BALANCE OF PAYMENTS WORKING GROUP

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1 EUROPEAN COMMISSION EUROSTAT Directorate C: National accounts, prices and key indicators Unit C5: Integrated Global Accounts and Balance of Payments 31 March 2016 BP/16/10 BALANCE OF PAYMENTS WORKING GROUP APRIL 2016 Deutsche Bundesbank Regional Office in Bavaria Munich Branch Leopoldstrasse München Starting: Wednesday, 20 April 2016 at Ending: Thursday, 21 April 2016 at Agenda item 10 CMFB Task Force on harmonised European Revision Policy Documents are available on CIRCABC at the following address: CIRCABC - Working Group 2016, April 20-21

2 51 ST MEETING OF THE COMMITTEE ON MONETARY, FINANCIAL AND BALANCE OF PAYMENTS STATISTICS January 2016 Frankfurt PART A ITEMS FOR DISCUSSION Item A.4.1 Progress report by the Task Force on Harmonised European Revision Policy. (Sponsored by Gerard Eding and Luigi Cannari) (CMFB Sponsors)

3 CMFB Task Force on the Harmonised European Revision Policy. Preliminary report January 2016 The CMFB is asked to take note of the progress report of the TF-EHRP and the fact that due to the identified interlinkages with the taskforce on benchmark revision the taskforce will not be able to deliver a final report in line with the timetable of its mandate. The CMFB is asked to take note and comment if needed of the taskforce consultation on amendments to the Harmonised European Revision Policy The CMFB is asked to agree with the extension of the mandate of the TF-EHRP by end of 2016, to allow the TF to take into account the findings of the ESS/DMES TF on Benchmark Revisions as well as the outcomes of other (possible and planned) discussions relevant to the Harmonised European Revision Policy. EECUTIVE SUMMARY At its July 2015 meeting, the CMFB mandated the Task Force on the Harmonised European Revision Policy (TF - EHRP), with focus on a joint policy for routine revisions. A second Task Force reporting to Eurostat s Directors of Macro-Economic Statistics (DMES) was set up at the same time to review a harmonised policy for benchmark revisions. Finally, other discussions on the Harmonised European Revision Policy have been scheduled in For instance, the Excessive Deficit Procedure Statistics Working Group (EDPS-WG) announced to hold a workshop devoted to data revisions, to feed the discussion of the DMES taskforce on benchmark revisions.. These groups will base their discussions on the recommendations of the CMFB in 2009 and the stocktaking carried out since then. The TF EHRP mandate agreed in the July 2015 CMFB plenary meeting encompasses the following: 2

4 (1) Review the main difficulties faced by the MS in their implementation of the EHRP for routine revisions, based on the results of the 2015 and 2012 questionnaire and the available CMFB questionnaires and documents. (2) On this basis, answer the question whether or not there is a clear need for an update of the harmonized European revision policy for routine revisions, (3) If appropriate, write an updated policy for routine revisions The mandate specified the aim of presenting a final report to the CMFB plenary in January The TF EHRP has met twice, on 8/10/2015 and 3/12/2015, and has conducted a written consultation amongst its member on the desired changes to the Harmonized European Revision Policy regarding routine revisions(annex 2). As regards the main difficulties experienced by MS, the TF has documented that (1) several countries are not able to adjust their national policies to the European policy as regards routine revisions, national considerations preventing them adopting fully or partially the European policy. (2) in several countries it does not prove possible to obtain an alignment in the revision practices between the domains, thus preventing the convergence between BOP/IIP and national accounts statistics, or between the financial accounts and the non-financial accounts. These countries request an ever greater flexibility in the implementation of the practice. The TF-EHRP established also that due to the different practices as regards benchmark revisions; which are outside the mandate of the TF to discuss, it would need to consult the ESS/DMES TF on Benchmark Revisions on borderline issues. With this input and discussion it would then be able to conclude on the specific needs for flexibility. One conclusion can however already be drawn. Given the deeply heterogeneous needs of the individual countries the TF-EHRP has not yet identified any single set of adjustment of the EHRP for routine revisions that would allow all countries needs to be accommodated and could be described as European and Harmonised. The TF-EHRP therefore has not yet come to a conclusion on item 3 in its mandate, as it would need to await the outcome of the discussions on benchmark revisions to formulate a concrete proposal to the CMFB on routine revisions. The ESS TF-BMR is expected to have its final report to the DMES by 16/12/2016. It is proposed that the TF would target its final report to the CMFB plenary in January The rest of this document summarises the discussions held so far and proposes a way forward. OVERVIEW OF MAIN DISCUSSION POINTS The EHRP agreed at the CMFB in 2009 encompasses two main elements, namely (1) The alignment of revision practices nationally, so as to eliminate different revisions policies as a factor in statistical differences between domains; 3

