Improving GDP Estimates in Vanuatu: Policy Brief and Recommendations

Policy Brief To: Honourable Minister, Ministry Of Finance and Economic Management From: MACROECONOMIC COMMITTEE (MEC) TECHINCAL TEAM Date: Thursday, 20 October 2016

Outline Purpose Background Findings Policy Analysis Recommendation

Purpose: The purpose of this brief is to present to you how we can improve GDP estimates in Vanuatu. This is by way of resolving the challenges we currently faced with GDP forecasting and identify possible solutions that we can adopt to sustain and improve medium term forecasting.

BACKROUND GDP compilation workshop enable MEC technical team to discuss challenges And identify solutions PFEM Act mandate MFEM to produce medium term GDP forecasting MEC members from RBV, DoFT, VNSO & DCIR MEC meets quarterly to review GDP based on recent policy developments GDP forecasting important for Monetary Fiscal Policy decision Therefore important to enhance GDP forecasting that is consistent and reliable With current and medium term plans

FINDINGS & RESULTS After the consultation session, the team have come up with the following findings: The list herein is not in order of importance. This tasks are equally important and must be actioned in the immediate future:

DEPARTMENT OF FINANCE AND TREASURY VNSO present to MEC GDP compilation methods Identify major indicators and data sources Improve questionnaire structure including legislation More support from PFTAC & propose for exchange programs with Aussie & NZ Treasury

DEBT UNIT Need to update debt data regularly Quarterly debt report? Important for policy makers to aware of the debt level on a regular basis. Timely dissemination of debt data with RBV and Treasury on time

Reserve Bank of Vanuatu RBV. Need to share monetary data with MFEM Ensure the use of composite index in forecasting GDP. Disseminate BOP data on time to treasury & other users Timely release of QER and other bulletin

Vanuatu National Statistics office - VNSO Timely release of NA for GDP forecasting discussion at MEC level Need to increase statistics coverage area Present compilation of GDP to MEC by Expenditure and Production approach Collect other identified indicators e.g. building permit Compile deflators to their corresponding deflators Compile and complete outstanding surveys Improve the department structure high job turn over

INLAND REVENUE - DCIR improve compliance coverage and enforcement improve tax auditing coverage recruit more compliance officers recruit more tax audit officers recruit a tax statistician/ data dissemination officer Publish calendar of release Need to improve tax infrastructure Tax Unit should present the tax reform outcome to MEC.

RECOMENDATIONS : Streamlining agencies calendar A memorandum of Understanding for Data Sharing Joint retreat/workshop for Annual Development Plans Regular government Cash Flow Committee meetings Accommodate MEC in the financial regulation and improve its structure An approved GDP forecasting model to be used by both RBV and Treasury Welcome comments from the region 1. 2. 3. 4. 5. 6.

Merci beaucoup