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MASTER PLAN OF DEVELOPMENT AND HARMONIZATION OF OFFICIAL STATISTICS IN SERBIA AND MONTENEGRO

1. THE PRINCIPLES OF OFFICIAL STATISTICS IN A MODERN STATE

2. GLOBAL ASSESSMENT OF THE STATISTIC SYSTEM - BASIC FINDINGS

3. ACTION PLAN BY FIELDS OF ACTIVITIES

4. ACTION PLAN FOR HORIZONTAL ACTIVITIES

A) LEGISLATIVE REGULATION IN THE FIELD OF STATISTICS B) STATISTIC REGISTERS C) CLASSIFICATIONS D) IT STRATEGY E) DISSEMINATION F) COOPERATION WITH DATA USERS AND SUPPLIERS G) TRAINING OF STATISTIC SYSTEM EXPERTS H) PARTICIPATION IN INTERNATIONAL COOPERATION

5. NECESSARY RESOURCES

6. MASTER PLAN IMPLEMENTATION ORGANIZATION

ANNEX: RATIONALIZATION OF STATISTIC RESEARCH PROGRAMS 2002-2005

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1. THE PRINCIPLES OF OFFICIAL STATISTICS IN A MODERN STATE

1. The official statistics is a fundamental source of information necessary for decision-making in economic development and management, environment protection, as well as demographic and other social trends. The quality of information provided by official statistics depends largely on a full cooperation between statistics-making bodies on the on hand and citizens, economic entities and other report units on the other. The essential trustworthiness of information provided by official statistics, as far as general public is concerned, depends for the most part on compliance with the basic democratic values and principles in the course of data collection, processing, publicizing and protection procedures. 2. Bearing in mind the international agreements concerning human rights in the field of privacy protection, protection of business interests of economic entities, as well as the need for promotion and compliance with the international standards by all entities involved in statistical research and the obligations ensuing from cooperation between official statistics-making bodies and statistic organization of other countries within the framework of the Conference of European Statisticians, this Master Plan provides for compliance and active implementation of the following official statistics principles: - The official statistics are an indispensable element of the information system of our country which provides data concerning economic, social and demographic situation and environment conditions. These data are used by the Governments (Serbian, Montenegrin and Federal), administrative bodies, economic entities and general public. The collected data are such as may be of use to the above mentioned entities, but at the same time allow for a comparative analysis with other countries as well. This course of action ensures compliance with a fundamental human right inherent to all democratic societies - the right to objective and public information. - In order to create an absolute trust in general public as regards data publicized by the official statistics, statistics-making bodies are obliged, in compliance with the principles of their science and profession and with professional ethics, to define data collection, processing, filing and publicizing methods and procedures. Data may originate both from various statistical research programs and administrative sources. The choice of data source is made with respect to the quality, costs, timeliness and load of work imposed on report units. - Statistical organizations are obliged, with a view to ensuring a correct interpretation of publicized data, to make their sources known; similarly, they are obliged to provide information concerning data collection and processing methods and procedures. Such organizations are required to state their opinion in cases of data misinterpretation. - Individual data, collected in the framework of statistic research, are strictly protected by the law and may be used exclusively for statistical purposes, regardless of whether they relate to natural or legal entities. All laws and othe regulations concerning the statistical system and its activities are always and exclusively public.

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- Coordination in the framework of statistical system of Serbia and Montenegro is essential in order to maintain the consistency and effectiveness of the system. Therefore, the application of international standards, classifications and methodology in all segments of the system is of utmost importance; the same applies to bilateral, regional and multiateral cooperation with statistical organizations of other countries. 3. Countries in transition, especially European countries with fully or partially non-market oriented economies in the past, all have a special course of development in the field of official statistics system transformation and adapting to market conditions. Former "planned economy" conditioned an organization of official statistic as predominantly a record system which encompassed the whole of the social and economic system, while all entities were compelled by the law to submit any requested information to the official statistics bodies. On the other hand, the concept of material production, endorsed by these countries through many a decade, contributed to an inappropriate treatment of certain important sectors, notably provision of services, and thus such a concept proved quite useless in practice. The system of complete coverage proved to be rather costly and a disproportionate load for information suppliers, and therefore absolutely inadequate in circumstances of a market ekonomy and a growing number of business entities, especially private ones. 4. The official statistics system of our country over the previous decades was likewise subject to the above mentioned deficiencies; however, it was at the same time marked by certain specific traits, owing primarily to the specific international position of our country, but no less to our specific social and economic system. Scope of communication with other statistical organizations throughout the world was much wider, participation in international statistic projects was much commended, various statistic standards of countries with market economy were accepted and applied, and substantial statistical researches based od sampling were included in the regular activities and applied throughout the years. Our experts participated in international conferences, went through professional training at European level and formed a part of the international expert public in this field. 5. Adoption of the above mentioned fundamental statistic principles requires an economic, social and administrative environment which shall allow consequent application of such principles in the overall statistic work. 2. GLOBAL ASSESSMENT OF THE STATISTIC SYSTEM - BASIC FINDINGS

1. The former Yugoslavia (Socialist Federative Republic of Yugoslavia) had a highly functional official statistics system, which comprised the Federal Institute for Statistics (SZS) situated in Belgrade and six republican institutes located in the six republics. SZS was fully integrated in international cooperation, and its statisticians were familiar with various statistic concepts and methods.