5 (2) The alignment as regards routine revisions and benchmark revisions at the European level. Moreover, the current European harmonised revision policy limits the depth of backward routine revisions to a maximum of 15 quarters in the first quarter, 4 quarters in the second quarter, 17 quarters in the third quarter and 6 quarters in the fourth quarter. This essentially allows for annual revisions 4 years deep in the 1 st and 3 rd quarter This calendar was agreed by the CMFB plenary and recognises the needs of the majority of the CMFB membership. It is designed around the ESA transmission programme and BOP/IIP transmission schedules as well as needs the timing of the 1 st and 2 nd EDP notification. The TF-EHRP examined five countries which are not able to comply with the CMFB revision policy and three countries which are partly able to comply, the taskforce used country presentations and a stocktaking to identify the issues and bottleneck. The TF also noticed that with the efforts to implement the agreed EHRP countries sometime face issues which haven t been taken into account in the initial CMFB discussion and decision, hence countries seem to be moving away from their positions taken during earlier consultations on the EHRP in the CMFB. Additionally, some countries even indicated not being able or seeking to achieve an alignment nationally between the BOP and NA domains, or even within NA domains. As a solution, several members proposed an annual revision point in the 2nd quarter, equal in depth to the revision window foreseen in the 3rd quarter in the EHRP, in order to meet the national economic policymaking cycle. These countries do not question the foreseen benchmark cycle. Opening up the 2nd quarter would address the needs of some but not all of the countries represented in the TF. Some countries also require the 4 th quarter to be open, either as part of their general approach of having all four quarters open for backward revisions, or due to a specific circumstance of delivering 3 rd quarter data consistent with the revised annual data after 90 days. Some countries, in the context of the benchmark revisions, mentioned the need to implement annually a benchmark revision, e.g. to open the full series for backward revisions once yearly, for all or part of the accounts. This would impact on the EHRP for routine revisions, as it would reduce the need for deep (e.g. 4 years) of backwards revisions. The TF also noted the impact of the EDP and GNI processes, which may exceed the maximum depth of the CMFB approved routine revision cycle. Such cases may occur when for instance statistical units are reclassified between the corporate sectors and the government sector. The TF-EHRP has therefore proposed to first consult the DMES TF on Benchmark revisions that has been launched by the ESS/DMES, as regards their views on an annual benchmarking cycle, or more generally the length of the benchmark cycle, and subsequent to this, has requested the TF on Benchmark revisions their views as to whether GNI and EDP reservations that require backward revisions beyond the routine cycle may be characterised as ad-hoc benchmark revisions. The DMES Task Force on Benchmark revisions, following an initial discussing at the DMES workshop in December 2015, will,, hold its first meeting only on 28 January. Discussions in the 4

6 TF HRP have shown that it will very difficult to define a revision policy for routine revisions independent from the discussions on benchmark revisions, since the borderline between the two needs to be clarified, and there is a tendency for more frequent routine benchmark revisions in some countries. It has also come to the attention of the TF-EHRP that the ESS WG-EDPS will devote one dedicated workshop to revision practices in the course of (DMES December 8, 2015). These initiatives need to be aligned with the 2 taskforces. SUMMARY OF TWO MEETINGS The TF-EHRP had two meetings: the first one took place on 8 October 2015 in Luxembourg and the second one on 3 December 2015 in Frankfurt am Main. The TF is chaired jointly by Eurostat and the ECB. Members are from Belgium, Bulgaria, Czech republic, Denmark, Germany, Ireland, France, Italy Netherlands, Portugal and the U.K. The following issues were discussed in the first meeting: (1.) the common revision policy and its implementation, (2.) the mandate of the task force, (3.) Member states experience in the implementation of the harmonised European revision policy, (4.) Assessing the needs for the update of the harmonised European revision policy for routine revisions and (5.) the way forward. In the second meeting the Member States experience in the implementation of the CMFB harmonised European revision policy was further discussed. On this basis the proposals for an updated harmonised revision policy for routine revision were collected. The TF members were invited to formulate a single suggestion for an alternative European routine revision policy for discussion at the CMFB, based on the results from the fact finding. Member States were invited to state advantages and disadvantages of the most far reaching national model, requiring annual benchmark cycle and backward revisions in all quarters, and does not pre-commit to the quarter in which that annual revision occurs. The TF members had split views on this. It was concluded that the DMES TF would need to be consulted on the aspect of allowing annual benchmark revisions, which are an essential feature of the UK practice, as part of the EHRP. Additionally, it was concluded that as the borderline between benchmark and routine revisions is unclear, the TF will need to align the DMES TF on Benchmark revisions, as a key consideration for the EHRP on routine revisions is not only whether routine revision points are foreseen in specific quarters, but also the depth of the backward revisions that are required, which needs to be consistent with the frequency of regular European harmonised benchmark revision cycle. The TF-EHRP will also need to align on the subject of GNI and EDP processes that may force backward revisions beyond the foreseen routine revision window. Concretely, it will need to be examined whether the DMES group would characterise any such revisions as ad-hoc benchmark revisions deviating from the currently foreseen five year regular benchmark revisions cycle in the EHRP. 2. THE OUTCOME OF THE CONSULTATION The TF-EHRP consulted its membership on proposals for a European Harmonised Revision Practice. This deviates from the earlier stocktaking, in that the members of the EHRP were 5

