Conference Agenda

Summary Proceedings



Background Paper
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

Contents
  1. Introduction

  2. Debtor and International Investment Position Data
    1. International Investment Position and External Debt
      External debt in the IIP
    2. The Special Data Dissemination Standard
      Strengthening the SDDS
      New SDDS data category for external debt statistics
    3. Some Issues for Discussion

  3. Supplementary Debtor and IIP Information
    1. Supplementary Information
      Foreign versus domestic currency external debt
      Fixed versus floating rate debt
      Financial derivatives
      Nominal versus market values
      Maturity and forward-looking indicators
      Corporate sector data
    2. Some Issues for Discussion

  4. Creditor and Market Data
    1. Joint BIS-IMF-OECD-World Bank Statistics on External Debt
    2. Improvements Underway
    3. Scope for Further Improvements
    4. 1997 Coordinated Portfolio Investment Survey (CPIS)
    5. Offshore Financial Centers
    6. International Security Databases
    7. Some Issues for Discussion

  5. High Frequency Reporting
  6. Systems of High Frequency Reporting
  7. Some Issues for Discussion

Appendices

  1. The Special Data Dissemination Standard, Requirements for External Sector Data
  2. Consultations on New Data Category for External Debt in the IMF' Special Data Dissemination Standard
  3. Joint BIS-IMF-OECD World Bank Statistics on External Debt
  4. Results of the Coordinated Portfolio Investment Survey


I.  Introduction

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.

II.  Debtor and International Investment Position Data

A.  International Investment Position and External Debt

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.

Box 1. International Investment Position: Key Components 1

A.  Assets
      1. Direct investment
          1.1  Equity capital and reinvested earnings
          1.2  Other capital

      2. Portfolio investment
          2.1   Equity securities
          2.2  Debt securities

      3. Other investment
          3.1  Trade credits
          3.2  Loans
          3.3  Currency and deposits
          3.4  Other assets

      4. Reserve assets
          4.1  Monetary gold
          4.2  Special drawing rights
          4.3  Reserve position in the Fund
          4.4  Foreign exchange
          4.5  Other claims

B. Liabilities
      1. Direct investment
          1.1  Equity capital and reinvested earnings
          1.2  Other capital 2

      2. Portfolio investment
          2.1  Equity securities
          2.2   Debt securities2, 3

      3. Other investment
          3.1  Trade credits2
          3.2  Loans2
          3.3  Currency and deposits2
          3.4  Other liabilities2


1Not all IIP components are shown such as those broken down by sector (monetary authorities, general government, banks, and other sectors) and, in most cases, by original maturity (long-term/short-term). A maturity breakdown is not shown for other direct investment capital and currency and deposits. The latter are generally treated as short term.
2These components comprise external debt.
3Includes long-term bonds and notes and money market instruments. Financial derivatives are presently in this category but are soon to become a separate functional category.

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.

B.  The Special Data Dissemination Standard

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:

  • Strengthening the prescriptions for the international reserves data category to include dissemination of detailed information on reserve and other foreign currency assets of the official sector together with information on reserve-related liabilities and other potential drains on these assets. These data are to be disseminated by SDDS subscribers in accordance with the data template on international reserves and foreign currency liquidity (reserves data template) on a monthly basis within one month of the reference period.6 The transition period for disseminating information for the reserves data template ends on March 31, 2000. For the official reserve assets component of the template, the requirement to disseminate monthly data with a one week lag remains; dissemination of weekly data within one week is encouraged;

  • Setting a three-year transition period--to end on December 31, 2001--for disseminating data on the international investment position, in light of information requirements and experience gained by countries in adopting the BPM5 guidelines. The data are to be disseminated on an annual basis within two quarters of the reference period; dissemination of quarterly data within one quarter is encouraged; and

  • Development of a separate data category for external debt with data for three main components: (1) general government, (2) the monetary authorities and banks, (3) and non-financial public corporations and the private sector. The data are to be disseminated, with further breakdowns, including by maturity, with quarterly periodicity and timeliness. Directors requested Fund staff to prepare precise proposals for the transition period for implementation after further consultations with countries, data users, and other international organizations.
New SDDS data category for external debt statistics

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:

  • Prescribe dissemination of quarterly external debt statistics within one quarter of the reference period, with data for four main sectors (1) the general government, (2) the monetary authorities, (3) the banking sector, and (4) other sectors. The data should also be broken down by maturity--short- and long-term--based on an original maturity7 basis and by instrument as recommended in the BPM5; and

  • Encourage 8 dissemination of supplementary information on prospective amortization payments (or prospective debt service payments) twice yearly for four quarters ahead, with a lag of two quarters.
20.  The consultation also indicated that a three-year transition period would be required to modify statistical systems to compile quarterly external debt statistics.

