Conference on Capital Flow and Debt Statistics:
Can We Get Better Data Faster?
Conference Sponsored by
The Statistics Department and the Policy and Development Review Department of the International Monetary Fund in Cooperation with the Financial Stability Forum Working Group on Capital Flows
Washington, D.C., February 23–24, 2000
1. The financial crises in 1997-98 in Asia, the Russian Federation, and Brazil brought to the fore again the importance of timely and reliable economic and financial data to assess risks of sharp swings in capital flows. Many international initiatives were launched to enhance disclosure practices and transparency in order to improve the functioning of markets as well as the basis for policymaking.
2. The IMF, in cooperation with other international institutions, has undertaken a number of initiatives both to identify the data that are necessary to strengthen policymaking and to improve data dissemination. Important steps have been taken to strengthen the IMF's Special Data Dissemination Standard (SDDS) in the area of international reserves and external debt statistics. The Inter-Agency Task Force on Finance Statistics, chaired by the IMF, has introduced the Joint Debt Statistics to facilitate access to data, mainly from creditor sources (BIS, IMF, OECD, and the World Bank), and is preparing a new guide on external debt statistics, which will assist countries in compiling these data as well as providing guidance in the analytical use of the data. The BIS is continuing to enhance the International Banking Statistics. Most importantly, much is being done at the country and regional level to improve the quality and timeliness of external sector data. At the same time, analytical work is underway on the sources of vulnerability, all of which will require better data. For example, a paper on "Debt- and Reserve-Related Indicators of External Vulnerability" is being prepared for consideration by the IMF's Executive Board in March. 1
3. The Financial Stability Forum's Working Group on Capital Flows, chaired by Mr. Mario Draghi, has also been identifying gaps in available information on cross-border capital flows and external positions, as well as elaborating on the analytical basis for risk and liquidity management. In this context, Mr. Draghi has called for a conference to address the data issues more closely.
4. Against this background, the IMF is pleased to host the Conference on Capital Flow and Debt Statistics: Can We Get Better Data Faster? This conference provides a unique opportunity for policymakers, data users in the private sector, and statistical compilers to exchange views on what are the most pressing requirements for data on capital flows and external debt and, importantly, how any new requirements can be met or existing data improved. This dialogue can help guide initiatives that are presently in train and set priorities for further work in this area. While data needs and the demands placed upon national statistical agencies continue to grow, the resources to develop and disseminate the statistics may not grow commensurately. Moreover, statistical compilers may not always be sufficiently consulted on new data initiatives agreed upon at the international level, and the data demands made in international fora may, at times, conflict with those coming from domestic policymakers.
5. This paper provides background information on key initiatives--both at the national and international level--that are underway to improve statistics on capital flows and external debt. These initiatives involve both debtor and creditor sources of information. The paper outlines the initiatives and poses a number of questions for discussion: Do these initiatives focus on the right issues? What is the need and scope for further improvements? Is it feasible to meet the additional demands and what are the trade-offs in terms of other demands on statistical resources?
6. The structure of the paper follows the conference agenda. Section II focuses on "core data requirements" in the area of capital flows and external debt. It briefly outlines the basic framework for these statistics--the international investment position (IIP)--and discusses the external sector data categories of the SDDS, highlighting recent and planned enhancements. The section also touches upon the role of the new debt guide, which is presently being drafted, in improving core debtor data. Section III discusses "supplementary data requirements" that many view as important in assessing a country's external indebtedness and vulnerability. Section IV examines creditor and market sources of information that can be used to complement debtor-source information to evaluate a country's external indebtedness and can also be used to evaluate or close gaps in coverage. In Section V, systems for high frequency reporting are examined. Such systems have been used in some countries to monitor external liabilities of domestic financial institutions and in other countries to monitor transactions and positions in the foreign exchange market.
7. The international investment position (IIP) is the balance sheet of the stock of a country's external financial assets and liabilities. The statistical framework for the IIP is presented in the fifth edition of the IMF's Balance of Payments Manual (BPM5). The IIP framework records at a specified date an economy's claims on and liabilities to the rest of the world (residency principle), in addition to monetary gold and SDRs.2 Foreign assets and liabilities are valued at market prices in the IIP.
8. An overview of the standard components of the IIP is presented in Box 1. The financial account of the balance of payments follows the same classification scheme. Box 1 presents the first two hierarchical levels of the IIP classification--the functional and the instrument breakdown. In addition, the IIP classification provides, at a third level, information on four sectors--monetary authorities, general government, banks, and other sectors and, at a fourth level, a maturity breakdown--short-term and long-term--for most of the asset and liability items. Maturities are defined on an original maturity basis: short-term refers to claims with an original maturity of one year or less or on demand and long-term refers to claims with an original maturity of more than one year or with no stated maturity.
