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Ôòò<þ6X9`("Courier NewTT µÝ ƒ*À'ÝÓ  ÓÔUKUS.,ÔÔ€X/„XXXÔÔ€X/„XXX/„ÔÝ  ÝÔ€(X/XXX/„ÔÔ€(ô4ŠôX(X/Ô(ç2À$§§Ý ƒ0,º!ÝÑÑÑ  ÑÑTRW`Ð6Â&3Ø'Ð6Â&A4ÿ3Ø'TÑÓ  ÓÔUKUS.,ÔÔ€X/„XXXÔÔ€X/„XXX/„ÔÝ  Ý(ÿÿ$òòÚ  ÚÚ  Úóó hÝ ƒ0,º!ÝÑ@ÑÑ @ ÑÑT@RW`Ð6Â&3Ø'Ð6Â&A4ÿ3Ø'TÑÓ  ÓÔUKUS.,ÔÔ€X/„XXXÔÔ€X/„XXX/„ÔÝ  ÝÔ€ôþôXX/„ÔÔ€(ô4ŠôôôþÔ1à  àPrepared€by€Lidia€Bratanova,€ECE€Statistical€Division. #Ñ#€((ôd#ÑPage ù#|P(È,º$¡¡ÑÑÑ  ÑÑTRW`Ð6Â&3Ø'Ð6Â&A4ÿ3Ø'TÑÓ  ÓÔUKUSÔÔ€X¿âXXXÔÔ€X¿âXXX¿âÔ d¶€y"°°""Ý ƒ0,º!ÝÑÑÑ  ÑÑTRW`Ð6Â&3Ø'Ð6Â&A4ÿ3Ø'TÑÓ  ÓÔUKUS.,ÔÔ€X/„XXXÔÔ€X/„XXX/„ÔÝ  ÝÓ33ÓÔ€ôþôXX/„ÔÔ€(ô4ŠôôôþÔÑ7€(4Š(ôôdÈdÈ7ÑÑŰÑÑ¥°ÑÖ€)ÿÿÖÑ  ÑÒ‰°ÒÒŰÒò òà á àà 9 àà ‘ àà é àà A àà ™ àà ñ àà I àECE€Working€paper€no.3ÌÌÌSTATISTICAL€COMMISSION€andà A àà ™ àà ñ àà I àCOMMISSION€OF€THE€EUROPEAN€Ð "Í ÐECONOMIC€COMMISSION€FOR€EUROPEà ™ àà ñ àà I àCOMMUNITIES€(EUROSTAT)Ð ¼ ÐÌCONFERENCE€OF€EUROPEAN€STATISTICIANSó óà ñ àà I àò òORGANISATION€FOR€ECONOMICÐ ï š Ðà á àà 9 àà ‘ àà é àà A àà ™ àà ñ àà I àCO„OPERATION€AND€DEVELOPMENTÌó óÌòòJoint€UNECE/Eurostat/OECDÐ ¼ g  ÐMeeting€on€National€AccountsóóÐ « V  Ð(Paris,€3„6€June€1997)ÌÌòòItem€3€of€the€provisional€agendaÐ x#  ÐóóÌÌÌÌÌÌÌÌÌÌÌÌÌÓ  Óò òMETHODS€USED€TO€ESTIMATE€STOCKS€OF€FIXED€ASSETS€AND€CONSUMPTION€OF€FIXEDÐ Š5 ÐCAPITAL€IN€TRANSITION€COUNTRIES€„€ECEÌó óÓ  ÓÌÓ  ÓSubmitted€by€ECE€secretariat׃,×Ý ƒ+ÿÿÝòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×Ð W  ÐÓ  ÓÌÌÓ  ÓÌÐ  $¾" Ðò òI.€Introductionó óññÐ U ÐññÐ U ÐÓ  ÓÌò òA.àáOàBackgroundó óÐ 3Þ ÐÌàá‰àAt€the€last€national€accounts€meeting,€held€in€Geneva,€30€April„3€MayÏ1996,€the€ECE€secretariat€was€asked€to€carry€out€a€survey€on€the€methodsÏcurrently€used€by€transition€countries€for€estimating€the€stocks€of€fixedÏassets€and€the€consumption€of€fixed€capital€and€to€prepare€a€summary€paperÏfor€the€present€Joint€ECE/OECD/Eurostat€national€accounts€meeting.€€The€workÏon€the€survey€was€discussed€with€the€Statistical€Committee€of€CIS€and€OECD.€ÏExperts€on€capital€stock€from€the€statistical€agencies€of€Hungary,€DenmarkÏand€the€Netherlands€contributed€to€the€preparation€of€the€survey€withÏcomments€and€suggestions.Ì€€Ìàá‰àThe€idea€was€that€the€survey€would€provide€information€on€the€practicesÏand€methods€used€in€transition€countries,€as€well€as€on€the€problemsÏencountered€by€them.€€The€summary€of€the€results€should€provide€anÏopportunity€for€exchange€of€experience€between€the€countries€and€contributeÏto€discussions€in€this€important€area,€which€often€presents€difficulties€forÏnational€accounts€experts.€€The€optimistic€goal€was€that€it€might€€provide€aÏbasis€for€the€development€of€recommendations€to€the€transition€countries.€€ÌÌàá‰àIt€was€also€thought€that,€based€on€the€results€of€the€first€attempt€toÏanalyze€the€problems€of€transition€countries€in€estimating€the€stocks€ofÏfixed€assets,€the€experts€from€national€statistical€agencies€andÏinternational€organisations€might€consider,€if€appropriate,€furtherÏdevelopment€of€the€work€in€this€area.€€Therefore,€it€should€be€made€clearÏthat€the€present€paper€is€regarded€as€work„in„progress€which€will€need€to€beÏdeveloped€in€future.ÌÌò òB.àáOàValuation€of€stocks€of€fixed€assetsó óÐ W  Ѐ€Ìàá‰à€Valuation€of€stocks€of€fixed€assets€and€the€consumption€of€fixedÏcapital€represents€one€of€the€major€unresolved€problems€in€national€accountsÏof€transition€countries.€€Continued€use€of€the€methods€from€the€period€ofÏcentral€planning€would€result€in€incorrect€estimates€of€the€value€of€stocksÏof€fixed€assets.€€Without€reasonable€estimates€of€capital€stock,€noÏmeaningful€figures€for€fixed€capital€consumption€can€be€obtained.ÌÌàá‰à€Transition€countries€use€various€methods€to€cope€with€the€problem€ofÏestimating€the€value€of€stocks€of€fixed€assets€and€consumption€of€fixedÏcapital€under€conditions€of€high€inflation€and€profound€structural€changes€inÏthe€economy.€€At€the€same€time,€book„keeping€data€of€enterprises€refer€toÏdepreciation€made€on€the€basis€of€the€historic€value€(price€of€acquisition)Ïof€fixed€assets.€€Regular€annual€revaluations€of€fixed€assets€are€carried€outÏat€enterprise€level€in€many€transition€countries,€on€the€basis€of€whichÏconsumption€of€fixed€capital€is€calculated.€€However,€in€some€countries,€suchÐ G/ò*. Ðrevaluations€still€do€not€always€give€satisfactory€results.€Ìàá‰àÌàá‰àThe€1993€SNA€recommends€that€consumption€of€fixed€capital€should€beÏcalculated€taking€account€of€the€actual€service€lives€of€the€assets€concernedÏand€be€valued€at€current€replacement€cost.€€However,€very€little€informationÏon€the€service€lives€of€fixed€assets€is€available,€which€makes€theÏintroduction€of€new€methods€extremely€difficult.Ìàá‰àÌàá‰àThere€are€two€broad€approaches€to€estimation€of€capital€stock:€€directÏestimation€and€the€Perpetual€Inventory€Method€(PIM).€€PIM€is€the€methodÏlargely€recommended€and€is€used€in€most€developed€market€economies€to€deriveÏcapital€stock€estimates.€€PIM€uses€estimates€of€gross€fixed€capital€formationÏover€a€long€time€period€combined€with€assumptions€over€the€length€of€assetÏlives€and€the€pattern€of€the€retirement€of€assets€in€a€simple€model.€€DirectÏestimation,€as€its€name€implies,€involves€measuring€directly€the€stock€ofÏfixed€capital€available€to€industry.ÌÌò òC.àáOàThe€surveyó óÐ 4ß ÐÌàá‰àThe€main€purpose€of€the€survey€was€to€collect€information€on€theÏprimary€statistics€of€stocks€of€fixed€assets€available€in€the€transitionÏcountries€and€the€methods€used,€so€as€to€have€a€better€picture€of€theÏsituation€in€these€countries.ÌÌàá‰àIn€view€of€the€objectives€mentioned€above,€a€short€questionnaire,Ïcomprising€six€major€groups€of€questions€was€designed€and€sent€to€allÏtransition€countries€(27€ECE€member€countries€in€transition).€€TheÏquestionnaire€asked€for€information€on:€€coverage€of€fixed€assets;€€sourcesÏof€data€(statistical€surveys,€business€accounts,€other€sources);Ïclassifications€used;€€methods€used€to€estimate€the€value€of€capital€stock;Ïcoverage,€concepts€and€methods€used€in€calculating€consumption€of€fixedÏcapital;€€coverage,€disaggregation€and€methods€for€estimation€of€gross€fixedÏcapital€formation€(GFCF)€at€current€and€at€constant€prices.Ìàá‰àÌàá‰àCountries€were€requested€to€supply€information€on€the€availability€ofÏprimary€statistics€on€ò òproduced€fixed€assetsó ó€(as€defined€by€1993€SNA)€inÐ %­ # Ðtransition€countries.€€It€was€thought€that€information€on€the€differentÏsources€of€data€and€methods€currently€used€for€making€estimates€would€beÏessential€in€planning€further€development€of€the€existing€methods€orÏdevelopment€of€new€ones€in€the€future.€€Inventories,€work„in„progress€andÏvaluables€(the€rest€of€produced€assets)€and€non„produced€assets€(land,Ïsubsoil€assets)€were€excluded€from€the€survey.€ÌÌàá‰àThe€emphasis€was€placed€onò ò€tangible€fixed€assets,ó ó€namely:€dwellings;€Ð z,%(+ Ðother€buildings€and€structures;€€machinery€and€equipment€(of€which€transportÏequipment€as€a€separate€sub„heading);€cultivated€fixed€assets€(livestock€forÏbreeding,€dairy,€etc.,€and€vineyards,€orchards€and€other€plantations€of€treesÐ G/ò*. Ðyielding€repeat€products).€€Detailed€information€was€requested€on€all€these.€ÏThe€1993€SNA€specifies€that€the€value€of€ò òintangible€fixed€assetsó ó,€such€asÐ Dï Ðmineral€exploration,€computer€software€and€literary€and€artistic€originals,Ïshould€also€be€included€in€the€value€of€stocks.€€For€these€intangible€assetsÏonly€general€information€was€requested€because€it€was€assumed€that€countriesÏin€transition€are€unlikely€to€make€such€estimates.ÌÌàá‰àCountries'€experts€were€encouraged€to€answer€the€questionnaire€withÏwritten€descriptions.€€They€were€also€requested€to€indicate€major€weaknessesÏthey€perceived€in€their€estimates€and€to€share€any€ideas€they€might€have€onÏhow€to€resolve€a€particular€problem.€€The€experts€were€requested€to€provideÏexplanations€of€specific€problems€encountered€during€the€transition€process,Ïsuch€as€privatization,€sales€between€sectors,€high€rates€of€inflation€andÏchange€in€coverage€of€the€gross€fixed€capital€formation€(GFCF).Ìò òÌD.àáOàThe€responseó óÐ V ÐÌàá‰àThe€response€to€the€survey€was€high€„€85€percent€„€out€of€27€surveyedÏtransition€countries€only€four€did€not€provide€an€answer,€namely:€€Armenia,ÏAzerbaidjan,€Bosnia€and€Herzegovina€and€Turkmenistan.€€Countries€providedÏinformation€with€different€degrees€of€detail.€€Some€of€them€sent€quiteÏcomprehensive€descriptions€and€explanations€and€submitted€other€relevantÏmaterial€such€as€tables€with€data€and€even€articles€published€€in€theirÏcountries.€€Other€countries€answered€the€questions€briefly€with€just€a€fewÏsentences.€ÌÌ€àáìàThe€information€revealed€some€common€practices€used€by€the€countries,Ð ›F Ðand€similar€problems€encountered.€€However,€the€ECE€did€not€have€time€to€goÏback€to€countries€in€cases€where€some€further€queries€needed€to€be€answeredÏin€order€for€the€situation€to€be€cleared.€€Therefore,€some€of€the€informationÏprovided€by€them€was€not€included.€€It€was€hoped€that€this€additionalÏresearch€could€be€carried€out€at€a€future€time.€ÌÌàá‰àAll€respondants€expressed€their€strong€support€for€the€survey.€ÏPractically€all€countries€expressed€the€hope€that€the€work€on€measurement€ofÏcapital€stock€and€its€estimation€in€transition€countries€would€continue.ÌÌÌÓ  Óò òII.€Methods€of€estimating€the€value€of€fixed€assets€ó óññÐ Ï'z#& ÐññÐ Ï'z#& ÐÓ  ÓÌÌàá‰àCountries€were€asked€to€provide€brief€descriptions€of€the€methods€theyÏpresently€use€to€estimate€the€value€of€fixed€assets.€€As€was€mentionedÏearlier€the€emphasis€was€placed€on€the€four€major€types€of€tangible€fixedÏassets:€€dwellings;€€other€buildings€and€structures;€€machinery€andÏequipment,€including€transport€vehicles;€€and€cultivated€assets€as€defined€byÏthe€1993€SNA.€€Information€on€sources€of€data€was€also€requested.Ð G/ò*. Їàá‰àIn€general,€there€are€two€main€procedures€currently€followed€byÏtransition€countries€in€estimating€the€stock€of€fixed€assets€„€€annualÏsurveys€of€fixed€assets€and€direct€observations€of€the€stock€of€fixed€assetsÏin€combination€with€the€PIM€technique.€€The€majority€of€the€countries€carryÏout€annual€surveys€of€fixed€assets.€€In€addition,€because€of€the€high€ratesÏof€inflation€experienced€during€the€last€several€years€by€most€of€them,Ïregular€revaluations€of€the€fixed€assets€are€carried€out.€€As€a€result€ofÏthis€revaluation,€fixed€assets€purchased€at€different€prices€are€revalued€atÏthe€prices€of€the€current€period.€€This€is€done€by€using€the€most€appropriateÏprice€indices€(from€the€available€ones)€for€fixed€assets.€€ÌÌàá‰àHungary€is€a€special€case€as€the€estimation€of€stock€of€fixed€assetsÏand€consumption€of€fixed€capital€has€been€suspended€since€1991.€€Prior€toÏ1991,€estimation€of€assets€was€based€on€information€taken€from€annualÏfinancial€surveys€of€all€enterprises€and€government€institutions.€ÌññÌññàá‰àÌàá‰àThe€Survey€showed€that€at€present€transition€countries€can€beÏconditionally€divided€into€four€groups,€depending€on€the€methods€used,€asÏfollows:ÌÌàá‰à„€à9 §àThe€first€group€consists€of€those€transition€countries€which€haveÐ ¬ Ðstarted€using€the€PIM€method€for€estimation€the€value€of€fixed€assets€or€haveÏdone€some€experimental€work€on€its€implementation.€€Only€two€countries€areÏpresently€using€PIM€technique,€these€are€the€Czech€Republic€and€Slovenia.€ÏPoland€has€done€some€experimental€work€on€the€implementation€of€PIM€but€theÏresults€have€not€been€reflected€in€the€accounts,€and€Hungary€has€done€someÏexperimental€calculations€using€a€"vintage€"€method€to€recalculate€Ïretrospective€data;ÌÌàá‰à„à9 DàThe€second€group€consists€of€the€countries€which€estimate€theÐ h Ðvalue€of€capital€stock€on€the€basis€of€annual€statistical€surveys€withoutÏapplying,€or€only€occasionally€applying,€revaluation€procedures€forÏestimating€the€value€of€assets.