## 1. Priority Recommendations

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**Canonical URL:** [1. Priority Recommendations](https://www.imf.org/-/media/files/publications/cr/2018/cr18325.pdf)

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---

### Mission overview and objectives
- A technical assistance (TA) mission on external sector statistics (ESS) was conducted during April 2–13, 2018, under the IMF-South Asia Regional Training and Technical Assistance Center (SARTTAC).
- The mission assisted the Royal Monetary Authority (RMA) in:
  - compiling and disseminating external debt statistics (EDS) consistent with the international investment position (IIP);
  - reviewing the compilation method of direct investment statistics;
  - assessing the coverage of external flows related to hydropower projects.

### Institutional responsibilities and current practices
- The RMA’s Macroeconomic Research and Statistics Department (MRSD) compiles and disseminates balance of payments, IIP, and EDS on a quarterly basis.
- Annual balance of payments is prepared on a fiscal year basis (July–June) with separate statements for: overall balance of payments, balance of payments with India, and balance of payments with countries other than India (COTI).
- The EDS currently published by the RMA comprises only debt liabilities in the form of loans.

### Key technical findings
- EDS should be bridged from IIP statistics on a quarterly basis and be consistent with IIP liabilities (Total IIP liabilities – direct investment equity = gross external debt).
- ESS must be recorded on an accrual basis, not on a settlement basis.
- An Excel-based loan-by-loan external debt database (covering from June 2009 onward) was reviewed and amended to:
  - estimate accrued interest of each loan to update the primary income account;
  - estimate accrued interest not yet paid to update the financial account;
  - estimate outstanding stocks including accrued interest not yet paid for the IIP and EDS.
- The database assumes accumulated accrued interest not yet paid at June 2009 was zero and that capitalized interest does not accrue interest.
- MRSD obtains FDI data from 38 companies out of 61 FDI companies; compilers plan visits to all 61 firms to improve coverage and request quarterly data.
- A new FDI worksheet was prepared and populated with quarterly FDI data for 2015 and 2016, mapped to balance of payments (overall, with India, and with COTI) and IIP components; validations were included.
- A new survey form to collect detailed data from hydropower authorities from 2007 was reviewed; compilers should visit all five hydro authorities with projects under construction.

### Priority recommendations (target dates preserved)
- June 2018
  - Update the IIP and the balance of payments statistics from September 2013 to include the accrued interest of all loans. — Responsible: RMA
- September 2018
  - Expand the current coverage of the EDS by including all debt liabilities components and participate in the World Bank’s Quarterly External Debt Statistics (QEDS) database. — Responsible: RMA
- December 2018
  - Collect data from the five hydro projects using the new form. — Responsible: RMA

### Detailed action plan — selected priority actions and target completion dates
- Include the original maturity breakdown for all financial instruments in the balance of payments, the IIP, and the EDS. — May 2018
- Expand the current coverage of the EDS by including all debt liabilities components, based on data from IIP. — September 2018
- Participate in the World Bank’s Quarterly External Debt Statistics (QEDS) database, providing the tables prepared during the mission (tables 1 and 6). Check the consistency between the total external debt provided in these tables and the IIP. — September 2018
- Check the consistency between external debt positions and IIP liabilities before dissemination. — September 2018
- Compile CDIS data using the new FDI worksheet, review CDIS data from 2013, and check consistency between CDIS and direct investment data included in the IIP before submission. — October 2018
- Request from the FERD the financial statements of the FDI companies and cross-check the equity values with survey information. — May 2018
- Check consistency between the financial account of the balance of payments and the IIP before quarterly dissemination. — June 2018
- Review the Excel-based loan-by-loan external debt database to: (i) include missing loans; (ii) exclude swap facilities; and (iii) review sectoral allocation of each loan. — May 2018
- Update the IIP and the balance of payments from Sept 2013 to include: (i) accrued interest of loans (other than those under the grace period) in the primary income account; (ii) accrued interest not yet paid of the period in the financial account; and (iii) outstanding amount of interest in the IIP. — June 2018
- Maintain and update the loan-by-loan database quarterly to estimate accrued interest and loans liabilities transactions and positions. — September 2018
- Request direct investment data from all 61 FDI companies to improve coverage of FDI statistics. — September 2018
- Meet with the five hydropower authorities with projects under construction to explain the new report form and request submission of quarterly data. — September 2018
- Collect data from the five hydro projects under construction using the new form and check with current ESS data to assess revisions. — December 2018
- Once validated, review ESS data and submit revised data to STA. — March 2019
- Estimate the value of goods imported by foreign contractor to update percentage applied to construction cost to obtain values of construction services-debits. — March 2019
- Compare estimated values on compensation of employees and workers’ remittances with information provided by the hydro authorities in the survey forms. — March 2019
- Review values of currency and deposits assets of other sectors provided by the BIS to assess inclusion in the financial account and IIP. — September 2018
- Human resource recommendations: support skills retention for ESS development (ongoing); allocate an additional assistant to the External Sector Unit. — March 2019

