Rosstat is always “above”: above the fights in the government, above the criticism of experts, above any disputes about strategies and tendencies in the economy. Aleksandr Surinov, head of the Federal State Statistics Service (Rosstat), told NBJ about the processes inside this organization and about how its methods are being modernized.

NBJ: Aleksandr Evgenyevich, how prompt is the exchange of statistics between Rosstat and the consumers? What are the main areas of interest of the Central Bank and how it applies the data it receives?

A. SURINOV: We submit all calculations to the Central Bank, to the Ministry of Economic Development and Trade and the Ministry of Finance simultaneously and equally promptly. Inflation, GDP, industrial production index, social indexes - unemployment, employment... All of these are important indexes that both the government and the Bank of Russia are interested in.

Russian Central Bank is one of the most professional consumers of statistics. In our country and elsewhere in the world, central banks request and carefully analyze the statistics. I cannot go into details, of course, regarding how the Central Bank uses it, but weekly inflation rate is very important for them.

NBJ: What data do you request from the Central Bank?

A. SURINOV: Certainly, we at Rosstat use banking statistics, as in order to calculate the GDP, we must take into account the added value created by financial intermediaries. This is one side of the coin, and the other is that the Central Bank calculates the balance of payments, i.e. basically the statistical system of national accounts. The balance of payments is more detailed from the point of view of foreign trade, while when we calculate the GDP, there is a "the rest of the world" sector. These are non-residents who participate in economic transactions with Russian residents - a conventional sector that includes all those outside the economic territory of Russia. In order to calculate this, we need customs and border statistics.

So we both give information to the Central Bank and consume their data as well. Without the information on the balance of payments, we would not be able to accurately represent our national accounts and calculate the GDP. We would have to invent something on our own, but they already have highly skilled experts in statistics at the Central Bank.

NBJ: Do you as statisticians have any doubts about the objectivity of indexes in the balance of payments - for example, about how up-to-date the methods are?

A. SURINOV: Certainly not. Who do I believe then? Analytics? A different story is how I interpret and use our figures for the purposes of Rosstat. I take the national finance statistics from the Treasury and I'm not going to take it from anybody else, irregardless of any insinuations of pundits and experts who think they are the smartest.

“THE CRITICISM IS NOT SERIOUS”

NBJ: Since you have started talking about experts, I have to note that recently your organization has been often criticized by fellow economists. Some say that you change your methods too seldom, others say that you change them too often. They criticize the structure of sector statistics - it is difficult to understand or find anything in it. How do you respond to the criticism of colleagues?

A. SURINOV: I give them our publications. Let them read first, then criticize. Or it is as if an eye doctor would criticize a dentist that he does a bad job with teeth and fillings.

Yes, our methodology is not perfect, and we are going to improve it considerably.

As for the sectors, it's been a few years since our country transitioned to a common classification of economic activities. It is harmonized with the international standard industrial classification. The differences are at the lowest codes from the aggregated codes. Roughly speaking, they don't have kefir, milk and sour cream, while we do, and yoghurts. This information ends up in the “sour milk products” section anyway.

So open the international methodological guidelines. Read and study them. After you've done, then we can talk. Until you study it, any of your criticism does not sound serious for me.

It is ridiculous to accuse us of working somehow incorrectly. We are verified by the department of statistics of the IMF. The IMF is not like some Russian consulting companies whose analytics have studied no one knows where with no one knows what grades. The IMF are real pros. Right now we are being verified by the mission of the statistics department of the Organization for Economic Development and Cooperation. They are professionals, and they have discovered numerous issues, and it helps us move forward and improve our results. Russia is joining the WTO, as you know...

NBJ: For ten years already, if not more...

A. SURINOV: Don't be so sceptical, it is not a simple process. For me as a statistician, the unification of methods is important. We also plan to join the OEDC - so we have to comply with their standards. Russia pays money so that this mission came to us, the professionals. And they evaluate us.

We already had several missions; another one is to arrive in September. Basing on professional and detailed research, opinions and plans are made: how do we achieve compliance with standards. It is a professional talk. OEDC mission plans to complete the evaluation in June next year.

In conclusion about the industry structure, I would like to stress that we have everything in order, we comply with the UN standard. I reject any claims against that. We are included into UN, OEDC and IMF publications. Starting from this year, we have adopted a classification of products based on types of economic activities. This is a revolution, it is difficult to adopt, but it is being adopted.

WHAT ABOUT THE BANKS?

NBJ: Don't you think that critics are somehow right: if even your fellow economists are not always sure that they interpret Rosstat data correctly, this is even more true about the bankers. How do they understand and analyze the trends in sectors?

A. SURINOV: If some bankers cannot read statistics, cannot see and analyze industry indexes, it is their problem. They want to live well with that? In the West, these “pros" would not be able even to work as junior clerks in a bank.

We do not make predictions and we do not spread the statistics among the public. We calculate, analyze and submit information, much like the Central Bank calculates and publishes the balance of payments. Our statistical publications have everything. Let us open, for example, the section called “Distribution of private entrepreneurs by types of economic activities”. Here are the borrowers. Almost 4 million potential borrowers, but do you think the banks want to give loans to private entrepreneurs?

NBJ: Some regional banks announced loan programmes for small businesses and entrepreneurs, although they use grants of international organizations.

A. SURINOV: For somebody else's money - of course, they don't have to repay it.

NВJ: They also promise to create the Postal Bank that will provide loans to entrepreneurs. Do you think this idea is viable?

A. SURINOV: If it will be a state-owned bank, then I do. It has a completely different stability. Commercial bankers want profit. But I am not an expert in this area, it is hard to comment on that.