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2. The centers of official statistic in FRY today are three institutes: Federal Institute for Statistics (SZS) and two Republican Institutes - those of Montenegro (SZRCG) and of Serbia (SZRS). SZRS and SZRCG (Republican Institutes) comprise 14 (Serbian) and 7 (Montenegrin) regional units, which are used solely for data collection. The City of Belgrade has a special institution - The Institute for Statistics and Informational Technology - which is not subject to SZRS, but to the administration of the City. 3. Between 1992 and 2000, Yugoslavia had been exposed to negative international community measures, including prohibition of commercial transactions and international contacts and the NATO intervention in 1999. Prior to 2000, Yugoslavia had not effected the transition towards pluralist democracy and market economy, while other countries of the region proceeded with such measures in the meantime. Yugoslav statistics has not as yet benefited much from EU statistic resources. These factors explain why the Yugoslav statistic system of today is relatively far from being able to tackle the future challenges, and why it is thus characterized by a need for changes. Specialized foreign assistance, both in the form of resources and transfer of knowledge, is essential for the commencement of reforms. 4. In purely quantitative terms of staff number, the number of approximately 1000 persons (three Institutes plus rough assessment of other producers), as well as a relatively continual percentage of public expenditures allocated to the budgets of the three statistics institutes, clearly demonstrate that the institutes could have sustained for the most part the level of activities recorded towards the end of the 80ies. This fact is backed up by the Statistic Research Program and the list of activities in the field which, with certain reductions and several substantial amendments, such as the introduction of labour force surveys, remained more or less the same as it had been at the end of the 80ies. 5. After our opening for cooperation and widespread introduction of market economy from 2000 on, negative aspects of such condition are gradually coming into light. These are as follows: - Reduced relevance: many traditional series, for example macroeconomic aggregates, still based for the most part on the old MPS (material production) system, relate to out-of-date standards, which calls into doubt their relevance for the needs of present-day users. - There is no user network: no regular contacts with current and potential users in the Governments, research teams and business communities, and this prevents the assessment of current and future needs and feedback on existing statistic products. - Focusing on the socially-owned sector (socially-owned enterprises and cooperatives): focusing on detailed research in this sector, the bodies paid no heed to the growing private sector, which was not taken into account when assessing numerous important economic indicators. Noteworthy exceptions were price statistics and retail trade statistics. - Insufficient expert knowledge of modern data collecting and processing methods, such as sampling, treatment of non-responding and quality monitoring.

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- Lack of transparency of the results: the distribution was focused on publicizing the results in accordance with Statistical Research Program, with only a few routine technical comments on definitions and sources. Explanations and analytic comments were lacking, and the absence of any results interpretation whatsoever obscure the potential relevance. Attention of the media was likewise not sought actively enough. - Low status of statistical institutes: statistical institutes were viewed both by the Government and extern users as a technical service, whereas they are supposed to be a professional and independent producer of relevant and unbiased, broadly accessible information. None of the Institutes has ever been made a participant in major committees preparing decisions for the Government, and none of the Institutes has ever been consulted when drafting a law. Furthermore, the formal status of independent governmental agencies leaves the Institutes no possibility to be represented at ministry level, and such a representative is essential for the protection of their position. - Institutional environment, also reflected in the statistics legislation, strips the Institutes of a possibility to actively and inventively perform their work and manage their activities on the basis of clearly defined priorities, with a sufficient knowledge of resource implications. - No distinction has been made, either in statistics legislation or practice, between strictly statistical research on the one hand, and data collection, both for statistical and administrative purposes, on the other hand. 6. All three statistical institutes are competent for administrative registers, and two of them perform IT activities related to control purposes of other governmental units. The statistical institutes constitute a part of legally based "Governmental Information Systems", which allow for, or even require, unlimited data exchange regardless of the purpose, which seems to contradict the provisions concerning privacy, included in statistics legislation. Resolution concerning the legal grounds and practical implementation of statistical secrecy, together with clear institutional distinction between the official statistics and other governmental functions which potentially contravene the official statistics paradigm (which is clearly the case when data are collected and processed for administrative decisions concerning individual units), are a necessary precondition if the Institutes are to inspire users with trust, especially if users are actors in private business community, and if they are to create credibility as an unbiased institution. 7. Complicated relationships between Federal and republican bodies are reflected in the field of statistics. The existence of parallel institutions within the same legal framework introduces unnecessary complications into decision-making in the field of statistics. Whereas the statistics program is de facto defined at the Federal level, major users, covered by administration of the republic, and major resource providers (also through the republican budget) only indirectly influence the statistics program. Present institutional framework is inappopriate for the modern approach in official statistics, which is user-oriented and flexible, and therefore the framework should be revised.

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8. In the year 2002, a census was carried out in the Republic of Serbia (including certain agricultural issues), in a more or less similar way as in 1991. A capacity for the organization of such extensive data collection is obviously there, as is an ability to carry out a number of regular researches in the framework of a program, which would include socially-owned sector entities (socially-owned enterprises and cooperatives). As regards households survey based on sampling and business or farms research, also based on sampling, the capacity should be increased with respect to research framework, methodology and field work aspects. The same applies to detailed activities like national accounts in accordance with SNA technology, which are still in the experimental phase. This creates a serious lack of internationally comparable short-term indicators and annual business indicators with extended coverage. Similarly, the ability to produce reliable annual population statistics is circumscribed by insufficient coverage of migrations. 9. Yugoslavia needs a substantial change in the paradigm of official statistics and structure of its activities. More emphasis should be placed on user orientation and orientation towards results with clearly defined priorities, taking into account effective and coordinated implementation and decision-making process. A precondition for any visible achievement in this direction is the adoption of the Master Plan with indicated objectives, priorities and resources. Design and implementation of such a Master Plan shall mean a redeployment of existing resources for current activities, in order to facilitate the preparation for future activities. A major issue which should be included in the Master Plan is the review of statistics legislation. 10. This Master Plan should, with foreign expert assistance, be developed as soon as possible and submitted for adoption to the Federal and the Republican Governments, and to the Federal Parliament, as a part of their national obligation. This Plan shall replace for the most part the present Statistical Research Program 2001 - 2005. Federal Government should, simultaneously with the adoption of the Master Plan, participate in IMF’s General Data Dissemination System (GDDS), as this is a part of its international obligation to develop its official statistics system. Master Plan shall ensure that the many necessary steps towards the reform of Yugoslav statistics system be taken within a reasonable framework and in conjunction with clearly defined priorities, taking into account the limited options and resources and connecting all parties to the process. 11. Certain important elements may and should be undertaken without waiting for the formal adoption of the Master Plan. These are the following: - Review of current statistical program and marking of activities which may be left out, i.e. research programs which are necessary neither under GDDS nor for the present determined and legitimate purposes; - Preparation of IT strategy for some segments of official statistics prepared by the three Institutes; - Preparation of staff training program for the three Institutes, taking into account new components of official statistics, such as national accounts, statistical methodologies, for example sampling, foreign languages (e.g. English) and IT;

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- Preparation of a framework for effective and sustainable data collection system for GDDS indicators, which could be applied as soon as the Master Plan is adopted and all resources are made known; - Preparation and financing of higher involvement of Yugoslav statisticians in the relevant groups of international and regional official statistics. 12. Master Plan should comprise the whole official statistics system, including the production segment, which is now within the competence of producers other than the statistical institutes or is not stated in the current program at all. The most important areas in this context are government finance statistics, monetary statistics and balance of payment statistics, as well as certain indicators for health care system. Federal statistical program at present comprises the National Bank of Yugoslavia (NBJ), Institute for Clearing and Payments (ZOP, a separate institution within the National Bank) and six federal ministries as official statistics producers. Within the existing legal framework, statistical institutes are neither authorized to coordinate the instruments nor allowed to monitor compliance of such production with the international standards.