C.  Some Issues for Discussion9

  • Do the above proposals for the external debt data category in the SDDS, together with the prescriptions for the other external sector data categories included in the SDDS, meet user requirements for "core" external sector data?

  • Are statistical compilers able to produce data of acceptable quality to meet the periodicity and timeliness requirements for the new data category for external debt?

  • Should data on forward amortization payments be a prescribed data item rather than an encouraged item? Should the amortization schedule be prescribed for debtor countries only?

  • Would a transition period of three years for countries to implement the new data category be too long or too short?

  • How useful are quarterly external debt statistics for industrial countries in the absence of quarterly data on their external financial assets? Is there a need for further information to evaluate the external position of these economies?

  • If quarterly external debt statistics for offshore financial centers are to be collected, should quarterly data on external financial assets also be collected at the same time?

  • Is the SDDS seen as being too inflexible ("one size fits all") in prescribing that both net debtor and net creditor countries be required to disseminate quarterly external debt statistics?

  • Is there a need for a central international database on quarterly external debt statistics for all sectors based on debtor information, as presently exists for annual IIP statistics? How important is it that the data be classified in conformity with international statistical guidelines?
III.  Supplementary debtor and IIP information

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

A.  Supplementary Information

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.  

Financial derivatives

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.

B.  Some Issues for Discussion 14

  • What do participants see as the most important "supplementary data requirements" for external debt statistics beyond what is under consideration for inclusion in the SDDS?

  • How important is it to accommodate these data requirements into statistical systems? Is it worth the costs?

  • What do (i) users and (ii) compilers regard as the priority areas in improving the coverage of financial derivatives in external debt and capital flow statistics?

  • Is there a preferred valuation measure for external debt, i.e., at market or nominal values? Are both measures important, or is one method preferred for some countries and the second for others? Would compilers be able to provide data on both bases?

  • How important is it for countries to disseminate data on the foreign currency liquidity position for the economy as a whole, as well as for the key sectors?

  • Are there data requirements in connection with sources of vulnerability arising from cross-border transactions in equities?

  • How important is it to separately identify external debt data for nonbank financial and nonfinancial corporations?

  • What is the need and scope for collecting data for corporate sector indicators? Can indicators of individual corporations based on published accounts suitably be aggregated for wider publication?

IV.  Creditor and Market data

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.

A.  Joint BIS-IMF-OECD-World Bank Statistics on External Debt

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:

  • Debt owing to foreign direct investors (except for cross-border intra-bank liabilities);

  • Domestically issued debt securities held by nonresidents (except for any holdings of banks in the BIS reporting area);

  • Nonbank trade credits (except for official and officially guaranteed nonbank export credits from 21 OECD countries);

  • Coverage of certain types of private placements;

  • Loans from nonbank private sector financial institutions; and

  • Nonresident deposits in domestic banks.
B.  Improvements Underway

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:

  • A planned increase in the number of reporting countries; and

  • Investigations into the feasibility of disseminating (respecting confidentiality constraints) the reported bilateral data of the countries that report to the BIS i.e., individual creditor-country positions vis-à-vis counterpart countries. This would improve transparency and greatly facilitate reconciliations with debtor source data.

41.  For the consolidated banking statistics, the following enhancements have recently been implemented:

  • The country coverage has been expanded to show the liabilities of the reporting countries themselves; and

  • Many reporting countries have begun to provide data on an ultimate risk (borrower) basis in addition to data on an immediate borrower basis.

