouseholdsTechnical Assistance Needs – TA may be needed for compiling the SUT, balancingcommodity accounts, computing systems for final balancing, etc. TA may also beneeded for developing sector accounts.Phase 4 – 2013-2014Proposed Outcomes – Symmetrical Input-output tables, QGDP (I), annual SUT.Main Requirements/Tasks Identify input-output tables needed. Compile these tables.Assess data needs for QGDP (I). Develop methodology.Integrate methodology for annual SUT into the annual compilation of theNAs.Technical Assistance Needs – TA may be needed for the IO tables.206/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammePhase 5 – 2014-2016Proposed Outcomes – next five-yearly symmetrical input-output tablesMain Requirements/Tasks Planning and conduct of data collectionCompilation of tables, reconciliation with annual SUTLinkages between Main Flows of Data and National AccountsThe diagram shows the main flows of data from the major sources and then thelinkages between the accounts of the system. The cells in the diagram indicate theaccounts in general terms only. For what is included in each account refer to thenotes below on the requirements minimally specified by the UN StatisticalCommission and Eurostat.The major tasks needed to improve the existing accounts and develop new accountsare shown in the shaded cells at the top of the diagram – these tasks are describedbelow, prioritized along with the expected new or improved accounts. The IPA2007project is also shown in the diagram – this project is expected to provide technicalassistance in at least some of the indicated tasks although further assistance may beneeded on some topics.207/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeClassifications:InstitutionalSector, NACE 2,NUTS IIStatistical UnitsModel – enterprise,establishment, localIPA07- Census ofAgriculture- Census of non-agenterprises- NA AssistanceQuestionnaire‘s reviewBUSINESSREGISTERBR UpdatingMethodology using– wages/socialinsurance, bankingdata, VAT,customs, etcCommodityquestionnaires- establishmentsANNUALSTRUCTURALBUSINESSSURVEYVAT and otherAdmin datasetsB/S for nonfinancialassets=> COFCImprovedSTS processesQuarterlySurveysAnnualGDP(P)RegionalGDPQuarterlyNAsGDP(I)QGDP(P)QGDP(E)Supply-useTablesGDP(E)Inst SectorA/csQGDP(I)Input-outputtablesOther Data Sets BOP Exports/Imports bycommodity Employment data Govt accounts Financ. statsQtly nationalsaving, netlending, dispincomeQtly Inst.Sector A/cs208/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAnnex H: Data collected from Quarterly Surveys (STS)74Tab H.1:Data collected for ElectricityIndicators Q1 Q2 Q3 Q4SourcesGenerationThermoHydroConcession/private plantsImport (including exchanges)ImportUsesOwn consumption/lossesExport (including exchanges)ExportLosses in networkIn distributionUses by domestic usersResidential sectorOthers209/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme75Tab H.2:Data collected for IndustriesMAIN ECONOMIC INDICATORSIndicator Q1 Q2 Q3 Q4Value of production (without VAT)In thousand LEKTotal turnoverIn thousand LEKDomestic TurnoverIn thousand LEKExportIn thousand LEKNew ordersIn thousand LEKNew orders for domesticIn thousand LEKNew orders for ExportAverage number of employedAverage number of employeesWagesIn thousand LEKTreatment and bonusIn thousand LEKWorking days per weekNumberWorking hours per daysNumberDemographic events210/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme76Tab H.3:Data collected for ConstructionMAIN ECONOMIC INDICATORIndicator Q1 Q2 Q3 Q4Volume of production (without VAT)In thousand LEKNew constructionIn thousand LEKReconstructionIn thousand LEKCivil engineering workIn thousand