7 asked to suggest a practice that could be proposed to the DMFB as an amendment or an alternative to the current agreed EHRP. The current European harmonised revision policy limits the depth of backward revisions to a maximum of 15 quarters in the first quarter, 4 quarters in the second quarter, 17 quarters in the third quarter and 6 quarters in the fourth quarter. The summary of the consultation is the following: all eleven Task Force members replied to the questionnaire. Concerning the question whether the involved institutions intend to implement the current EHRP with regards to aligning practices between national accounts and balance of payment statistics, six Member States replied that they are going to implement this and five Member States that they are not going to do so. Concerning the question whether the Member States have intention of alignment to the European schedule of routine revisions, six Member States replied yes and five no. Concerning the question whether there should be an European Revision Practice which will ensure better coordination, four Member States replied that they do not see need to change the current policy and seven indicated more flexibility would be needed to the current revision policy. CONCLUSION AND PROPOSED FOLLOW-UP The preliminary finding of the TF-EHRP is of a deep heterogeneity in the needs of the individual countries in the TF as regards their ability to adhere to the EHRP, reflecting their national circumstances. Whereas this reflects on the need to adjust the EHRP to accommodate these national circumstances, the TF has not yet been able to identify any single set of adjustment that would allow all countries needs to be accommodated and could be described as European and Harmonised. The TF EHRP suggests to continue its work and to seek closer cooperation between the two Task Forces. Given that the DMES TF-BMR is expected to provide its final report to DMES in December 2016, it is proposed to extend the mandate of the TF EHRP by the end of 2016, such that it proposals may take into account the findings of the TF BMR. The CMFB is requested to approve the amended mandate, presented in Annex 3.. 6

8 Annex 1 Mandate of the CMFB Task Force on the harmonised European revision policy (final, 10 July 2015) Background In July 2012, the Committee on Monetary, Financial and Balance of Payments statistics (CMFB) recommended that a harmonized European revision policy is implemented for balance of payments/international investment position and national accounts statistics by September This policy is outlined in the ESS Guidelines on Revision Policy for Principal European Economic Indicators (see In February 2015, the CMFB launched a questionnaire to take stock of progress by Member States (MS) in the implementation of the agreed harmonised European revision policy as regards both the quarterly and annual routine revisions. The questionnaire also addressed the major statistical (benchmark) revisions. On the basis of the survey results, the 26 EU responding countries can be broadly grouped as follows: Seven countries (AT, CZ, ES, HU, LV, PT, SK) which have fully implemented the revision policy for routine revisions; Twelve countries (BG, CY, DE, EE, GB, IT, LT, LU, PL, RO, SE, SI) which have partially implemented this revision policy; Seven countries (BE, DK, FI, FR, HR, IE, NL) which have not yet implemented this revision policy. Compared to the results of the questionnaire of 2012, it shows that less MSs implemented the policy than had been foreseen in From these mixed results and a detailed analysis of the results of the 2015 questionnaire it follows that there are several issues which need to be further investigated. To this end, the CMFB EB proposes to establish a new Task Force on the harmonised European revision policy (TF-EHRP) dealing with routine revisions. Benchmark revisions would be tackled by another Task Force established by the DMES. In the period October 2015-January 2016, the TF-EHRP conducted a stock-taking exercise and collected national proposals for changing the rules for routine revisions in the current revision policy. These proposals should be further discussed to conclude on the need of an updated revision policy. Furthermore, it turned up difficult to address the additional flexibility requested for routine revisions as long as the borderline issues between benchmark and routine revisions have not been addressed in the context of the DMES TF on Benchmark Revisions. Since the DMES TF will conclude its work at the end of 2016, it would be necessary that the TF-EHRP and the DMES TF cooperate within this time period. Finally, other discussions on the revision policy had been scheduled in 2016, e.g. the ESS government finance statistics workshop. TF-EHRP would need to be in a position to take into account the views expressed at such events and take into account their outcomes. It is therefore suggested that the mandate of the TF-EHRP would be extended. Mandate The TF-EHRP is mandated to Review the main difficulties faced by the MS in their implementation, based on the results of the 2015 and 2012 questionnaire and the available CMFB questionnaires and documents. 7