€€This€group€includes€countries€such€asÏBulgaria,€Estonia,€Latvia,€Lithuania,€FYR€of€Macedonia,€Yugoslavia;ÌÌàá‰à„à9 DàThe€third€group€comprises€Russian€Federation€and€the€rest€of€CISÐ %­ # Ðcountries,€which€carry€out€annual€statistical€surveys€of€fixed€assets,Ïsupplemented€by€regular€revaluations€of€the€value€of€fixed€assets€practicallyÏevery€year€since€the€beginning€of€the€transition€period.€€Another€specificÏfeature€is€the€annual€compilation€of€balance€of€fixed€assets€(BFA)€which€isÏdiscussed€further€in€this€paper;€ÌÌàá‰à„à9 DàThe€fourth€group€consists€of€those€countries€which€presently€doÐ ‹+6'* Ðnot€carry€out€any€survey€for€estimating€stocks€of€fixed€assets.€€Albania€andÏCroatia€reported€that€they€had€not€started€any€work€on€measurement€of€capitalÏstock.€€Ì€Ð G/ò*. Ðò òA.àáOàDirect€observation€of€the€stock€of€fixed€assets€in€combination€with€PIMó óÐ U ÐÌàá‰àThe€Perpetual€Inventory€Method€is€the€method€largely€recommended;€it€isÏused€by€OECD€countries€to€derive€the€estimates€of€capital€stock.€€In€order€toÏapply€the€PIM,€four€types€of€information€are€required€:€the€value€of€theÏstock€in€an€initial€period,€capital€formation€in€each€year€after€the€startingÏpoint,€the€length€of€time€that€assets€remain€in€the€capital€stock,€i.e.€assetÏservice€lives,€before€being€withdrawn€and€changes€in€the€prices€of€capitalÏassets€(see€"Methods€used€by€OECD€countries€to€measure€stocks€of€fixedÏcapital",€Statistics€Directorate,€OECD,€Paris€1993).ÌÌàá‰àAs€mentioned€above€the€PIM€method€is€presently€applied€by€twoÏtransition€countries€„€€the€Czech€Republic€and€Slovenia.€ÌÌòòThe€experience€of€the€Czech€RepublicóóÐ g  ÐÌàá‰àIt€seems€that€Czech€Republic€has€the€most€experience€among€transitionÏcountries€in€applying€the€PIM.€€The€last€direct€observation€of€capital€stockÏ(before€the€implementation€of€new€techniques)€at€historic€cost€was€carriedÏout€in€1991€and€the€estimates€were€expressed€at€1984€prices.€€The€results€ofÏthat€survey€were€taken€as€a€starting€point€for€further€development€of€theÏestimates€by€type€of€assets.ÌÌàá‰àAt€present€the€valuation€of€stock€of€dwellings€is€somewhat€problematicÏbecause€of€the€€lack€of€appropriate€statistics.€€Reliable€information€on€theÏloss€of€dwellings€is€not€available€and€this€is€seen€as€a€major€problem.€ÏTherefore,€only€a€rough€estimate€of€the€value€of€stock€of€dwellings€can€beÏmade€at€present.€€The€additions€and€deductions€from€the€value€of€the€stock€ofÏdwellings,€last€surveyed€on€31€December€1991,€is€done€on€the€basis€ofÏinformation€from€various€sources,€such€as:€€number€of€issued€building€permitsÏand€number€of€houses€constructed€(quarterly€data);€€number€and€value€ofÏcompleted€dwellings€(continuously);€€and€data€about€the€value€of€investmentsÏmade€by€enterprises€to€acquire€new€and€existing€dwellings€(annual€data€fromÏ1995).€€Since€the€beginning€of€1997€a€new€quarterly€survey€collects€dataÏabout€number€of€demolished€(lost)€dwellings.€€In€addition€a€separate€priceÏindex€especially€compiled€for€revaluing€the€dwelling€stock€will€replace€theÏgeneral€price€index€for€buildings€and€structures€which€has€been€used€untilÏnow.ÌÌàá‰àIt€is€expected€that€the€Census€of€population€and€dwellings,€which€isÏplanned€for€the€year€2001€will€provide€the€necessary€information€for€updatingÏthe€value€of€stock€of€dwellings.€€At€the€moment€the€only€information€onÏdwellings,€directly€collected€by€the€statistical€agency,€refers€to€those€NACEÏRev.1€codes€which€are€subject€to€direct€observation€of€age€structure€ofÏcapital€stock,€but€the€share€of€these€dwellings€is€negligible.ÌÌàá‰àThe€method€used€for€estimating€the€value€of€fixed€assets€of€otherÐ G/ò*. Ðbuildings€and€structures€and€machinery€and€equipment€follows€the€concept€ofÏperiodic€direct€observation€€of€tangible€fixed€assets€in€combination€with€theÏbalancing€between€two€observations.€€Statistical€observation€of€age€structureÏof€capital€stock€is€carried€out€annually€for€selected€enterprises€at€theÏlevel€of€two„digit€NACE€codes.€The€selection€of€enterprises€changes€in€such€aÏway€that€each€NACE€code€gets€into€the€survey€once€in€five€years.ÌÌàá‰àThe€value€of€other€buildings€and€structures€and€machinery€and€equipmentÏis€updated€using€information€from€statistical€questionnaires.€These€are:€Ìàá‰à„à09 Dàperiodic€direct€observation€of€age€structure€of€tangible€fixedÐ ¼ g  Ðassets€(including€financial€leasing)€which€covers€all€enterprisesÏwith€25€employees€or€more€and€is€conducted€every€5€years;Ð 9 ý#9 ý# Ðàá‰à„à9 Dàannual€survey€of€leasing€companies€(since€1995);Ð ‰4  Ðàá‰à„à09 Dàannual€statistical€survey€of€enterprises€by€industries€provideÐ x#  Ðdata€on€value€of€àAÌ1àacquisitions,€disposals€and€demolished€fixedÐ g  Ðassets€at€historic€cost€(including€their€à¡Iàaverage€age)€on€1Ð V ÐJanuary€and€31€December;Ð 9 ý#9 ý# Ðàá‰à„à09 Dàbalance€sheets€of€non„financial€corporations€and€selected€NPISHÐ 4ß Ðare€used€for€additional€information.€€The€Ministry€of€FinanceÏkeeps€balance€sheets€for€budget€institutions€which€report€dataÏabout€value€of€fixed€assets€at€the€beginning€and€at€àQUTàthe€end€ofÐ ¬ Ðeach€year.€€Ð 9 ý#9 ý# ÐÌàá‰àThe€first€pilot€surveys€of€capital€stock€in€Czech€Republic€were€carriedÏout€in€1993€and€1994.€€Depending€on€the€year€of€acquisition,€appropriateÏprice€indices€are€then€used€to€revalue€the€fixed€assets€at€currentÏreplacement€cost€and€at€constant€prices.€€Between€the€years€of€surveying,€theÏestimation€of€tangible€fixed€assets€is€made€by€using€data€about€expendituresÏmade€for€the€acquisition€of€fixed€assets€and€the€value€of€disposed€andÏdemolished€assets.€€Information€on€the€average€life€of€demolished€assets€isÏalso€used.€€After€each€direct€observation€of€the€value€of€capital€stock,€Ïretrospective€adjustments€and€corrections€are€done€for€the€estimates€madeÏbetween€the€observations.€ÌÌàá‰àFrom€1995,€the€€annual€enterprise€questionnaires€provide€information€onÏacquired,€disposed€and€demolished€buildings€and€structures;€machinery€andÏequipment.€€On€that€basis,€the€value€of€stock€is€calculated€following€theÏformula:€value€of€stock€on€31€December€of€year€Xo€+€acquisitions€during€theÏyear€X1€„€disposals€of€year€X1.€€The€observation€of€fixed€assets€acquiredÏthrough€financial€leasing€was€also€introduced€in€1995€which€complies€with€theÏrecommendations€of€the€1993€SNA.€ÌÌàá‰àThe€estimation€of€stock€of€cultivated€assets€as€recommended€by€the€1993ÏSNA€is€not€done€yet.€€Their€value€is€estimated€on€the€basis€of€informationÏtaken€from€balance€sheets€of€agricultural€enterprises€which€report€data€atÏhistoric€cost.€€Currently,€work€is€being€undertaken€to€prepare€the€conceptÏfor€collecting€these€kind€of€statistics,€based€on€the€assumption€thatÐ G/ò*. Ðprevailing€part€of€cultivated€assets€is€acquired€on€own„account.€€However,Ïinformation€on€the€average€unit€costs€for€the€acquisition€of€cultivatedÏassets€is€not€available.€Ì€€€ÌòòThe€experience€of€SloveniaóóÐ ¼ ÐÌàá‰àThe€last€complete€survey€of€stock€of€fixed€assets€in€Slovenia€whichÏalso€included€the€value€of€land,€was€carried€out€for€the€period€1980„1987€andÏwas€conducted€on€31€December€1987;€€the€last€survey€of€legal€entities€wasÏcarried€out€in€1990.€€Data€on€public€sector€were€taken€from€business€accountsÏof€enterprises€and€other€organisations€and€from€the€annual€financial€surveyÏof€industrial€enterprises.€€For€1990„1995€the€value€of€stock€was€estimated.€ÏTwo€sectors€were€distinguished.€€The€first€included€non„financial€andÏfinancial€corporations€and€general€government€for€which€data€were€taken€fromÏbusiness€accounts.€The€second€sector€included€households€for€which€data€wereÏtaken€from€tax€authorities€and€from€statistical€surveys.€ÌÌàá‰àThe€estimation€of€stock€of€dwellings€is€based€on€information€from€theÏlast€population€census€(1991).€€Data€are€updated€annually€with€data€fromÏconstruction€statistics€applying€the€PIM€technique.€€This€method€of€updatingÏwill€be€used€till€the€next€census€of€population€and€housing€stock€to€beÏcarried€out€in€2001.€€Updating€of€the€value€of€stock€of€other€buildings€andÏstructures,€machinery€and€equipment€is€done€on€the€basis€of€information€fromÏbusiness€accounts.€ÌÌàá‰àIn€estimating€the€value€of€livestock,€the€method€of€constant€inventoryÏat€the€end€of€the€year€is€used.€€Information€on€both€legal€entities€andÏhouseholds€is€available.€€Vineyards,€orchards€and€other€plantations€areÏestimated€using€information€from€business€accounts;€€the€value€of€assetsÏbelonging€to€households€is€estimated€on€the€basis€of€data€from€theÏagricultural€census.ÌÌòòExperimental€work€on€the€PIMóóÐ 5"à  ÐÌàá‰àSince€December€1994€ò òPolish€experts€ó óhave€been€carrying€out€someÐ $¾" Ðexperimental€work€on€applying€PIM€in€co„operation€with€French€experts€fromÏINSEE,€but€the€results€of€this€work€have€not€been€reflected€in€the€nationalÏaccounts€data.€€The€work€includes€development€of€country€methodology€of€theÏPIM€taking€into€account€the€specific€conditions€in€the€national€economy€withÏcharacteristic€changes€in€the€organisational€structure€of€the€corporations;€Ïfrequent€change€in€the€kind€of€economic€activity€of€enterprises;€€bigÏturnover€of€existing€fixed€assets.€€Another€problem€which€has€to€be€resolvedÏis€the€transition€from€the€old€national€economic€classification€to€NACEÏRev.1.ÌÌàá‰àò òHungaryó ó€has€tried€to€apply€a€simplified€version€of€PIM€which€is€calledÐ X.*- Ðthe€"vintage€model",€with€a€pilot€project€carried€out€to€produceÐ G/ò*. Ðretrospective€estimates€of€the€stock€of€fixed€assets€and€consumption€of€fixedÏcapital.€€There€are€plans€to€extend€the€model€forwards.€€ÌÌàá‰àThe€model€is€based€on€information€collected€through€a€revaluationÏsurvey€of€capital€stock€carried€out€in€1968€which€covered€all€industries.€ÏApproximate€estimates€were€made€about€the€average€service€lives€of€fixedÏassets.€€An€assumption€was€made€for€a€probability€density€function€concerningÏthe€rate€of€retirement€of€fixed€assets.€€Then€the€30„year€period€was€brokenÏdown€into€two€parts,€so€that€the€first€one€covered€the€period€1968„1991.€TheÏreason€for€that€was€that€big€economic€changes€took€place€after€1990€and€itÏwas€not€considered€appropriate€to€carry€forward€past€tendencies.€€€ÌÌàá‰àFor€that€period€(30€years)€a€homogeneous€group€of€assets€was€chosenÏaccording€to€the€€mortality€functions€and€expected€service€lives.€€RetirementÏrates€were€calculated€based€on€assumed€mortality€functions.€A€model€wasÏdeveloped€of€vintage€type€and€applied€to€the€selected€group€of€assets€byÏusing€the€appropriate€investment€chain€indices,€so€that€estimates€at€currentÏreplacement€cost€were€obtained.€The€model€was€experimented€on€machinery€andÏequipment€for€three€industries€and€the€results€are€considered€by€theÏHungarian€experts€as€"acceptable".ÌÌàá‰àAn€attempt€was€made€to€apply€a€simplified€version€of€PIM€in€ò òEstoniaó ó,€byÐ ð› Ðusing€information€from€enterprise€surveys.€€Stocks€at€the€beginning€of€theÏyear€are€revalued€at€current€replacement€cost€using€investment€price€indices.ÏThen€disposals€are€deducted€and€acquisitions€of€fixed€assets€added.€€TheÏprevious€year€is€taken€as€the€base€period.€The€results€of€this€experiment€areÏnot€considered€to€be€very€reliable.ÌÌàá‰à€All€other€CEE€countries,€the€Baltic€states€and€CIS€member€countriesÏare€either€preparing€or€are€planning€the€implementation€of€a€PIM€technique€inÏthe€future.€€The€Slovak€Republic,€for€example€is€planning€the€implementationÏof€direct€observation€of€stock€of€fixed€capital€from€the€beginning€of€1998.€ÏThe€survey€will€collect€information€for€the€four€major€types€of€assets.ÌÌòòService€lives€of€fixed€assetsóóÐ $¾" ÐÌàá‰àCountries€were€asked€whether€information€on€the€service€lives€of€fixedÏassets€was€available€and,€if€yes,€what€were€the€sources€of€data.€ÌÌàá‰à€Asset€service€lives€are€defined€by€the€length€of€time€that€assetsÏremain€in€capital€stock€before€being€withdrawn.€€In€many€developed€marketÏeconomies€the€tax€authorities€prescribe€the€asset€lives.