LEKTotal turnoverIn thousand LEKNew ordersIn thousand LEKNew order for new constructionIn thousand LEKNew order for reconstructionAverage number of employedAverage number of employeesWagesIn thousand LEKTreatment and bonusIn thousand LEKWorking days per weekNumberWorking hours per daysNumber77Tab H.4:Data collected for TransportsMAIN ECONOMIC INDICATORIndicator Q1 Q2 Q3 Q4Total turnoverIn thousand LEKAverage number of employedAverage number of employeesWagesIn thousand LEKTreatment and bonusIn thousand LEK211/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme78Tab H.5:Data collected for HotelsIndicator Q1 Q2 Q3 Q4TurnoverIn thousand LEKAverage number of employedAverage number of employeesWagesIn thousand LEKTreatment and bonusIn thousand LEKCapacity of hotelRoomsBedsFrequency, Total of clientsAlbaniansForeignersTotal overnightsAlbaniansForeigners79Tab H.6:Data collected for Wholesale TradeIndicator Q1 Q2 Q3 Q4Total turnoverIn thousand LEKAverage number of employedAverage number of employeesWagesIn thousand LEKTreatment and bonusIn thousand LEK212/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme80Tab: H.7: Indicators of volume on “retail trade” and “sale and repair ofmotor vehicles”Economic activityRetail tradeNon-spec stores with food, bev. or Predominating tab.Other retail sale in non-specialized storesFood, beverages, tobacco in specialized storesPharmacy and medic goods, cosmetics and toilet artic.Clothing, footwear, leather goodsHousehold equipmentBooks, newspapers, stationery in specialized storesSale maint. and rep. of motor vehicles and motoc.Sale maint. and rep of motor vehicles and motoc.Retail sale of automotive fuelq1 q2 q3 q4213/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme81Tab H.8:Deflators used for quarterly seriesBranchesDeflatorsPPI for quarrying of energy producingMining and quarrying of energy producing materials materialsPPI for quarrying, except energy producingMining and quarrying, except energy producing materials materialsManufacture of products based on cerealsPPI for products based on cerealsOther manufacture of food productsPPI for Other food productsManufacture of textile and leather productsPPI for textile and leather productsManufacture of wood, paper, furniture; publishing andPPI for wood, paper, furniture; publishingprintingand printingManufacture of coke, refined petroleum products and nuclear PPI for coke, refined petroleum productsfueland nuclear fuelManufacture of chemicals, chemical products, rubber and PPI for chemicals, chemical products,plastic productsrubber and plastic productsPPI for of other non-metallic mineralManufacture of other non-metallic mineral products productsPPI for basic metals and fabricated metalManufacture of basic metals and fabricated metal products productsManufacture of machinery and equipmentPPI for machinery and equipmentfor outputvolume indexIntermediate ConsumptionpriceindexElectricity (direct method)for importsfrom importsIntermediate Consumptionindexfromfor domesticIC/KW ratioGas and water supplyPPI for Gas and water supplyConstructionCCITradeTotal CPIHotel and restaurantsCPI for Hotel and restaurantsTransportCPI for TransportPost and communicationCPI for Post and communicationFinancial activitiesNIMCPI for Real estate, renting and businessReal estate, renting and business activitiesactivitiesPublic administration and defense, compulsory socialsecurityTotal CPIEducationTotal CPIHealthTotal CPIOthersCPI for Others214/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAnnex I: Benchmarking process & Seasonal Adjustment process82Tab I.1:YearBenchmarking processAnnualValue Added QuarterQuarterindicatorIn Million LEKQuarter