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:

  • Shortening of lags in reporting to the BIS to a maximum of 12 weeks;

  • Change the frequency of reporting from semi-annual to quarterly; and

  • Increase the number of reporters (possibly Hong Kong SAR, Portugal, and Singapore).

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:

  • Further improvements in the timeliness with which statistics are released;

  • Further improvements to the coverage of multilateral claims;

  • Expansion of the database to include the external debt of the industrial countries; and

  • Development of a compendium matrix that would refer users to national (i.e., debtor) sources of information.

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.

C.  Scope for Further Improvements

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:

  • Offshore financial centers: Presently, only two offshore centers provide a detailed country breakdown of claims into loans and securities in the context of the locational banking statistics, while the others only provide broad aggregates of loans and securities without any country breakdown. The detailed country breakdown is important for estimating overall exposure of the economy, and for comparison with national data sources as well as data for other countries. In addition, two major offshore centers do not report on a quarterly basis, but on a semi-annual and annual basis, respectively;

  • Consolidated banking statistics: The statistics do not provide (1) separate information on local claims in non-local currencies, which hampers vulnerability analysis and linkages with external debt statistics; (2) a breakdown of short-term claims into loans and debt securities and thus there is no information on whether securities are locally acquired;19 and (3) a sectoral breakdown of short-term claims; and

  • Locational banking statistics: Unlike in the consolidated statistics, information on debt maturities for loan data is presently not available. Also, the sectoral breakdown combines reporting by banks and monetary authorities.

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.

D.  1997 Coordinated Portfolio Investment Survey (CPIS)

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.

E.  Offshore Financial Centers

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).

F.  International Security Databases

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.

G.  Some Issues for Discussion21

  • What do participants see as the principal shortcomings of creditor- and market-source information for use in evaluating the external indebtedness of countries and what are the areas where further improvements would be most welcome?

  • Would it be useful for the BIS to disseminate the bilateral data of the individual countries (respecting any confidentiality constraints) that report the locational banking statistics?

  • The BIS international banking statistics involve 24 countries and entail the collection of an extensive matrix of information from a large number of financial institutions. Is there scope for significant improvements in the timeliness with which these statistics are reported to the BIS?

  • Is it essential to obtain more statistical information from offshore financial centers?

  • The primary focus of the Joint Debt Statistics has been on the developing and transition economies. Do participants support the extension of these data sources to present the external debt of the industrial countries?

  • Are there other creditor or market sources that might be explored to provide the policymakers and statistical compilers with additional information on external debt and/or capital flows?

  • What are compilers' views on the use of creditor- and market-source data for compiling and/or checking national source data?

  • Is it necessary for users to understand the causes of the differences between the creditor and debtor sources of information? Is it feasible for statistical compilers to undertake such data reconciliations?

V.  High Frequency Reporting

A.  Systems of High Frequency Reporting

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.

B.  Some Issues for Discussion

  • Do participants see a need for information that is disseminated at high frequencies and with very short time lags? In which areas is such information particularly important?

  • How do participants view the information that is available and used to assess and monitor developments in foreign exchange markets? If there are important gaps, where are they and is it feasible to close these gaps?