---

### 2. External Debt Statistics (EDS) — detailed technical points

### Coverage and data sources
- Public external debt is compiled and disseminated by the Debt Management Division, Department of Macroeconomic Affairs (DMEA) of the Ministry of Finance (MOF); MOF provides detailed information on disbursements, principal payments, interest paid, interest rate, and outstanding stock for loans of government, RMA, and public companies (NFC).
- Values provided by MOF as outstanding stock do not include accrued interest not yet paid; hydropower construction loans have grace periods and MOF estimates capitalized accrued interest and provides this to RMA.
- The RMA’s published EDS excludes several IIP liabilities. The mission found the following IIP liabilities were not included in EDS:
  - Currency and deposits of the central bank and other deposit taking corporations;
  - Special drawing rights (SDR) allocations;
  - Trade credits;
  - Direct investment – Debt instruments.

### Classification, maturities, and accrued interest
- External debt instruments must be broken down by original maturity (short-term and long-term).
- Guide recommendations:
  - Include all currency and deposits in the short-term category unless detailed information is available to make the short-term/long-term attribution.
  - In the absence of information to make the short-term/long-term attribution, classify insurance, pension, and standardized guaranteed schemes as long-term.
  - Report SDR allocations as long-term external debt liabilities.
- Accrued interest treatment:
  - Hydropower loans during construction have interest capitalized (grace period); MOF-provided capitalized interest is recorded in primary income account-debits and in the financial account as increase in loans liabilities; capitalized interest is added to outstanding loans in IIP and EDS.
  - Accrued interest not yet paid on other loans was not yet included in ESS before the database adjustments.

### Database maintenance and validations
- The amended loan-by-loan database (June 2009 onward) should be updated every quarter to:
  - estimate accrued interest and update primary income;
  - estimate accrued interest not yet paid and update financial account;
  - produce outstanding loan stocks including accrued interest for IIP and EDS.
- Review findings from the database:
  - Few loans of the RMA and NFCs were missing from the database; swap facilities should be excluded (financial derivatives do not accrue interest).
  - Differences between calculated results and disseminated balance of payments and IIP values were small, but some differences in general government loans transactions need further analysis and sectoral allocation review.
- Recommendation to update ESS using new estimates from September 2013 (first quarter of the FY13), the date MRSD started disseminating quarterly IIP statistics.
- MOF agreed to provide loan information in a new Excel file instead of pdf to facilitate MRSD processing.
- MOF indicated principal and interest are paid when due, so arrears are not created. MOF’s reported interest paid includes “fees and charges” paid to nonresidents; MOF should provide separate information on these fees and charges and specify the services paid so items currently recorded in primary income can be reclassified to the services account.

---

### 3. Direct Investment (FDI) — collection, validation, and CDIS

### Data collection and coverage
- ESS form collects external transactions and positions including direct investment data: data on equity; debt instruments; and primary income (dividends, reinvested earnings, and interest).
- Compilers obtain FDI data from 38 companies out of 61 FDI companies. The list of FDI companies is provided by the Ministry of Economic Affairs (MEA).
- MRSD compilers plan to visit all these 61 companies in the coming weeks to explain the survey form and request the submission of quarterly data; compilers expect to largely improve coverage after visits.