Sum of 4YearValue Added Quarters149,326 2004q4 34,997 29,840 149,3262005q1 39,905 34,3982005q2 56,771 49,1882005 2005q3 42,472 36,697 2005150,021 2005q4 34,720 29,739 150,0212006q1 42,437 35,8542006q2 61,230 51,2592006 2006q3 44,916 37,512 2006154,672 2006q4 35,883 30,048 154,6722007q1 43,297 36,4962007q2 61,397 52,0142007 2007q3 45,258 38,452 2007158,539 2007q4 37,117 31,577 158,5392008q1 45,325 38,5592008q2 64,255 54,6642008q3 47,217 40,1692008q4 39,304 33,437 166,8292009q1 45,860 39,015215/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme83Tab I.2:QuarterSeasonal Adjustment processValue Added not SAIn Million LEKValue Added SA2005q1 29,840 37,6972005q2 34,398 37,5872005q3 49,188 37,1362005q4 36,697 37,6872006q1 29,739 38,2422006q2 35,854 38,4622006q3 51,259 38,7212006q4 37,512 39,1932007q1 30,048 38,4892007q2 36,496 39,2892007q3 52,014 39,3122007q4 38,452 40,0092008q1 54,664 41,3262008q2 40,169 41,5912008q3 33,437 42,6722008q4 39,015 42,1112009q1 56,354 42,6062009q2 54,664 41,326216/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAnnex J: IPA 2007 National Account structureIPA 2007: National Account. Activities:1. Improving the statistical sources and methodology for annual NationalAccounts estimations.1.1. Improvement of data sources1.2 Improvement of the methodology and estimations for annual NationalAccounts2. Elaboration of Supply and Use Tables (SUT-)2.1. Identification of information and methodology gaps, analysis of datainconsistencies2.2 Elaboration of SUT- in current prices2.3 Elaboration of SUT- in constant prices and the realization of thebalancing for the final version2.4 Preparation of the specific publication3. Elaboration of institutional sectors accounts3.1 Analysis and improvement of data sources for institutional sectors3.2 Classification of the institutional units in institutional sectors3.3 Elaboration of a simplified intermediate system (SIS3.4 - Elaboration of the production account by institutional sectors3.5 Elaboration of the generation of income account by institutionalsectors3.6. Elaboration of the full accounts sequence for Government sector3.7. Preparation of a specific publication4. Improve the methodology and the statistical measure of the non-observedeconomy (NOE)4.1 Identification of sources and improvement in the statisticalinfrastructure4.2 Improvement of the NOE methodology estimation4.3 Estimation of NOE and its integration in National Accounts5 – Improvement of Quarterly GDP5.1 Identification of data sources for the estimation of QGDP5.2 Estimation of QGDP by expenditure side for the period 2008-20095.3 Experimental calculation of QGDP by expenditure side5.4 Estimation of the QGDP in constant prices and in the prices of theprevious year6. Estimation of regional accounts6.1 Identification of data sources6.2 Elaboration of the methodology for the estimation of the GVA byregions and activities6.3 Estimation of the GVA by activity7. Strengthening the institutional capacity of INSTAT in relation with NationalAccounts217/236

Table 84TableIPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAnnex K: Statistical AnnexK.1 Statistical annex 2009Name of Economic UnitNIPT ___________________NACE___________________STATISTICAL ANNEXIncomeCorrespondence withthe accounting system COD1 Turnover (a + b +c) 70 11100a) Production sold : 701/702/703 11101from which: value of the products manufactured by the enterprise,sold in its own shops 111011b) Income from selling performed works and delivered services 704 11102In 000/LekëYear 2010 Year 2009from which: Incomes from selling services to sub-contracts 111021c) Income from sales of merchandise 705 111032 Income from other sales (a+b+c) 708 11104a) Rent 7081 111041b) Commission 7082 111042c) Transport for others 7083 1110433 Stock variation : 71 11201Credit balances (+) 112011Debit balances (-) 1120124 Production for own purpose and capitalized: 72 11300from which: Production of tangible assets 113015 Income from subsidies 73 114006 Other Incomes 75 115007 Income from selling long-term assets 77 116008Income from interest rates of units which has as main activity theleasing 11700I) Total Income I= (1+2+/-3+4+5+6+7+8) 11800218/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeTable 85Table K.2: Statistical annex 2009 Part 2ExpendituresCorrespondence withthe accounting system1 Purchases/ Expenditures (a+/-b+c+/-d+e) 60 12100a) Expenditure for Raw materials and consumable materials 601+602 12101b) Change in inventories of goods (+/-) 12102c) Purchased goods 605/1 12103d) Change in inventories of goods (+/-) 12104e) Expenditure for services 605/2 121052 Expenditures with the employees (a+b) 64 12200a- Wages including wages in kind 641 12201b- Social contribution 644 122023 Amortization and depreciation 68 123004 Services from third part (a+b+c+d+e+f+g+h+i+j+k+l+m) 61 12400a) Expenditures for the sub-contracting activity 12401b) General services 611 12402c) Rent 613 12403d) Maintenace and repair 615 12404e) Expenditure for insurance 616 12405f) Research and development 617 12406g) Other services 618 12407h) Expenditures for concessions, patents and licences 623 12408CODIn 000/LekëYear 2010 Year 2009i) Expenditures for publicity and promotions 624 12409j) Transfers, travelling and provision expenditures 625 12410k) Postal and telecommunication expenditures 626 12411l) Transport expenditures 627 12412219/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeFor purchases 6271 124121For sales 6272 124122For employees 6276 124123m) Expenditure for bank services 628 124135 Taxes (a+b+c+d) 63 12500a) Taxes and custom duties 632 12501b) Excise 633 12502c) Local taxes 634 12503d) Registration taxes and other taxes 635+638 12504II) Total expenditures II=(1+2+3+4+5) 126006Expenditure with purchasing goods through operational leasingand long-term renting 12800In 000/LekëYear 2010 Year 20093 Investment (a - b) 15000a) Increase of fixed assets 15001from which: new assets 150011b) Decrease of fixed assets 15002-from which by selling the existing assets 1500211 Average number of occupied persons 140002 Average number of employees 14100220/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAnnex L: Financial AnnexChapter 1: Identification dataName…………………….NIPT code……………….Address: Street……………………………Municipality…………….District………….Main activity………………………………………………………………………………221/236

86 TableIPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeChapter 2: Annual Condition of Credits, Deposits and received and paid Interest in 2009L.1: Financial AnnexNr Name Credit Deposits Other*StateInterestreceivable StateINTERESTSPAID StateInterestreceivable StateINTERESTSPAIDa b c d e f g h i1 Total Loans / Deposits / Etc (2 +3)2 - to residents / by residents3 - to non-residents / by non-residents (a + b)Of which:ab- Financial Institutions- Non-Financial Institutions4 Transactions between financial institutions (c + d)cd- Among the resident financial Intuition- Between institutions and non-resident to resident222/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeChapter 3: Production of Interim Financial Services: Loans from financial intermediaries resident to resident sector,and sector resident deposits in financial intermediaries resident in 2009Nr Emërtimi Credit Deposits Other*1 Total for Residents (2 +3+4 +5 +9)2 Non-financial institutions3 Other financial