9. As defined in BPM5, the IIP does not make it possible to separately identify external assets and liabilities denominated in domestic and foreign currencies.
10. The Fund publishes summary annual IIP statistics and quarterly balance of payments statistics in its monthly International Financial Statistics. A more detailed breakdown of the annual data--items in Box 1 together with sectoral and maturity information--is presented in the annual Balance of Payments Statistics Yearbook. At present, some 50 countries report IIP data to the Fund's Statistics Department, while more than 170 countries report quarterly or annual balance of payments statistics. Increasingly, countries are providing balance of payments data on a BPM5 basis, consistent with the IIP framework. Both the IIP and the balance of payments data are reported with varying degrees of timeliness, at times with very long lags.
External debt in the IIP
11. External debt is not a separate component of the IIP, but can be derived by summing the non-equity liability components (see Box 1, footnote 2). A far greater number of countries report external debt statistics to the Fund for surveillance purposes than are able to generate full IIP data. Moreover, more than 80 countries report such external debt data with a monthly or quarterly periodicity. Thus, more information is available on the external debt of the developing/emerging market economies than can be extracted from the published IIP statistics.
12. The responses from 48 countries3 to a questionnaire used in an SDDS consultation on external debt (see below) showed that 70 percent of the surveyed developing/emerging market economies disseminated either monthly or quarterly IIP and/or external debt statistics; only 35 percent of the surveyed industrial countries disseminated either monthly or quarterly data in these areas. Respondents reported that the coverage of the external debt statistics varied, which to a considerable extent can also be said of the IIP statistics.
13. The Inter-Agency Task Force on Finance Statistics (TFFS)4 launched in 1998 an important initiative to improve data compilation and understanding of external debt statistics. A first draft of a new publication--External Debt Statistics: Guide for Compilers and Users (Debt Guide)--was discussed by the TFFS in January 2000. The publication will provide international statistical standards for the measurement of external debt and discuss sources and methods for compiling the data. The draft Debt Guide will be presented in a series of regional training seminars for national compilers of external debt statistics. The first seminar will be held at the IMF-Singapore Regional Training Institute in March 2000. The member institutions of the TFFS will also provide technical assistance to assist countries to develop their external debt statistics.
14. The Special Data Dissemination Standard (SDDS) was introduced in 1996, following the Mexico crisis, which highlighted the implications of data deficiencies for the assessment of external vulnerability. The SDDS is a standard of good practices in the dissemination of economic and financial data to which IMF member countries may subscribe on a voluntary basis. It is intended for use mainly by countries that either have or seek access to international financial markets, to signal their commitment to the provision of timely and comprehensive data. As of January 31, 2000, there were 47 subscribers to the SDDS. The SDDS requirements regarding coverage, periodicity, and timeliness of external sector data dissemination, as prescribed when the standard was introduced, is shown in Appendix 1.
Strengthening the SDDS
15. The Asian financial crisis again drew attention to essential data deficiencies. Key issues were the lack of adequate information on external debt, forward foreign currency commitments of central banks, and the usability of foreign exchange reserves.5 Following extensive preparatory work, the IMF announced on March 26, 1999 the decision by its Executive Board to strengthen the SDDS data categories in three important ways by:
16. The Fund staff has recently completed its consultations on transition periods for countries to implement the new SDDS data category and on the specific details of this category, notably regarding debt maturities. The Fund's Executive Board will consider these proposals in March on the occasion of the Third Review of the IMF's Data Standards Initiatives.
17. As part of the consultation, a questionnaire was sent to SDDS subscribers to obtain their views on a range of debt-recording issues. Responses were received from all of the subscribers and the questionnaire was also posted on the Fund's Dissemination Standards Bulletin Board for the information of other countries. The results from the debt questionnaire were put before the IMF Committee on Balance of Payments Statistics and the TFFS and consultations were also undertaken with other selected users and international organizations. An overview of the responses received from the 47 SDDS-subscribing countries and one other country is presented in Appendix 2.
18. On the issue of debt maturities, the responses to the debt questionnaire revealed that a debt service schedule can be difficult to construct in economies with large private sector borrowings, because it requires detailed information on principal repayments. Respondents in many industrial countries and in some other countries commented that developing such data would entail substantial changes in compilation systems, as they generally collected debt data on an aggregate basis rather than on a loan-by-loan basis.
19. On the basis of the consultations, there appeared to be support, on balance, for the SDDS external debt data category to:
21. The focus of the SDDS continues to be on those series viewed as most important for assessing macroeconomic performance and policy. It was never the intention to cover the full range of information sought by policymakers and other data users. While the standard focuses on the minimum coverage necessary, all countries are encouraged to disseminate data that increases the transparency of economic and financial performance and policy.