### Worksheet improvements and validations
- The mission assisted in developing a cleaner and integrated FDI worksheet to replace the current FDI compilation file.
- The new file was populated with FDI data for 2015 and 2016; aggregated data were calculated and mapped to standard balance of payments and IIP components; validations were included.
- Mission found inconsistencies (e.g., a bank misreported equity; some values with the Indian number format were not added). Compilers will review and explain differences before disseminating updated data.

### Reinvested earnings and interest on DI debt
- Reinvested earnings are correctly calculated for each company as quarterly net profits before dividends multiplied by the percentage of foreign ownership.
- When dividends are reported once per year, the dividends paid to foreign owners are deducted from the calculated reinvested earnings.
- Accumulated reinvested earnings are included in the direct investment equity positions.
- No data are reported under direct investment – interest, in the primary income account. Some DI enterprises have loan liabilities to their direct investors but do not report incurred interest; compilers noted some related-company loans do not accrue interest.
- Mission explained potential "transfer pricing" adjustment (record market interest rate in primary income and increase liabilities-direct investment equity as contra-entry), but judged amounts not relevant and interest rates low, so adjustment should not be made at this moment.

### FERD financial statements and valuation differences
- FERD collects financial statements of FDI companies; only four FDI companies currently submit monthly financial statements to FERD.
- Example discrepancy: equity provided by an insurance company in financial statements was Nu 130 million and in the FDI survey was Nu 13 million — this should be investigated and corrected.
- Financial statements collected by FERD should be periodically validated with information from FDI surveys.
- Valuation differences example: estimated market-value direct investment equity of a commercial bank in IIP was much larger than the value included in MFS (book value). Estimated market value should be reviewed and confirmed.

### CDIS inconsistencies and recommendations
- Large discrepancies exist between CDIS and direct investment positions in the IIP; CDIS metadata questionnaire cites “Misclassification of data and different compiler for CDIS and IIP”.
- Compilers estimate values for nonresponding companies for CDIS by carrying forward previous period values; when estimates are received, IIP data are reviewed but CDIS is not updated.
- Mission explained CDIS should be annually reviewed when new FDI data are collected.
- CDIS will be compiled using the same data sources as direct investment in the IIP. Mission explained how to use the new FDI worksheet to complete the CDIS form.
- Confidentiality rule for CDIS: when one value includes amounts provided by less than three companies, this value will be considered confidential and provided as a “C”. The total unallocated data, including confidential, should be provided as an aggregated value.

### Recommendations (FDI)
- Request direct investment data from all 61 FDI companies to improve coverage.
- Use the new FDI worksheet to compile FDI data; regularly validate consistency between the balance of payments and the IIP.
- Review and explain differences between FDI data compiled in the new file and the published FDI data.
- Compile CDIS data using the new FDI worksheet, review CDIS data from 2013, and check consistency between CDIS and direct investment data included in the IIP before submission.
- Update the CDIS metadata questionnaire to indicate that CDIS and IIP data are consistent.
- Request from the FERD the financial statements of the FDI companies and cross-check equity values with information collected through FDI surveys.
- Review the difference in the equity position reported by an insurance company in the FDI form and in the financial statements.
- Review the difference between the market value and the book value of the equity position of a commercial bank.

---

### 4. Hydropower projects — coverage, recording, and survey

### Coverage and classification
- MRSD collects quarterly data from five hydropower generating companies and from three hydro projects through the general ESS survey form; MRSD plans to request information from two new hydropower projects started in the last two years.
- Most construction projects are long-term and undertaken by foreign contractors not registered in Bhutan and not paying income taxes; construction of hydropower plants will be included in the balance of payments as construction services.