institutions**4 Government5 Families (6 +7 +8)InterestINTERESTSInterestINTERESTSState receivable State PAID State receivable State PAIDa b c d e f g h i6 - as consumers7 - as the owner of theapartment8 - as the owner of asmall business9 Non-profit institution* On this item should be entered all transactions except loans and deposits, for which a bank receives or pays interest** Includes insurance companies and pension funds, other financial intermediaries and financial auxiliaries.223/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeChapter 4: Investments in 2009Type of InvestmentGrandTotalValue of New Assets: Value of used assets Major RepairsTotalFromImportFromnationalproducerFrom ownproductionTotalFromImportFrom nationalmarketTotalOf witch:OwnrepairsI. Intangible assets (a + b), ofwhich:a. Computer Programb. Other….x 1=2+6+9 2=3+4+5 3 4 5 6=7+8 7 8 9 10II. Tangible assets (a + b + c + d + e+ f + g)a. Flats x xb. Building x xc. Other Buildingsd. Machinery and equipment,including computing devicese. Vehiclesf. Office Equipmentg. Other…..III. Land x x x x x x x x xTotal (I+II+III)224/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeChapter 5: Data by prefecturesNr.District(NUTS 4)Wages Fund - thousand lekPrefecture(NUTS 3)RethiAverage number ofEmployees1 2 3 4 51 Berat Berat, Kuçovë, Skrapar2 Dibër Dibër, Bulqizë, Mat3 Durrës Durrës, Krujë4 Elbasan Elbasan, Peqin, Gramsh, Librazhd5 Fier Fier, Lushnje, Mallakastër6 Gjirokastër Gjirokastër, Tepelenë, Përmet7 Korçë Korçë, Kolonjë, Devoll, Pogradec8 Kukës Kukës, Has, Tropojë9 Lezhë Lezhë, Mirditë, Kurbin10 Shkodër Shkodër, Malësi e Madhe, Pukë11 Tiranë Tiranë, Kavajë12 Vlorë Vlorë, Sarandë, DelvinëTOTAL225/236

87 TableIPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAnnex M: Insurance AnnexChapter 1: Identification dataName…………………….NIPT code……………….Address: Street……………………………Municipality…………….District………….Main activity………………………………………………………………………………Chapter 2: Economic indicatorsL.1: Insurance Annex Part1Thousand of lekë2009 2010Crt. no IndicatorLife insurance Non-lifeinsuranceLife insurance1 Gross Premiums written during the period2 Change in the provision for unearned premiums3 Supplementary premiums4 Premium from reinsurance services5 Claims paid during the period6 Change in gross provisions for outstanding claims-net ofreinsurance7 Changes in other technical provisions net of reinsurance8 Operating costs net of personnel costs( purchases of goods and services)9 Claims management costs10 Investment management fees11 Reinsurance services paymentNon-life insurance226/236

88 TableIPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeChapter 3: Investments in 2009L.2: Insurance Annex Part2Thousand lekëType of investment Total New assets bought Second hand assets bought MajorrepairsTotalFromimportFrom domesticproductionOwnproductionTotalFromimportFrom domesticproductionTotalFrom which:Own productionx 1=2+6+9 2=3+4+5 3 4 5 6=7+8 7 8 9 10I. Intangible assets(a+b), from which:a. computer softwareb. othersII. Tangible assets(a+b+c+d+e+f+g)a. dwellingsb. buildingsc. other constructionsd. machinery andequipment, including ITequipmente. transport vehiclesf. furnitureg. otherIII. Land x x x x x x xTotal (I+II+III)227/236

89 TableIPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeChapter 4: Local unitsL.3: Insurance Annex Part3Nr Prefectures Districts Average number ofemployees- personsGross Wages –thousand lekëGross writtenpremiums –thousand lekëData for 2009Gross claimspaid–thousand lekë1 Berat Berat, Kuçovë,Skrapar2 Dibër Dibër, Bulqizë, Mat3 Durres Durrës, Krujë4 Elbasan Elbasan, Peqin, Gramsh, Librazhd5 Fier Fier, Lushnje, Mallakastër6 Gjirokastër Gjirokastër, Tepelene, Përmet7 Korçë Korcë, Pogradec, Kolonjë, Devoll8 Kukës Kukës, Has, Tropojë9 Lezhë Lezhë, Mirditë, Kurbin10 Shkodër Shkodër,Malesi e Madhe,Puke11 Tiranë Tiranë, Kavajë12 Vlorë Vlorë, Sarandë, DelvinëThe same indicators for 2008 and 2010228/236