1In addition to the various initiatives to improve capital flow and external debt data, work is also underway on the development of so-called macroprudential indicators-defined broadly as indicators of the health and stability of financial systems. A consultative conference organized by the IMF in September 1999 determined that a substantial amount of work would be required to craft a core set of macroprudential indicators and thus it was premature to include these indicators in the SDDS.  Since work in this area is still at an early stage, it is proposed that data issues relating to macroprudential indicators not be included in the conference proceedings.
2In relation to the balance sheet (as delineated in the 1993 System of National Accounts) of an economy, the net IIP combined with an economy's stock of domestic financial and nonfinancial assets comprises the net worth of that economy. Consistency among statistical systems facilitates the data compilation efforts of countries and the understanding of linkages between the external and domestic sectors.
3Of which 47 were SDDS subscribers.
4The TFFS is one of the interagency task forces endorsed by the UN Statistical Commission and the Administrative Committee on Coordination-Sub-Committee on Statistical Activities and was set up in 1992. It was reconvened in 1998 to coordinate work among the participating agencies to improve the quality, transparency, timeliness, and availability of data on external debt and international reserve assets. The TFFS's work draws on representatives from the Bank for International Settlements, the Commonwealth Secretariat, the European Central Bank, the Statistical Office of the European Union, the IMF, the Organisation for Economic Co-operation and Development, the Paris Club Secretariat, United Nations Conference on Trade and Development, and the World Bank.
5Investment of central bank foreign currency assets with foreign branches of domestic banks rendered these assets de facto unusable during the financial crisis.
6The reserves data template was jointly developed by the Fund and a working group of the Committee on the Global Financial System of the G-10 Central Banks.
7Short-term debt refers to an original maturity of one year or less or on demand; long-term refers to an original maturity of more than one year or no stated maturity.
8An "encouraged" data item, rather than a "prescribed" data item, indicates that a member is to be considered fully in line with the SDDS even though it does not produce and disseminate that component or category. This treatment recognizes the diversity of countries' economies and statistical systems and provides flexibility. The encouraged designation may also apply with respect to periodicity and timeliness.
9This is not intended to be an exhaustive list.
10Some countries compile data from respondent reports that contain aggregated information, rather than data on individual loans/securities.
11Information on the currency breakdown of external obligations is particularly important in the public and corporate sectors; in the banking sector interest usually focuses on the quality and maturity mismatch.
12Balance of payments and national accounts compilers have agreed to revise the international statistical standards set out in the BPM5 and the 1993 System of National Accounts for the recording of financial derivatives in IIP, balance of payments statistics, and national account statistics more generally. The principal change is to recognize all financial derivatives as financial assets; the previous standards in essence did not recognize, as financial assets, off-exchange derivatives such as interest rate swaps and forward rate agreements.
13The consultation covered 47 SDDS subscribers and one non-subscriber.
14This is not intended to be an exhaustive list.
15Report on the World Current Account Discrepancy (1987) and Report on the Measurement of International Capital Flows (1992).
16The lag applies to the core component of the table, which is the BIS international banking statistics. Some of the other components (e.g., international securities data) are more timely; others less so.
17A more complete discussion of these improvements is provided in the Recent Initiatives at the BIS to Improve Statistics on International Exposures and Debt (IMF-FSFCON/3).
18The BIS reporting system for locational banking statistics gathers data on banks' international assets and liabilities broken down by currency, sector, and country. In this system, unconsolidated data are supplied by banking offices located within reporting countries' borders (residency-based data). The reporting system for consolidated banking statistics focuses only on the asset side of banks' balance sheets. It covers data on banks' international lending broken down by maturity, sector, and borrowing country on a worldwide-consolidated basis.
19This is important because it is often difficult to obtain accurate data on such securities from the debtor side.
20The most important objective of the survey was to provide benchmark information to enhance the quality of balance of payments and IIP statistics. The survey also produced a rich database of information on bilateral positions.
21This is not intended to be an exhaustive list.
 
APPENDIX 1

The Special Data Dissemination Standard

Coverage, Periodicity, and Timeliness Requirements for
External Sector Data as at end-1998

Coverage Periodicity Timeliness
Prescribed Encouraged
Categories and/or
Components
Category Components
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.

APPENDIX 2

Consultations on New Data Category for External Debt in the IMF' Special Data Dissemination Standard

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:

  • Almost all of the respondents were in a position to generate some information on short-term debt based on original maturity (i.e., one year or less at time of issuance). Data were commonly not available for direct investment liabilities (non-equity liabilities), which was especially the case in the industrial countries;3

  • About 60 percent of the compilers could compile some information on short-term debt based on residual maturity (i.e., one year or less remaining to maturity). For these countries, the most common gaps were in the area of direct investment liabilities, trade credits, and deposit liabilities of banks; and

  • About 40 percent of the respondents were able to compile some data on prospective amortization payments falling due for payment in one year or less, mostly related to loans and bonds and notes; data were commonly not available for direct investment liabilities, trade credits, and deposit liabilities of banks.

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:

  • Some 58 percent of the respondents revealed a preference for a sectoral presentation of data on external debt compared with only 12 percent who favored the functional presentation--direct investment, portfolio investment, and other investment--recommended for IIP statistics in the BPM5. The remaining countries expressed no preference, as their debt compilation systems could generate data for both classifications or they considered that data should be disseminated on both bases.