22. The work of the TFFS on the Debt Guide recognizes that the analysis of the vulnerability of an economy's external debt position requires data beyond that provided by the IIP framework. The Debt Guide seeks to address these data needs by covering a range of presentations of external debt and supplementary detail that may be useful for policy and analytical needs. Many countries, especially those that collect information on external debt on an individual loan/security basis, are able to compile such supplementary information that goes beyond the detail specified in the IIP.10
Foreign versus domestic currency external debt
23. Foreign currency and foreign currency-linked debt covers debt instruments that require repayment either in or whose redemption value is linked to a currency other than the domestic currency. These obligations may be to residents and nonresidents. The residency-based IIP framework in the BPM5 only covers obligations to nonresidents and does not provide a breakdown into domestic- and foreign currency-denominated obligations.
24. Interest in a breakdown of debt obligations by domestic and foreign currency derives from the impact of exchange rate changes. If a significant part of foreign debt is denominated in domestic currency, exposure to exchange rate depreciation and the potential for balance sheet effects arising from such exchange rate changes is reduced.11 However, the use of financial derivatives to hedge exchange rate risk can significantly alter the effective currency composition of short-term debt and limit the usefulness of information on the domestic/foreign currency breakdown of the underlying debt instruments.
Fixed and floating rate debt
25. For countries with large amounts of floating rate debt, interest rate fluctuations can contribute to balance of payments and debt management problems, especially during periods when international interest rates are volatile. Information on the breakdown of debt by fixed and floating interest rates is important to assess a country's vulnerability to changes in international interest rates. However, as in the case of foreign currency exposure, financial derivatives such as interest rate swaps can be used to alter the effective composition of debt in this respect. In advanced economies, such swaps are frequently used, limiting the value of information on the breakdown of debt obligations into fixed and floating rate debt.
26. As noted, financial derivatives can be used to hedge the currency and/or interest component of external debt, which can have a positive or negative effect on cash flow and balance sheets. Views expressed in the context of the IMF's SDDS debt consultation suggest that many respondents attach great importance to including financial derivatives data in any assessment of external debt positions. The TFFS is considering these results in developing the presentation of external debt statistics to be included in the Debt Guide.
27. Many countries have not yet introduced statistical systems to collect data on financial derivatives for balance of payments and IIP compilation. It is difficult to assess the importance of these data, but the balance of payments data published in the Balance of Payments Statistics Yearbook for countries such as Sweden, France, and Japan suggest that their impact is significant.
28. The IMF's Statistics Department will shortly issue new statistical guidelines12 for recording financial derivatives to its balance of payments correspondents and encourage countries to report data to the Fund on this basis for publication purposes. In line with the new guidelines, financial derivatives will be presented as a separate functional category in the balance of payments and IIP statistics. The new classification scheme will show, at market values, the net positions--for assets and liabilities--by sector. Once the new standards for financial derivatives are disseminated, it is expected that more countries will investigate statistical collections.
29. Supplementary information on notional values of derivatives and risk categories, while not covered in the new guidelines, is also important. Notional values, together with information on risk categories, indicate exposures in terms of risk type, such as foreign currency risk, interest rate risk, etc.
Nominal versus market values
30. The IIP statement is presented on a market value basis--that is, it reflects current market prices for external financial assets and liabilities, an indication of their current economic value. Debt data on a nominal value basis are, however, equally important to debtor countries. They reflect the amount actually owed by the debtor and are critical for debt sustainability analyses. The Debt Guide will discuss the measurement of external debt valued in both market prices and in nominal value terms, and will also cover the repayment schedule of that debt, the debt service schedule.
31. Answers to the questionnaire employed in the SDDS debt consultation13 suggest that most countries preferred the use of market valuation.
Maturity and forward-looking indicators
32. Information on amortization schedules (or debt service schedules) helps in ascertaining the sustainability of the debt position from a liquidity perspective in future periods. Such information indicates what countries need to pay and when (given the stock of debt at any moment in time) and may warn of a potential build up in debt repayments and future liquidity problems. Work within the IMF on indicators of external vulnerability and early warning systems has identified short-term debt by remaining maturity as the relevant variable in constructing the reserves over short-term debt vulnerability indicator.
Corporate sector data
33. The paper prepared by the IMF staff on "Debt- and Reserve-Related Indicators of External Vulnerability" and the work of the Working Group on Capital Flows of the Financial Stability Forum stress the importance of the corporate sector in vulnerability analysis. However, the IIP statement (and the SDDS enhancements to external debt) only make possible the identification in aggregate of "other sectors" (including indistinguishably nonbank financial corporations, nonfinancial corporations, and households). Further sectoral breakdowns may therefore be desirable.