NBJ: The crisis has certainly changed the situation in the Russian economy. Are the banks an important part of our GDP now? What is their share in the economy?

A. SURINOV: Around 4% of the GDP, and of course, Sberbank holds a large market share.

NBJ: In your opinion, is 4% a lot for a country like Russia?

A. SURINOV: If we speak about Luxembourg or Switzerland, the banks' share would be certainly much higher. But we also fly into the space and develop other sectors of the economy. Although bankers certainly want more. But shall we close the oil sector then or what? The GDP includes not only banks or, for example, Gazprom, but also education and healthcare.

NO TV SETS FOR AFRICANS

NBJ: Let's talk about the inflation. It is your favourite topic…

A. SURINOV: Not the favourite at all. The lower the inflation rate, the better.

NBJ: However, Rosstat calculates the inflation rate by weeks. Few countries in the world do that. Question: why do we need this? And what is our inflation rate compared to that of the UK, China or other countries?

A. SURINOV: Methods for calculating the consumer price index are the same everywhere, and the IMF checks everyone. There are minor differences: structure, intervals. We calculate it every week, and it is true that nobody else does this. Why? First, we have a high inflation rate. And second, we have created a system so that it is not very expensive, but at the same time very quick. It is a popular index.

One more thing: absence of inflation is bad as well. Inflation stimulates the growth of the economy. I believe that deflation is worse.

NBJ: Don't you think that weekly publication of inflation data gives room for speculations on the financial market etc., which hardly adds any stability in our economic situation?

A. SURINOV: Depends on your point of view. Somebody has to quickly adjust rates in currency exchange outlets.

NBJ: That is what I am saying. And what is currently included into the consumer basket? How often is it updated?

A. SURINOV: The inflation rate is calculated using the actual basket - consumer expenses of average people, which include the poor, the rich and the middle class.

The basket which is the basis for calculating the inflation rate includes all Russian households and is actively updated. It correlates with the consumption structure: as soon as the share of some item in the structure of consumer expenses exceeds 0.1%, it must be included into the basket.

Currently we have about 500 goods and services. It is not always true that the more goods are included, the more precise the data is. The American basket is less diverse - 300 goods, and in Italy it includes over 1000 goods.

It is related to the statistics traditions and expenses on statistical research. But the output is the same comparable consumer price index.

We have a relatively large set of goods since most prices on these goods are used to calculate the minimum subsistence level, which enables comparing such indexes as wages and pensions.

NBJ: So the basket for the poor people still has one set of clothes in 10 years or is anything changing? In the UK, as far as I know, the consumer basket includes a large assortment of audio and video devices…

A. SURINOV: There is a law about the minimum subsistence level. We also calculate the inflation rate for poor people, and as for the minimum consumer basket - this is a question for senators and for the Ministry of Public Health and Social Development. We only monitor the prices for these goods. It is what is consumed by a person who is close to the poverty line. I don't know about the UK, but in Russia - how can he have an iPod in a situation like this? In Africa, even TV sets are not included into the minimum consumer basket, while in Russia they are.

In general, if the price of the minimum subsistence level basket grows faster than the average consumer basket for the whole population, this means that it is getting relatively worse for the poor. As a rule, it is the case during the crisis, since prices for the goods in the minimum subsistence level grow faster.

“MY BUSINESS IS TO CALCULATE”

NBJ: Another issue that Rosstat is criticized for - the quality of the producer price index. They say that there have been considerable corrections.

A. SURINOV: We have to choose between the speed and the quality. We publish information on the 11th business day after the end of a month. If we were given a week for receiving information from enterprises and calculations, no corrections would have been necessary.

NBJ: Again, many businesspeople say: we do not believe it. We make our own calculations and the sector indexes do not match.

A. SURINOV: Well, for a start, nobody understands what methods they use. Again, we use the international ones. But most importantly, if nearly every enterprise gives invalid data, how can we produce accurate reports?

I remember only one case when a Western company came to Russia and asked Rosstat: help us figure out what kind of information we should give you and how we should calculate it. Russian businesspeople seem to understand everything, don't they? That is why we have the statistics this way.

NBJ: And do you provide information for a fee? Is it possible to order a research?

A. SURINOV: We provide information for free. The opinion of the government is that the statistics has already been paid with taxes. Rosstat even has no settlement account. Regional branches do accept orders for calculations. However, if some order from a business is deemed important and included into the federal programme of statistical research, we work for free.

NBJ: You always say: we are above the fight, we do not make predictions. Is it really true that you, a macroeconomist with a lot of experience, and your colleagues, do not analyze the trends for many years? Don't you want to share your thoughts?

A. SURINOV: We provide information and make predictions only in one aspect - regarding the population size. But even here we act as a computer. Experts in demography create scenarios, we translate them into formulas and make predictions using our databases. Sometimes we come across interesting phenomena. For example, in 5 months of this year the industry has grown by 10%, while the employment rate has grown by 1.2%.

NBJ: Paradox?

A. SURINOV: No. What about labour efficiency, business efficiency? Businesses are saving money. The question is, what kind of workers we need. From our neighbouring ex-USSR countries? Then we will preserve low-technology enterprises. Is this what Russia needs? Or do we need to make it so that our skilled experts did not leave the country and so that educated people came to Russia? These are the questions for the government. My business is to calculate, to comment on the methods, explain what the methods do and do not take into account, who is the respondent, how statistical monitoring is performed.

As a professional economist, I certainly monitor the situation in the country, and when I see a certain phenomenon, I estimate whether there will be demand for information. If we think that there will be such demand, I say: let us make test measurements. And it is the job of the Ministry of Economic Development and Trade to make macro-economic predictions basing on our data that they have requested.