Annex N: Non-observed Economy90 Table N.1: NOEIPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeECONOMYLegalIllegal activitiesN2Registered unitsNon-registeredLegal personsunitsEntrepreneurs-selfemployedIs not necessaryN3To avoid to paytaxesN1In BR andstatistical surveyReportUnderreportingN6In BR and NOT in stat.surveys ( adm. data)N4;N5ReportUnderreportingN6Not in BR but inadm. DataN4;N5ReportUnderreportingN6AgricultureConstructionTaxi driversPrivatelessonsRent of thehouseIncomplete data;not direct collectedN7TipsWages in kind229/236

91 TableIPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAnnex O: Quarterly improvementsO.1: Quarterly improvementsGross Domestic Product by Broad Industry Group (Chain-volume series expressed in previous year prices (1))Agriculture,hunting, forestryand fishingIndustryConstructionTrade, hotels andrestaurantsTransportPost andcommunicationOther services Total VA FISIMGDP at basicprices (2)Values without seasonal adjustment (3)Quarter2005 Q1 34,761 15,828 17,504 30,584 6,519 6,832 37,756 149,783 4,673 145,111Q2 50,032 20,546 25,382 38,760 10,135 7,745 39,996 192,596 4,846 187,750Q3 37,486 19,543 26,687 43,022 11,560 8,133 41,336 187,767 4,989 182,779Q4 30,336 20,071 30,792 43,069 11,288 7,887 44,361 187,804 4,904 182,9002006 Q1 36,001 20,239 18,809 33,731 8,221 7,593 43,446 168,041 6,076 161,965Q2 51,754 21,881 25,427 39,703 10,144 6,592 45,454 200,956 6,555 194,401Q3 38,131 22,573 29,871 43,250 12,441 8,296 46,282 200,844 6,776 194,068Q4 30,494 23,110 38,379 45,583 11,106 9,365 51,708 209,746 7,504 202,2412007 Q1 36,290 19,855 25,231 35,786 9,623 8,233 49,700 184,719 9,430 175,289Q2 52,019 21,487 27,184 42,857 12,350 8,814 52,441 217,152 9,395 207,757Q3 38,737 19,527 30,826 48,075 13,056 9,807 54,688 214,716 9,606 205,109Q4 31,823 18,795 44,306 49,143 10,984 10,354 61,453 226,859 9,086 217,7732008 Q1 40,865 18,531 29,473 42,226 10,368 8,791 59,316 209,571 9,862 199,709Q2 58,052 23,072 34,558 47,783 11,338 10,466 58,710 243,980 9,716 234,264Q3 43,138 24,178 36,467 55,296 12,082 11,514 59,793 242,468 10,357 232,111Q4 35,807 23,553 42,944 53,897 11,631 13,553 61,903 243,289 10,571 232,7182009 Q1 42,489 20,232 28,957 44,462 11,106 12,630 65,189 225,067 11,065 214,002Q2 61,615 24,385 41,344 52,194 13,592 12,196 65,098 270,424 11,114 259,311Q3 44,821 25,708 37,257 59,240 14,907 14,532 65,252 261,717 11,031 250,686Q4 37,342 25,939 37,953 56,827 12,761 13,901 66,419 251,143 11,100 240,0422010 Q1 47,797 23,890 23,639 47,365 12,859 9,581 67,946 233,076 10,030 223,046Q2 69,193 28,838 29,210 58,782 15,705 10,036 71,060 282,824 10,129 272,696Q3 49,381 29,361 29,260 67,179 17,653 11,334 74,796 278,964 10,302 268,662Q4 39,718 31,173 32,354 65,545 14,409 11,303 72,434 266,937 10,165 256,772(1) Year ended 31 December(2) Non Includes taxes and subsidy on production(3) Values in million Lekë230/236

92 TableIPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAnnex P: Regional AccountP.1: Regional Account Distribution231/236