34. At the level of individual corporations, two key financial indicators reflect external vulnerability: (1) the mismatch in foreign currency cash flow as a ratio of overall cash flow, and (2) the difference between foreign currency liabilities and liquid foreign currency assets as a ratio of liquidity. In the absence of data for such indicators, other indicators, if available, such as the coverage of interest payments by operational cash flow, leverage, the ratio of short-term debt to overall debt (for domestic and foreign currency), the ratio of domestic currency versus foreign currency debt, and the return to assets before tax and interest, might be useful to assess corporate profitability and vulnerability. In addition, information on interest sensitivity is important, as the policy response to an exchange rate crisis frequently entails sharp interest rate increases.
35. Individual corporate data, including data published by trade organizations (e.g., the Mexican Bolsa) and internationally maintained databases, can be used to derive aggregate indicators. Indicators on corporate leverage by sector (traded and non-traded), and information on the dispersion, provide useful information on the overall state of the corporate sector and its contribution to external vulnerability.
36. Two IMF Working Parties 15 that investigated the statistical discrepancies in global balance of payments statistics showed that creditor-source data could be useful in improving the coverage of balance of payments and IIP statistics. The most important of these creditor-source data are the BIS international banking statistics. In the aftermath of the Asian financial crisis, there has been renewed interest in these statistics in gauging the external indebtedness of emerging market economies, as well as exposures of financial institutions to these markets.
37. In the main, the international banking statistics are designed to provide comprehensive information on the cross-border assets and liabilities of banking centers making up the BIS reporting area. Importantly, they include a comprehensive geographical distribution of claims (and liabilities), which allows the partner countries to use the data in compiling and/or checking data from national data sources for external debt, IIP, and balance of payments statistics. The BIS publishes these data in its International Banking and Financial Market Developments.
38. With the renewed interest in external debt statistics, the TFFS introduced, in March 1999, a new statistical release providing data on the external debt of developing and transition countries, based largely on creditor and market sources of information. These statistics--the Joint BIS-IMF-OECD-World Bank Statistics on External Debt (Joint Debt Statistics)--are disseminated each quarter on the websites of the BIS, IMF, OECD, and the World Bank. The statistics provide information for 176 developing and transition countries and are currently disseminated with a lag of five months.16 The aim of this initiative is to facilitate access to a single set of data that brings together information currently compiled and published separately by the contributing institutions on components of countries' external debt.
39. The table in Appendix 3, printed from the OECD's website (which has hyperlinks to the website of the other three organizations), shows the Joint Debt Statistics for Brazil. A background summary of the Joint Debt Statistics is also provided and more extensive metadata about these statistics is available on the websites of the participating organizations. The Joint Debt Statistics provide information on selected components of a country's external indebtedness and thus are not intended as a substitute for external debt statistics compiled by countries from national sources. Some important components of debt not covered, or not fully covered, in the Joint Debt Statistics include the following:
40. The BIS is working with the countries that report to the BIS to improve the coverage and classification of the data transmitted for compiling the international banking statistics. Some important improvements to the timeliness have been achieved and further improvements are expected.17 Other improvements underway for the locational banking statistics18 include:
41. For the consolidated banking statistics, the following enhancements have recently been implemented:
42. Despite some shortcomings in the coverage and consistency of the data, the BIS has begun publishing the new data in November 1999.
43. Furthermore, there are plans to implement the following enhancements in the near future:
44. In addition to the work on the BIS international banking statistics, other improvements to the Joint Debt Statistics that are under consideration by the TFFS include:
45. It is known that reconciling creditor-based BIS international banking statistics with debtor-based sources can be a complex task. While complete harmonization is usually not feasible, a careful reconciliation of such differences is essential for the credibility of these data. Efforts to reconcile such differences are a focus of regular work by IMF and BIS staff in conjunction with country authorities. However, greater impetus is required to systematize these efforts.
46. A number of areas where it would be desirable to improve the coverage of the international banking statistics and the Joint Debt Statistics have been identified in discussions in various international fora and the surveillance work of the Fund staff. These include:
47. Other data issues, but which do not relate to BIS' reporting systems, concern the availability of timely information on nonresident holdings of domestically issued securities. Creditor source data from the Coordinated Portfolio Investment Survey (discussed below)--which cover both international and domestically issued securities--become available only after a lengthy lag. Also, the significance of creditor information for the external positions of nonbank financial institutions is uncertain.
48. As part of the work program of the IMF Committee on Balance of Payments Statistics, an internationally coordinated survey conducted by 29 countries on the stock of their portfolio investment securities--Coordinated Portfolio Investment Survey (CPIS)--was recently completed with respect to data for year-end 1997. Like the BIS international banking statistics, these creditor-source data provide a full geographical distribution of claims, thus providing the counterpart countries with information on which countries are holding securities issued by resident enterprises i.e., portfolio investment liabilities.
49. The results from the 1997 CPIS identified holdings of foreign securities of US$ 5.2 trillion as at December 31, 1997 (See Appendix 4). In addition to enhancing the coverage of portfolio investment assets in IIP statistics, it provided, at the same time, a partial measure of the partner countries' external liabilities in the form of equities and long-term bonds.