  • Some 56 percent of the respondents considered liabilities arising from financial derivative contracts to be a component of external debt, while 27 percent were of the opposite view and the rest were uncertain. Only 30 percent of the respondents indicated that data on these obligations were available in their countries.

  • Put options in securities permit creditors, under certain circumstances, to secure repayment of a medium- or long-term obligation prior to the scheduled maturity. Such instruments may expose a country to external vulnerability. In the debt questionnaire, a quarter of the respondents said it was very important to disseminate information on such positions and another third said it was somewhat important to publish data on these positions. Overall, developing countries saw more merit in disclosing such data than the industrial countries.

  • More than 80 percent of the respondents were of the view that it was very important (42 percent) or somewhat important (42 percent) to disseminate information on the currency composition of external debt.

  • Half of the respondents indicated that they valued debt securities at market prices in their IIP/external debt statistics (the BPM5 recommendation) and all but a few of these countries said that this practice provided analytically more useful information on the valuation of external debt than data compiled on the basis of nominal value. About half of the countries that did not employ market valuations in their statistics were also of the view that market rather than nominal valuations were appropriate for debt statistics.

  • More than three-quarters of the respondents were of the view that it was very important (33 percent) or somewhat important (44 percent) to disseminate information on repurchase agreement (repo) liabilities. Overall, only a quarter of the respondents said that separate data on cross-border repo liabilities could be derived from the compilation system(s) in their countries.


1Elements of external debt are separately identified in three other SDDS data categories-analytical accounts of the banking sector, analytical account of the central bank, and central government debt.
2The responses were related to data on the liabilities of banks and nonfinancial public corporations and the private sector.
3No distinction is made in the BPM5 between long- and short-term investment for direct investment capital. Nor does the BPM5 make a maturity distinction for the series on currency and deposits in the other investment category.
 

APPENDIX 3

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)
 
BrazilData last updated 30 November 1999
(in millions of US dollars) STOCKS (end of period) FLOWS (2)
1997 1998 1999 1998 1998 1999
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
C Brady bonds 35,512 35,512 35,996 36,154 35,812 35,323 -109 -109 -158 -342
D Non-bank trade credits (4) 7,403   7,616 7,159   -341 -358   34
E Multilateral claims 10,631 11,732 17,542 18,141 23,052 24,188 6,368 5,341 1,112 5,194
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          
Memorandum items:
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 summary matrix)

Notes:
(1) From creditor and market sources, except for data on Brady bonds which are from debtor sources, all currencies included
(2) Flow data for items B, C, E and F; exchange rate adjusted changes for items A, D, J, L and M; no data available for items G, H, I, K and N
(3) From BIS locational banking statistics, which are based on the country of residence of reporting banks
(4) Official and officially guaranteed
(5) From BIS consolidated banking statistics, which are based on the country of head office of reporting banks and which include banks' holdings of securities
(6) Including debt securities held by foreign banks, which are also included in line G
(7) From BIS locational banking statistics, which are based on the country of residence of reporting banks and which include banks' holdings of securities
(8) From BIS locational banking statistics, which are based on the country of residence of reporting banks

 

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

Background summary


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:

a. Stocks--the amounts outstanding at the end of each period; and

b. Flows--disbursements net of repayments during the period. Flows are available for debt securities, Brady bonds, multilateral claims and bilateral loans (lines B, C, E and F). For the banking and trade credit figures (lines A, D, J, L and M), the change in stocks, adjusted for changes in exchange rates to the US dollar during the period, is given. For other series flow data are not available.