9 On this basis, answer the question whether or not there is a clear need for an update of the harmonized European revision policy for routine revisions, e.g. in order to introduce appropriate elements of flexibility to facilitate the convergence of approaches. It is necessary to weigh up carefully the way forward, specifying the pros and cons of any change in the policy. In case of borderline issues between benchmark and routine revisions, address them in cooperation with the DMES TF dealing with benchmark revisions. If appropriate, write an updated policy for routine revisions, to be presented to the CMFB EB for discussion and eventually to be discussed in the CMFB plenary. The TF will be co-chaired by Eurostat and ECB DG-S and it will be composed of 6-8 MSs, a combination of balance of payments and national accounts experts, from NCBs and NSIs. Eurostat and ECB DG-S will provide the secretariat of the group. The group will provide regular progress reports to the CMFB EB and conclude its work until the end of 2016, with the aim to present its final report to the CMFB plenary in January

10 Annex 2. Consultation on the desired changes to the harmonized European routine revisions policy EUROPEAN COMMISSION EUROSTAT CMFB Task Force on European Harmonised Routine Revision Policy Written consultation on desired changes to the harmonised European routine revisions policy 1. Background The current European harmonised revision policy recommended by the CMFB in 2012 is aiming at ensuring a good coordination between revision practices applied nationally in the area of national accounts and balance of payments and at the same time, at setting up a common practice to be followed at the European level by the member states, thus making available for international data users consistent data sets in both statistical domains. It was supposed to be implemented by September A country consultation which took place during 2015 revealed that not all the member states were able to implement it due to various constraints. The CMFB mandated the Task Force on European harmonised routine revisions (TF EHRP) to review difficulties faced by the member states in the implementation, to assess whether there is a clear need for an update of the harmonized revision policy and if so to present the CMFB with a new proposal for discussion and consideration. 2. Purpose of the consultation: The current European harmonised revision policy limits the depth of backward revisions to a maximum of 15 quarters in the first quarter, 4 quarters in the second quarter, 17 quarters in the third quarter and 6 quarters in the fourth quarter. Several countries expressed the need for more flexibility. During the first meeting of the TF EHRP, several countries expressed the need for more flexibility. Some countries also expressed difficulties in implementing the revision policy even 9

11 partially (e.g. either aligning between the domains nationally, or for single national domains to align to the EHRP revision cycle) and pointed out the need to keep revisions in line with the needs of institutional internal users. The purpose of this consultation was to assess the countries propensity to implement the EHRP as it is currently described and if found difficult to be introduced, and to collect their proposals for a modified EHRP, such that it can be applied by all EU member states, in a harmonised way. 3. Summary: All 11 countries represented in the TF replied to the consultation; Question 1: In 7 cases, the involved institution intends to implement the current EHRP with regards to aligning practices between national accounts and balance of payments statistics; o Yes: BG, DK, IE, IT, NL, PT, UK 1 ; o No: BE, CZ, DE, FR. Question 2: As regards intention of alignment to the European schedule of routine revisions aligning : 6 yes/ 5 no; o Yes: BG, CZ, DE, DK, IT, PT, o No: BE, FR, IE, NL, UK. Question 3: Proposals: alternative European revision practice which will ensure better coordination: o BE (although there is no intention to implement EHRP), DK, IT, support the current EHRP; there is no need to change it; o CZ: annual revisions could take place up to 3 months (advance annual estimate) up to 9 months (preliminary estimate) and up to 12 (revised preliminary estimate) after the reference year. Revision of the advance annual estimate for the year t-1 previously foreseen to take place up to 6 month after the reference year should be excluded from the practice, thus allowing coordination between the two revision schemes, quarterly and annual revisions, respectively. Depth of the data series to be revised (see question 4); o DE: although understanding the idea of an extended revision windows in the second and the fourth quarter, there are doubts whether the implementation of an "EHRP" could be achieved under these circumstances; o IE: Revisions sent in Q2 due to the European Semester and larger depth of revisions, depending on whether benchmark revisions are annual or every 5 years; 1 Position adopted during the meeting (in written, the original reply was "no") 10