50. This first survey of portfolio investment holdings was a major undertaking, taking some of the industrial countries nearly two years to finalize their data.20 The IMF Committee on Balance of Payments Statistics agreed in October 1999 that a second CPIS should be undertaken with respect to data for end-2001 and thereafter consideration would be given to conducting the survey on either an annual or triennial basis. In addition, the instrument coverage would be extended to include short-term debt securities. Although the 1997 CPIS was seen by all involved as a major success, the Committee urged the Fund to extend the coverage to include other major investing countries, including offshore financial centers. Another goal will be to improve timeliness.
51. Offshore financial centers (OFCs) have long presented difficulties in the compilation of global statistics on cross-border capital flows because these centers frequently omit from their balance of payments statements the large volume of financial flows that pass through these centers. Several important offshore financial centers regularly report international banking statistics to the BIS, but some do not report the data with the recommended periodicity and classifications. Few other financial data are available on the activities of these centers, except for the BIS international securities statistics, which provide, on the basis of market sources of information, data on securities issuance by entities domiciled in OFCs. The Fund is planning to contact some of the OFCs to seek their participation in the planned 2001 CPIS (only one OFC--Bermuda--participated in the 1997 CPIS).
52. An interest in the development of a harmonized approach to securities databases arose out of the work on the 1997 CPIS. A securities database is one that maintains information on individual securities. It is envisaged that a harmonized approach to the coverage of securities and the storing of information on securities--e.g., interest rate, currency of issue, maturity--would assist national compilers in correctly attributing, in statistical surveys, the residency of the issuer of any security (a primary requirement of the balance of payments and IIP frameworks). Over time, the exchange of information between compilers could be facilitated.
53. While not all countries involved in the 1997 CPIS maintain a database of individual securities, the development of international standards and the spread of best practice could facilitate efforts in this field. At the present time, the IMF, the BIS, and the ECB are exploring the feasibility and appropriateness of setting international statistical standards for securities databases.
54. A securities database would be especially useful to national compilers who conduct security-by-security portfolio investment surveys; for compilers that conduct aggregate-type surveys (i.e., individual securities not separately identified) the information could assist the reporters in correctly attributing residency (i.e., the country of issuer) of security positions. The database would not contain any information on the investors in these securities, which would come from the CPIS conducted by the creditor countries themselves. For national compilers, the development of a securities database would also bring benefits for the compilation of comprehensive external debt and flow of funds data, as borrowers increasingly access securities markets for funds.
55. The debtor, creditor, and market data sources discussed above provide statistics at varying frequencies, ranging from monthly through annual to less frequent, and with varying degrees of lags in their dissemination. All of the improvements under way are in the context of national or international statistical systems. However, in some situations, information outside this context may be needed at higher frequencies and with shorter reporting lags. Two examples of such high frequency reporting are the systems that were established in some countries to monitor the external liabilities of domestic financial institutions, and the systems used in other cases to monitor developments in the foreign exchange market.
56. With the assistance of the IMF, systems for high frequency monitoring of the external liabilities of domestic financial institutions were established in a small number of countries to expand their capacity to manage a crisis or to provide early warning of emerging problems. The coverage of these monitoring systems has been limited to interbank transactions of domestic banks (including their offshore branches and subsidiaries) vis-à-vis foreign banks. The monitoring systems typically cover a large proportion of the domestic banking sector and entail the collection of weekly information, with reports on roll-over rates, changes in exposure, average maturity, and spreads. While the IMF intends to provide assistance to systemically important countries to introduce high frequency debt monitoring systems, such systems are relatively resource intensive and, therefore, not suitable as a general approach.
However, details on the maturity structure of the foreign liabilities of the banking sector could perhaps be collected within the framework of existing monetary surveys that are usually conducted at relatively high frequencies.
57. Information at high frequencies can also be important in monitoring developments in foreign exchange markets. In addition to data on prices, which are readily available and disseminated, authorities in many countries also rely on various formal or informal monitoring systems to obtain information on transactions and positions in the market. Such information may be used to gain a better understanding of past developments in the market and to detect a buildup of market pressures. To gain a better understanding of high frequency monitoring systems in foreign exchange markets, the IMF has conducted a survey of such systems in a sample of 39 mature and emerging market economies. The survey covers both formal reporting systems and systems based on informal contacts with market participants. The results of the survey will be discussed at an informal workshop held at IMF headquarters on February 25 and summarized in a background note to be discussed at the forthcoming meeting of the Manila Framework Group, in Hong Kong SAR on March 20-21, 2000.