3. ACTION PLAN BY FIELDS OF ACTIVITIES

1. Action plan by fields of activities is an amendment to the existing Statistic Research Program 2001 - 2005. Action plan is the development plan for the period 2003 - 2005 and relates solely to the prioritized activities in the framework of statistical production changes, which enable substantial harmonization of our official statistics with European standards in the field. 2. This plan comprises only activities of the statistical institutes (and, to a lesser degree, of NBJ and CBCG - Central Bank of Montenegro as producers of official statistics). Other competent bodies authorized in accordance with the statistical Research Program are not covered. In many cases their production is not one creating official statistics in the modern sense of the phrase, or is not a priority in the statistics system. Hereafter, they shall mostly be referred to as administrative sources of official statistics data. 3. Action plan by fields of activities is prepared as a matrix representing the new outputs in the statistics system (instead of a list of research activities). Thus, a new way of statistic data and indicator production is highlighted, and this way of production shall be available to the users. At the same time, such representation serves to point to the connection between individual statistic research projects (existing, reformed and new ones) and final statistic outputs. The aim was to update the approach to statistical production, i.e. to include the results of individual research projects in as many outputs as possible. 4. In preparation of the Action Plan, special attention has been given to the requirements of General Data Dissemination System (GDDS), an IMF standard in the field. Implementation of the Action Plan enables effective participation in GGDS, since it provides for necessary statistic indicators in the area of national accounts, public finance, balance of payments and monetary and financial statistics to be prepared. Moreover, GDDS National Coordinator should be one of the federal statistic institute staff, as this would enable effective implementation.

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5. Simultaneously with the plans for new statistical production, rationalization of Statistical Research program has been proposed; this should be carried out by cancelling and reducing certain research projects. Some of these research projects are made out-of-date by the adoption of new international standards of conception and methodology, other are ineffective in the conditions of market economy, and in some cases the intervals of research activities have been rationalized. It is also planned to suspend until 2005 certain large and costly research project which are not priorities. A survey of such research projects is given in the Annex. 6. Effective official statistics production requires that more use be made of modern statistic methods (sampling, assessment, adaptation, data quality evaluation, econometric models etc.). The large number of economic entities in a market economy makes research projects based on full sampling unreasonable and ineffective. Detailed and large research projects are implemented in rarefied multi-annual intervals, and shorter intervals are applied only for research based on sampling and assessment of data concerning the total population. 7. Market economy conditions require that statistic research projects be extended to economic entities in private property. Such economic entities are numerous; their economic power is generally weak, yet they are extremely dynamic. Therefore, statistic coverage of such entities should be approached rationally, so that relevant data for this exceptionally important sector could be produced. 8. Realization of certain elements of the Action Plan is planned at a different pace for Montenegro, mainly because this republic is in a specific situation as regards data sources and existing statistical capacities. Unification of statistic production for Montenegro is planned to take place before 2005. 9. According to international methodologies - System of National Accounts 1993 (SNA93) and European System of Accounts 1995 (ESA95), national accounts occupy the central position in modern statistics. Macroeconomic accounts prepared on the basis of material production concept are overcome in a market economy, and the Action Plan provides for accounts prepared in this way to be completely abandoned. National accounts, on the other hand, play an integrating role for the whole statistics system and serve as the methodological framework for the whole area. GDP, the basic macroeconomic aggregate, shall be calculated annually pursuant to the production and expenditure method, by current and standing prices, and quarterly by standing prices. Inclusion of hidden and informal economy assessments is also envisaged. 10. Apart from national accounts, another significant element of statistical research projects are administrative data sources, notably final accounts, until quite recently in the competence of ZOP (Institute for Clearing and Payments). Cessation of activities of ZOP urges for a final account database to be maintained by another institution (tax authorities, commercial courts), and such a measure should be envisaged for the transitional period until the end of 2005. It is also necessary to provide for more substantial use of data collected by tax authorities. Statistics experts must prepare an alternative strategy for introduction of new forms of statistical research which would enable data collection, more specifically in the non-financial sector.

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11. Statistic polls based on sampling which are carried out in households play a key role in the statistics system, since they serve as an abounding source of information concerning various statistic indicators. An extensive review of household consumption poll is envisaged, in accordance with European standards (increase of the sample to 10 thousand households in Serbia and 2 thousand in Montenegro, improvement of data collection methods by maintaining diaries, application of COICOP classification). In this way, it would be possible to obtain reliable data for the purposes of social trends monitoring, national accounts preparation (personal consumption), consumption prices ponder index, poverty indicators etc. It is also planned to enlarge the sample included in labour force poll to 5000 households in Serbia and at least 2000 households in Montenegro, in order to ensure more reliable data which could be used, among other purposes, for assessments of hidden and informal economy sector. 12. Public finance statistics is an important component of GDDS, but until now it has not been recognized as a part of the official statistics (it has not been included in the Statistical research Program). It is proposed that new units in statistical institutes be formed in order to prepare State aggregates in accordance with IMF recommendations, on the basis of data provide by the Ministry of Finance, other administrative sources and additional statistic research. 13. Preparation of balance of payments and monetary and financial statistics is an activity within the competence of NBJ (National Bank of Yugoslavia) and CBCG (Central Bank of Montenegro), and statistical institutes shall support such preparation (in asccordance with GDDS) by providing statistical research on foreign trade, direct foreign investments, export an import of services (transport, tourism) and internal turnover between the two republics. Statistical research of the financial sector shall be carried out by NBJ and CBCG. 14. As regardes price statistics, it is planned to replace the existing price indexes with the consumption price index, which shall be determined in accordance with EU recommendations (annual change of the ponder, COICOP classification, application of geometric mean). The consumption price index shall be an official indicator of inflation. For the needs of international comparisons of purchase power parities, annual indexes of prices of investerment goods and export and import prices shall also be prepared. 15. Agricultural statistics shall witness, in serval phases, the introduction of new research project concerning cattle breeding and plant production based and sampling, in sccordance with the international standards. These projects shall take the place of former assessments carried out at the municipal level. Introduction of such research projects requires the creation of a register of farms. 16. Wage statistics shall be suplemented with a new quarterly wage indey (by the hour) and average annual wage, while abandoning the present system of principle (the period forh which the wage was earned), instead of the "cash" principle (the period in which the wage was paid). It is also planned to introduce quarterly imployment indexes and new labour force indicators in accordance with EU definitions.