12 o NL: allowing Member States to revise a longer period in the 2 nd quarter (e.g. a period of 8 quarters); o PT (already introduced the EHRP): allowing maximum of quarters when needed; o UK: considering new depth of the data series to be revised (see question 4). Question 4: Country Proposals for the depth of backward revisions: CMFB EHRP July 2012 CZ IE NL UK 1 st quarter Max 15 quarters 15 quarters quarters 2 nd quarter Max 4 quarters 16 quarters 20 quarters if benchmark revisions every 5 years 8 quarters 13 quarters 3 rd quarter Max 17 quarters 17 quarters quarters 4 th quarter Max 6 quarters 11 quarters quarters 11

13 Annex I. Countries replies: Q1. Is your institution or does your institution intend to implement the European Harmonised Revision Practice, with regards to aligning revision practices between the two domains nationally: Country Yes No Comments Belgium 2 Our first priority is to progress on the consistency of NA and BoP statistics regarding their respective content, at least for major components. The question of the revision policy is of course an important point. It will help to solve vintage differences once the content of the statistics will be even more convergent. With many respects, we nevertheless already implement the European guidelines for routine revisions for NA and BoP (see below). The most critical point regarding the implementation of a common revision policy will be the alignment of major revisions hence the depth of revisions in BoP is generally shorter than in NA. Major revisions may also occur more frequently in NA than in BoP. As already mentioned in our reply to question 4 of the CMFB questionnaire launched in February 2015, the strict implementation of the proposed European policy could only be a long term issue for BoP statistics. For national accounts, the assessment of the implementation of the European revision policy is complex as quarterly national accounts in Belgium are revised at t+120 days (we do not revised previous quarters at t+60 and we do not published at t+90). If we consider that the publication of figures at t+120 days can be analysed in the light of the recommendations formulated in case of Final estimate (up to 3 months after reference period), the Belgian revision policy is in line with the European recommendations (also see question 2). Bulgaria Czech Republic 2 Belgium provided additional details in a separated, dedicated annex added at the end of the document 12

14 Denmark Germany France Ireland Italy Netherlands Portugal It's already implemented UK Reply changed during the meeting to "Yes"; original UK comment: "No see comments below" Q2: Is your institution or does your institution intend to implement the European Harmonised Revision Practice as regards aligning to the European schedule of routine revisions? Country Yes No Comments Belgium 1/ Regarding (non-financial) national accounts, we try to implement major revision every five years. Nevertheless, due to specific circumstances, major revisions can happen at a more frequent pace. For instance, the implementation of ESA2010 which occur in September 2014 was followed by a new occasional revision in September 2015 : some changes required by the transition to ESA 2010, even though they had been implemented quite satisfactorily in 2014, could still undergo some qualitative improvements; other minor changes were postponed due to the work overload. Another challenge is the requirements imposed by the EDP. The close control of Eurostat imposes that some changes have to been implemented as soon as possible (disregarding the timing of occasional revisions). As a consequence, changes regarding general government may be implemented on long time series at a more frequent pace, with impact on the whole set of national accounts (for instance concerning counterpart sectors). Annual routine revisions are implemented with due respect to the European guidelines regarding the maximum depth of the revised period (up to maximum 3 years + reference year to be reported for the first time), as well as the points in time (twice a year in March and September). We notice however one specific exception that has occurred in the past : government accounts have been revised for longer time series in March and September (EDP procedures); these changes were generally required by Eurostat, sometimes disregarding the supposed time span of routine revisions. It s much more difficult to assess whether quarterly routine revisions follow the European recommendation as we produced QNA at t+30 days (flash estimate only relating to the growth rate of GDP), at t+60 days (partial set of accounts with due respect to the transmission program, with no revision of previously released quarters) and at t+120 days (more complete set of QNA 13