93 TableIPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAnnex Q: SBS improvementsQ.1: Cost Structure of the EnterpriseXVIICOST STRUCTURE OF THE ENTERPRISEFor INSTAT 1. YES 3. R|__|1 Purchase costs, grouped by kind The value of purchases (InTotal purchases (I+II)thousand lekë)No.crt I. Materials and services (1+… + 35)1 Cereals and industrial plants2 Livestock products3 Forest Products4 Fishery products and water culture5 Flour, cereals and products of transformed Starch6 Cotton fiber, wool, leave, yarn, etc. of this nature7 Cotton textile, woolens material, fabrics, silk, textile other8 Paper products9 Coal and lignite10 Crude oil and natural gas, sand and bitumen schist11 Iron and non ferrous metals12 On the other extraction industries13 Products from, petroleum refining14 Chemicals (Dyer and pigments, fertilizers and nitrogen products, etc.)15 Pesticides and other products16 Paint, lacquer, printing ink,17 Other chemical products (cough, chlorine, oilseed essence, for industrialuse)18 Artificial synthetic fibers19 Rubber and Plastic Products20 Glass and Ceramic Products21 Wood products and articles22 Bricks and other construction products23 Iron Pipes, Steel pipes, aluminum products, metal products other24 Structural metal products such as life, steam generator, turbines, pumps,etc.25 Metallic production26 Articles cutter, instruments and hardware27 Other metal items (such as screws, nut, nails, etc.)28 Equipments for distributing electricity control29 Isolated wires and cables30 Batteries31 Other electrical equipment32 Tubes of electric valves, other electronic component33 Reclamation34 Other raw materials non mentioned above, specifyI.1 Furniture11 Electrical energy232/236

94 TableIPA 2009 Multi-beneficiary StatisticalCooperation Programme2 Natural gas3 Steam and hot water4 Fuel5 Water6 Installation Services performing construction or repair of buildings7 Car repair costs, spare parts and other repairs8 Transportation costs (trip) - plane tickets, train, bus, taxi, etc9 Post and communication expenditures10 Rent paid for building, land, equipment11 Expenditures with financial services12 Insurance premiums paid13 Expenditure with research projects paid to others14 Expenditure with informatics software15 Expenditures with advertising, publicity, other servicesII. Goods for resaleQ.2: Value of the turnover from construction distributed by districtsValue of the turnover from construction distributed by districtsDistrictcodeDistricts| 0 | 1 | Berat (Berat, Kuçovë, Skrapar)| 0 | 2 | Dibër (Dibër, Bulqizë, Mat)| 0 | 3 | Durrës (Durrës, Krujë)| 0 | 4 | Elbasan (Elbasan, Peqin, Gramsh, Librazhd)| 0 | 5 | Fier (Fier, Lushnje, Mallakastër)| 0 | 6 | Gjirokastër (Gjirokastër, Tepelenë, Përmet)| 0 | 7 | Korçë (Korçë, Kolonjë, Devoll, Pogradec)| 0 | 8 | Kukës (Kukës, Has, Tropojë)| 0 | 9 | Lezhë (Lezhë, Mirditë, Kurbin)| 0 | 10| Shkodër (Shkodër, Malësi e Madhe, Pukë)| 0 | 11| Tiranë (Tiranë, Kavajë)| 0 | 12| Vlorë (Vlorë, Sarandë, Delvinë)TOTALTurnover fromconstruction(thousand lekë)233/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme95Table Q.3:Regional distribution1 Do you have activities in other Prefectures?1. Yes 2. No I__I2 If "yes", please detail the following indicators by prefecturesNo.PrefecturesTurnover(000 /lekë)AverageNo. ofemployeeWages and Salaries(000 / lekë)1 Berat (Berat, Kuçovë, Skrapar)2 Dibër (Dibër, Bulqizë, Mat)3 Durrës (Durrës, Krujë)Elbasan (Elbasan, Peqin, Gramsh,4 Librazhd)5 Fier (Fier, Lushnje, Mallakastër)Gjirokastër (Gjirokastër, Tepelenë,6 Përmet)7 Korçë (Korçë, Kolonjë, Devoll, Pogradec)8 Kukës (Kukës, Has, Tropojë)9 Lezhë (Lezhë, Mirditë, Kurbin)10 Shkodër (Shkodër, Malësi e Madhe, Pukë)11 Tiranë (Tiranë, Kavajë)12 Vlorë (Vlorë, Sarandë, Delvinë)TOTALCAUTION1.The Total Turnover by prefectures should be equal to the Total Turnover in the relevant Section VI2.The Total of the average number of employees by prefectures should be equal to the average number ofemployees in Section IV3. Total wages by prefectures should be equal to the value of wages in Section IV.234/236