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17. Among other innovation in short-term economic indicators, the most important one is the improved coverage of private sector in statistical research of industry, construction and trade. It is also envisaged the turnover value in industry be monitored in the framework on regular monthly research. 18. In the field of anual population statistics, planned measures include estabilishment of demographic inducators in accordance with the international standards and inclusion of external migrantions assessment in the total population, disaggregated by gender/age. At the municipal lavel, data available shall be those concerning the population exclusive of external migrations. 19. Proverty and living condition statistics shall include annual poverty indicators (for the first time in the official statistics, income and household consumption indicators classified by social-economic groups and standard an minimal consumer needs (with eytender coverage of products and services, notabli health and education services). 20. In the fields of health care system and education sistem statistics, it is main change is the coordination with the international standards in these two areas, which implies monitoring of public eypenditure for health and education.

4. ACTION PLAN FORM HORIZONTAL

a) LEGISLATIVE REGULATION IN THE FIELD OF STATISTICS

1. Existing legal framework for the overal official statistic activities comprises Low of FRY on Statistic Research, Law of the Republic of Serbian Statistic Research, Five-years Statistic Research Program (convering all activities in this area, both at federal and at republican lavels) and Low on Census (Federal and Republican). 2. Basic legislative regulation in the field of statistics for the future should comprise three laws on statistics - one in each Republic and on art the lavel of the future Union. Besides defining statistic activities holders, contents of such activities, rights and obligations of data suppliers, i.e. report units, rights and obligation of competent statistical bodies, rights of data users and provisions concerning individual information protection and dissemination, the laws must clearly define the distribution of responsibilities and rights and oblitations of specifical bodies, both at republican lavel and at the lovel of the Union. 3. All legal acts to be adopted must comply with UN and EU regulations in this area. 4. Detailed description of official statistics activities shall be defined by Five-year Statistic Activities Programs, adopted by competent Parliaments pursuant to the Law on Statistics. Such Program shall define each individual activity in the field of statistics, the periods methodological basis, agent, data sources and deadilines for publication. Competent public bodies shall review and endrose annual Program implementation reports, as well as possible amendments of the Program. It is nesessery to ensure coordination in proparation and amending of the Program.

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5. Apart from the Laws on Statistics, special legal instrument regulating major statistic activities (e.g. censuses) shall also be adopted. Such an instrument is the Law on Census of Population, Households and Apartments, covering regular censuses at ten- year intervals; adoption of a Law on Agricultural Census in also envisaged. 6. Legislative regulation of registers must be providet in orgder to ensure celar definition and separation of comtetence between verious administrative registers, on the one hand, and statistic registers created and used exclusively for statistic purposes on the other. It is also necessary to regulate the right of statistics-making bodies to acces administrative registers as sources in informations. 7. The forthcoming period should be used for consolidation of specific leal provisions relating to official statistics which are included in other legal instruments (e.g. Law on Pension and Old-age Insurance etc.).

B) STATISTIC REGISTERS

1. A substantial change in the mode of operation of official statistics, especially, in the framework of economic statistics, is related to a change in the economic system ond shift towards market economy. In such conditions, the need arises to implement substantial changes in data collectin methods. Full coverage and report method are still applied, but are limited to large report units (large economic systems) while to small, and in some cases medium units, sampling method is generally applied. In order to apply modern collection, processing and analyzing, methods, it is necessary to create there statistic registers which would form the basis of statistics system infrastructure. The three registers should be the following: - Bussiness register - Register of Apartments / Households - Register of frams 2. Opinions of relevant international organizations (IMF, EUROSTAT, WB and others) stress the necessity of creation of such registers without delay. Work on introduction and maintenance of such registers is not only time-consuming, but also very demanding in terms of resources, and therefore actual realization shall primarily depend on available funds. Moreover, future legislative arrangements should facilitate implementation and maintenance of such registers, supported by free access to administrative registers. Complete creation of the above mentioned registers, as defined by EU regulations, shall not be possible within the period covered by the Master Plan. BUSINESS REGISTER 3. Business register created for statistical purposes represents an essential element of enterprise information syustem, enabling more specifically: - increased quality, better organization and coordination of statistic research, through providing sample basis and framework, extra-polling option and response monitoring;

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- ensuring, for statistical purposes, monitoring and analysis of enterprise structure and structural changes in economy leading to operations such as joint ventures, partnerships, acquisitions, mergers and taking-over; - to overcome problems caused by contradictory requests for, on the one hand, increased availability of enterprise-related information, and on the other, for reduction of administrative obligations imposed on enterprises, notably as regards the use of information alredy existing in administrative and public registers (this is of utmost importance for SMEs); - on the basis of unified definitions, descriptions and contents, based primarily on EU standards, to ensure a higher level of data comparability, both at national level and in relation to the surrounding (notably European cauntries). 4. A business register complying with the above requirements does not exist in our country. Our statistics system includes two administrative registers: Classification Units (enterprises) Register and Private Entrepreneurs Register. Serbia currently witnesses ongoing work on reform of legislative regulation related to business registration, the aim of which is simplification of registration procedure. This shall provide a good opportunity to dislocate administrative register maintenance from the scope of offical statistics. As the existing registers are administrative ones, their use for statistical purposes is of a limited nature, but they may for the most part be very useful in the creation of a single business register. Definition of contents of the business register should be given in relation to other administrative registers and detabases, with a view to achieving a high level of quality in its maintenance. REGISTER OF APARTMENTS/HOUSEHOLDS 5. A majority of statistical research projects related to population and households, providing data for national accounts, prices, living standard monitoring, employment, unemployment, external migrations etc., are carried out by sampling households. The quality of results depends primarily on the sample type and sampling framework. Thus, a register of households is a necesdsary pecondition for conducting a research of appropriate quality. As a register of house holds is not included in our statistics system, the starting point of the register may be provided form census data and te results of the Census of Population, Hoseholds and Apartments conducted in 2002. However, update of this register, as regards resources and methodology, would be exceedingly demanding. Thus, it is the international practice to use the register of apartments, the saving of resources is brought about by cooperation with other bodies at Republican level, i.e. by the use of their automatic registers and existing research results.

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REGISTER OF FARMS 6. Agricultural sector is of utmost importance for our economy (approximately 20% of GDP). Monitoring of private sector activities in this field was often diversey evaluated in the past. Private sector participation in total agricultural production is 80%. A basic feature of our agriculture is the small size of individual farms. In such conditions, our statistics system provided data on the basis of research and assessments which are being abandoned, both in our surroundings and in the whole of Europe. A Register of Farms would provide basis for the application of new methods, notably sampling, through monitoring of production units. 7. The Register of farms would comprise a section relating to legal persons, which may readily be derived from the existing administrative register of legal persons, and a section relating to natural persons. In accordance with the international definitions of a farm and with national interest, data relating to private farms may be partially derived from the results of the Census of Population, Households and Apartments, conduced in 2002. Each full updating would be carried out by means of an agricultural census (which full updating would be carried out by means of an agricultural census (which is not envisaged for the period covered by the Master Plan). A majority of neighbouring countries in whose economy agriculture plays a vital role conduct agricultural censuses, which are finaced for the most part by international organizations (EU, WB, FAO). Common practice is also the maintenance of an administrative register within the Ministry of Agriculture, which is used for the formulation of current economic policy in accordance with E regulations, as well as for updating the statistical register of farms. C) CLASSIFICATIONS 1. the main development objective in this area is the coordination of all major national statistics classifications and nomenclatures with the international standards by the year 2005. Among the priorities are classification of products, classification of professions, classification of education, classification of individual consumption according to the purpose and major classifications in the field of national accounts (classification of institutional sectors, classification of transactions and other exchange, classification of account items and classification of resources). 2. The application of these classifications and nomenclatures in Yugoslav statistics should commence no later than 2005, depending on the level of preparatory activities alredy conducted and the time necessary for the remaining activities to be performed. 3. Classification of activities must be in full compliance with the corresponding European standard, and statistical production pursuant to the earlier JKD classification shall cease at the end of 2002. As of 2003, all statistic publications shall comprise exclusively data in accordance with the Classification of activities, Moreover, application of this classification in institutions other than the statistics institutes must be ensured (for example certain administrative data sources).

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4. Comparable regional statistics are of special importance both for the European and our statistics system and major aspects of economic and social life, for example demography, economic accounts, employment, unemployment etc. 5. With a view to setting standards in this area, and in conjunction with other sectors of European Commission, Eurostat introduced the Nomenclature of Units for Territorial Statistics (NUTS), as a coherent system enabling territorial divisions. NUTS is a hierarchical classification, comprising five regional levels (NUTS1 - NUTS5). NUTS level applicable to a certain class of administrative units in a country is determined on the basis of the average population of the area. NUTS1 comprises areas with 3 to 5 million inhabitants, NUTS2 those with 800 000 to 3 millions and NUTS3 those with 150 to 800 000. 6. Ideal requetes which should be met by the regions, whether normative or analytic (functional), are the following: - To be accepted bz its population; - To ensure homogeneity; - To be of appropriate size. 7. In the formal sense, there are no NUTS regions in countries which are not EU Member States. However, the acceptance of this regional division of a country′s territory is one of the fundamental preconditions for negotiations concerning EU accession (Eurostat suggested a division for each of the 10 countries included in the Phare program). Thus all candidate countries adopted NUTS2 (which is obligatory), while some (Romania, Poland, Slovenia) likewise adopted NUTS3. 8. The adoption of NUTS, a matter exceeding the scope of an agreement in the framework of the statistics system, is of utmost importance for at least two reasons: - it enables more precise definition of indicator clusters which should be ensured for various territorial levels necessary for the formulation of economic and social policy, and - it enables participation in European development programs and projects which would, besides comparisons, also enable the use of financial support. 9. As regards Master Plan realization, the work on NUTS level redefining should commence in 2003. It is necessary to prepare a proposal for the definition of NUTS2 level in Serbia and NUTS3 level in Montenegro. D) IT STRATEGY It strategy for the development of the statistics system should be based on certain existing basic analyses of the current situation. These include the Global Assessment of Yugoslav Statistics System by Eurostat, the results of LFA Course prepared by SIDA and activities envisaged by the Master Plan. Major issues related to IT strategy may be grouped as follows:

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It structure of statistical organizations, including: - Hardware basis development strategy (manyframe and Intel platform), - Software development strategy (OSs, databases, application development tools, Internet technology application development, - Strategy for development of a communication network for the creation of a single statistics system, - Strategy for introduction of special, statistics-oriented hardware and software (automatic data acquisition, quality control, GIS). Data collection, exchange, dissemination and filling organization strategy; Statistical data and information publication strategy (print, CD/DVD, Web) Intern and extren documentation and data workflow strategy It sectors organization strategy 9within the statistics system) IT-related HR development strategy. After the adoption of the Master Plan, IT strategy for three statistical institutes should be defined, in accordance with the reached level of development and future needs and functions. A successful realization of the Master Plan requires the development of appropriate it tools. In the framework of projects related to specific activities defined by the Master Plan, the necessary resources for their realization (hardware, software and human resources) shall be defined in more detail. E) DISSEMINATION 1. An agreement between official statistic data producers should define the competence as regards data dissemination by different user types and forms of dissemination. Theleading principle here is that the federal and republican Institutes for Statistics and other institutions authorized to produce official statistic data are also responsible for dissemination thereof. At the same time, it is necessary to fully satisfy the needs of alluser types, ensure the consistency of the information in cases when dissemination is undertaken by several bodies and avoid the unnecessary doubling in dissemination of statistic data. 2. Dissemination of officias statistic data is coordinated between the three statistics institutes. The Federal Institute is primarily concerned with official distribution and exchange of statistic data with international users, as well as the dissemination for the needs of Federal Government and other federal bodies. The republican institutes essentially disseminate data for the needs of republican governments and other users. Publication Programs are prepared at republican levels, and on the basis of these Programs a Federal Publications program is prepared. 3. Publications may be in the form of printed materials (notes or books), in electronic form (CD) or may be maintained on Internet (or Intranet).