15 with revisions of previously released quarters). The Belgian current practice is the following: at the end of October Y, we publish the 120 days estimate for Q2 Y (reference period) and the QNA are benchmarked with the annual accounts published in September. In theory, the quarterly revisions should cover a maximum of 17 quarters for routine revisions (longer in case of major revisions) as stated in the CMFB recommendation. The practice is more complex: QNA are built in Belgium by disaggregating annual series with the help of econometric models that are based on the processing of relevant quarterly indicators. When new annual data are available (or revised), the parameters of the econometric models have to be reassessed. This reassessment leads to revise the quarterly series not only for the years that are reviewed but also for previous years (the whole time span is revised following the reassessment of models); at the end of January Y, we publish the 120 days estimate for Q3 Y-1 (reference period), and we may revise the first 2 quarters of Y-1; Y-2 is not revised; at the end of April, we publish the 120 days estimate for Q4 Y (reference period), and we may revise the quarters of previous years depending on the revised series of general government (EDP). One can expect a revision of maximum 15 quarters; at the end of July, we publish the 120 days estimate for Q1 Y (reference period), and we generally do not revise the previous year (thus no revision). If we consider that the Belgian t+120 days estimates fall in the same category than the final estimate (up to 3 months after the reference period) considered in the European recommendations, we can conclude that the European revision policy is broadly followed by Belgium but encounter two major difficulties: a revision of QNA for the whole time span when benchmarking on new yearly figures (even limited in time); this is due to the reassessment of models once a year when new annual data are available (see above). This specific point also concerns quarterly series that are generated by an econometric process in the framework of QSA; the benchmarking of QSA on new ASA figures (in September) with due respect to QNA (only available in October) poses a specific problem: for the transmission in September (at t+85 days), QSA have to be benchmarked with the forthcoming ASA released a few days later at the end of September, with revisions for maximum the 3 years (excluding the reference year reported for the first time). At that point of time, the new benchmarked QNA, which have to be transmitted later (at the end of October, see above), are not yet available. This means that QSA can only be definitively benchmarked on both ASA and QNA when the third quarter is transmitted (in December, at t+85 days). 2/ Regarding balance of payments/iip, the data transmission calendar requested in the BoP vade-mecum of Eurostat and in the ECB's Booklet on the exchange of BoP/IIP and International reserve template within the ESCB is followed. The guidelines for routine revisions are thus already implemented (3 years of backward revisions in September which is not so far from the practice in NA). For the international trade in goods, we also revise 3 years to 14

16 be in line with the practices in BoP. Concerning major revisions, due to the consistency requirements between annual/quarterly/monthly figures, combined with a high degree of details (counterpart by country etc.), the depth of the revised period, even in case of major revisions, is more limited than in national accounts: for instance, the implementation of ESA2010 led to revised NA since 1995, the implementation of BPM6 led to revised BoP/IIP series since However, some major BoP aggregates have been revised from 2003 onwards as well as some major IIP aggregates from Revisions every 5 years may only concern a limited time span in BoP. A revision for the whole time serie (since 1995 as in NA) for instance in case of major ad-hoc revisions can only be envisaged every 10 years, so far as it is planned in due time by the European instances. 3/ Regarding financial accounts, no specific revision policy is followed: financial accounts are revised at any time according to the revisions encountered in the primary sources; methodological changes may also occur at any time. Bulgaria Czech Republic Denmark Germany In former meetings between the NSI (Destatis) and the NCB (Deutsche Bundesbank) not only the terms and conditions of the Harmonised CMFB Revision Policy but also the conformity of the (coordinated, well established) German revision procedures have been discussed with the conclusion that all domains are broadly in line with the approved revision policy. A special topic in the discussions was the necessity of full consistency of data sets at any point in time in a year. In Germany, there is a consensus that minor deviations, i. e. temporary differences for some months (mainly between April and August of each year), are unpreventable, due to diverging user needs and the differing availability of necessary data for the compilations. Or more general, accuracy and timeliness -for the short term- are more crucial than consistency. Inevitable revisions in one area should not be stored only for the purpose of congruence in a given revision scheme. When the participants therefore agree on the assumption that coherence of the data sets is only necessary for final data and that temporary inconsistencies of preliminary data are permitted within the alignment of revision policies on national and international level, this should be stated explicitly in the proposal of the TF. It should make clear that it is sufficient when each national statistical domain follows the ERP revision cycle by itself even if they are not fully aligned nationally. France Ireland In its current form Italy Netherlands 15