€Tax€authorities€mayÏspecify€the€number€of€years€over€which€the€depreciation€of€different€types€ofÏassets€may€be€deducted€from€profits€before€charging€taxes,€on€which€basis€anÏestimate€of€service€lives€could€be€made.€€Another€source€of€data€are€companyÏaccounts€which€record€stocks€and€flows€of€assets€at€historic€cost€values,Ïwhich€can€be€used€to€estimate€asset€lives.€€Special€surveys€and€expert€adviceÐ G/ò*. Ðare€also€often€used.€ÌÌàá‰àThe€ò òCzech€Republic€ó óestimates€the€average€service€lives€of€fixed€assetsÐ 3Þ Ðthrough€a€model€calculation€and€a€second€estimate€is€derived€from€informationÏcollected€with€direct€annual€survey€introduced€in€1995.€€Estimates€of€serviceÏlives€of€dwellings,€other€buildings€and€structures,€machinery€and€equipmentÏare€available.ÌÌàá‰àIn€ò òSloveniaó ó,€information€on€service€lives€for€all€assets€is€taken€fromÐ Í x Ðthe€company€business€accounts.€€For€their€experimental€work,€the€ò òPolishÐ ¼ g  Ðexpertsó ó€have€used€company€accounts,€which€record€stocks€and€flows€of€assetsÐ « V  Ðat€historic€cost€(price€of€acquisition),€to€estimate€the€length€of€time€thatÏassets€remain€in€the€capital€stock.€€These€estimates€will€be€further€comparedÏwith€the€average€service€lives€of€similar€assets€in€other€OECD€memberÏcountries.€ÌÌàá‰à€Expert€advice€about€service€lives€of€fixed€assets€has€been€used€inÏò òHungary€ó óto€make€retrospective€estimates€by€applying€a€simplified€version€of€Ð 4ß ÐPIM€(the€vintage€model).ÌÌàá‰à€Information€on€service€lives€is€available€in€ò òRomania€ó óby€type€ofÐ ¬ Ðassets.€€The€length€of€service€lives€together€with€the€rates€of€depreciationÏfor€each€type€of€assets€are€approved€by€the€government.€€Within€the€ò òCISó óРߊ Ðcountries,€in€most€cases,€the€government€prescribes€or€specifies€the€numberÏof€years€over€which€the€depreciation€rates€should€be€applied.€€However,€itÏshould€be€noted€that€the€length€of€service€lives€approved€by€governments€forÏdepreciation€allowances€may€differ€from€the€actual€service€lives€of€theÏassets.ÌÌò òB.àáOàAnnual€surveys€of€fixed€assets€ó óàñÞ8àÐ h ÐÌàá‰àAnnual€surveys€of€fixed€assets€is€the€other€main€approach€applied€inÏestimating€the€stock€of€fixed€assets.€€In€some€transition€countries€the€dataÏof€fixed€assets€are€collected€through€statistical€questionnaires,€in€others,Ïthe€information€is€collected€through€the€financial€statistics.€€However,€€inÏboth€cases€these€surveys€collect€information€on€the€value€of€stock€of€fixedÏassets€at€historic€cost€as€recorded€by€enterprises€in€their€businessÏaccounts.ÌÌàá‰àò òBulgariaó ó€estimates€the€value€of€stock€of€fixed€assets€on€the€basis€ofÐ ¾(i$' Ðinformation€from€the€annual€book„keeping€reports€provided€by€the€enterprises.€ÏAccording€to€national€accounting€standards,€all€enterprises€keep€accountsÏabout€the€value€of€fixed€assets€and€changes€in€their€value€during€theÏaccounting€period€for€the€major€groups€of€assets.€€A€specialised€statisticalÏsurvey€which€covers€all€economic€sectors€collects€quarterly€and€annual€dataÏabout€the€transactions€with€fixed€assets€(acquisitions,€disposals,Ïliquidation).€Ð G/ò*. Ðàá‰àÌàá‰àUntil€1991€the€value€of€assets€inò ò€Hungaryó ó€was€estimated€on€the€basis€ofÐ Dï Ðinformation€from€the€annual€financial€reports€of€enterprises€and€governmentÏunits.€€For€the€period€1968„1991€the€assets€were€valued€at€historic€cost€andÏdepreciation€was€calculated€as€a€fixed€percentage€of€historic€value€ofÏassets.€€These€data€were€derived€directly€from€the€enterprise€accounts.ÌÌàá‰àInò ò€Poland,ó ó€the€value€of€fixed€assets€is€estimated€annually€on€31Ð Þ ‰ ÐDecember.€€This€is€done€on€the€basis€of€information€taken€from€statisticalÏquestionnaires€which€are€differentiated€by€type€of€institutional€units.€€TheÏfirst€group€comprises€non„financial€corporations€which€are€further€sub„¼ññ¼¼ññdivided€into€three€groups€depending€on€the€number€of€employees.€€The€secondÏgroup€comprises€of€financial€institutions,€insurance€corporations,€centralÏgovernment,€universities.€€The€third€covers€the€units€of€local€government.€ÏAll€questionnaires€provide€information€on€the€four€major€types€of€fixedÏassets,€including€transport€equipment€as€a€separate€heading.Ìàá‰àÌàá‰àIn€ò òRomaniaó ó€fixed€assets€are€surveyed€annually€on€the€basis€ofÐ 4ß Ðaccounting€balance€sheets€covering€non„financial€and€financial€corporations.€ÏThe€four€major€types€of€tangible€assets€are€covered€plus€land,€includingÏexpenses€for€major€improvements.€€An€additional€source€is€the€annualÏstatistical€survey€of€enterprises€which€also€gives€information€on€fixedÏassets.ÌÌàá‰àò òThe€Slovak€Republicó ó€has€reintroduced€an€annual€statistical€survey€ofÐ ½h Ðfixed€assets€in€1995€after€a€break€of€three€years.€€All€legal€entities€haveÏduty€to€report€accounting€data,€with€the€help€of€statistical€questionnaires,Ïto€the€statistical€agency.€€Data€are€reported€by€type€of€assets€separately€inÏthe€following€breakdown:€€land;€€buildings€and€structures;€machinery€andÏequipment;€€transport€equipment;€€furniture€and€other€office€equipment;Ïfruit„bearing€plants;€€breeding€and€dairy€livestock;€€works€of€art€andÏprecious€metals;€€other€tangible€assets.€€The€questionnaires€provide€dataÏabout€the€value€of€stock€at€the€beginning€and€at€the€end€of€the€year€as€wellÏas€the€changes€in€fixed€assets€during€the€reference€period.€€For€the€periodÏ1993„1995,€only€the€total€value€of€tangible€and€intangible€fixed€assets€atÏhistoric€cost€is€available.€€ÌÌàá‰àStatistical€data€on€fixed€assets€are€collected€differently€byÏinstitutional€sectors€in€ò òEstoniaó ó.€€An€annual€survey€covering€all€enterprisesÐ Ï'z#& Ðwith€19€and€more€employees€collects€information€on€the€four€major€type€ofÏassets.€€For€smaller€enterprises€sample€surveys€are€used.€€Non„financialÏcorporations€provide€the€most€detail€data,€where€the€most€complete€data€onÏfixed€assets€could€be€found€in€the€financial€reports€provided€by€financialÏcorporations.€€The€Ministry€of€Finance€provides€data€on€government€sector.€ÏCapital€stock€is€valued€at€historic,€full€cost,€except€in€the€financialÏsector,€where€depreciated€value€of€fixed€assets€is€used.ÌÐ G/ò*. Ðàá‰àThe€information€on€households€and€NPISH€is€far€from€complete€inÏEstonia.€€The€value€of€stock€of€fixed€assets€of€households€is€estimated€usingÏinformation€from€different€sources,€one€of€which€is€the€statistical€survey€ofÏfarms.€€A€very€useful€source€€is€the€annual€survey€of€housing€which€providesÏinformation€on€housing€stock.€€The€value€of€stock€of€dwellings€is€estimatedÏon€the€basis€of€information€from€local€authorities€on€new€registered€housingÏin€physical€terms€which€are€then€converted€into€values€by€using€averageÏprices€of€construction€works€per€sq.€metre.€€Another€useful€source€is€theÏlocal€registers€of€vehicles,€where€the€new€tractors€are€registered€and€thisÏinformation€is€used€to€adjust€the€value€of€fixed€assets€in€private€sector.ÌÌàá‰àA€new€accounting€system,€which€was€implemented€in€ò òLatviaó ó€in€1993,Ð šE  Ðrecommended€the€introduction€of€new€form€of€balance€sheets.€€The€main€sourceÏof€information€on€non„financial€corporations€is€a€statistical€form€calledÏ"Report€on€the€financial€situation€of€enterprises".€€Information€on€value€ofÏcapital€stock€in€general€government€sector€is€taken€from€the€central€andÏlocal€government€budgets€which€give€details€by€type€of€assets€and€include€theÏfollowing€items:€€buildings€and€structures;€€dwellings;€€land;€€machinery€andÏequipment;€€transportation€vehicles;€€hardware;€€breeding€and€dairyÏlivestock;€€library€stock;€other.€€To€estimate€the€value€of€fixed€assets€ofÏhousehold€sector€similar€sources€of€data€as€in€Estonia€are€used.€ÌÌàá‰àInò ò€Lithuania,ó ó€the€value€of€stock€of€dwellings€is€estimated€usingРߊ Ðinformation€from€construction€statistics.€€An€annual€survey€of€collectsÏinformation€from€the€book„keeping€accounts€of€the€enterprises€on€the€basis€ofÏwhich€the€value€of€machinery€and€equipment€is€estimated.€€Data€are€cross„¼ññ¼¼ññchecked€using€a€commodity€flow€method,€i.e.€output€plus€import€minus€exportÏof€machinery€and€equipment.€€Information€on€investment€expenditures€isÏcollected€annually€and€quarterly.€€Ìàá‰àÌàá‰àò òThe€FYR€of€€Macedoniaó ó€estimates€the€value€of€stock€of€fixed€assetsÐ W  Ðthrough€an€annual€survey€which€collects€data€from€the€balance€sheets€of€allÏlarge€enterprises€(about€2000).€€Information€on€the€value€of€stocks€of€smallÏprivate€enterprises€(about€2800€legal€units)€is€taken€from€the€financialÏreports€which€the€units€provide€to€a€specialised€agency,€called€Bureau€ofÏPayments.€€The€major€types€of€fixed€assets,€including€cultivated€assets€areÏcovered.€€€ÌÌò òC.àáOàPractice€in€CIS€countriesÐ Ï'z#& Ðó óÌòòBalance€of€Fixed€Assets€(BFA)Ð ­)X%( ÐóóÌàá‰àThe€balance€of€fixed€assets€was€one€of€the€balances€traditionallyÏcompiled€in€the€Material€Product€System€(MPS).€€It€is€still€in€use€in€RussianÏFederation€and€other€CIS€member€countries.€€The€Balance€represents€aÏstatistical€table€which€characterises€the€value,€structure€and€change€inÏvalue€of€fixed€assets€for€the€economy€as€a€whole,€by€industries€and€by€formsÐ G/ò*. Ðof€ownership.€€It€is€compiled€by€the€statistical€agencies€and€can€beÏdeveloped€on€national€and€regional€level.€€The€stock€of€assets€is€estimatedÏat€full€value€and€at€depreciated€value€(i.e.€€after€consumption€of€fixedÏcapital).€€Different€concepts€of€valuation€of€fixed€assets€are€used€toÏestimate€the€stock€of€fixed€assets€when€compiling€the€balance,€some€of€theseÏare€€as€follows:ÌÌàá‰à„€ò òbalance€valueó ó€is€the€estimated€value€of€stocks€of€fixed€assets€asÐ Þ ‰ Ðrecorded€in€the€balance€sheets€of€the€enterprises.€€When€revaluation€of€fixedÏassets€is€carried€out€it€may€happen€that€part€of€the€enterprises'€assets€areÏrecorded€at€current€replacement€cost€in€the€business€accounts€and€the€assetsÏacquired€in€the€period€following€it€are€valued€at€historic€cost€(price€ofÏacquisition).€€In€that€case€the€balance€value€represents€a€mixed€estimate€ofÏthe€value€of€fixed€assets;€€ÌÌàá‰à„ò ò€historic€costó ó€represents€the€actual€cost€of€construction€of€buildingsÐ V Ðand€of€acquisition,€delivery€and€installation€of€machinery€and€equipment€andÏother€types€of€fixed€assets€at€prices€available€at€the€time€of€constructionÏor€at€the€moment€the€fixed€assets€are€acquired.€€Full€historic€value€is€theÏactual€value€at€which€the€fixed€assets€are€put€into€operation€and€does€notÏchange€until€revaluation€of€fixed€assets€is€carried€out€to€estimate€theÏassets€at€current€replacement€cost.€€Depreciated€historic€value€is€the€valueÏafter€deductions€for€consumption€of€fixed€capital;€ÌÌ€€àáOà„€ò òreplacement€cost€ó óis€estimated€as€a€result€of€revaluation€proceduresÐ ½h Ðby€using€different€price€indices,€such€as€contract€prices€for€constructionÏwork,€wholesale€prices€of€construction€materials,€fuel,€energy,€machinery€andÏequipment,€price€indices€of€transport€tariffs,€etc.€€The€replacement€valueÏcould€be€also€full€and€depreciated;€ÌÌàá‰à„€ò òaverage€annual€value€of€stock€of€fixed€assetsó ó€is€the€average€value€ofÐ W  Ðfixed€assets€available€during€the€year€which€is€calculated€as€a€chronologicalÏaverage.ÌÌàá‰àThe€balance€of€fixed€assets€is€compiled€for€"pure"€industrial€branches,Ïthat€is€to€say,€for€example,€that€the€value€of€fixed€assets€in€transportationÏindustry€includes€also€the€value€of€fixed€assets€of€transportation€unitsÏwhich€represent€a€secondary€activity€to€a€unit€classified€in€a€differentÏindustry€(such€as€trade).€€ÌÌàá‰àBook„keeping€and€statistical€reports€of€economic€units€are€the€mainÏsources€of€data€for€compiling€the€balance€of€fixed€assets.€€Some€sampleÏsurveys€which€cover€the€assets€owned€by€households€are€also€used.€ÏStatistical€reports€are€usually€differentiated€by€type€of€€units.