Public Information Notice: IMF Executive Board Reviews Data Provision for Surveillance
April 12, 2004
|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 March 15, 2004, the Executive Board of the International Monetary Fund (IMF) considered the staff paper Review of Data Provision to the Fund for Surveillance Purposes─which is the sixth review in a series that was initiated in 1995.
Timely, accurate, and comprehensive data are essential for surveillance, which encompasses a process of dialogue, analysis, and advice that the Fund carries out with its member countries on their economic and financial conditions and policies. The framework for data provision to the Fund for surveillance purposes is based on the Articles of Agreement (particularly, Article VIII, Section 5) and relevant decisions of the Executive Board, and relies on a cooperative approach.
The current framework, established in 1995, has three main components. The first component concerns the data that members are called upon to provide the Fund. These include a common set of data (identified then as "core statistical indicators") to be provided by all members on a timely basis, and complementary data as needed for effective surveillance, which vary according to members' individual circumstances. The second component calls for the IMF to make an assessment of the data that members provide, in surveillance reports (known as Article IV consultation reports) and in summings up (the summaries of the Executive Board's discussions of Article IV consultation reports). This assessment consists of an overall judgment on the adequacy of data provision for the purposes of surveillance and, where relevant, a discussion of the impact of any data deficiencies and how they can be addressed. The third component comprises a graduated approach to address the rare cases where the data necessary for surveillance are not forthcoming due to reluctance on the part of a member.
Data needs vary according to members' circumstances, and the Fund's data requirements have evolved over time in line with developments in the coverage of surveillance and other Fund activities. This is reflected in the Executive Board's 2003 review of the legal framework for the provision of information to the Fund, which expanded the categories of information that members are required to report to the IMF to meet its data needs.1 The expanded list of required information is known as the list of "common indicators required for surveillance," which replaces the above-mentioned "core statistical indicators."
In addition to the data provision framework, which focuses on the information flow between the Fund and its members, the Fund has created voluntary data standards for the dissemination of reliable statistics to the public by member countries.2 The Fund and the World Bank assess countries, at their request, in their observance of internationally recognized standards and codes in twelve different areas, including data standards, through Reports on the Observance of Standards and Codes (ROSCs).3
The data provision framework is reviewed biennially. Past reviews have, among other things, supported enhanced reporting of international reserves and external debt data, and considered the data needs for new crisis-prevention initiatives such as vulnerability assessments.
The staff paper prepared for this sixth review of the data provision framework highlighted data needs stemming from four major areas of work to strengthen surveillance (balance sheet analysis, debt sustainability assessment, liquidity management, and financial soundness indicators) and steps to meet these data needs. Also featured was the increased focus on data quality in the Fund's statistical work, as other aspects of data quality, in addition to their frequency and timeliness, have a major bearing on the Fund's ability to conduct effective surveillance. The paper also addressed the issue of increased dissemination of macroeconomic data by the Fund and the benefits of the common sourcing of data.
Executive Board Assessment
Executive Directors welcomed the further opportunity to review progress in the provision of data to the Fund by members. Better data not only support strengthened Fund surveillance and crisis prevention, but they also allow members to formulate sounder economic policies. In this context, Directors expressed their appreciation to the staff and country authorities for the substantial progress achieved in recent years in improving data provision to the Fund. They reaffirmed the principles underlying the policy on data provision to the Fund for surveillance purposes, namely: that timely, accurate, and comprehensive data are essential for effective surveillance; that data needs vary according to members' circumstances; and that data requirements evolve over time with changes in the scope and focus of surveillance.
In taking stock of developments in the coverage and frequency of data provision by members, Directors were encouraged by the finding that a rising share of the membership now provides data that are deemed adequate for Fund surveillance, and that most members—including virtually all countries with market access—now report core statistical indicators on a timely basis. At the same time, Directors recognized that in just under one-third of the Fund's membership—consisting mostly of countries with small populations or low per capita incomes-severe data deficiencies continue to hamper policy analysis and Fund surveillance. A number of Directors considered that efforts to strengthen data provision, going forward, should focus on these countries. Directors acknowledged that, in many cases, more time will be needed to overcome long-standing statistical capacity constraints, requiring national efforts and international support calibrated to the circumstances of each case.
Directors viewed favorably the current framework for data provision to the Fund, and agreed that it should be essentially preserved. They noted that the core statistical indicators had been replaced by a set of common indicators required for surveillance, following the recent decision adopted by the Executive Board pursuant to Article VIII, Section 5. Directors supported addressing data quality issues in the Statistical Issues Appendix based on available ROSCs. Most Directors also agreed that the table of common indicators required for surveillance should include summary assessments of data quality when available from data modules of ROSCs. Some Directors were concerned about the adequacy of data ROSCs for providing assessments of data quality, especially because the quality of the individual common indicators is not directly assessed in the ROSCs, and about the risk that these assessments could be inappropriately viewed as a rating of members' statistics.