17 Portugal It's already implemented UK No see comments below Q3: Based on the current CMFB proposal on revision policy, please describe an alternative European revision practice (e.g. applicable to all Member States) supported by your institution, which will achieve a better coordination of data revision between the two statistical domains balance of payments/international investment position and national accounts and between Member States: Country Belgium Bulgaria Czech Republic Alternative described: We broadly support the actual revision policy. All in all, it appears to be well balanced and feasible provided that the timing for final estimate is considered on a flexible way (120 days instead of 90 days in the case of the Belgian national accounts). The current practice is: QNAs data are revised for two years in September when the annual final data (T-1) are elaborated. In case of new statistical information, QNAs could be revised for longer period. Balance of payments/international investment position could be revised in March and September for 4 years. Annual routine revisions- preliminary data could be sent earlier (up to 9 months), which reflect practices of many countries. Table C: Framework for annual routine revisions Description Depth Scope Advance annual estimate (up to 3 months after reference year) First estimate for the reference year, mostly corresponding to the release of quarterly figures, i.e. with the publication of the 4 th quarter results for year t-1 Revisions limited to a maximum of 3 years (excluding t-1, being reported for the first time) At least GDP and main aggregates, employment, financial and non-financial accounts by institutional sectors, balance of payments and international investment position, first EDP notification Annual data Preliminary estimate (up to 9 months after the reference year) First official transmission of annual data for t-1, which corresponds to the second revision of t-1 for some variables Revisions limited to a maximum of 3 years (excluding t-1, being reported for the first time for annual accounts) Entire set of accounts, including the 2 nd EDP notification. Excluding input/output tables, regional accounts and non-financial balance sheets - Revised preliminary estimate (up to 12 months after the reference year) Third revision of year t-1, from the aggregation of quarterly data Revisions limited to year t-1 Entire set of accounts. Excluding input/output tables, regional accounts and non-financial balance sheets 16

18 Denmark - Germany In order to satisfy the different national policies of all countries, it seems to require a certain flexibility, particularly in the depth of the revisions in the second and the fourth quarter. On the one hand, an adequate expansion especially in these quarters improves and rectifies the unity of all national practices. But on the other hand, a concession of main revision windows in the second rather than the third quarter at national level dilutes and weakens the aim of an EHRP, perhaps even makes it impossible to reach this goal at the European level. France - Ireland Italy Netherlands Portugal UK Revisions sent in Q2 due to the European Semester_and larger depth of revisions, depending on whether benchmark revisions are annual or every 5 years; Italy, on the basis of the currently adopted revision practices, does not envisage the need for updating the current European revision policy. Inter alia, some remaining bottlenecks for the application of a common revision policy for BOP and NA were solved during 2015; Allowing Member States to revise a longer period in the 2 nd quarter (e.g. a period of 8 quarters) would enable us to follow the European framework for routine revisions and harmonise national practices at the same time; Need of more flexibility within the limits of the depth of backward revisions in the four quarters of the year, enlarging the maximum of quarters when needed; The UK welcomes, and supports, the development and introduction of the EHRP. The EHRP is one of various factors that would enable the production of consistent and coherent accounts. It should be noted that the UK ONS compile the National Accounts, Balance of Payments (and IIP), Regional Accounts as well as the Public Sector Finances, non-financial and financial accounts by institutional sectors. All of which are compiled in an integrated manner with inter-related systems and use a single revision policy approach applied to all parts. Albeit a different policy may apply to the quarterly accounts exercise or annual accounts exercise, the policy applies to all parts, thus National Accounts and Balance of Payments would always be aligned. However, the present EHRP proposals generate various problems for the UK and very restrictive, and in turn, lowers the quality of the UK outputs. Q4. Framework for quarterly routine revisions: Please indicate depth of revision required for a European revision practice supported by your institution that could be presented as an alternative to the CMFB Plenary, i.e: EHRP recommended by the CMFB in 2012: Depth of the series 1 st quarter Max. 15 quarters 2 nd quarter Max. 4 quarters 3 rd quarter Max. 17 quarters 4 th quarter Max. 6 quarters 17

19 Belgium Country Depth to be changed As mentioned above, the current European policy is not strictly applied by the NBB for quarterly figures mainly because figures are revised at t+120 (corresponding to the final estimate instead of 90 days. However, the philosophy that is followed in Belgium is closely in line with the European recommendations. The benchmarking of QNA on new annual figures as well as the benchmarking of QSA on annual ASA with consistency with QNA is however problematic. Our view is that those two points require a dedicated exception. 1st quarter: 2nd quarter : 3rd quarter : specific problem linked to reassessment of econometric models that leads to a revision of the whole time span 4th quarter : necessity to foreseen the specific case of QSA that should allow current revisions for a longer time span, leaving a room to incorporate the most recent QNA which have been benchmarked in October on the annual release of 30 September. For balance of payment, the transmission calendars proposed by Eurostat/ECB are applied. Bulgaria - Czech Republic 1 st quarter: 15 quarters 2 nd quarter 16 quarters 3 rd quarter 17 quarters 4 th quarter 11 quarters For the many countries for the different reasons is June main publication date for annual accounts. CMFB proposal accept that annual data can be send earlier than in September, that s a reason of need to have opportunity to revise 16 quarters in June. Denmark - Germany - France - Ireland Italy 20 quarters if benchmark revisions every 5 years Italy does not need a change in the depth of revision required by the current European revision policy. Netherlands 1 st quarter: 3 quarters (so max 15 quarters is fine) 2 nd quarter: 8 quarters (so 4 quarters is not sufficient. In addition, we plan to have an annual benchmark revision of the financial accounts in the 2 nd quarter) 3 rd quarter: 1 quarter (so max 17 quarters is fine) 4 th quarter: 1 quarter (so max 6 quarters is fine) Portugal In the case of Portugal there is no need to extend the limits of the depth of backward revisions. 18