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4. A statistics yearly shall be published by all three institutes. Index (monthly overview of economic statistics) shall be prepared by both republican institutes, while the Federal Index should be subject to reduction of the scope, or the preparation of a single publication for Serbia and the Union should be provided for. Communications containing the results of each new research project shall be publicized by the republican institutes in the form of a document (PDF form). The Federal Institute shall issue a substantially reduced number of Communications, which shall relate exclusively to major and complex results. As regards the issuance of other publications (analytical, methodological) the Institutes shall maintain their autonomy. 5. Existence of calendars with indicated deadilnes for issuance of all statistic publication is essential. It is also necessary to prepare a new classification of subject matters to which the data relate (at one level). The publications should be marked by labels indicating the subject matter, which would facilitate the handing and use of such materials. 6. Statical publications should comprise a far greater number of analytical comments, in order to facilitate the task of users. For this purpose, it is necessary to for new organizational groups in the Institutes, which would be trained in production of such comments. 7. Broad use of Internet enables the users faster and easier access to the required data. The Republican Institute of Montenegro for Statistics should desing its own Web-site in 2003. It is necessary to create interrelations between the Federal and the two Republican Web-sites and enable more effective links with the requested data or publications. Moreover, it is necessary to design a single Web-site containing the most important short-term indicators. 8. Another objective is preparation of a single (common) dissemination database which should comprise all official statistic data at the federal and Republican levels, tohether with data concerning the methodologies applied in preparation of statistic data (meta data). This complex task (it implies tackling numerous problems: automatic data processing, terminology, data organization) should be carried aut by coordinated and joint efforts of all three Institutes. 9. GDDS accession shall in many respects promote general data dissemination as laid down by this IMF standard. National data shall be available in databases of major international institutions. 10. A sp0ecial procedure pursuant to user′s individual requests shall be defined. Furthermore, procedure for special processing of individual data is also envisaged, and shall be applied in accordance with the regulations with maximum level of protection.

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F) COOPERATION WITH DATA USERS AND SUPPLIERS

1. The main task of official statistics is to produce official statistic data for all user categories - Governments and administrative bodies, business systems, media, scientific and expert communities, wider public and individuals. In order to promote the official statistics, it is necessary to develop close cooperation between statistics-making bodies and user network. Such coordination should be put in place at all levels of organization. 2. A substantial role in this respect shall be played by user forums, which should be held on a regular basis and review the needs of the society in the field of statistics, discuss the activities of various bodies and state proposals for possible advancements, contributing thus to the formulation of the most effective policies for organization and functioning of official statistics. 3. At the official statistics level, it is envisaged to maintain organized work with data suppliers, with a view to ensuring more effective work and higher quality of work. Official statistics-making bodies shall be obliged to familiarize data users with detailed reasons for the collection of certain data, the importance of such data for official statistics and society as a whole and the collection method, stressing the confidentiality and protection of collected data. These activities shall be promoted by means of seminars, public presentations, media and other appropriate shannels.

G) TRAINING OF STATISTIC SYSTEM EXPERTS

1. Expert training is a major shallenge facing aur statistics system. Several years′ lag in this field must be compensated in as short a period as possible. For this purpose, it is planned to carry aut the largest proportion of expert training in the course of the first year of Master Plan application, with subsequent reduction to a standard level necessary for expansion of knowledge of existing staff and training of new staff. 2. It is worth mentioning that training organization, with respect to the locality where the course is taking place and the type of the lecturer, comprises foru types of professional training: - Training abroad, foreign lecturers - Training in the country, foreign lecturers - Training in the country, national lecturers autside the statistics system - Training in the country, national lecturers within the statistics system 3. Expert training should cover the following agreas: - General principles - Methodology and analysis - IT for statisticians - English language - Organization/Management

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Total scope of envisaged training, in nam/week terms shall be:

2003 2004 2005 Total

SZS (Federal Institute) 570 420 390 1380RZS RS (Serbian Institute) 1150 600 490 2240RZS CG (Montenegrin Instiute) 350 300 240 890

Total 2070 1320 120 4510 Which makes aporoximately 9% of average working time for 2003, 5,6% for 2004 and 4,3% for 2005.

I) PARTICIPATION IN INTERNATIONAL COOPERATION

1. Statistics system is involved in international cooperation through active participation in the following international forums: - Conference of European Statisticians - organizer: UN, European Economic Commission; - DGINS Meetings - organizer: Eurostat - Policy Group Meetings - organizer: Eurostat 2. Our statistics system also participates in regional cooperation with the countries of: - Western Balkans - through EU CARDS program - South-eastern Europe - Centarl and Eastern Europe 3. Statistics system experts take part in various seminars, working groups etc., which are parts of international projects in the field of statistics. 4. A special form of cooperation is that with the international organizations acting as donors for specific projects (EU CARDS, SIDA, World Bank, DFID, ...) 5. Our statistics system has established bilateral cooperation with systems of other countries. FRY has signed contracts for cooperation in the field of statistics with the following countries: - Albania - Bulgaria - Macedonia - Romania - Russia - Croatia

19.

Other forms of cooperation are operational with the statistics of Bosnia and Herzegovina, Hungary, Poland, Czech republic and Slovenia.

5. NECESSARY RESOURCES

1. Realization of activities under the Master Plan requires an increase in staff of the Institutes for Statistics. An increase of 232 persons (by years: 121, 61, 50) is planned for the period 2003 - 2005; the number includes experts in statistics and IT. The necessary increase by years and horizontal and vertical activities is given in the table below.

Planned increase in staff

No

DESCRIPTION Total 2003 2004 2005

1 National accounts 45 28 10 7 2 Price statistics 21 11 5 5 3 Wages and employment statistics 13 8 3 2 4 Other short-term economic

indicators 28 16 6 6

5 Public finance statistics 5 3 1 1 6 Balance of payments 2 1 1 0 7 Monetary and financial statistics 0 0 0 0 8 Census 5 3 1 1 9 Annual population statistics 10 6 3 1

10 Poverty and living conditions statistics

11 6 3 2

11 Health care system statistics 3 0 2 1 12 Education statistics 0 0 0 0 13 Agricultural statistics 7 2 1 4 B Statistic registers 31 14 10 7 C Classifications 6 3 2 1 D Dissemination 32 14 10 8 E Training 5 2 1 2 F Polling network 8 4 2 2

TOTAL 232 121 61 50 2. After the adoption of the Master Plan, special projects for each activity shall be designed and shall comprise detailed information concerning the necessary material and human resources for implementation, as well as the division of tasks between individual Institutes for Statistics. 3. Master Plan is, on the one hand, a step towards full harmonization with the European system of statistics and requires substantial human resources. On the other hand, bearing in mind restrictions concerning available resources and prioritezed needs for specific indicators, a proposal (Annex) of the amendment of the existing Statistical Research Program 2001 - 2005 (Official Gazette of FRY, 54/2001), i.e.