Coverage, Periodicity, and Timeliness Requirements for
|Balance of payments||Goods and services, net income flows, net current transfers, selected capital (or capital and financial) account items (including reserves)||Foreign direct investment and portfolio investment||Quarterly||1 Quarter|
|International reserves||Gross official reserves (gold, foreign exchange, SDRs, and Fund position) denominated in U.S. dollars||Reserve-related liabilities, as relevant||Monthly (Weekly encouraged)||1 Week|
|Merchandise trade||Exports and imports||Major commodity breakdowns with longer time lapse||Monthly||8 Weeks (4-6 weeks encouraged)|
|International investment position||1||Annual (Quarterly encouraged)||2 Quarters
(1 Quarter encouraged)
|Exchange rates||Spot rates and 3- and 6-month forward market rates, as relevant||Daily|
|1 It is recognized that the IIP is a new framework introduced in the fifth edition of the Balance of Payments Manual (BPM5) and that at present only a few countries prepare an IIP. The SDDS therefore calls for countries to work towards the development, as appropriate and feasible, of the IIP following the component detail specified in the BPM5.|
In its second review of the IMF's Special Data Dissemination Standard (SDDS) in December 1998, the IMF's Executive Board approved the introduction of a separate data category for external debt in the SDDS, covering data for three main sectors--general government, the monetary authorities and banks, and nonfinancial public enterprises and the private sector. The data are to be disseminated with further breakdowns, including by maturity, with quarterly periodicity and timeliness. The IMF's Executive Board requested that the IMF staff provide precise proposals on external debt statistics in the SDDS after further consultation with countries, data users, and other international organizations. The separate data category for external debt will be introduced once the IMF determines a suitable transition period for the observance of this data category by SDDS subscribers. The IMF's Executive Board is expected to discuss this issue in March 2000 at the time of its third review of the SDDS.
The IMF staff prepared a detailed questionnaire to gather information from national compilers in the SDDS-subscribing countries on data availability and compilation practices in the area of external debt, to assist in determining a suitable transition period for developing and disseminating the external statistics. The questionnaire was posted on the IMF's Data Dissemination Bulletin Board for the benefit of other countries and data users. All 47 SDDS-subscribing countries, and one additional country, completed and returned the debt questionnaire. The IMF is grateful to compilers for their very helpful comments.
In addition to the responses to the debt questionnaire, the IMF staff will take account of the views of other important stakeholders when preparing the proposals for consideration by the IMF's Executive Board. The staff has consulted with the IMF Committee on Balance of Payments Statistics, selected users, and international organizations.
The debt questionnaire focused on two important elements--quarterly periodicity and timeliness for data on external debt and information on short-term indebtedness. It was envisaged that, to the extent feasible, the new SDDS data category for debt would be consistent with the framework for international investment position (IIP) statistics in the fifth edition of the Balance of Payments Manual (BPM5). In addition, the questionnaire sought compilers' views on a range of other debt-recording issues that will be covered in External Debt Statistics: Guide for Compilers and Users, which is being produced in connection with the work program of the Inter-Agency Task Force on Finance Statistics. Data compilers and users in the coming year will review a draft of the Guide, which updates a 1988 publication.
A brief overview of the responses from compilers of the 48 countries (21 were industrial countries and 27 were developing/emerging market economies) is presented below.
Compilers' views on periodicity of disseminating external debt data
Regarding quarterly periodicity, 70 percent of the respondents from developing/emerging market countries indicated that they currently compile and disseminate either monthly or quarterly external debt and/or IIP statistics. Only 35 percent of the respondents from the industrial countries said they disseminated such data on a monthly or quarterly basis. Although the other industrial countries mostly disseminated annual IIP statistics, they indicated that some debt data were available on a more frequent basis, mainly pertaining to the banking sector and the monetary authorities.1
For those countries that compiled a quarterly IIP, the data were disseminated from eight to 17 weeks after the reference period; the average was 12 weeks. This time lag was broadly the same for those countries that only disseminated quarterly external debt statistics. The coverage and detail disseminated, however, varied across countries. Where quarterly IIP or quarterly external debt data were not compiled, most respondents indicated that a period of two to three years might be required to generate the external debt data.
Compilers' views on collecting various external debt data
The debt questionnaire sought information on compilation practices with respect to data on short-term indebtedness on the basis of original maturity (the BPM5 recommendation) and residual maturity, as well as information on prospective amortization payments falling due for payment in one year or less.2 The survey responses indicated:
Nearly all of the respondents who reported that they were able to compile data on amortization payments were from the developing/emerging market countries group; they indicated that such information was of great value to their main data users. Some of the respondents who do not compile such data found it difficult to specify appropriate transition periods for the development of data on prospective amortization payments. Most of those that responded indicated that one to two years might be sufficient to develop the data for general government and banks and up to three years for the nonbank sector.