€€In€theÏRussian€Federation€they€are€different€for€business€companies,€smallÏenterprises,€budget€organisations,€joint€ventures,€institutions€which€reportÏonly€during€revaluation€procedures€(farms,€banks)€and€households.Ð G/ò*. Ѐ€ÌòòAnnual€statistical€surveysóóàA—+àÐ Dï ÐÌàá‰à€The€estimates€of€stock€of€fixed€assets€are€annually€updated€on€theÏbasis€of€the€regular€statistical€information€collected€for€that€purpose.€€AnÏannual€statistical€survey€of€available€fixed€assets€and€the€change€in€theirÏvalue€is€conducted€for€all€enterprises€which€report€data€as€recorded€in€theirÏbalance€sheets.€€In€most€CIS€countries€these€surveys€are€still€exhaustive.€ÏInformation€for€the€following€type€of€assets€is€collected:€€other€buildings;Ïresidential€buildings;€machinery€and€equipment,€transport€equipment;€andÏothers.€€For€each€type€of€assets€the€enterprises€report€information€on:€Ìàá‰à„à9 Dàvalue€of€stocks€of€fixed€assets€at€the€beginning€of€the€year;Ð šE  Ðàá‰à„à9 Dàacquisitions€during€the€year€(including€new€assets);Ð ‰4  Ðàá‰à„à9 Dàwithdrawals€(including€liquidation)€of€fixed€assets;Ð x#  Ðàá‰à„à9 Dàvalue€of€stocks€of€fixed€assets€at€the€end€of€the€year.€€Ð g  Ðàá‰àÌàá‰àThe€value€of€fixed€assets€owned€by€households€includes€the€value€ofÏindividual€dwellings€and€the€value€of€breeding€and€dairy€livestock,€perennialÏplants,€agricultural€buildings€and€structures.€€In€the€ò òRussian€Federationó óÐ #Î Ðtheir€value€is€estimated€annually€on€the€basis€of€information€taken€from€theÏhousehold€budget€survey€(HBS).€€However,€the€estimates€are€considered€to€beÏincomplete.€€Additional€working€tables€are€constructed€by€type€of€fixedÏassets€on€the€basis€of€which€a€balance€of€fixed€assets€for€households€isÏcompiled€at€full€and€at€depreciated€value.ÌÌàá‰àThe€regular€statistical€collection€in€ò òthe€Kyrgyz€Republicó ó€covers€allÐ ¬W Ðinstitutional€sectors€except€households,€for€which€additional€estimation€ofÏvalue€of€dwellings€and€cultivated€assets€is€made.€€Thus,€for€example,€theÏvalue€of€dwellings€is€estimated€by€multiplying€the€area€of€dwellings€by€the€Ïprice€of€1€sq.m.;€the€value€of€€fruit„bearing€plants€is€estimated€on€theÏbasis€of€information€about€total€output€of€fruit€and€corresponding€marketÏprices;€the€value€of€livestock€is€estimated€on€the€basis€of€number€of€animalsÏand€prices€per€head.€€ÌÌàá‰àAn€exhaustive€annual€survey€of€all€enterprises,€budget€organisations,Ïco„operatives€and€small€enterprises€provides€data€for€the€compilation€ofÏbalance€of€fixed€assets€in€ò òUkraine;ó ó€the€last€survey€was€conducted€in€1996.€Ð ñ%œ!$ ÐIn€ò òUzbekistanó ó€the€annual€survey€of€major€fixed€assets€covers€all€legal€unitsÐ à&‹"% Ðexcept€budget€institutions.€€The€last€statistical€survey€of€enterprises€inò òÐ Ï'z#& ÐBelarusó ó€was€conducted€in€1995.Ð ¾(i$' Ðàá‰àÌàá‰àò òKazakstanó ó€is€still€using€the€old€classification€of€fixed€assets€adoptedÐ œ*G&) Ðin€1987,€according€to€which€fixed€assets€are€subdivided€into€12€groupsÏincluding€buildings,€structures,€machinery,€transportation€vehicles€andÏcultivated€assets,€but€which€also€includes€capital€investments€on€improvementÏof€land€(irrigation€systems,€drainage€systems,€etc).€€€For€eachÏclassification€group€information€is€collected€about€the€value€of€stock€ofÐ G/ò*. Ðfixed€assets€and€the€change€in€its€value.€€Another€classification€Ïdifferentiates€the€assets€depending€on€how€they€are€used,€i.e.€€in€stock,€inÏoperation,€in€reserve,€rented.€€€The€classification€is€necessary€because€ofÏthe€different€rates€of€depreciation€which€are€applied.€ÌÌò òD.àáOàRevaluation€proceduresó óÐ  « ÐÌàá‰àIn€periods€of€high€inflation€revaluations€of€the€value€of€fixed€assetsÏare€carried€out€in€order€to€adjust€the€value€for€high€inflation.€€Usually€theÏrevaluation€is€obligatory€for€all€enterprises€as€it€is€mainly€carried€out€forÏtax€purposes.€€The€enterprises€revalue€the€assets€as€recorded€in€theirÏbusiness€accounts€directly€into€current€market€prices€or€with€the€help€ofÏaverage€coefficients€centrally€developed€by€the€statistical€agency.€€TheÏresults€of€the€revaluation€are€then€reported€to€the€statistical€agencies.€ÏThe€same€data€are€also€used€in€business€accounts€of€the€enterprises.€€ÌÌàá‰àRevaluation€of€the€value€of€fixed€assets€is€usually€established€in€law,Ïby€an€Act€approved€by€the€government€with€an€decree.€€The€statistical€officesÏare€executing€agencies€in€all€countries€which€have€experience€with€conductingÏregular€revaluation€procedures.€€€Other€institutions€such€as€Ministry€ofÏFinance€and€Ministry€of€Economics€might€also€be€involved.ÌÌàá‰àIn€ò òPolandó ó€for€example,€the€Ministry€of€Finance€can€issue€a€specialРߊ Ðorder€which€sets€up€the€terms€of€the€revaluation,€its€scope€and€at€what€priceÏlevels.€€Such€revaluations€are€carried€out€each€year€starting,€with€1990Ï(except€1992),€on€1€of€January€at€prices€of€September€of€the€previous€year.€ÏThe€normal€practice€is€that€price€indices€by€type€of€assets€are€used.€€WhenÏmarket€prices€for€certain€type€of€assets€are€available,€they€are€used€insteadÏof€the€price€indices.€€In€revaluing€the€assets€the€following€model€isÏapplied:€€the€value€of€fixed€assets€at€the€beginning€of€the€year€is€revaluedÏat€prices€of€the€previous€year,€then€the€value€of€new€fixed€assets€is€addedÏ(taken€from€the€investment€survey)€and€the€value€of€liquidated€fixed€assetsÏdeducted.€€ÌÌàá‰àOnly€one€revaluation€of€fixed€assets€was€carried€out€in€ò òEstoniaó 󀄀on€1Ð $¾" ÐJanuary€1993€„€whichò ò€ó ócovered€mainly€the€public€enterprises.€€A€generalÐ %­ # Ðproblem€of€the€revaluation€was€that€the€bulk€of€fixed€assets€held€byÏenterprises€was€not€revalued.ÌÌàá‰àAt€the€beginning€of€the€90's€ò òLatviaó ó€experienced€high€inflation,€PPIÐ ¾(i$' Ðwent€up€by€2600€%€and€CPI€up€by€1000%.€€Thus€the€value€of€fixed€assetsÏrecorded€in€the€accounting€balance€sheets€of€enterprises€more€and€more€didÏnot€correspond€to€their€real€value.€€The€Council€of€Ministers€decided€thatÏfixed€assets€should€be€revalued€on€1€January€1992€in€all€enterprises€andÏorganisations,€excluding€agricultural€enterprises€and€business€companies€withÏforeign€participation.€€Revaluation€coefficients€were€determined€depending€onÏthe€year€of€acquisition€of€fixed€assets.€€Fixed€assets€in€institutionsÐ G/ò*. Ðfinanced€from€central€and€local€government€budget€had€to€be€also€revalued,Ïbut€as€of€1€May€1992.€€As€a€result€of€the€general€€revaluation,€the€value€ofÏfixed€assets€was€increased€on€average€by€2.5€times.€€ÌÌàá‰àLatvia€conducted€a€second€revaluation€of€fixed€assets€for€all€units€theÏnext€year€(1993).€€The€assets€recorded€in€the€enterprises'€balance€sheetsÏbefore€31€December€1990€were€revalued€by€a€coefficient€of€10€(i.e.€€theÏbalance€sheet€value€was€increased€by€10€times),€those€recorded€between€1ÏJanuary€and€31€December€1991€„€by€a€coefficient€of€3€and€fixed€assetsÏacquired€in€1992€were€not€revalued.€€As€a€result€of€this€revaluation€theÏvalue€of€stock€of€fixed€assets€was€increased€by€6.6€times€on€the€average.ÌÌàá‰àFrom€1991€to€1993,€in€stages,€revaluation€of€the€fixed€assets€wasÏconducted€for€the€enterprises€of€the€public€sector,€except€agriculture,€inò òÐ x#  ÐBulgaria,ó ó€but€the€results€are€not€considered€satisfactory€and€are€notÐ g  Ðreflected€in€the€national€accounts€estimates.àIð>àÐ V ÐÌòòThe€experience€of€CIS€countiresóóÐ 4ß ÐÌàá‰àIn€the€ò òRussian€Federationó ó,€revaluations€were€carried€out€starting€with€Ð ½ ÐJuly€1992€(excluding€1994),€the€last€one€being€on€1€January€1997.€€In€1992,Ïthe€replacement€value€of€stock€of€fixed€capital€was€reported€to€be€18.7€timesÏhigher€than€historic€cost€(balance€value)€of€fixed€capital€while€on€1€JanuaryÏ1996€only€2.6€times.€€The€revaluation€of€fixed€assets€is€done€by€industrialÏbranches,€sub„branches€of€manufacturing,€forms€of€ownership,€major€type€ofÏfixed€assets€and€territorial€breakdown.€€ÌÌàá‰àThe€revaluation€of€fixed€assets€in€1996€is€characterised€by€two€things.€ÏFirst,€two€estimates€of€revalued€capital€stock€were€made€and€compared€„Ïstatistical€estimation€on€macro€level€and€a€detailed€one€based€on€theÏrevaluation€calculations€reported€by€enterprises.€€The€discrepancy€betweenÏboth€was€5%€which€was€seen€by€the€Russian€experts€as€a€proof€for€theÏreliability€and€feasibility€of€the€statistical€estimation€made€on€macroÏlevel.€€Second,€enterprises€are€using€more€and€more€the€evaluation€experienceÏof€"independent"€experts€and€agents€rather€than€simply€applying€the€centrallyÏdeveloped€revaluation€coefficients€by€type€of€assets.€€€€€ÌÌàá‰àThere€are€still€problems€with€the€price€indices€used€for€revaluing€theÏstock€of€fixed€capital.€€More€differentiated€indices€are€needed,€which€alsoÏtake€into€account€the€prices€of€imported€goods.€€Unresolved€problems€withÏprice€indices€have€accumulatively€distorted€the€value€of€stock€of€fixedÏassets€with€each€revaluation€process.€€The€only€solution€to€that,€as€seen€byÏsome€Russian€experts,€is€the€direct€observation€of€the€stock€of€fixed€capitalÏwhich€will€show€the€degree€of€distortion€in€the€estimates.Ìàá‰àÌàá‰àRevaluation€of€fixed€assets€in€ò òKazakstan€ó ówas€first€conducted€on€1€ofÐ X.*- ÐJanuary€1993,€and€since€then€every€year€according€to€a€government€decision.Ð G/ò*. ÐThe€revaluation€by€type€of€assets€is€done€with€coefficients€determined€on€theÏbasis€of€the€average€wholesale€price€indices€of€manufacturing€industry€andÏprice€indices€of€construction.€€Imported€machinery€and€equipment€is€indexedÏby€coefficients€calculated€as€weighted€averages€of€manufacturing€priceÏindices€of€Kazakstan€and€CIS€member€countries.€€Price€indices€of€sales€ofÏagricultural€goods€are€used€to€revalue€the€fruit„bearing€plants€and€breedingÏand€dairy€livestock.€€The€stock€of€fixed€assets€held€by€households€isÏgenerally€not€revalued.€€€However,€the€stock€of€fixed€assets€of€smallÏenterprises€registered€by€households€is€revalued.€€€ÌÌàá‰àPrivatisation€of€dwellings€started€in€1990€in€Kazakstan€and€was€doneÏeither€at€depreciated€historic€cost€or€free€in€charge.€€Practically€allÏdwellings€were€privatised€by€the€time€of€the€first€revaluation€exercise€inÏ1993,€so€the€value€of€dwellings€and€unfinished€construction€were€revalued€byÏcoefficient€"1".€€The€rest€of€the€fixed€assets€were€revalued€by€appropriateÏcoefficients€depending€on€the€time€of€their€acquisition.€€€ÌÌàá‰àPrivatised€enterprises€used€differentiated€coefficients€depending€onÏthe€period€they€were€privatised.€€According€to€the€regulations,€the€value€ofÏstock€of€fixed€assets€of€enterprises€set€for€privatisation€was€estimatedÏ(revalued)€on€the€date€of€their€privatisation€applying€the€monthly€PPI.€€TheÏprivatisation€process€affected€the€ratio€historic€cost€to€current€replacementÏcost.€€Thus,€for€example,€€during€the€first€revaluation€the€value€of€stock€ofÏfixed€assets€was€increased€by€17€times€and€on€1€January€1995€only€by€9€times.ÌÌàá‰à€The€normal€practice€was€that€the€value€of€old€fixed€assets€is€indexedÏby€a€higher€coefficient.€€However,€in€several€cases€the€replacement€valueÏhappened€to€be€higher€than€the€current€market€value€of€new€analogous€assets,Ïthe€most€typical€examples€were€hardware€and€cars.€€As€a€result€of€this,Ïenterprises€have€been€allowed€to€directly€recalculate€the€value€of€theirÏassets€according€to€the€current€market€prices€at€the€time€of€revaluationÏprocess€since€1995.€€However,€enterprises€have€to€present€a€proof€of€theÏestimate€which€can€be€in€the€form€of€an€expert€estimation€or€a€certificateÏissued€by€the€appropriate€agency.ÌÌàá‰àAll€legal€entities€are€obliged€to€participate€in€the€revaluationÏprocess.€€Good€co„operation€with€tax€authorities€is€established€to€insureÏthat€all€legal€units€conduct€the€€revaluation.€€Thus,€for€example,€taxÏauthorities€will€not€accept€the€balance€sheets€of€those€enterprises€which€canÏnot€present€a€document€from€the€statistical€agency€that€the€indexation€hasÏbeen€done.€€Nevertheless,€the€ratio€between€those€which€did€the€revaluationÏof€fixed€assets€and€those€which€did€not€was€still€about€50/50€in€1995.