Govt approves changing National Accounts base year to 2025-26

ISLAMABAD: After a 10-year pause, the government has approved changing the base year for National Accounts from 2015-16 to 2025-26 in order to add and exclude certain businesses for calculating the GDP growth rate.

The cost of the project has been revised upward from Rs 608 million to Rs 903.4 million after the incorporation of 12 additional surveys to include small and medium enterprises (SMEs) for estimating the GDP growth rate.

In recent years, the base year of 2005-06 was adopted for national accounts, followed by 2015-16. Now, after 10 years, the government has approved replacing the base year of national accounts to 2025-26 from 2015-16.

According to the set objectives, the project will aim to change the base of the National Accounts from 2015-16 to 2025-26 and to improve the estimates of GDP, GFCF and expenditure on GDP, amongst others, by enlarging its coverage and filling the data gaps.

The contribution of all economic sectors and sub-sectors towards the national economy in terms of the size and volume of GDP and GFCF will be estimated. The ratios and constant growth rates being used in the estimation of GDP will be updated or revalidated, and implementation of the System of National Accounts 2008 will be enhanced. The introduction of a Producer Price Index (PPI) into the country’s statistical system will also be carried out.

Every 10 years, the base of the National Accounts is changed to add new businesses, exclude closed businesses, and account for the expansion and contraction of existing businesses. The original project cost stood at Rs 607.911 million. Under the original project, 46 surveys and studies were to be conducted; under the revised scope, the Pakistan Bureau of Statistics (PBS) will conduct 52 surveys and studies. The project aims to rebase National Accounts and price statistics to 2025-26, improve GDP estimates, expand coverage, introduce new indices (such as PPI and Natural Capital Account), update methodologies, strengthen PBS capacity, and conduct a feasibility study to establish a Statistical Research and Training Institute.

The project revision has been proposed to incorporate the Survey/Census of SMEs as per the Prime Minister’s directive. The new base year for the National Accounts offers several advantages: firstly, sectors are added or deleted every ten years to better reflect relevant ratios impacting the economy; secondly, it enables evaluation of Gross Fixed Capital Formation (GFCF) to determine sector-wise investment; and lastly, it introduces the Producer Price Index.

The project will conduct studies and surveys throughout the country. It will stimulate research activities in the field of national accounts and price statistics for the adoption of a robust statistical system through the collection, compilation, and cross-checking of data available from regular sources.

It will improve the methodology for estimating macro variables, specifically in agriculture, industry, energy, construction, and services sectors within the macroeconomic framework. Deflators and input-output ratios will be updated. This information will provide a sound basis for better micro and macro decisions by the government, business community, and general public, along with the development of a linkage between natural capital and economic growth.