In addition to data availability, the views of compilers were sought on a range of other issues that may facilitate the analysis of a country's external debt position. These issues will be covered in detail in External Debt Statistics: Guide for Compilers and Users. The responses to the debt questionnaire showed the following:
|BANK FOR INTERNATIONAL SETTLEMENTS International Monetary Fund Organization for Economic Cooperation and Development THE WORLD BANK GROUP|
Joint BIS-IMF-OECD-World Bank statistics on external debt (1)
|Brazil||Data last updated 30 November 1999|
|(in millions of US dollars)||STOCKS (end of period)||FLOWS (2)|
|Dec.||Sep.||Dec.||Mar.||June||Sep.||Year||4th Qtr.||1st Qtr.||2nd Qtr.|
|External debt - all maturities|
|A||Bank loans (3)||92,619||89,556||82,211||77,246||77,000||-11,906||-8,127||-4,540||-9|
|B||Debt securities issued abroad||36,428||43,194||41,712||38,107||39,976||41,574||4,709||-1,639||-3,024||2,126|
|D||Non-bank trade credits (4)||7,403||7,616||7,159||-341||-358||34|
|F||Official bilateral loans (DAC creditors)||7,549||7,722||254|
|Debt due within a year|
|G||Liabilities to banks (5)||48,582||40,738||35,417|
|H||Debt securities issued abroad (6)||6,540||7,202||6,207||3,372||3,945||5,857|
|I||Non-bank trade credits (4)||1,833||2,202||2,975|
|J||Total liabilities to banks (7) (locational)||103,301||101,973||94,898||89,086||87,802||-10,046||-7,914||-5,216||-1,001|
|K||Total liabilities to banks (6) (consolidated)||75,525||74,098||62,310|
|L||Total trade credits||10,452||12,199||12,119||1,195||728||759|
|M||Total claims on banks (8)||59,836||53,933||52,826||47,999||55,661||-7,750||-1,451||-4,349||7,863|
|N||International reserve assets (excluding gold)||50,827||43,900||42,580||31,900||39,582||40,784|
|(see also Background
|BANK FOR INTERNATIONAL SETTLEMENTS International Monetary Fund Organization for Economic Cooperation and Development THE WORLD BANK GROUP|
Joint BIS-IMF-OECD-World Bank statistics on external debt
These statistics are a product of the Inter-Agency Task Force on Finance Statistics (1). They bring together data that are currently compiled and published separately by the contributing international agencies on components of countries' external debt and international reserve assets. This should facilitate timely and frequent access by a broad range of users to a single data set.
These data are mostly from creditor and market sources, but also include information provided by the debtor countries themselves. Not all the series are yet available on a quarterly basis and there are some gaps in coverage. The most important gaps relate to (i) non-officially guaranteed suppliers credit not channeled through banks (e.g., direct investment debt); (ii) private placements of debt securities; (iii) domestically issued debt held by nonresidents; and (iv) deposits of nonresidents in domestic institutions. There is also some overlapping coverage in the area of debt maturing within a year. As a result, individual data do not necessarily add up to a comprehensive definition of total external debt.
At present, the statistics cover--and use the nomenclature of--all developing countries and countries in transition as defined by the OECD's Development Assistance Committee in their list of aid recipients (i.e., all non-OECD countries and territories plus the Czech Republic, Hungary, Korea, Mexico, Poland and Turkey). The sources, definitions and coverage of individual series are explained in detail in the accompanying methodological notes.
The organizations collaborating on these statistics are working to improve their collection systems and to gradually improve their content (in terms of quality, coverage, frequency and timeliness), as part of more general efforts towards greater transparency.
The data series in each row of the table are described briefly in the matrix below. The columns of the table cover:
The 1997 Coordinated Portfolio Investment Survey (CPIS) was a major statistical initiative in which 29 countries1 participated under the aegis of the IMF. The Fund has published the results from this statistical undertaking in Results of the 1997 Coordinated Portfolio Investment Survey. The publication contains tables that show how the participating countries allocated their portfolio investment assets among major partner countries; country tables containing CPIS data collected at the national level; and descriptions of the essential features of CPIS implementation in each country.
Countries participating in the CPIS collected information on portfolio investment assets (specifically, cross-border claims mainly in the form of equity and long-term debt securities) as at end-December 1997. The data were disaggregated by type of instrument (equity and debt securities), with geographical detail by country of issuer. For the majority of the participating countries, the CPIS represented the first occasion when such data had been collected in accordance with standardized definitions and methodologies, an approach that enhanced data quality and comparability. Only two-thirds of these countries previously had compiled an international investment position statement, most without any geographic details. To meet the requirements, most compilers introduced major changes and refinements in their data compilation, even those who already collected stock data attributed geographically. Overall, the 1997 CPIS covered portfolio investments of more than 4,000 banks, 8,000 non-bank financial institutions, and 13,000 non-financial enterprises.