20.

proposal for the reduction thereof, has been prepared. Thus, a rough assessment indicates that, should this amendment be adopted, 38 additional staff would be put at disposal (20 in 2003, 3 in 2004 and 15 in 2005) and directed towards the prioritized activities in accordance with the Master Plan.

6. MASTER PLAN IMPLEMENTATION ORGANIZATION

1. Implementation working group is composed of representatives from all three Institutes for Statistics. The basic task of the group is to ensure implementation of the Master Plan and propose measures for the promotion of this process. 2. Conference of directors of the three Institutes has the obligation to monitor on a regular basis the implementation of the Master Plan and to take all necessary measures. 3. Realization of the Master Plan should be in accordance with the project approach. This means that each activity or group of activities with certain statistic data as autput is a part of the defined project. The project is managed by project manager, who is at the same time responsible for realization of the project. 4. Master Plan realization reports shall be submitted to the Republican governments and the Government of the future Union at intervals which may not exceed one year.

1.

MASTER PLAN FOR YUGOSLAV STATISTICS Draft

ACTION PLAN BY FIELDS OF ACTIVITIES

TABLE OF NEW STATISTICS SYSTEM OUTPUTS

Data sources Data discription Comparision with the former state Deadline (data for) Existing Amanded and new

1. NATIONAL ACCOUNTS (SNA93/ESA95)

GDP by production method, annual, in current prices

Shortening of result deadlines to 11 months after the expiry of the year to which they relate Inclusion of hidden and informal economy 2004

Annual (final) accounts - NBJ, ZOP, NBJ Balance of Payments, budgetary final accounts and other administrative sources - the Ministry of Finance and other bodies

Structural calance research: KGI-01, KG-02, KGI-03, DZ methodology), Statistical business register, New administrative (fiscal) data sources, Labor force survey (extended sample), Household sonsumption poll (reviewed)

GDP by production method, in standing pices

Replacing the social product in standing prices 2003 annually

2004 quarterly

Physical production scope indexes, turnover indexes (standing prices)

More effective statistics of services, Deflators (consumption prices index)

Various acconts relating to Shortening of the deadline 2003 inclusive of capital All existing statistic and Public finance statistics

2.

economy as a whole and the institutional sectors, annual, in current prices

to 12 months after the expiry of the jear, More effective assessments and coverage

accont 2004 financial account of the State

administrative sources

GDP acconts for the period from 2000 on, annual, curent and standing prices

Review of accounts in current prices and new accounts in standing prices

End of 2005 Al axisting sources

Economic indicators for minicipalities

Replacing the social product and other economic belance aggregates

2004 Administrativate sources (fiscal, social)

Abolition of the system of economic balances (i.e. abolition of the concept of materijal production)

Cessation 2003

GDP by the expenditure method (final consumption account, annual, curent and standing pices

New accounts in compliance with the international standards

2005 Household consumption poll (extended sample, on the basis of COICOP clasification), Public finance statistic (on the basis of COFOG clasification), Statistics of investments (extended to the private sector, sampling method), including FDI Statistics of import end ixport services, Price statistic (annual price indexes for investment goods and export-import price indexes)

3.

Pereparation of GDP assessments for the current period, current and standing prices

New activity End of 2005 All existing sources Expert assessment

Participation in the international project for purchase-power parties and GDP

Return to the project (last recordet participation: 1990)

2005 GDP by expenditure method, Price statistics

2) PRICE STATISTIC

Consumption price index, monthly

New official inflation indicator, in compliance with EU recommendations (annual chage of the ponder, geometric mean)

June 2003 (first stage, Serbia) October 2005 (second stage

World Bank Poll 2002 (pondesr)

Review of the list products and services Extension of price monitoring in supplies of services Household consumption poll 2004 (ponders)

Abolition of retail prices index and conts of living index

Cessation End of 2005

Abolition of wholesale prices index

Cesation End of 2003

Inclusion of hotel and restaurant prices index in the consumption price index

Inclusion in consumption price index

2004 Adaption of nomenclature of products

Index of prices of investment goods (equipment and buildings), annual

New research 2005

Equipment production and construction enterprises (sample)

Purchase power parity New research in case of 2005 Prices statistic

4.

between Serbia and Montenegro

tho separate monetary systems (two diferent currencies)

National accounts

Index of export and import prices, annual

New research 2005 Index of manufacturers' prices for export Research among importers

3) STATISTICS OF WAGES AND EMPOLOYMENT

New index of wages, quarterly

Gross wages by the hour (working hour cost), by activities, sectors of property and gender, "accural" principle

III quarter of 2004 Batter coverage of the private sector, new questionnarire (wages, working hours, employed), index based on the ponder

Avarage wages, annual Replacing the monthly data

2004 Reviwed annual research

New indexes of the empolyed and of working hours, quarterly

New indicators, coordination with the results of labour force servey

III quarter of 2004 New questionnaire (working hours divided into categories: regular, overtime etc.)

Abolition of the existing research of wages and the number of employed persons

Cessation End of 2004

Labour force indicators (employment, including informal employment, unemployment, working conditions, job seeking, qualifications, accessory activities, labour force mobility), annual

Major annual indicators of employment and unemployment in accordance with EU definitions Bater clatiry

Autmn 2003 (Serbia) Autmn 2004 (Monteenegro)

Labour force survey

5.

