Public Information Notice: IMF Executive Board Reviews Data Provision for Surveillance
November 18, 2002
|Public Information Notices (PINs) are issued, (i) at the request of a member country, following the conclusion of the Article IV consultation for countries seeking to make known the views of the IMF to the public. This action is intended to strengthen IMF surveillance over the economic policies of member countries by increasing the transparency of the IMF's assessment of these policies; and (ii) following policy discussions in the Executive Board at the decision of the Board.|
On May 10, 2002 the Executive Board of the International Monetary Fund (IMF) considered a staff paper on Data Provision to the Fund for Surveillance Purposes - the fifth review in a series that was initiated in July 1995.1
The IMF relies on members' cooperation in the provision of data it needs for its surveillance. Under the IMF's Articles of Agreement, the IMF may require members to furnish it with information deemed necessary for the activities under its mandate. Specifically, each member is obligated to provide the Fund with the information necessary for surveillance. Recent crises in emerging market economies have reinforced the importance of timely and adequate economic and financial data, especially on international reserves, external debt, and capital flows, for the assessment of countries' external vulnerabilities and as an essential element of surveillance. Therefore, the Executive Board, in aiming to strengthen IMF surveillance, has emphasized the need for the provision of comprehensive, timely and accurate economic data by members. Directors agreed that data requirements for surveillance should reflect the present data needs of the Fund. The IMF has also created data standards, the Special Data Dissemination Standard (SDDS) and the General Data Dissemination System (GDDS), that emphasize the importance of timely dissemination of reliable and comprehensive statistics to the public.
Executive Board Assessment
Directors welcomed the recent improvements in members' data provision to the Fund for surveillance purposes. They stressed that comprehensive, timely, and accurate economic data are critical for prudent national policy-making and for effective surveillance and crisis prevention. Directors reaffirmed the Fund's policy on data provision whereby all members are required to provide a minimum set of core data, consistent with their capacity. Beyond this, they are expected to provide the data appropriate to their individual characteristics and circumstances that are needed for effective surveillance. Directors broadly supported staff proposals to enhance the provision of data to the Fund needed for surveillance purposes, while noting that the cost implications of these enhancements for member countries as well as for the Fund will require careful prioritization and sequencing. They stressed that efforts to increase the frequency of data provision should not come at the expense of compromising on the quality of data.
Directors welcomed recent progress in the timely provision of core statistical indicators, which constitute a minimum data set necessary for surveillance. At the same time, however, they noted that in about one third of the cases discussed in staff reports data provided to the Fund are still judged to be inadequate for effective surveillance. Directors encouraged member countries to continue to build up their statistical capacity further.
Directors were generally satisfied with the progress in the coverage of data issues in Fund surveillance. Article IV reports have continued to devote considerable attention to data issues and increasingly discuss the implications of data deficiencies for macroeconomic analysis and policy, and Directors concurred that this development should continue. They also agreed that Article IV summings up should generally continue to include a paragraph assessing data provision to the Fund, in particular in cases where there are problems.
Directors reviewed the use of benchmarks for data provision on international reserves and external debt for Fund surveillance. They considered that these benchmarks have in practice provided a coherent and uniform framework for the assessment of data provision to the Fund in these areas. The positive experience with the reporting of reserves data is a particularly encouraging step towards the ideal of members' providing high frequency and comprehensive reserves data for surveillance. Recognizing the need to improve further the reporting on the use of these benchmarks in surveillance, Directors supported the staff proposals to modify the format of the statistical appendix and core indicators table to enable more transparent comparisons of countries' practices in reporting data on the core indicators of reserves and external debt/debt service with the benchmarks. In this regard, they underlined that the benchmarks should continue to be used as points of reference rather than as absolute standards. Directors also agreed that technical assistance in support of the provision of reserves and external debt data should remain a priority, while noting that this should be assessed further in the context of the forthcoming general review of technical assistance.
