Real Sector Division IMF Statistics Department GUIDE TO

Real Sector Division IMF Statistics Department GUIDE TO ANALYZE NATURAL RESOURCES IN THE NATIONAL ACCOUNTS 10 th Meeting of the Advisory Expert Group on National Accounts April 13 -15, 2016 Paris, France Claudia Dziobek IMF Reproductions of this material, or any parts of it, should refer to the IMF Statistics Department as the source.

Real Sector Division IMF Statistics Department Introduction § STA is developing a Guide to Analyze Natural Resources in § § § National Accounts with the generous support of the Managing Natural Resource Wealth Topical Trust Fund The Guide complements the GFS Template to Collect Data on Government Revenues from Natural Resources Six template tables to guide analysis of macroeconomic impacts of natural resources and to aid in national accounts compilation for natural resource industries Yet to be written is a chapter on problems in compilation of national accounts for natural resources • Suggestions for this section are welcome! 2

Real Sector Division IMF Statistics Department What is the Guide’s Contribution? § Other manuals on statistics for natural resources are being § developed by the Ulaanbaatar City Group, the Oslo City Group, and the OECD Task Force on SEEA Implementation Our Guide is different • • We do not cover environmental-economic accounts We focus on issues of compilation and analysis of natural resource industries in core national accounts Concepts are defined with the specificity needed by national accounts compilers The Guide is fully consistent with the 2008 SNA § And many of the analytical measures of macro impacts of natural resources aren’t covered by existing guidance 3

Real Sector Division IMF Statistics Department The Six Template Tables The Guide has six template tables: 1. Importance of the Natural Resource Industries in GDP 2. Disposition of the Income of Natural Resource Enterprises 3. Labor in the Natural Resource Industries 4. Contribution of Natural Resource Industries to GDP Growth 5. Contribution of Prices Paid and Received by Natural Resource Industries to Growth in the GDP Deflator 6. Terms of Trade Index with and without Natural Resources 4

Real Sector Division IMF Statistics Department Template Table 1: Importance of Natural Resource Industries in GDP Output* Value Taxes Subsidies VA + Added on on Taxes (VA) Products Subsidies Local Currency Percent of GDP % Coal Oil & Gas Metal Mining … Total, Natural Resource Industries Total Economy * Consolidated to exclude output used within the same industry GDP 100

Real Sector Division IMF Statistics Department Template Table 1: Importance of Natural Resource Industries in GDP Proportion of Value Added from Natural Resources 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Chile (2008) Zambia (2010) Australia (2012/13) Lesotho (2012)

Real Sector Division IMF Statistics Department Template Table 2: Disposition of the Income of Natural Resource Enterprises § Table answers the question “Where does the money go? ” § Uses of income from sales of output are: 1. Intermediate consumption 2. Compensation of employees and “other taxes less subsidies on production” 3. Payments of property income (dividends, reinvested earnings of foreign subsidiaries, interest, rent), and 4. Payments of current transfers (income taxes, transfers from and to SOEs 5. Gross capital formation, net capital transfers and net acquisitions of non-produced, non-financial assets, leaving Net Lending as a residual * Production sharing with the SOE is rerouted, meaning that it is treated as rent paid to the government that the government transfers to the SOE. 7

Real Sector Division IMF Statistics Department Template Table 2: Addendum Section on Government Revenues § “Taxes on products” in the main section of Table 2 are on § § § products purchased by natural resource enterprises This is consistent with the measurement of output at basic prices (which excludes taxes on products) Taxes on products sold by natural resource enterprises are the focus in the GFS Template and in EITI reports These taxes are shown in the addendum to Table 2 It also shows the total government revenue from the diverse types of payments received by the government Another section of the addendum shows exports of natural resource products relative to all exports and to GDP 8

Real Sector Division IMF Statistics Department Template Table 3: Labor Statistics § Employment, hours, compensation and compensation per hour in the natural resource industries are compared to the economy as a whole § An example for Australia (2012/13) Employment (‘ 000) Compensation of Employees ($AUS million) Compensation of Employees per employee ($AUS) Natural Resource Industries 342, 667 34, 955 102, 009 All other industries 8, 464, 729 698, 678 82, 540 All Industries 8, 807, 066 733, 633 83, 300 9

Real Sector Division IMF Statistics Department Tables 4 and 5: Contributions of Natural Resource Industries to GDP Growth § Template Table 4 shows how to decompose the growth rate § § of constant-price GDP into industry contributions One version of the formula multiplies the growth rate of constant-price value added by the share of GDP Role of natural resource industries in GDP growth (excluding multiplier effects) is analyzed The same sort of decomposition formula can be used to find contributions to the growth of the GDP price index This is done in Template Table 5, with accompanying warnings that only direct effects are reflected • For example, a downstream industry that doesn’t pass along an increase in an intermediate input price would record a negative contribution to GDP price change 10

Real Sector Division IMF Statistics Department Template Table 6: Terms of Trade Effects Terms of trade index = (export price index)/(import price index) § Volatile natural resource prices make exporters of natural resource products susceptible to terms of trade shocks § To gauge the role of natural resources in changes in the terms of trade, the standard terms of trade index is compared to one that omits natural resources from exports and imports § The price index for gross final domestic expenditure (GFDE) differs from the GDP price by excluding exports and imports § Real gross domestic income = GDP/(price index for GFDE) § Ratio of the GDP and GFDE price indexes = Ratio of real GDI to GDP volume indexes § Role of natural resource prices in real GDI growth is analyzed 11

Real Sector Division IMF Statistics Department Some topics for the chapter on common compilation problems § Natural resource projects have four phases: exploration, § § § development, production and environmental remediation Mineral exploration is a kind of fixed capital formation that must be estimated Investment in structures during the development phase must also be measured Imports of drilling services purchased through foreign direct investment (FDI) can be hard to measure Fixed capital assets that take a long time to construct (such as an LNG production facility), especially import assets Implications of price volatility 12

Real Sector Division IMF Statistics Department Conclusion § The Template Tables will aid policymaking by providing § § § guidelines for dissemination of key analytical information to understand the actual or potential macroeconomic impacts of changes in natural resource values, volumes and prices They will aid national accounts compilation in resourcerich economies by helping to reveal errors and omissions in measuring natural resource transactions We plan to pilot test a draft version of the template tables in several countries Work on the Guide is proceeding and comments are welcome 13

Real Sector Division IMF Statistics Department Comments! 14