Directors called for strengthened implementation of the framework for data provision to the Fund. In particular, they stressed that Article IV consultation reports should identify data shortcomings, indicate where the analysis of key issues is significantly affected by these shortcomings or where important policy conclusions may be subject to unusual uncertainty due to data weaknesses, and recommend remedial actions where data prove inadequate for effective surveillance. In general, Directors encouraged staff to seek full compliance with existing guidelines on treatment of data issues in staff reports, while noting that coverage of these issues will of course vary from report to report, depending upon the adequacy of data provision to the Fund in each case. Most Directors supported the continued inclusion in Article IV summings up of a paragraph assessing the adequacy of data provision to the Fund, in particular in cases where there are shortcomings.
Directors also called for greater elaboration of remedial strategies in Article IV staff reports for countries where severe and long-standing data deficiencies hamper policy analysis and Fund surveillance. They emphasized that these member countries should be encouraged to participate in the General Data Dissemination System, which provides a structured framework for statistical improvement. Directors stressed the importance of technical assistance to strengthen these countries' statistical systems as well as the need for country authorities to demonstrate ownership of these institution-building efforts by committing the necessary local resources. Generally, Directors were of the view that technical assistance priorities in the area of statistics should continue to be guided by identified deficiencies in data provision to the Fund.
Directors had a wide-ranging discussion on how best to meet the data needs of the Fund, as the framework for Fund surveillance evolves and gives rise to new data provision requirements. They focused on the data implications of the work the Fund is doing in four areas to strengthen Fund surveillance, namely, the balance sheet approach, the framework for debt sustainability assessments, liquidity management, and financial soundness indicators for financial sector surveillance. Most Directors agreed that a priority in the period ahead is to improve data availability to conduct balance sheet analysis, as contemplated in these four areas of work. They emphasized the importance of breakdowns of assets and liabilities to gauge currency and maturity mismatches in sectoral balance sheets and the need to address weaknesses in public debt data.
Directors recognized that improving the availability of data needed for balance sheet analysis will involve costs for member countries and the Fund. In this context, some Directors emphasized the need to balance the benefits of improved data against the resource costs involved, including the costs to member countries. Taking account of these considerations, most Directors endorsed a pragmatic action plan to improve data availability to serve the needs of the various balance sheet initiatives. This plan involves (a) the continuation of current efforts to improve external debt data, foreign direct investment data, and compilation of financial soundness indicators; and (b) the seven additional steps outlined in paragraph 43 of the staff report.4 It was suggested that a reduced set of core financial soundness indicators be included within the Special Data Dissemination Standard.
Directors expressed satisfaction that significantly increased dissemination of macroeconomic data by the Fund has been a vital part of efforts in recent years to strengthen the international financial architecture. To minimize the risk of misperceptions about the accuracy and reliability of Fund data that may arise from the publication of different data series for a given variable, Directors endorsed several approaches. These will include: efforts to strengthen metadata and explain data differences; work to promote common sourcing and better sharing of data across the Fund; and inclusion of a general disclaimer on published staff reports. Directors generally supported the acceleration and extension of the Integrated Monetary Database Project, pointing to the prospective significant medium-term efficiency of such an exercise.
Directors reviewed the resource implications of the measures endorsed in this review and, more broadly, of steps to improve availability of data for policy analysis and Fund surveillance. They noted that many of the steps to strengthen availability of data are compatible with medium-term budget plans, if the current pace of implementation is maintained. Some other steps—particularly the expanded reporting of public domestic debt data, enhanced collection of monetary and financial data, and review of the International Financial Statistics (IFS)—will involve additional costs. The majority of the Board felt that these additional costs should be accommodated within the existing budget envelope. The preferred course of action, for these Directors, is to boost the efficiency of existing data initiatives and to prioritize statistical activities. In this context, it was suggested that the review of the contents of the IFS could be delayed. A number of other Directors, however, were in favor of expanding the resource envelope to accommodate the additional costs, emphasizing the need to protect the effectiveness and high quality of the Fund's data work while not crowding out other important activities, including data ROSCs.
Directors agreed that the next review of data provision to the Fund should be conducted in about two years' time.
1 See Public Information Notice (PIN) No. 04/10 (2/23/04): IMF Approves Decisions Strengthening the Effectiveness of the Legal Framework for the Provision of Information to the Fund at http://www.imf.org/external/np/sec/pn/2004/pn0410.htm.
2 Information on the Special Data Dissemination Standard (SDDS) and the General Data Dissemination System (GDDS) is available at http://www.imf.org/external/np/sta/index.htm.
3 See http://www.imf.org/external/standards/index.htm for information on the Fund's work on international standards and codes and on data ROSCs.
4 These additional steps are: development of a standard set of tables to help guide reporting of public debt data to the Fund, including appropriate breakdowns; enhanced collection of monetary and financial sector data, including through development and use of standard reporting forms; promotion of greater coherence of data needs across policy initiatives, such as FSIs and the balance sheet approach; review of the contents of the International Financial Statistics to explore the scope for reflecting data needed for policy initiatives; continued experimentation with the use of nonfinancial corporate data from a variety of sources; continued elaboration of internationally agreed methodologies to incorporate pertinent breakdowns and details; and initiation of consultations on the SDDS prescriptions for public debt in the context of the next review of the Fund's Data Standards Initiatives.