The survey was conducted in response to global asymmetries in reported balance of payments data, especially those in portfolio investment flows. Such asymmetries were originally identified and analyzed in the IMF Report on the Measurement of International Capital Flows (Godeaux Report, 1992). The Godeaux Report recommended, inter alia, that an effort be made to undertake a coordinated benchmark survey of international portfolio assets and liabilities broken down by partner country.
The major goal of the 1997 CPIS was to ensure that: (1) all the main investing countries undertook a benchmark portfolio asset survey at the same time; (2) participating countries followed consistent definitions and classifications (by following those of the fifth edition of the Balance of Payments Manual (BPM5)); (3) participating countries provided a breakdown of their stock of portfolio investment assets by the country of residency of the nonresident issuer; and (4) countries, to the extent possible, observed the best practices in survey design and implementation. The geographical requirement was intended to permit the construction of a partner-country source for portfolio investment liabilities, albeit with regard given to respecting confidentiality.2
The CPIS showed that holdings of portfolio investment assets in the form of equity and
long-term debt securities amounted to nearly $5.2 trillion at the end of 1997. The United States, United Kingdom, and Japan were the largest investing countries, accounting for almost 68 percent of such holdings. The shares of the Netherlands, Italy, and France were each 4-6 percent of the total, and those of Sweden, Ireland, Canada, Bermuda, and Belgium were each 1-3 percent of the total.
On average, portfolio investment assets were almost equally allocated between equity and long-term debt securities. About 60 percent of investors' holdings of foreign long-term securities was related to issuers resident in advanced economies. A significant fraction of such holdings, amounting to some 12 percent, was related to securities issued by emerging market countries (mainly Argentina, Mexico, Brazil, Ghana, Korea, China, and Hong Kong SAR). About 4 percent was allocated to offshore centers (Cayman Islands, British Virgin Islands, Netherlands Antilles, and Jersey), and international organizations accounted for about 3 percent. The remaining countries accounted for only 0.2 percent of total reported portfolio investment holdings.
These data, in particular, have been used to investigate two issues. First, global imbalances in portfolio investment assets and liabilities have been reviewed in the light of the evidence
made available by the 1997 CPIS and some additional sources of information.3 Second, the data provided by the eight countries that collected geographical detail on their portfolio investment liabilities have been compared with the corresponding assets reported by their 1997 CPIS partner countries.
Regarding the first issue, the CPIS permitted the identification of additional portfolio investment holdings of $750 billion. The newly identified assets were largely attributable to investors resident in European and North American countries, reflecting new surveys conducted in some countries for the 1997 CPIS (e.g., Canada, Ireland, Italy, and Spain), and a new benchmark survey in the United States. Bermuda, the only offshore financial center participating, accounted for $133 billion.
The CPIS also permitted the identification of new liabilities of some $500 billion, mostly related to offshore centers (45 percent) and emerging market countries (36 percent). As a result of these adjustments, it was estimated that outstanding portfolio investment liabilities in both equity and long-term debt securities were $9.4 trillion at the end of 1997, and outstanding portfolio investment asset positions were $7.7 trillion. The difference of $1.7 trillion represented about 18 percent of total liabilities.
An analysis of bilateral asymmetries (that could only be addressed with reference to the eight countries that collected geographically detailed data on their own portfolio investment liabilities: Australia, Indonesia, Israel, Japan, Malaysia, Netherlands, Portugal, and Spain) indicated that a substantial part of the external liabilities was attributed to intermediary countries with large international financial markets. These results supported the view that it is difficult to derive a reliable breakdown, by creditor countries, of a country's external liabilities based on its own data. They also pointed to the usefulness of the CPIS as a source of such data.
As noted, the size of the global discrepancy between portfolio investment assets and liabilities remained substantial. This could be attributed to a lack of coverage of holdings of portfolio investment assets by households (which some participating countries in the 1997 CPIS considered to be a critical weakness), and the lack of data sources for offshore financial centers and those countries for which no estimate could be made. These considerations underscore the need for a more complete participation of major investing countries in future surveys, including offshore financial centers, that would address the remaining sources of underreporting of global portfolio investment assets, and provide an indication of the reliability of the global data for portfolio investment liabilities.
In addition to shedding some new light on the size of global discrepancies in portfolio investment positions, the 1997 CPIS provided a number of benefits. The main ones were that it has: (1) shown that a coordinated effort could be successfully organized across a large number of countries with respect to the scope, coverage, timing, definitions and concepts used in the compilation of data; (2) provided an effective and efficient vehicle for establishing and spreading good methodological standards worldwide; (3) facilitated a greater understanding of country practices with respect to survey design and alternative approaches to data collection and the exchange of experience in this regard; (4) allowed countries to gain confidence in the data; and (5) facilitated data exchange. In all of this, it has served to spread awareness of BPM5 and promote and facilitate its implementation. As more countries take steps to compile an annual international investment position, the likely outcome will be improved reporting of stocks and flows of portfolio investment and a reduction in global discrepancies.