Ìàá‰àÌàá‰àò òIn€the€Kyrgyz€Republicó ó€the€first€revaluation€was€carried€out€in€1993.€Ð z,%(+ ÐHowever,€during€this€first€exercise,€the€coefficients€as€determined€mainly€inÏRussian€Federation€on€1€July€1992€were€used.€€As€a€result€of€this€revaluationÏthe€total€value€of€stock€of€fixed€assets€was€increased€by€16€times€(theÐ G/ò*. Ðprevious€revaluation€was€carried€out€in€1982).€€The€CPI€increased€by€12€times€Ïin€1993€to€1992€(9€times€in€1992/€1991).€€In€addition,€it€should€be€mentionedÏthat€the€value€of€dwellings€was€not€revalued.€€The€second€revaluation€ofÏfixed€assets€was€carried€out€in€1996€but€the€results€are€not€yet€reflectedÏinto€the€balance€of€fixed€assets€for€1995.€€€ÌÌàá‰àThe€value€of€stock€of€fixed€assets€of€public€and€private€legal€unitsÏhave€been€revalued€three€times€since€December€1993€in€ò òMoldovaó ó.€€The€assetsÐ Þ ‰ Ðwere€first€revalued€from€roubles€into€the€national€currency€„€lei.€€Thus,€forÏexample,€all€assets€acquired€before€29€November€1993€were€recalculated€fromÏroubles€into€lei€by€a€factor€of€1000.€€The€value€of€assets€acquired€after€29ÏNovember€were€taken€at€their€historic€cost.€€ÌÌàá‰àThe€revaluation€of€other€buildings€and€structures€is€done€by€industriesÏand€the€coefficients€used€are€differentiated€depending€on€the€year€the€assetÏis€put€into€operation.€€€As€in€Kazakstan,€enterprises€are€obliged€to€prove€toÏtax€authorities€that€they€have€done€the€revaluation€of€their€assets.€€In€caseÏthe€value€of€a€certain€revalued€asset€€(applying€the€coefficients)€is€moreÏthan€10%€higher€than€the€market€price€of€similar€assets,€the€enterprises€areÏallowed€to€apply€directly€the€market€price,€but€they€have€to€have€a€prove€forÏthat.€€ÌÌàá‰àRevaluations€of€fixed€assets€have€been€conducted€3€times€in€ò òUzbekistanó ó,Рߊ Ðon€1€April€1992,€1993€and€1995.€€All€units,€both€private€and€public,€wereÏcovered.€€Coefficients€were€developed€differentiated€by€type€of€assets€and€byÏdegree€of€wear€and€tear.€€The€coefficients€are€determined€on€the€basis€ofÏprice€indices€of€construction€materials,€machinery€and€equipment,€as€well€asÏtransport€tariffs€and€the€increase€of€the€wages€and€salaries€for€the€periodÏJanuary€1991„January€1995.€€Dwellings€were€not€revalued.ÌÌàá‰àò òUkraine€ó óhas€been€conducting€regular€revaluations€of€fixed€assets€sinceÐ W  Ð1992.€€€During€the€revaluations€of€1995€and€1996€dwellings€were€also€revaluedÏ(but€not€during€the€previous€ones).€€The€balance€value€of€fixed€assets€asÏrecorded€in€the€enterprises'€business€accounts€are€revalued€by€the€averageÏprice€indices€of€construction€works€and€of€€manufacturing.€€Revaluation€ofÏlivestock€is€done€on€the€basis€of€data€about€the€weight€of€livestock€and€Ïaverage€prices€of€sales€by€type€of€livestock.ÌÌò òE.€€àáàIndustries€and€institutional€sectors€coveredó óÐ Ï'z#& ÐÌàá‰àCountries€were€asked€whether€estimates€of€stock€of€fixed€assets€wereÏavailable€by€industries€and€by€institutional€sectors.€€The€practice,€asÏreported,€seems€to€be€different€from€country€to€country.ÌÌòòIndustriesóóÐ i-), ÐÌàá‰àIn€general,€all€countries€produce€estimates€of€stock€of€fixed€assets€byÐ G/ò*. Ðindustries.€€However,€countries€from€Central€and€Eastern€Europe€reported€thatÏchanges€in€the€economic€classifications€disturb€the€time€series€of€fixedÏassets€by€industries.€€Some€countries€moved€to€the€NACE€Rev.1€in€1992Ï(Romania,€Poland,€Czech€Republic),€others€in€1993€(Slovak€Republic)€and€1994Ï(Slovenia),€a€third€group€of€countries€is€either€in€a€process€of€implementingÏNACE€Rev.1€(Bulgaria)€or€are€planning€to€do€so€in€the€near€future.€€Countries€Ïsuch€as€Lithuania€started€producing€estimates€by€industry€only€from€1994,Ïbefore€that€only€estimates€by€type€of€assets€were€available.€€All€CISÏcountries€are€still€using€the€old€industrial€classification€(though€with€someÏimprovements)€used€in€the€material€product€system,€so€that€eventual€problemsÏwith€disturbances€in€the€time€series€are€left€for€the€future.ÌÌàá‰àOne€problem,€mentioned€by€several€countries,€is€the€coverage€of€thoseÏindustries€where€small€enterprises€started€dominating€during€the€transitionÏperiod.€€Thus,€for€example,€the€value€of€stock€of€fixed€assets€in€industriesÏsuch€as€trade,€transport€and€agriculture€could€be€underestimated€due€to€lackÏof€information€on€small€businesses€which€are€not€registered€and,€as€a€result,Ïnot€observed.€€The€estimation€of€the€stock€of€fixed€assets€in€agriculture€inÏseveral€countries€is€reported€to€be€far€from€complete€because€of€lack€ofÏinformation€on€households.€€ÌÌòòInstitutional€sectorsóóÐ ð› Ðàá‰àÌàá‰àAll€institutional€sectors€are€covered€in€Bulgaria,€Estonia,€Slovenia,ÏPoland€(from€1995)€and€the€Baltic€states.€€However,€in€Estonia€the€estimationÏof€capital€stock€is€far€from€complete€in€household€sector€and€NPISH.ÌÌàá‰à€Hungary,€Romania€and€Slovak€Republic€have€not€estimated€the€value€ofÏfixed€assets€for€household€sector€and€NPISH.€€No€estimation€by€institutionalÏsectors€is€done€in€the€Czech€Republic,€although€this€is€planned€for€the€1997Ïestimates.ÌÌàá‰àThe€CIS€countries€which€provided€answers€to€the€survey€produceÏestimates€by€institutional€sectors.€€The€annual€balance€of€fixed€assets€isÏcompiled€by€industries€(the€old€industrial€classification)€and€by€form€ofÏownership€of€legal€units,€but€not€by€institutional€sectors.€€The€usualÏpractice€is€that€the€industries€are€regrouped€in€order€to€form€theÏinstitutional€sectors.€€Only€the€Russian€Federation€explicitly€reported€thatÏboth€public€and€private€non„financial€and€financial€corporations€are€covered.€ÏThe€Kyrgyz€Republic€does€not€estimate€the€value€of€fixed€assets€for€householdÏsector.€€ÌÌò òF.àáOàDifferentiation€of€fixed€assets€from€other€assets€€ó óÐ ‹+6'* ÐÌàá‰àIt€seems€that€differentiation€of€fixed€assets€from€other€assets€(e.g.€Ïbuildings€from€land)€does€not€represent€any€particular€problem€for€most€ofÏthe€transition€countries.€€In€principle€there€are€no€problems€with€theÐ G/ò*. Ðseparation€of€value€of€land€from€the€value€of€buildings€and€other€structuresÏbuilt€on€it.€€Slovak€experts€are€not€able€to€distinguish€the€value€ofÏdwellings€within€other€buildings€and€structures,€but€this€affects€mainly€theÏvalue€of€fixed€assets€by€type.€€€ÌÌàá‰à€€Usually€the€individual€items€of€fixed€assets€are€well€defined,€whichÏhelps€their€delineation€from€other€assets.€€In€some€CIS€countries,€theÏenterprises€are€asked€to€report€€the€value€of€land€they€own€separately€fromÏthe€value€of€produced€fixed€assets.€€However,€it€should€be€noted€that€untilÏrecently€sales€of€land€were€prohibited€by€law€in€those€counties.€€If€there€isÏany€market€for€land€it€has€emerged€only€recently,€so€these€transactions€areÏnot€very€common€despite€changes€in€legislation.€€In€the€Ukraine,€for€example,Ïthe€value€of€land€has€not€been€collected€and€recorded€so€far.ÌÌàá‰à€There€are€some€methodological€and€practical€problems€withÏdifferentiation€of€€fixed€assets€from€other€assets,€such€as€inventories,Ïwork„in„progress.€€In€such€cases€differentiation€is€based€on€expertÏestimation.Ìàá‰àà9 áàÌò òG.àáOàIntangible€fixed€assets€and€sources€of€data€for€themó óÐ ½ ÐÌàá‰àThe€1993€SNA€specifies€that€the€value€of€intangible€fixed€assets,€suchÏas€mineral€exploration,€computer€software€and€literary€and€artisticÏoriginals,€should€also€be€included€in€the€value€of€stocks€of€fixed€assets.€€ÌÌàá‰àIt€should€be€noted€that€new€business€accounts€introduced€recently€inÏsome€transition€countries€incorporate€data€on€intangible€assets,€bothÏproduced€and€non„produced,€such€as€patents,€licences,€leases,€trade€marks,Ïsoftware,€etc.€€Thus,€for€example,€recent€regulations€in€the€RussianÏFederation€clearly€define€the€scope€of€these€assets€and€the€rules€for€theirÏdepreciation.€€In€principle€€intangible€assets€are€included€in€theÏclassification€of€fixed€assets€of€the€Russian€Federation€and€should€beÏreported€by€enterprises.€€However,€in€practice€enterprises€very€often€haveÏproblems€with€the€estimation€of€their€value.€€€ÌÌàá‰àBelarus,€Ukraine€and€Uzbekistan€collect€information€on€intangibleÏassets€through€the€annual€statistical€survey€of€fixed€assets.€€In€Ukraine,Ïthe€value€of€software€is€taken€from€the€questionnaire€reported€by€allÏcomputing€centres€which€act€as€separate€enterprises€or€are€part€of€others;€Ïexpenditures€on€mineral€exploration€are€estimated€on€the€basis€of€informationÏtaken€from€the€enterprises€which€carry€out€geological€and€drilling€works€andÏincluded€in€the€value€of€gross€fixed€capital€formation.€€Information€onÏintangible€assets€held€by€small€enterprises€and€co„operatives€is€taken€fromÏtheir€reports.€€€ÌÌàá‰àNo€estimates€of€the€value€of€artistic€and€literary€originals€have€beenÏmade€yet€by€any€of€the€CIS€countries.€€Estimates€of€intangible€assets€are€notÐ G/ò*. Ðavailable€at€all€in€Kazakstan€and€Kyrgyzstan,€although€there€are€plans€toÏmake€some€estimates€for€1996.ÌÌàá‰àIntangible€assets€are€recorded€in€the€Czech€enterprise€accounting.€€TheÏexpenditures€incurred€on€research€and€development€are€also€part€of€theÏintangible€fixed€assets€and€reported€by€the€enterprises.€€Data€on€acquisitionÏand€disposal€of€intangible€assets€are€recorded€at€historic€cost.€€However,Ïspecific€price€indices€for€their€revaluation€at€current€replacement€cost€areÏnot€available.€€ÌÌàá‰àThe€rest€of€the€countries€from€Central€and€Eastern€Europe€and€theÏBaltic€states€also€include€estimates€of€the€value€of€produced€intangibleÏassets.€€The€only€exception€is€Romania,€which€reported€that€estimates€ofÏintangibles€had€not€been€produced€yet.€€€Hungary€started€collecting€data€inÏ1995.€€From€1993,€Estonia€includes€the€value€of€expenditures€on€mineralÏexploration.€€Annual€statistical€surveys€on€investments€are€the€sources€ofÏdata€in€Poland€and€Hungary.€€Slovenia€and€Slovak€Republic€derive€theÏestimates€from€business€accounts€of€the€enterprises.Ì€ÌÌÓ  Óò òIII.€€Methods€used€for€estimating€consumption€of€fixed€capitaló óÐ ¬ ÐÌÌÓ  Óò òA.àáOàDepreciation€or€consumption€of€fixed€capital.€€Gross€or€net€values?ó óÐ Îy ÐÌàá‰àCountries€were€asked€to€describe€the€approach€they€apply€in€estimatingÏconsumption€of€fixed€capital:€€depreciation€at€historic€cost€as€used€in€theÏbusiness€accounts€of€enterprises€or€the€concept€of€consumption€of€fixedÏcapital€at€current€replacement€cost€as€defined€by€the€System.€€ÌÌàá‰àIn€principle,€capital€consumption€should€be€calculated€for€all€fixedÏassets€„€that€is€tangible€and€intangible€assets€„€owned€by€producers,€but€notÏfor€valuables.€€It€must€be€also€calculated€in€respect€of€fixed€assets€whichÏare€constructed€to€improve€land,€such€as€drainage€systems€and€dykes€as€wellÏas€roads,€railway€tracks,€tunnels,€dams,€etc.€€The€1993€SNA€recommends€thatÏconsumption€of€fixed€capital€should€be€calculated€taking€account€of€theÏactual€service€lives€of€the€assets€concerned€and€be€valued€at€currentÏreplacement€cost.€€€However,€as€already€noted€earlier,€countries€reportedÏthat€very€little€information€on€the€service€lives€of€fixed€assets€isÏavailable,€which€makes€the€introduction€of€new€methods€extremely€difficult.€ÏThe€exceptions€are€the€Czech€Republic€and€Slovenia.ÌÌàá‰àData€available€in€business€accounts€of€enterprises€in€transitionÏcountries€refer€to€the€concept€of€depreciation€made€on€the€basis€of€theÏhistoric€value€of€fixed€assets€(price€of€acquisition).€€As€the€rate€ofÏinflation€increases€the€historic€costs€of€fixed€assets€may€become€quiteÏirrelevant€and€the€book„keeping€values€of€depreciation€become€increasinglyÐ G/ò*. Ðinappropriate€as€measures€of€consumption€of€fixed€capital.€€For€this€reasonÏsome€experts€suggest€that€during€the€transition€period€it€might€beÏadvantageous€to€focus€on€the€gross€estimates.€€Thus,€for€example,€consumptionÏof€fixed€capital€is€not€calculated€in€Romania€and€Hungary€(suspended€in€1991)Ïand€the€national€aggregates€are€expressed€only€in€gross€values.ÌÌ€àáìàIt€should€be€noted€in€this€context,€however,€that€estimation€ofÐ ï š Ðdomestic€product€on€a€gross€basis€does€not€eliminate€the€need€for€estimationÏof€consumption€of€fixed€capital€in€the€general€government€sector,€as€outputÏof€non„market€services€by€government€is€normally€measured€at€cost,€i.e.€Ïincluding€consumption€of€fixed€capital.ÌÌò òB.àáOàCalculation€of€consumption€of€fixed€capitalÐ ‰4  Ðó óÌàá‰àAt€present€the€concept€of€consumption€of€fixed€capital€at€currentÏreplacement€cost€as€defined€by€the€1993€SNA€is€applied€by€the€Czech€RepublicÏand€Slovenia.€€In€the€ò òCzech€Republicó ó,€it€is€applied€to€the€two€major€types€ofÐ Eð Ðassets,€i.e.€€other€buildings€and€structures€and€machinery€and€equipment.€ÏThe€concept€of€depreciation€at€historic€cost€is€used€for€the€remaining€typeÏof€fixed€assets.€€Consumption€of€fixed€capital€is€calculated€at€the€2„digitÏlevel€of€NACE€Rev.1€using€information€on€gross€fixed€capital€formation€andÏaverage€service€lives€of€fixed€assets.€€In€addition,€the€informationÏcollected€through€the€annual€survey€of€the€average€age€of€demolished€fixedÏassets€has€been€reflected€in€the€capital€consumption€estimates€for€1995.€€ItÏis€possible€that€retrospective€adjustments€of€consumption€of€fixed€capitalÏcould€be€done€for€1991„1994.€€ÌÌàá‰àò òIn€Sloveniaó ó,€enterprises€decide€for€themselves€about€the€depreciationÐ Š5 Ðfunction€they€apply€(straight„line€depreciation,€declining€balanceÏdepreciation),€annual€depreciation€rates€and€the€distribution€of€annualÏallowances€over€the€years.€€Under€conditions€of€high€inflation€data€onÏdepreciation€has€to€be€revalued.€€This€revaluation€is€done€using€a€retailÏprice€index,€which€covers€the€period€from€the€moment€the€fixed€asset€was€putÏinto€operation€to€the€end€of€the€estimation€period.€€Depreciation€rates€asÏrecommended€for€tax€purposes€differ€from€those€applied€in€calculatingÏconsumption€of€fixed€capital.€€According€to€the€income€tax€law,€depreciationÏallowances€estimated€by€enterprises€can€not€be€higher€than€the€valueÏestimated€by€using€the€straight„line€depreciation€method€and€the€highestÏrates€as€prescribed€by€the€law.€€Thus,€for€example€in€Slovenia,€they€are:Ïconstruction€„€10%;€€equipment,€vehicles€„€33,3%;€€computers€„€50€%;€Ïperennial€crops€„€14,3%;€breeding€stock€„€50%.ÌÌòòThe€concept€of€depreciationóóÐ ‹+6'* ÐÌàá‰àThe€concept€of€depreciation€at€historic€cost€of€fixed€assets€(price€ofÏacquisition)€as€used€in€the€business€accounts€of€enterprises€with€someÏadjustments€for€high€inflation€is€used€by€several€countries€(Poland,€SlovakÐ G/ò*. ÐRepublik,€The€FYR€Macedonia,€Yugoslavia).€€€Again,€the€1993€SNA€says€that€ifÏdata€on€depreciation€are€used€they€must,€at€the€very€least,€be€adjusted€fromÏhistoric€costs€to€current€prices.Ìàá‰àÌàá‰àA€third€approach€used€by€the€countries€is€the€ò ò"best€proxy"€method.ó ó€€ItÐ ¼ Ðis€€applied€by€most€countries,€mainly€those€which€experienced€quite€highÏrates€of€inflation€during€the€transition€period,€such€as€the€CIS€countriesÏand€Bulgaria.€€As€the€rate€of€inflation€increases,€the€book„keeping€values€ofÏdepreciation€become€increasingly€inappropriate€as€measures€of€consumption€ofÏfixed€capital.€€At€the€same€time,€information€and€conditions€for€applyingÏbetter€techniques€(PIM€or€others)€are€not€available,€including€information€onÏlength€of€service€lives€of€fixed€assets.€€€ÌÌàá‰àThe€usual€practice€is€to€take€the€ratios€of€consumption€of€fixedÏcapital€either€to€value€added€or€to€output€over€a€certain€period€of€pre„¼ññ¼¼ññtransition€years€as€proxy€measures€of€the€amount€to€be€attributed€toÏconsumption€of€fixed€capital€in€later€years.€€The€general€rule€is€that€theÏperiod€should€be€characterised€by€very€low€rates€of€inflation€or€practicallyÏnone,€which€was€the€case€in€most€transition€countries€before€the€politicalÏand€economic€changes€took€place.€€Some€countries€take€a€longer€period€of€tenÏyears,€e.g.€€Bulgaria,€but€others€such€as€the€CIS€countries€can€take€a€veryÏshort€one€comprising€of€only€two„three€years.€€Where€possible€these€ratiosÏare€calculated€separately€by€branches€and€sub„branches€of€the€economy€(theÏold€industrial€classification€still€in€use€in€most€transition€countries)€andÏby€different€kind€of€fixed€assets.€€ÌÌàá‰àSince€1991€each€reporting€unit€in€ò òBulgariaó ó€has€been€free€to€determineÐ ›F Ðthe€level€of€depreciation€independently.€€However,€the€data€available€in€theÏbusiness€accounts€of€enterprises€refer€to€the€concept€of€depreciation€made€onÏthe€basis€of€the€historic€value€of€fixed€assets.€€Though€revaluation€of€fixedÏassets€was€conducted€for€the€enterprises€of€the€public€sector€in€severalÏstages,€the€results€are€not€considered€as€satisfactory€and€are€not€used€forÏcalculation€of€consumption€of€fixed€capital€in€the€national€accounts.€€UntilÏbetter€estimates€could€be€done€using€new€information€on€the€valuation€ofÏassets€and€perpetual€inventory€techniques,€the€ratios€of€consumption€of€fixedÏcapital€to€value€added€over€the€period€1980„1990€are€taken€as€proxy€measuresÏof€the€amount€to€be€attributed€to€consumption€of€fixed€capital€in€laterÏyears.€€The€ratios€over€ten€year€period€are€calculated€separately€by€branchesÏand€sub„branches€of€the€economy€and€by€different€kind€of€fixed€assets;€€theÏchange€in€the€kind€of€assets€is€also€taken€into€account.ÌÌàá‰àSimilarly€to€Bulgaria,€ò òThe€Kyrgyz€Republicó ó€has€twice€conductedÐ œ*G&) Ðrevaluation€of€fixed€assets€but€the€value€of€stock€is€considered€to€beÏunderestimated.€€So€consumption€of€fixed€capital€is€estimated€as€the€averageÏof€the€ratios€of€consumption€of€fixed€capital€to€the€value€of€output€over€theÏperiod€1990„1991.€€The€same€approach€is€applied€by€ò òBelarus€and€Uzbekistanó ó,Ð X.*- Ðbut€the€ratios€are€taken€over€the€period€1989„1990.Ð G/ò*. Їàá‰àConsumption€of€fixed€capital€is€calculated€in€parallel€with€theÏrevaluation€of€fixed€assets€in€ò òMoldovaó ó.€€In€ò òUkraineó ó,€depreciation€data€areÐ Dï Ðadjusted€from€historic€costs€to€current€prices€by€using€price€indices€ofÏconstruction€works€(for€buildings€and€structures)€and€wholesale€price€indicesÏof€manufacturing€(for€machinery€and€equipment.ÌÌ€àáìàFrom€1€of€January€1997€enterprises€inò ò€Kazakstan€ó ócan€chose€one€of€theÐ ï š Ðthree€possible€methods€for€making€depreciation€allowances:€straight„lineÏdepreciation;€€production€method,€(i.e.€€in€proportion€to€the€output)€orÏaccelerated€depreciation.€€€Different€methods€can€be€applied€to€differentÏtypes€of€assets.€€However,€only€one€method€can€be€used€for€the€same€type€ofÏassets.€€€ÌÌòòThe€experience€of€Russian€FederationóóÐ x#  ÐÌàá‰àEarlier€in€this€paper€it€was€noted€that€data€on€consumption€of€fixedÏcapital€appear€in€the€balance€of€fixed€assets€compiled€by€the€CIS€countries.€ÏThe€balance€value€(mixed€value)€of€fixed€assets,€as€reflected€in€the€balanceÏof€fixed€assets€is€the€basis,€for€estimating€the€consumption€of€fixed€capitalÏin€the€ò òRussian€Federation.ó ó€€In€principle,€the€balance€value€is€the€closestÐ ½ Ðestimate€to€the€concept€of€current€replacement€value€of€fixed€assets;€it€is€Ïcalculated€as€an€average€annual€value€of€stock€of€fixed€assets€(i.e.€€theÏvalue€of€stock€after€last€revaluation€and€the€value€of€acquired€andÏliquidated€fixed€assets€during€the€accounting€period€at€current€prices).€ÏDepreciation€rates€by€type€of€assets€are€then€used€to€calculate€consumptionÏof€fixed€capital.€€During€periods€of€high€inflation€consumption€of€fixedÏcapital€is€broken€down€in€quarters,€and€then€inflated€by€the€price€index€ofÏcapital€investments€for€the€corresponding€months.€€€ÌÌàá‰àSince€1€January€1997€the€rules€for€making€depreciation€allowances€andÏthe€annual€rates€of€depreciation€have€been€changed€in€the€Russian€Federation.€ÏThe€stocks€of€fixed€assets€are€sub„divided€into€four€categories,€for€whichÏcorresponding€norms€of€depreciation€are€determined€instead€of€the€existingÏ1.5€thousand.€€Thus,€for€example,€5%€will€be€the€norm€for€buildings€andÏstructures;€€25%€for€cars,€light€trucks,€office€equipment,€hardware€;€15%€forÏtechnological,€electrical€and€transport€equipment€not€included€in€theÏprevious€two€groups.€€The€same€norms€to€be€used€by€small€enterprises€andÏindividual€entrepreneurs€are€respectively€6%,€30%,€18%.€€The€depreciationÏallowances€for€intangible€assets€will€be€made€by€applying€equal€proportionsÏin€the€course€of€their€service€life.€€In€those€cases€where€service€lives€ofÏintangible€assets€can€not€be€defined€they€are€fixed€to€10€years.ÌÌò òC.àáOàCoverage€by€institutional€sectorsó óÐ ‹+6'* ÐÌ€àáìàGenerally,€consumption€of€fixed€capital€is€calculated€for€allÐ i-), Ðinstitutional€sectors.€€There€are€no€problems€in€its€calculation€for€the€non„¼ññ¼¼ññfinancial€and€financial€corporation€sectors.€€The€information€is€usuallyÐ G/ò*. Ðtaken€from€reports€provided€annually€or€even€quarterly€by€the€enterprises€toÏthe€statistical€agencies.ÌÌàá‰àThe€estimates€for€general€government€sector€are€in€most€cases€compiledÏusing€information€on€the€value€of€fixed€capital€at€current€replacement€costÏand€fixed€rates€of€depreciation€by€type€of€assets.€€An€alternative€methodÏapplies€previous€year€ratios€of€consumption€of€fixed€capital.€€ÌÌàá‰àNot€all€countries€calculate€consumption€of€fixed€capital€for€theÏhousehold€sector€and€NPISH.€€The€main€reason€is€the€lack€of€information€onÏthe€value€of€stock€in€these€two€institutional€sectors€and€especially€for€theÏhouseholds.€€Information€on€stock€of€fixed€assets€used€by€households€forÏproduction€is€either€not€available€or€far€from€complete€in€both€Central€andÏEastern€Europe€and€CIS€countries.€€Another€problem€is€the€lack€of€appropriateÏprice€indices€to€adjust€the€estimates€for€high€inflation.€€ÌÌàá‰àSome€countries€calculate€consumption€of€fixed€capital€for€the€householdÏsector€on€the€basis€of€information€taken€from€income€declarations€reported€toÏthe€tax€authorities.€€€Depreciation€rates€are€cross„checked€and€harmonisedÏwith€the€rates€applied€to€fixed€assets€in€similar€economic€activitiesÏexercised€by€non„financial€corporations.ÌÌ€àáìàIn€the€ò òSlovak€Republicó ó€for€example,€tax€returns€do€not€show€separatelyРߊ Ðdata€about€depreciation€allowances€and€depreciation€is€estimated€on€the€basisÏof€information€taken€from€different€sources.€€Thus,€for€example,€theÏstructure€of€acquired€tangible€fixed€assets€is€taken€from€a€statisticalÏsample€survey€(buildings€and€structuresññ€ññ,€machines€and€equipment,€others).€€AnÏattachment€to€the€income€declarations€gives€information€on€the€average€valueÏof€stock€of€fixed€assets.€€Tax€payers€may€apply€either€declining€balanceÏdepreciation€or€accelerated€depreciation€and€the€mode€of€depreciation,Ïdetermined€by€the€owner€for€every€newly€acquired€tangible€or€intangible€fixedÏasset,€is€then€fixed€throughout€the€depreciation€period.€€€ÌÌàá‰àCalculation€of€consumption€of€fixed€capital€for€the€private€householdÏfarms€pose€problems€in€a€number€of€countries,€mainly€because€of€lack€ofÏinformation€on€the€stock€of€fixed€assets.€€In€ò òSlovenia,ó ó€for€example,€€asÐ %­ # Ðinformation€on€stock€of€fixed€assets€in€private€farms€is€not€available,Ïconsumption€of€fixed€capital€€is€estimated€by€using€proxy€measures.€€It€isÏestimated€to€15%€of€the€value€added;€€for€the€non„agricultural€part€of€theÏhousehold€production€this€proportion€is€13%.€€ÌÌò òD.àáOàConsumption€of€fixed€capital€at€constant€pricesó óÐ œ*G&) Ðàá‰àÌàá‰àSome€countries€estimate€consumption€of€fixed€capital€at€constant€pricesÏ(mainly€CIS€countries)€others€do€not€(Bulgaria,€Slovak€Republic,€BalticÏstates,€Yugoslavia).€€The€Czech€Republic€does€not€make€estimates€at€constantÏprices,€but€it€does€not€represent€any€problem€to€do€it.Ð G/ò*. Їàá‰à€Hungary€and€Poland€calculate€constant€price€estimates€from€constantÏprice€values€of€fixed€assets.€€Price€indices€are€used€by€the€CIS€countriesÏwhich€vary€across€the€countries.