Reviewing the dissemination of data to the public on international reserves under the SDDS, Directors stressed the importance of frequent and timely disclosure of reserves data to the public, which is emerging as a best practice for many countries. However, most Directors considered that increasing the frequency and timeliness for the dissemination of reserves template data under the SDDS is not necessary at this time. They noted that moving to weekly frequency and timeliness would raise technical and resource constraints for most subscribers and could deter new subscribers, and some Directors expressed concern about the potentially destabilizing market reactions to volatile weekly data. Directors stressed that priority should be given to ensuring that the maximum number of member countries can subscribe to the SDDS or participate in the GDDS. Directors will have an opportunity to return to these issues on the occasion of the fifth review of the Fund's data standards initiative scheduled for 2003.
Directors welcomed the recent improvements in the discussion of countries' vulnerabilities in Article IV consultation reports, particularly for countries with access to international capital markets. They looked forward to members' continued efforts to strengthen the compilation of data that are important for vulnerability assessments and national policy-making. In view of the data deficiencies that in many cases continue to hamper vulnerability analysis, most Directors agreed that staff reports should identify more clearly gaps in data and technical assistance priorities during Article IV consultations and discuss progress in compiling data needed for vulnerability assessments, as relevant. Data needs for vulnerability assessments are to be reviewed in the context of discussions on data provision to the Fund. In line with previous Board guidance, the data to focus on should include frequent and comprehensive data on international reserves; detailed data on international investment positions and capital flows; maturity profile and repayment schedules of external and public sector debt; and financial soundness indicators, including corporate sector data. The objective should be to work toward compiling the above data with the necessary detail depending on country circumstances and characteristics and in line with the relevant statistical methodologies. A number of Directors felt, however, that the Fund's analysis of public sector debt should be strengthened before addressing issues related to private sector balance sheet exposures. Many Directors considered the compilation of comprehensive data for vulnerability assessments—including data on foreign exposure—to be especially important for countries that borrow substantially on international capital markets in foreign currencies. A number of Directors, however, suggested that, subject to macroeconomic relevance or impact on other countries, significant international positions should be covered for a broader group of countries, including industrial countries which borrow internationally in domestic currency or whose private enterprises have significant international exposure.
Most Directors considered that, to further enhance vulnerability assessments, data from debtor countries should be complemented by creditor-side data on cross-border exposures. They welcomed, in this regard, recent improvements in the Bank for International Settlements' (BIS) statistics and the Fund's Coordinated Portfolio Investment Survey, and looked forward to further discussions between Fund and BIS staffs on adding a maturity breakdown to the BIS locational banking statistics and extending the coverage of financial derivatives in the BIS statistics.
Directors asked the staff to explore with other international entities, national experts, and the appropriate working groups how their expertise might be brought to bear to evaluate and address the gaps in debtor- and creditor-side data.
Directors stressed the critical importance of the Fund being provided with adequate fiscal data, and asked staff to continue working on improving the provision of these data. They welcomed the recent completion of the Government Finance Statistics Manual, which represents a major advance in the development of an analytical framework for fiscal data and supported the provision of Fund technical assistance to help member countries adopt the practices set out in the new manual.
Directors encouraged national authorities to articulate their policies on data revisions, which would enhance the transparency of the data provided to the Fund and would help assess when the reporting of revised data to the Fund brings to light a breach of obligations. Directors will discuss later this year a paper on Strengthening the Application of Article VIII, Section 5, which will address data revision policies in the context of misreporting to the Fund in more detail.
The staff proposals will require strengthened efforts by members, and an appropriate balance will need to be struck among greater comprehensiveness, frequency and timeliness, and data accuracy. The resource implications of these efforts could be substantial over time. Directors urged prioritization, based on the identification and careful evaluation of data gaps, capacity constraints, and technical assistance availability and needs during Article IV consultations. They looked forward to further consideration of these issues in the context of the upcoming review of the Fund's Technical Assistance policy.
1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities.