CB to strengthen GDP estimates to avoid Argentinian-like disasters

The Department of Census and Statistics (DCS) in Sri Lanka is collaborating with donor agencies to improve the accuracy of its GDP estimates to avoid a situation similar to Argentina's recent loss in a court case, highly placed sources said.

DCS, the authorised agency to compile National Accounts Estimates for Sri Lanka, disseminated by the National Accounts Division of the Department, now follows the guidelines of the system of National Accounts 2008 (SNA – 2008), which includes the latest set of boundaries, methodologies, concepts, and recommendations. It uses 2015 as the base year for its National Accounts Estimates.

During discussions on external debt restructuring, creditors had suggested the use of a GDP-linked bond, but disagreement on GDP levels led to the need for accurate GDP estimation.

“This is why we need to estimate the GDP correctly. If the country is to agree on a GDP-linked bond, we need to be careful of the methodology in which it is calculated,” a senior source said noting that this was the issue with Argentinian negotiations.

The court case in London against Argentina involved gross domestic product-linked securities issued in 2005 and 2010 and focused on a change in methodology for calculating GDP in 2013.

Brought by four corporate and institutional investors, the lawsuit was in a dispute about the change in its method of calculating GDP in 2013 and whether it was under an obligation to make a payment under the securities after the change in methodology.

Another highly placed source said that it is inevitable that Sri Lanka and its creditors will go for a GDP-linked solution hence the emphasis on improving the target numbers of the DCS.

He also added under technical assistance the parties are trying to secure uncaptured data, current trends in measurements, the methodology to collect data, improve the sources and the follow-ups etc.

Added to this, another senior source said that capacity-building programmes have also taken into consideration the port city in rebasing the GDP estimate.