IPA 2009 Multi-beneficiary StatisticalCooperation Programme96Table Q.4: Investment table1 Your company has made investments during the year? 1.Yes 2. No I__IIf "Yes" please detail below investment allocation made (in thousands of lekë)Value of new assets bought Value of used assets bought The value of majorrepairsTotal DirectfromimportsFromDomesticProductionOwnproductionTotal DirectfromimportsFromDomesticProductionTotal From whichownproductionTotal 1=2+6+9 2=3+4+5 3 4 5 6=7+8 7 8 92 Total investments (I+II)3 I. Intangible assets1- Mineral exploration2- Computer Software3- Patents, Trademarks, and similar4- Other4 II. Tangible assets x x x x x x x x1. Land x x2. Buildings x x2.1 Residential buildings x x2.2 Non-residential buildings2.3 Civil engineering and other constructions4. Machinery and equipments5. ICT equipment6. Other machinery and equipment5. Office equipments7. Other : -8 -235/236

IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeAnnex R: Chain link97Table R.1: Chain linking techniqueAgriculture,hunting, forestryand fishingIndustryConstructionGross Domestic Product by Broad Industry GroupChain-volume series expressed in previous year pricesTrade, hotelsand restaurantsTransportPost andcommunicationOther services Total VA FISIMMillion LekëGross Value Added atbasic prices (1)Values without seasonal adjustmentQuarter2005 Q1 34,761 15,696 17,504 30,908 6,935 6,807 37,756 150,367 4,673 145,694Q2 50,032 20,637 25,382 38,741 10,362 7,742 39,996 192,891 4,846 188,046Q3 37,486 19,610 26,687 42,682 11,005 8,146 41,336 186,952 4,989 181,963Q4 30,336 20,045 30,792 43,105 11,199 7,902 44,361 187,741 4,904 182,8372006 Q1 35,998 19,444 18,804 34,003 8,207 7,607 43,495 167,558 6,076 161,482Q2 51,751 21,817 25,420 40,289 10,225 6,598 45,505 201,605 6,555 195,050Q3 38,132 22,632 29,868 42,730 12,251 8,294 46,288 200,196 6,776 193,420Q4 30,499 23,910 38,394 45,245 11,229 9,347 51,602 210,226 7,504 202,7222007 Q1 36,287 18,365 25,249 35,715 9,808 8,178 49,468 183,071 9,430 173,641Q2 52,015 21,627 27,204 42,075 12,376 8,762 52,199 216,258 9,395 206,863Q3 38,738 20,184 30,833 47,570 12,805 9,803 54,648 214,581 9,606 204,975Q4 31,829 19,488 44,262 50,501 11,025 10,464 61,966 229,536 9,086 220,4502008 Q1 40,878 19,189 29,470 42,218 10,469 8,826 59,116 210,165 9,919 200,247Q2 58,030 22,924 34,563 47,176 11,835 9,703 58,479 242,711 9,741 232,969Q3 43,004 23,835 36,567 54,836 12,306 11,152 60,079 241,779 10,342 231,437Q4 35,554 22,829 43,075 54,393 11,919 13,441 62,280 243,492 10,505 232,9872009 Q1 42,463 22,946 29,500 45,316 11,222 11,505 65,259 228,210 10,936 217,274Q2 61,370 26,875 40,872 51,940 14,118 10,686 65,439 271,300 11,013 260,287Q3 44,608 27,428 37,537 56,936 15,035 12,323 65,832 259,699 11,045 248,654Q4 37,163 28,081 38,127 54,979 13,074 11,471 67,371 250,266 11,316 238,9502010* Q1 47,887 28,070 23,377 45,474 13,369 8,533 70,289 236,998 10,484 226,514Q2 69,861 31,688 30,373 54,929 17,180 8,583 71,127 283,740 10,786 272,955Q3 50,084 30,235 31,198 61,273 19,527 9,424 72,932 274,674 11,105 263,568Q4 39,561 33,301 35,024 60,988 17,485 9,732 73,645 269,737 11,463 258,2742011** Q1 50,384 32,607 25,905 50,495 15,807 8,035 73,234 256,467 12,372 244,095Q2 73,391 31,476 29,321 57,042 20,035 8,447 75,805 295,517 12,628 282,889Q3 52,328 33,672 31,070 67,317 23,680 9,257 73,940 291,264 12,944 278,319Q4 40,932 31,303 35,509 68,738 20,631 10,104 80,806 288,022 13,316 274,7062012*** Q1 52,100 26,851 21,580 55,606 16,336 7,667 81,515 261,655 12,940 248,715Q2 76,642 34,046 24,029 62,642 19,591 9,316 80,390 306,655 13,190 293,4652010* Semi final2011** Preliminary2012*** Flash (1) Non Includes taxes and subsidy on production236/236