Data Series Source Description
External debt - all maturities
A Bank loans BIS Loans from banks resident in 18 major industrialised countries and 6 offshore centres
B Debt securities issued abroad BIS Money market instruments, bonds and notes issued in international markets by both public and private sector borrowers
C Brady bonds World Bank Bonds issued to restructure commercial bank debt under the 1989 Brady Plan
D Non-bank trade credits OECD Official and officially guaranteed non-bank export credits from 21 OECD countries
E Multilateral claims
(African Development Bank, Asian Development Bank, IDB, IMF, World Bank)
African Development Bank, Asian Development Bank, IDB, IMF, World Bank Loans from the African Development Bank, Asian Development Bank, and Inter-American Development Bank, use of IMF credit , and IBRD loans and IDA credits from the World Bank.
F Official bilateral loans
(DAC creditors)
OECD Concessional (aid) and other loans provided mainly for developmental purposes by the 21 member countries of the OECD Development Assistance Committee
Debt due within a year
Liabilities with an original maturity of one year or less, plus repayments due within the next 12 months on liabilities with an original maturity of over a year, plus arrears.
G Liabilities to banks BIS Liabilities to banks which are nationals of (i.e. headquartered in) 18 major industrialised countries and which report their claims on a worldwide consolidated basis. The data include holdings of short-term securities which are also included in line H
H Debt securities issued abroad BIS Money market instruments, bonds and notes issued in international markets by both public and private sector borrowers. The data include securities held by foreign banks which are also included in line G
I Non-bank trade credits OECD Official and officially guaranteed non-bank export credits from 21 OECD countries
Memorandum items
J Total liabilities to banks
(locational)
BIS Liabilities to banks resident in 18 major industrialised countries and 6 offshore centres (i.e. line A plus banks' holdings of debt securities which are partly included in line B plus other claims which are not loans or debt securities)
K Total liabilities to banks
(consolidated)
BIS Liabilities to banks which are nationals of (i.e. headquartered in) 18 major industrialised countries and which report their claims on a worldwide consolidated basis, both short term (line G) and long term liabilities
L Total trade credits OECD Official and officially guaranteed export credits from 21 OECD countries
M Total claims on banks
(locational)
BIS Claims on banks resident in 18 major industrialised countries and 6 offshore centres.
N International reserve assets
(excluding gold)
IMF Monetary authorities' holdings of SDRs, reserve position in the Fund and foreign exchange assets
Note 1: The Inter-Agency Task Force on Finance Statistics is one of the interagency task forces endorsed by the UN Statistical Commission and the Administrative Committee on Coordination - Sub-Committee on Statistical Activities and was set up in 1992. It was reconvened in 1998 to co-ordinate work among the participating agencies to improve the quality, transparency, timeliness and availability of data on external debt and international reserve assets. The Task Force is chaired by the IMF and includes representatives from the four organisations that have collaborated to produce this data--the Bank for International Settlements, the International Monetary Fund, the Organisation for Economic Co-operation and Development, and the World Bank--as well as from the European Central Bank, European Statistical Office and the United Nations.
 
APPENDIX 4


Results of the Coordinated Portfolio Investment Survey

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.

Background

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

Results

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.

Analysis

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.


1The countries were: Argentina, Australia, Austria, Belgium, Bermuda, Canada, Chile, Denmark, Finland, France, Iceland, Indonesia, Ireland, Israel, Italy, Japan, Korea, Malaysia, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Thailand, United Kingdom, United States, and Venezuela.
2In addition to the decision to focus on the asset rather than on the liability side, it was also decided that the main focus of the 1997 CPIS should be on long-term equity and debt securities (i.e., on instruments with an original maturity of more than one year), rather than on short-term securities and financial derivatives. Data to be provided on a voluntary basis comprised: (1) the geographic attribution of a country's holdings of short-term instruments and financial derivatives; (2) a breakdown of a country's portfolio investment liabilities (i.e., short and long-term instruments and financial derivatives); and (3) other useful attributes of data on the liability side, such as a currency breakdown of nonresidents' holdings of issues by residents, and a sectoral breakdown to indicate the economic sector of domestic investor.
3These additional sources were: (1) a Survey of Country Distribution of Long-Term Securities Held as Foreign Exchange Reserve Assets (SEFER), conducted by the Fund, (2) a Survey of Foreign Equity and Long-Term Debt Securities Held by Selected International Organizations, mainly with respect to pension funds, also conducted by the Fund; and (3) data from the Bank for International Settlements (BIS) on banks' holdings of debt securities reported on a residency basis. When added to the data reported in the 1997 CPIS, these sources brought the total of reported portfolio holdings to US$6.1 trillion, for which a geographic attribution was available separately for equities and bonds.
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