€€In€Belarus,€this€is€the€price€deflator€ofÏgross€fixed€capital€formation;€€in€the€Russian€Federation€constant€priceÏestimates€are€obtained€with€the€help€of€price€indices€of€the€major€types€ofÏfixed€assets€and€price€index€of€construction€work;€€Ukraine€deflates€theÏcurrent€values€of€consumption€of€fixed€capital€by€the€output€price€deflatorÏof€those€branches€which€produce€predominantly€fixed€assets.€€Kyrgyzstan€usesÏextrapolation€of€current€values€by€volume€indices€of€the€correspondingÏeconomic€branches.€€ÌÌÌÓ  Óò òIV.€€Gross€fixed€capital€formation€(GFCF)ó óññÐ ‰4  ÐññÐ ‰4  ÐÓ  ÓÌÌò òA.àáOàLength€of€time€series€on€GFCF€at€current€and€at€constant€pricesó óÐ V ÐÌàá‰àAll€transition€countries€have€long€traditions€in€estimating€the€valueÏof€gross€fixed€capital€formation€both€at€current€and€constant€prices.€€TheÏseries€go€back€to€the€beginning€of€the€50s,€in€the€Russian€Federation€toÏ1960.€€However,€it€has€to€be€made€clear€that€these€figures€refer€to€the€oldÏsystem,€the€Material€Product€System€(MPS),€€the€methodology€used€by€allÏcentrally€planned€economies.€€For€most€countries€gross€fixed€capitalÏformation€as€defined€by€the€1993€SNA€has€been€estimated€since€the€beginningÏof€the€90s.€€€ÌÌàá‰àThe€series€for€most€ò òCIS€countriesó ó€start€around€1990€when€the€FormerÐ ›F ÐUSSR€was€dissolved.€€The€Russian€Federation€and€Ukraine€have€estimates€fromÏ1989;€€estimates€at€both€current€and€constant€prices€are€available€for€theÏperiod€1989/90€„€1995.€€In€most€cases€the€constant€price€estimates€areÏexpressed€at€prices€of€the€previous€year.€€The€reason€for€this€is€thatÏbecause€of€the€big€structural€changes€which€took€place€in€these€countries€andÏhigh€levels€of€inflation€experienced€in€all€countries€it€was€thoughtÏappropriate€to€make€constant€price€estimates€at€prices€of€the€previous€year.ÌÌàá‰àThe€length€of€time€series€in€the€countries€of€ò òCentral€and€EasternÐ %­ # ÐEurope€and€the€Balticó ó€ò òstates€ó óis€the€same€or€even€shorter.€€Thus,€for€example,Ð ñ%œ!$ Ðthe€series€of€annual€estimates€of€GFCF€at€current€prices€start€from€1991€inÏBulgaria,€Hungary,€Poland,€Slovenia€and€€Lithuania.€€Romania€starts€theÏseries€from€1989€and€Yugoslavia€from€1990.€€Annual€estimates€at€currentÏprices€for€the€Czech€Republic€and€Slovak€Republic€are€available€only€fromÏ1992,€but€quarterly€estimates€of€GFCF€at€current€and€constant€prices€areÏavailable€from€1987€for€Czech€Republic€and€from€1990€for€the€Slovak€RepublicÏ(only€aggregated€data)€.€€The€shortest€time€series€is€available€for€Estonia,Ïstarting€in€1993.€€€Lithuania€is€planning€to€start€producing€estimates€atÏconstant€prices€only€in€1998.ÌÐ G/ò*. Ðò òB.àáOàDisaggregation€of€gross€fixed€capital€formationó óÐ U ÐÌàá‰àGross€fixed€capital€formation€in€CEE€countries€and€the€Baltic€states€isÏdisaggregated€by€type€of€assets,€by€industry€and€by€institutional€sector.€€InÏFYR€Macedonia,€it€is€done€by€type€of€assets€and€by€industry.€€ÌÌàá‰à€However,€disaggregation€by€type€of€assets€could€be€different€forÏdifferent€institutional€sectors.€€Thus,€for€example,€in€ò òSlovak€Republic€ó óonlyÐ Þ ‰ Ðtwo€types€of€assets€are€distinguished€for€non„financial€corporations€sector€„€Ïbuildings€and€structures€and€other€tangible€and€intangible€fixed€assets.€€ForÏthe€government€sector,€the€following€type€of€assets€can€be€identified:€€R&D,Ïsoftware,€other€intangible€assets,€buildings€and€structures,€machinery€andÏequipment,€of€which€transport,€office€equipment,€etc.ÌÌàá‰àAnother€cross„classification€is€between€industries€and€institutionalÏsectors.€€Thus,€ò òSloveniaó ó€mentions€that€gross€fixed€capital€formation€inÐ V Ðagriculture€is€allocated€to€different€institutional€sectors€„€non„financialÏcorporations€and€households.€€This€is€done€on€the€basis€of€financial€dataÏtaken€from€the€banks€reports,€i.e.€€bank€credits€given€to€enterprises€andÏindividual€farmers.€€ÌÌàá‰àAs€regards€the€ò òCIS€countriesó ó,€disaggregation€by€type€of€assets,Ð ð› Ðindustry€and€partially€institutional€sector€(households)€is€available€onlyÏfor€the€Russian€Federation.€€The€rest€of€the€CIS€countries€disaggregate€GFCFÏby€industry€and€by€institutional€sectors€but€not€by€type€of€assets.€€GrossÏfixed€capital€formation€is€calculated€by€industries€which€are€then€regroupedÏby€institutional€sectors.€€In€Uzbekistan,€it€is€first€calculated€for€theÏwhole€economy€and€then€disaggregated€by€institutional€sectors.€€ÌÌò òC.àáOàMethods€of€measuring€ó óÐ h ÐÌàá‰àBasically,€the€measurement€of€gross€fixed€capital€formation€follows€theÏprinciples€of€the€1993€SNA.€€The€main€exceptions€refer€to€countries€whichÏhave€not€implemented€the€main€framework€of€the€system€of€national€accountsÏyet.€€There€are€some€problems€with€the€full€coverage€of€gross€fixed€capitalÏformation€as€reported€by€the€countries.€€ÌÒ̉ÒÒ²ÅÒÌÒ‰ÌÒÒŲÒàá‰àThe€1993€SNA€defines€gross€fixed€capital€formation€of€an€institutionalÏunit€or€sector€as€measured€by€the€value€of€the€acquisitions€less€disposals€ofÏnew€or€existing€fixed€assets.€€However,€for€the€economy€as€a€whole€theÏacquisitions€less€disposals€off„set€each€other€and€total€gross€fixed€capitalÏformation€is€thus€a€measure€of€new€fixed€assets.€€The€1993€SNA€also€definesÏthe€main€types€of€gross€fixed€capital€formation€which€are€distinguished€inÏthe€System:€€tangible€fixed€assets;€€intangible€fixed€assets;€€majorÏimprovements€to€tangible€non„produced€assets,€including€land;€€costsÏassociated€with€the€transfers€of€ownership€of€non„produced€assets€(e.g.€Ïland).Ð G/ò*. Їàá‰àGross€fixed€capital€formation€also€includes€construction€of€militaryÏfacilities€that€can€be€converted€to€civilian€uses,€such€as€roads,€hospitals,Ïetc.€€The€1993€has€expanded€the€scope€of€GFCF€to€include€capital€outlays€onÏintangible€assets.€€These€cover€capitalised€outlays€on€mineral€exploration,Ïacquisition€of€software€and€output€of€artistic€and€literary€work.€€OnlyÏunfinished€construction€in€respect€of€which€a€change€of€ownership€has€takenÏplace€is€included€in€the€GFCF.ÌÌàá‰àGenerally,€countries€measure€the€gross€fixed€capital€formation€by€theÏvalue€of€the€expenditures€(capital€investments)€made€for€tangible€andÏintangible€fixed€assets.€€Tangible€fixed€assets€include€dwellings€(rented€andÏowner„occupied);€€other€buildings€and€structures;€€machinery€and€equipment,Ïincluding€transport€equipment;€€expenditure€on€planting€fruit„bearing€plants;€Ïpurchases€of€breeding€and€dairy€livestock.€€In€most€cases,€intangible€assetsÏinclude€computer€software€and€the€products€as€a€result€of€scientific€work.ÌÌàá‰àGross€fixed€capital€formation€also€includes€expenditures€made€byÏhouseholds€on€own„account€construction€of€dwellings€and€major€repairs;€€theseÏare€estimated€on€the€basis€of€construction€statistics€data€and€data€fromÏhousehold€budget€surveys.€€A€special€note€is€made€by€Romania,€which€includedÏan€estimate€of€gross€fixed€capital€formation€for€the€hidden€economy€„€this€isÏthe€value€of€construction€work€carried€out€by€private€workers€in€building€newÏdwellings€or€renovating€the€old€ones€(since€1991).€€ÌÌàá‰àIn€their€answers,€countries€explicitly€mention€that€they€follow€theÏ1993€SNA€recommendation€to€treat€the€acquisition€of€military€equipment€asÏintermediate€consumption€of€general€government.ÌÌàá‰àSeveral€countries€noted€that€no€information€is€available€on€acquisitionÏof€fixed€assets€by€small€private€enterprises.€€In€Bulgaria,€for€example,Ïthese€are€the€small€enterprises€that€are€not€required€to€keep€double„entryÏbook„keeping€and€are€mainly€classified€to€household€sector.€€In€Slovenia,Ïestimates€of€gross€fixed€capital€formation€for€private€enterprises€have€beenÏincluded€since€1992.€€The€amount€of€capital€formation€by€small€orÏunincorporated€enterprises€is€still€relatively€small€in€some€CIS€countriesÏwhere€the€privatization€process€has€not€finished€yet.€€However,€it€is€veryÏlikely€that€the€share€might€grow€in€future.€€ÌÌàá‰àThree€countries,€namely€Bulgaria,€Check€Republic€and€Romania,€splitÏeach€component€of€gross€fixed€capital€formation€by€products€for€the€purposeÏof€compiling€the€annual€input„output€tables.ÌÌòòCIS€countriesóóÐ ‹+6'* ÐÌàá‰àThe€CIS€countries€follow€a€similar€methodology,€recommended€by€the€CISÏStatistical€Committee.€€Gross€fixed€capital€formation€is€measured€on€theÏbasis€of€capital€investments€made€as€reported€by€the€enterprises.€€A€secondÐ G/ò*. Ðmethod€uses€annual€data€reported€by€enterprises€about€the€value€of€their€newÏassets€put€into€operation€and€the€value€of€those€which€have€been€scrapped,Ïdata€which€are€also€used€for€the€compilation€of€the€traditional€balance€ofÏfixed€assets.€€€ÌÌàá‰àThe€value€of€gross€fixed€capital€formation€includes€the€value€ofÏcapital€investments€made€for:Ìàá‰à„à09 Dàacquisition€of€new€fixed€assets€(buildings,€structures,€machineryÐ Þ ‰ Ðand€equipment,€transport€equipment)€which€are€valued€atÏpurchasers'€prices,€including€the€expenses€incurred€for€ownershipÏtransfer,€transportation,€taxes€and€agents'€fees;€€own„account€à@Õ"–"_à¼ññ¼ññproduction€is€valued€at€cost;€€the€value€of€major€repairs€thatÏsignificantly€change€characteristics€of€capital€goods€is€alsoÏincluded,Ð 9 ý#9 ý# Ðàá‰à„à09 Dàgeological€and€drilling€works€related€to€specific€constructionÐ g  Ðsites;Ð 9 ý#9 ý# Ðàá‰à„à09 Dàcapital€goods€and€services€incorporated€into€the€land€to€improveÐ Eð Ðit€or€prepare€it€for€productive€use€(clearing,€draining,€etc.);Ð 9 ý#9 ý# Ðàá‰à„à09 Dàunfinished€construction€in€respect€of€which€a€change€of€ownershipÐ #Î Ðhas€taken€place€(paid€for€by€the€contractor).Ð 9 ý#9 ý# ÐÌàá‰àGross€fixed€capital€formation€includes€also:€acquisition€of€importedÏequipment€bought€at€credit;€changes€in€breeding€and€dairy€livestock;€Ïpurchases€of€equipment€by€budgetary€government€units;€€purchases€of€books€forÏlibraries;€€expenditures€on€mineral€exploration€not€related€to€constructionÏ(information€collected€from€specialised€enterprises);€€development€andÏacquisition€of€software,€including€databases;€€expenditures€on€theÏacquisition€of€literary€and€art€originals;€€costs€associated€with€transfersÏof€ownership€of€non„produced€assets€€ÌÌò òD.àáOàIntangible€fixed€assetsó óÐ W  ÐÒ¸‰ÒÒ²ÅÒÌà¸àHungary€and€Romania€do€not€include€any€estimates€of€intangible€fixedÏassets€in€the€value€of€gross€fixed€capital€formation.€€Bulgaria€andÏSlovenia€have€included€the€value€of€purchases€of€software€since€1994€andÏthe€Slovak€Republic€since€1992.€€The€Baltic€states€have€also€included€theÏacquisition€of€intangible€assets.€€ÌÌà¸àSeveral€countries€mention€problems€with€distinguishing€the€value€ofÏsoftware€from€the€value€of€hardware.€€According€to€the€accounting€rules€inÏone€country,€enterprises€report€the€value€of€software€separately€only€if€itÏhas€been€purchased€as€an€individual€item€or€developed€by€the€enterpriseÏitself.€€Usually€the€purchases€of€software€are€reported€under€tangibleÏfixed€assets€together€with€the€value€of€hardware.€€This€affects€theÏstructure€of€fixed€assets€but€not€the€value€of€gross€fixed€capitalÏformation€as€a€whole.€€However,€it€might€affect€the€value€of€consumption€ofÏfixed€capital.Ð G/ò*. Ї€ààFinancial€leasing€was€mentioned€by€Hungary€and€the€Baltic€states.€Ð U ÐThe€1993€SNA€(paragraph€10.44)€says€that€a€financial€lease€is€a€contractÏbetween€lessor€and€lessee€whereby€the€lessor€purchases€the€good€and€theÏlessee€pays€rentals€which€enable€the€lessor,€over€the€period€of€theÏcontract€to€cover€all€costs€including€interest.€€The€goods€under€aÏfinancial€lease€are€treated€in€the€System€as€if€they€were€purchased€by€theÏuser,€that€is,€as€if€a€change€in€ownership€had€occurred.€€Since€1991ÏHungary€has€included€in€the€gross€fixed€capital€formation€the€differenceÏbetween€the€value€of€imported€capital€goods€under€financial€leasing€and€theÏrentals€paid€on€them.€€The€value€of€rentals€is€included€in€the€intermediateÏconsumption.