20 UK 1 st quarter: 12 quarters 2 nd quarter: 13 quarters 3 rd quarter: 14 quarters 4 th quarter: 11 quarters Please note, the above relate to quarterly routine revisions. It should be noted, when the annual accounts process including benchmarking take place, and released in either 2 nd Quarter or 3 rd Quarter, then many years are open to revisions to ensure long run consistent time series without discontinuity. 19

21 II. BELGIUM Annex to the written consultation of CMFB Task Force on Harmonised European Revision Policy : clarification To summarize and clarify the points that are mentioned in the written consultation: We actually support the actual European revision policy (EHRP) regarding routine revisions which seems to us to be well balanced and responding to the main practices that we follow in Belgium (except for financial accounts). More flexibility should however be foreseen for QSA data (see below). 1/ The EHRP is at the moment strictly applied in BoP. 2/ The philosophy behind the EHRP is also followed in non-financial NA with the specificity that the revision of QNA is made in Belgium at t+120 days (and not at+90 days as stated in the EHRP). The production of revised quarterly figures at t+120 days is a national constraint that cannot be removed at the moment since it allows being concomitant with our flash estimate at t+30days and it also allows having final primary data. o Disregarding this divergence, we will try to follow the EHRP even more strictly in the near future within the QNA, notably by limiting the depth of revisions in October to 17 quarters as recommended in the EHRP (with due concern for the evolution in the first quarter under revision); o More flexibility is in our view required for the production of QSA as QSA are a statistical product that aims at integrating many short term statistics. For instance, QNA revised at t+120days can only be integrated in the QSA produced at t+85days in the sub-sequent quarter. It should be allowed to revise QSA for 15 quarters in Q1, 16 quarters in Q2, 17 quarters in Q3 and 18 quarters in Q4. 3/ The implementation of the EHRP is a more complex subject for financial accounts as no revision policy has never been followed yet. Nevertheless, we think that the current EHRP could be a reasonable solution and there is no need in our view for a revision. The implementation of EHRP in the Belgian financial accounts must be however considered for the medium term. We would like to clarify the EHRP on three points : a/ The constrains due to EDP should be explicitly taken into account in the EHRP; b/ Data in current prices should be distinguished from CLV data : CLV data are by definition modified for the whole time span once a year when a new reference year is used. This should be explicitly stated in the EHRP; c/ As CLV data, seasonally adjusted data are also a specific case and the use of seasonal adjustment models should allow revisions on the whole time span. In our view, this also deserves a clarification in the EHRP. 20

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23 Annex 3 Membership of the Task Force Country Delegate name Institution BELGIUM BULGARIA CZECH REPUBLIC DENMARK GERMANY IRELAND FRANCE Ms. Catherine Rigo Ms. Elka Atanasova Mr. Vladimir Kermiet Mr. Tue Mathiasen Mr. Simon Lohner Mr. Christopher Sibley Mr. Marc-Alain Bahuchet National Bank of Belgium National statistical institute Czech Statistical Office Danmarks Nationalbank Deutsche Bundesbank CSO Ireland Banque de France ITALY Mr. Luca Serrai Banca d'italia NETHERLANDS Mr. Erik Bieleveldt De Nederlandsche Bank PORTUGAL Mr. António Agostinho Banco de Portugal UK Mr. Sanjiv Mahajan Office for National Statistics ECB Mr. Tjeerd Jellema Mr. Ilja Kristian Kavonius Co-chairperson Co-secretary Ms. Ani Todorova Co-chairperson EUROSTAT Ms. Diana Cucu Mr. Henk Nijmeijer Co-secretary Secretary DMES Task Force Mr. Arto Kokkinen 22