Registered unemployment, monthly

Annual coordination of monthly unemployment on the basis of labour force survey

2004 (Serbia) 2005 (Monteenegro)

Administrative sources Labour force survey

Unemployment rate, monthly

On the basis of questionnaires and monthly unemployment coordinated with the results of the labour force survej

2004 (Serbia) 2005 (Monteenegro)

Administrative sources Labour force survey

Аbolition of the existing unemployment indicators

Cessation 2004 (Serbia) 2005 (Monteenegro)

4) OTHER SHORT-TERM ECONOMIC INDICATORS

Industrial production index, monthly

BatTer coverage Choice of relevant products followed by a reduction in the number of included products

January 2004 (2002 ponders) January 2005 (full compliance with EU)

Batter coverage of the private sector, reduction of the number of included products

Civil engineering, hours and value of contracted and performadet works, current and standing prices

Large and medium-sized enterprises in all forms of ownership

2003 Monthli research

Retail turnever, quarterly, current and standing prices

Including a smaller sample for small enterprises and stores

2003 Monthli research

Retail turnover, annual, current and standing prices

Large sample Structural information COICP classification

2004 Annual research

Industrial turnover, monthly

New indicator 2004 Inclusion in the regular research concernig

6.

industry Foreign trade statistics Estabilishing foreign trade

statistic in Montenegro 2004 Sustoms declarations

Newly-registered passenger vehicles, annual

New indicator The ministry of internal affairs

5) PUBLIC FINANCE STATISTICS

Aggregates of the State in accordance with IMF recommendations, Federal and republican, annual

GDDS accession Data produced by the Institutes for Statistics IMF definitions COFOG classification in accordance with the "accrual" principle instead of the "cash" principle

2003 Formation of new organizational units in the Institutes Administrative sources provided by the Ministry of Finance the Institutes for Social Insurance and health Care Protection etc.

Public finance at provincial and local levels, annual

In accordance with the international standards

2005 Additional statistic research at municipal level

Quarterly aggregates of the State

IMF definitions 2004 Available and amended administrative sources

6) BALANCE OF PAYMENTS (NBJ AND CBCG - Federal and Montenegrin Central Bank)

Current account of the balance of payments, monthly

Full compliance with IMF 2003 Reports from commercial banks concernin transactions

Foreign trade statistics (the issue of transit between the Republics) Statistic research concerning FDI, transport and tourism

Direkt foreign investments, annual

New statistic research 2003 (pilot) 2004 (regular)

Research of companies owned by foreign entities

7.

Serbina Balance of Payments, montlhly

Full compliance with IMF 2004 Exploring possible data sources for the assessment of internal turnover between the Republics

Montenegrin Balance of Payments, quarterly

Full compliance with IMF 2004 Exploring possible data sources for the assessment of internal turnover between the Republics

7) MONTERY AND FINANCIAL STATISTICS

Monteray aggregates, monthly

Full compliance with IMF, inclusion of Montenegro

2003 Raports from commercial banks

External debats, quarterly Instead of semi-annual research

2003 NBJ

8) CENSUS

Census in Montenegro In accordance with the

ixisting unified methodologies and questionnaires

2003 Existing methodology

9) ANNUAL POPULATION STATISTICS

Total annual population, including migrations, disaggregated by age/gender

On the basis of 2002 Census and the migration statistics

2003 Vital statistics The ministry of internal affairs for international migrations, Labour force survey for migrations abroad (at national level)

Annual population without migrations abroad,

On the basis of the 2002 Census

2003 Vital statistics The ministry of internal affairs for internal

8.

disaggregated by age(gander/municipalities

migrations

Demographic indicators, annual

In accordance with the international standards

2003 All existing sources

10) POVERY AND LIVING CONDITIONS STATISTICS

Number and participation of household below the minimal consumption standard, annual

The first poverty indicators in the official statistics System ov poverty indicators

2003 (first stage - Serbia) 2004 (second stage)

World Bank polls and the existing polls concerning household consumption

Household consumption poll (reviewed: adapted methodology, larger simple, keeping of diaries, COICOP clasisification)

Available income and expenses, by socioeconomic groups, annual

Based on a new methodology, in compliance with EU standards

2005 Household consumption poll, Tax and transfer statistic (administrative sources

11) HEALTH CARE STATISTICS

Health care statistics system, annual

Extension to the private sector, with a solution of the problem posed by double coverage (including working hours, number of patients, provided services and pices thereof)

2004 Data collection in health care centers, New statistic research projects

Health behaviour and use of health care services, conducted every three

New household poll (one person responds to questions relating to

2005 New poll beased on sampling

9.

years his/her behaviour in the course of one year)

Public eypenditure for health care system, annual

In accordance with the international definitions and classifications

2003 KGI-03 New public finance statistics

12) EDUCATION STATISTICS

Expenditure for education, annual

In accordance with the international standards, including the benefits for pupils and students

2003 KGI-03 New public finance statistics

Education indicators Rates in accordance with the international standards

2004 Statistic research

13) AGRICULTURAL STATISTICS

Cattle breeding by municipalities, annual

New data source for the number of cattle and; poultry

2004 Research based on reduced sample Cattle register

Catle production, annual No data for municipalities 2004 (Serbia) 2005 (Montenegro)

New questionnaire Register of farms (samplin framework)

New system of plant production monitoring, annual

New data collection method, in accordance with EU standard (replacion assessment)

Research based on sampling Register of Forms (sampling framework)

List of statistic research projects included in 2001 - 2005 Program for which amendments are proposed

Oficial Gazette 54/2001 Code

No. Page Tupe of change Explanation

DP 1,3 25 1- replacement Replaced by GDP - SNA conception C-21 2 33 1- replacement C-11-14 3,4,5,6 33 1- replacement C-31 7 33 1- replacement Costs of living 5 35 1- replacement

Replaced by consumption pices

GRAĐ-21 1 44 1- cessation Insufficient quality of the indicator

RAD-1 1,7 62,63 1- replacement Replaced by quart.index - EU standard MZ-1 1 22 2-suspension PB-11 8 25 2-suspension VOD-2v 5 44 2-suspension VOD-2k 7 44 2-suspension VOZD-2 5 43 2-suspension TU-13 6 56 2-suspension TU-18 7 57 2-suspension KOM1-7 1 59 2-suspension RAD-10 14 65 2-suspension PO-73 17 40 2-suspension PK-2 4 58 2-suspension UG-20,21,22 8 57 2-suspension

No implemented in the period 2003-2005

GRAĐ-33 3 45 3-cessation Not significant for shortterm indicators SŽ/M-11 1 46 3-periodics SP/M-11 2 46 3-periodics SP/M-31 3 46 3-periodics SV/M-11 5 47 3-periodics SV/M-21 6 47 3-periodics SV/M-11 7 47 3-periodics SG/M-11 11 47 3-periodics S-NF/M-11 12 48 3-periodics PR/M-11 13 48 3-periodics PTT/M-11 14 48 3-periodics PTT/M-11a 15 48 3-periodics 16 48 3-periodics

Monthly becomes quarterly

2.