€€From€1995,€Estonia€includes€an€estimate€of€financial€leasingÏin€the€value€of€GFCF.€€ÌÒç¸ÒÌÒ‰çÒÒŲÒàá‰àMost€of€the€CIS€countries€include€the€value€of€software€and€mineralÏexploration€in€gross€fixed€capital€formation.€€Only€Kyrgyzstan€mentions€thatÏan€estimate€of€€the€value€of€artistic€and€literary€originals€is€alsoÏincluded.€€In€principle,€countries€are€aware€of€the€SNA€recommendation€thatÏcosts€associated€with€ownership€transfers€of€non„produced€non„financialÏassets€should€be€included€in€the€gross€fixed€capital€formation.€€However,€theÏanswers€provided€does€not€make€it€clear€whether€information€is€available€andÏwhether€any€problems€are€encountered€by€the€countries.Ì€Ìò òE.àáOàConstant€price€estimates€ó óРߊ ÐÌàá‰àIn€principle€most€transition€countries€which€responded€to€the€surveyÏhave€estimates€of€gross€fixed€capital€formation€at€constant€prices,€the€onlyÏexception€being€Uzbekistan.€€The€deflation€is€done€by€components€of€GFCFÏusing€the€appropriate€price€indices.€€Most€often€these€are€the€price€index€ofÏinvestment€goods,€a€capital€investment€index€or€a€combination€of€priceÏindices€of€machinery€and€equipment€and€construction€price€index.€€ÌÌàá‰àThe€majority€of€transition€countries€produce€constant€price€estimatesÏat€prices€of€the€previous€year.€€Some€countries€make€estimates€at€fixed€baseÏyear,€such€as€Slovenia€(1992),€Latvia€(1993),€and€Hungary€(1992).€€€ÌÌàá‰àIt€should€be€noted,€in€the€context€of€the€constant€price€estimates,Ïthat€the€survey€did€not€deal€with€the€price€indices€used€by€the€countries.€ÏIn€most€countries€the€methodologies€used€for€the€calculation€of€pricesÏindices€still€differ€from€those€internationally€recommended,€which€affectsÏthe€constant€price€estimates€in€general.ÌÌò òF.àáOàSources€of€dataó óÐ œ*G&) ÐÌàá‰àUsually€several€sources€of€data€are€used€in€order€to€estimate€the€valueÏof€GFCF€with€different€sources€used€for€compiling€GFCF€by€industry€and€byÏinstitutional€sectors€(balance€sheets,€consolidated€state€budget,€book„¼ññ¼ññkeeping€reports€of€private€NPIs).€€The€statistical€surveys€conducted€for€theÐ G/ò*. Ðbig€non„financial€corporations€provide€information€on€net€acquisitions€ofÏtangible€and€intangible€fixed€assets.€€The€Czech€Republic€has€introduced€aÏseparate€form€to€collect€information€on€net€acquisitions€of€land€and€otherÏnon„produced€assets.€€ÌÌàá‰àIn€most€cases,€in€the€estimation€of€an€individual€item€of€GFCF,€aÏcombination€and€mutual€comparison€of€all€available€sources€of€data€is€madeÏand€data€are€cross„checked€and€compared.€€For€this€purpose,€Bulgaria,€theÏCzech€Republic€and€Romania€construct€€a€sector„branch€(industry)€matrix€whichÏshows€possible€discrepancies€between€estimates€by€industries€and€by€sectors.€ÏThe€analysis€of€the€matrix€allows€for€certain€adjustments€to€be€made.€€AÏsecond€adjustment€is€made€by€products€through€the€input„output€techniquesÏwhen€the€supply€and€use€tables€are€balanced.€€In€Romania,€for€example,€thisÏis€done€simultaneously€in€current€and€constant€prices.ÌÌàá‰àThe€CIS€countries€collect€information€on€net€acquisitions€of€assetsÏwith€the€annual€reports€of€construction€and€manufacturing€enterprises.€€OtherÏsources€used€are:€€financial€statistics,€state€budget€and€household€budgetÏsurvey€for€the€households.ÌÌàá‰àCountries€noted€that€they€have€problems€with€collecting€information€on:€Ïmajor€improvements€to€non„produced€€non„financial€assets;€€the€value€of€costsÏof€ownership€transfers€(Czech€Republic€and€Romania);€€financial€leasing.ÌÌÌÓ  Óò òV.€€Specific€problems€of€transition€and€their€effect€on€the€estimation€ofÐ ¬W Ðcapital€stock€and€consumption€of€fixed€capital.ó óÐ ›F Ѐññ¹ññ¹Ó  ÓÌò òA.àáOàHigh€rates€of€inflationó óÐ h ÐÌàá‰àHigh€rates€of€inflation€are€experienced€by€transition€countries€as€aÏmajor€problem€in€the€measurement€of€capital€stock€for€the€moment.€€CountriesÏare€trying€to€deal€with€it€by€conducting€regular€revaluations€of€fixedÏassets.€€However,€some€countries€do€not€find€the€estimates€satisfactory.€€ÌÌàá‰àThe€estimation€of€value€of€capital€stock€and€defining€the€concept€ofÏcapital€investments€are€still€major€problems€for€most€statistical€agencies€ofÏthe€CIS€countries.€€€€There€are€methodological€and€practical€(fromÏorganisational€point€of€view)€reasons.€€In€some€countries€(Kyrgyz€Republic,ÏUzbekistan)€the€survey€of€fixed€assets€is€not€conducted€on€a€regular€basisÏand€the€estimates€at€current€replacement€cost€are€very€doubtful.€€Thus,€forÏexample€in€the€Kyrgyz€Republic,€the€stock€of€fixed€assets€is€valued€at€pricesÏof€acquisition€(historic€cost).€€The€only€revaluation€of€fixed€assets€wasÏcarried€out€in€1993€and€the€results€are€not€considered€satisfactory.€ÏConsequently,€for€the€period€1990€„€1995,€the€value€of€fixed€assets€at€theÏend€of€the€year,€according€to€the€balance€of€fixed€assets€(balance€value)€inÐ G/ò*. Ðmln.€€soms€is€moving€as€follows:€€119€(1990);€170€(1992);€3344€(1993);€€5247Ï(1994);€6666€(1995).€€€ÌÌàá‰àA€major€weakness,€as€seen€by€the€Kyrgyz€experts,€is€that€capitalÏconsumption€estimates€derived€from€the€balance€of€fixed€assets€differ€fromÏthe€concept€of€consumption€of€fixed€capital€as€recommended€by€the€1993€SNA.€ÏThus,€for€example,€the€value€of€consumption€of€fixed€capital€estimated€on€theÏbasis€of€the€balance€of€fixed€assets€for€1995€is€449€mln.€€soms€while€theÏestimate€made€based€on€the€"best€proxy"€method€(see€the€section€on€itsÏcalculation)€is€1644€mln.€€soms.€€It€is€desirable€that€retrospectiveÏrevaluation€of€stock€of€fixed€assets€is€carried€out€in€order€to€makeÏadjustments€for€the€high€inflation.€€However,€both€methodological€knowledgeÏand€lack€of€data€prevent€this€work€for€the€moment.ÌÌò òB.àáOàPrivatisationó óÐ g  ÐÌàá‰àAll€transition€countries€have€to€reflect€in€their€national€accounts€theÏprivatisation€of€fixed€assets€which€has€taken€place€since€the€beginning€ofÏthe€transition€period.€€This€is€€recorded€in€the€accounts€as€a€propertyÏtransfer€between€institutional€sectors.€€State€owned€dwellings€sold€toÏhouseholds€are€treated€as€gross€fixed€capital€formation€increasing€the€valueÏof€gross€fixed€capital€formation€of€household€sector€and€decreasing€the€GFCFÏof€government€sector€by€the€same€amount.ÌÌàá‰àCountries€responded€differently€to€the€question€of€whether€theÏprivatisation€procedures€affected€their€estimates€of€capital€stock.€€ForÏEstonia,€for€example,€the€process€of€privatisation€did€not€influence€theÏlevel€of€gross€fixed€capital€formation.€€The€privatisation€was€carried€outÏthrough€vouchers€and€the€privatised€assets€had€to€be€revalued€at€theirÏreplacement€cost€both€for€the€state€and€public€sectors.€€For€that€purpose,Ïdetailed€information€on€stock€of€fixed€assets€by€type,€€appropriate€priceÏindices€€and€€information€on€the€length€of€service€lives€was€also€needed.€€ÌÌàá‰àRomania€also€experienced€voucher€privatisation;€€the€largest€part€of€itÏwas€done€in€1996€when€a€large€number€of€enterprises€privatized€up€to€60%€ofÏtheir€capital.€€In€the€Czech€Republic,€in€view€of€the€large€scale€of€propertyÏtransfers€during€the€first€and€second€waves€of€voucher€privatization,€theÏvalue€of€stock€of€fixed€assets€as€recorded€in€the€balance€sheets€of€theÏenterprises€was€regarded€as€very€rough.€€For€accounting€purposes€fixed€assetsÏin€privatised€enterprises€are€recorded€at€estimated€prices.€€€The€€prevailingÏpart€of€enterprises€with€25€and€more€employees€which€are€covered€by€theÏdirect€observation€of€age€structure€of€capital€stock,€can€provide€informationÏon€the€year€of€acquisition€and€price€of€acquisition.€€ÌÌàá‰àThe€process€of€privatisation€has€been€monitored€by€quarterlyÏstatistical€surveys€since€1992€in€Ukraine.€€Information€on€the€value€of€stateÏfixed€assets€which€are€submitted€for€privatisation€is€collected€with€the€sameÐ G/ò*. Ðforms.€€€ÌÌò òC.àáOàOther€problemsó óÐ 3Þ ÐÌàá‰àA€few€other€problems€are€mentioned€by€the€countries.€€One€of€them€isÏthe€considerable€share€of€completely€obsolete€equipment€which€is€still€in€useÏin€the€production€process€in€most€CIS€countries.€€In€general,€theÏrevaluations€do€not€cover€the€housing€stock.€€There€are€problems€with€theÏdevelopment€of€price€indices€for€capital€investments,€investment€goods€andÏimported€equipment.€€ÌÌàá‰àThe€1993€SNA€states€that€capital€consumption€must€be€calculated€inÏrespect€of€fixed€assets€which€are€constructed€to€improve€land€(e.g€drainageÏsystems)€or€on€assets€which€are€constructed€through€land„roads,€railwayÏtracks,€tunnels.€€Several€countries€noted€that€was€a€problem€for€them.€€ÌÌÌÓ  Óò òVI.€€Future€workó óÐ 4ß ÐÌÓ  ÓÌàá‰àCountries€were€asked€about€their€plans€for€improving€the€estimation€ofÏcapital€stock€and€the€calculation€of€the€consumption€of€fixed€capital.€ÏDepending€on€the€methods€presently€used€different€answers€were€received.€ÏThey€vary€from€work€on€improving€the€PIM€techniques€to€simply€planning,€someÏtime€in€the€future,€to€produce€an€estimate€of€the€value€of€stock€of€fixedÏassets.ÌÌàá‰àIn€the€Czech€Republic,€the€work€on€developing€"finer"€price€indicesÏneeded€for€the€valuation€of€capital€stock€is€envisaged€to€start€in€1997.€ÏThis€will€€improve€the€estimation€of€capital€stock€and€the€calculation€ofÏconsumption€of€fixed€capital€for€two€types€of€assets:€other€buildings€andÏstructures€and€machinery€and€equipment.€€The€work€on€conducting€directÏperiodic€observation€of€age€structure€of€capital€stock€will€continue.€€At€itsÏinitial€stage€is€the€preparatory€work€for€evaluation€of€capital€stock€ofÏcultivated€assets.€€Ñ€-ÑÑ€.ÑThe€same€refers€to€the€work€on€estimation€of€stock€ofÏdwellings.€€ÌÌàá‰àCollecting€data€about€service€lives€of€fixed€assets€and€developingÏsuitable€assumptions€about€the€retirements€of€assets€is€planned€for€theÏññÑ-"ÑÑ7€(ÙD(ôôdÈ(ôôdÈ7ÑÑ  Ñññfuture€in€Hungary.€€This€is€required€in€order€to€develop€the€vintage€methodÏinto€a€PIM€model.€€Another€problem€to€be€resolved€is€the€collection€ofÏinformation€on€small€enterprises€and€entrepreneurs.€€As€already€mentionedÏearlier,€Hungary€suspended€the€estimation€of€value€of€capital€stock€sinceÏ1991.€€The€main€reason€that€the€suspension€has€lasted€so€long€is€that€theÏrate€of€inflation€is€still€high€and€the€process€of€privatisation€has€not€beenÏcompleted€yet.ÌÐ G/ò*. ÐÑ-"ÑÑ7€(ÙD(ôôdÈ(ôôdÈ7ÑÑ  Ñàá‰àSeveral€countries€noted€that€improving€quality€of€basic€statistics€onÐ U Ðcapital€stock€is€an€important€prerequisite€in€order€to€improve€valuation€ofññÏññcapital€stock€as€well€as€estimation€of€consumption€of€capital.€€The€methodsÏused€for€the€estimation€the€stocks€of€fixed€capital€are€also€important.€ÏRecommendations€on€how€to€do€the€best€estimates€during€the€transition€periodÏare€needed.ÌÌàá‰àThe€compilation€of€balance€of€fixed€assets,€used€in€the€CIS€countries,Ïdoes€not€satisfy€the€SNA€requirements.€€To€reduce€to€a€minimum€theÏdifferences,€some€methodological€problems€have€to€be€resolved.€€One€of€themÏis€the€coverage€of€gross€fixed€capital€formation.€€The€balance€of€fixedÏassets€does€not€include€data€about:€historical€monuments;€acquisition€ofÏfixed€assets€for€military€purposes,€which€can€also€be€used€by€the€publicÏ(computers,€cars,€etc.);€€the€coverage€of€livestock€is€also€not€complete€asÏrecommended€by€the€SNA.€€At€the€same€time€expenditures€on€major€improvementsÏof€land€and€other€non„produced€tangible€assets€and€expenditures€on€ownershipÏtransfers€have€to€be€taken€out€from€the€value€of€stock€of€fixed€assets.ÌÌàá‰àPractically€all€countries€emphasise€in€their€answers€that€someÏmethodological€assistance€and€consultations€are€required€to€improve€theÏcurrent€methods€or€implement€new€ones€for€the€estimation€of€value€of€capitalÏstock.€€The€majority€of€the€CIS€countries€mention€that€detailedÏrecommendations€for€applying€the€PIM€technique€will€be€very€helpful€as€wellÏas€studying€the€experience€of€countries€applying€it.€€The€organisation€ofÏtraining€courses€on€measurement€of€capital€stock€could€be€very€useful.€€Ì