### Recording guidance when contractor is nonresident
- Construction services - debits should include the quarterly disbursement to foreign contractors for the cost of the project incurred during the quarter, comprising:
  - (i) goods and services imported;
  - (ii) salaries paid;
  - (iii) acquisition of goods and services from Bhutan;
  - (iv) payments to local contractors; and
  - (v) the profit margin.
- Goods imported by foreign contractors are included in the balance of payments as imports of general merchandise rather than construction services (misclassification that does not affect current account total).
- MRSD currently estimates the rest of the cost (total construction cost minus goods imported) by applying a rate of 15 percent to the total contract amount for construction services (MEA estimate implying imported goods represent 85 percent of total cost).
- Mission recommended obtaining information on goods imported by foreign contractors and updating the 15 percent percentage, which could be underestimated.
- Construction services - credits should include:
  - (i) acquisition of goods and services by foreign contractor from Bhutan; and
  - (ii) the quarterly disbursement to local contractors for the cost of construction.
- Salaries paid to residents by foreign contractors should be included in primary income-compensation of employees-credits; this information is not yet included in the balance of payments.

### Resident contractor / FDI company treatment
- When the company undertaking the construction project is resident and an FDI company is created, goods and services supplied between branch and parent should be included in FDI.
- Value of goods imported for constructions should be classified as general merchandise; other imported services should be classified under relevant categories (other business services). If construction is provided by a resident company, no entries should be recorded under construction services.

### Other related transactions and estimates
- Exports of electricity are collected through monthly reports from five completed hydropower plants.
- Grants and loans: contra entries for payments should be recorded to loans or grants depending on financing; information provided by MOF.
- Trade credits on export of electricity: MRSD estimates trade credits as the difference between exported amount minus received amount each quarter; complemented with survey values from non-hydro companies.
- Compensation of employees and workers’ remittances:
  - MRSD estimates these based on immigration department information on foreign workers (wages and salaries).
  - Foreign workers classified as residents (long-term) or nonresidents (short-term) based on skills.
  - Salaries received by nonresident foreign workers are classified under compensation of employees - debits; 70 percent of salaries received by resident foreign workers are classified as workers’ remittances.
  - These estimates should be compared with information from hydro authorities' surveys.
  - Salaries earned by nonresident foreign workers from nonresident contractors should not be included in the balance of payments.

### New survey form and actions
- MRSD prepared a new survey form to collect detailed hydropower transaction data from 2007; mission reviewed form and provided suggestions.
- Compilers should visit all five hydro authorities with projects under construction to explain new report form and request quarterly information.
- MRSD has collected customs information from the Department of Revenue and Customs on goods imported by three hydropower projects, but this was considered underestimated; MRSD is collecting similar information from individual hydro authorities via the new survey to check consistency with merchandise imports provided by MOF.

### Recommendations (Hydropower)
- Estimate the value of goods imported by foreign contractor to update the percentage applied to construction cost to obtain construction services-debits.
- Meet with the five hydropower authorities with projects under construction to explain the new report form and request submission of quarterly data.
- Collect data from the five hydro projects using the new form and check new information with current ESS data to assess revisions.
- Once collected data are validated, review ESS data, and submit revised data to STA.
- Compare estimated values on compensation of employees and workers’ remittances with information provided by hydro authorities in survey forms and review the estimates.

---

### 5. Other issues — IIP, BIS data, consistency, and staff resources

### IIP vs financial account consistency
- IIP data should be consistent with the financial account of the balance of payments.
- The mission prepared a file to validate consistency between financial account and IIP; following inconsistencies were found and corrected during the mission:
  - In December 2016, loans liabilities of the central bank reported in the IIP decreased from US$206 million to US$103 million and no transactions were reported in the balance of payments. Compilers found the value of the transaction was missing in the output file.
  - In December 2014, large increase in direct investment - debt instruments in the IIP was not recorded in the balance of payments because the input file had values instead of formulas.
  - From March 2016, some trade credit transactions were missing because the formula pointed to a blank line below the values.
  - In the IIP, currency and deposits assets of other sectors could be further classified under NFCs.

### BIS international banking statistics
- BIS collects and disseminates international banking statistics providing quarterly data on banks assets and liabilities with nonresident counterparts broken down by banks and nonbanks, and by economy.
- Data for nonbanks (Table A6) can be used in compiling IIP assets - other investment - deposits - other sectors.
- The nonbank sector includes not only other sectors but also the general government sector; compilers would have to estimate general government amounts to exclude these positions from the nonbank sector to avoid double counting.
- In June 2017, the value provided in the BIS database of currency and deposits in nonresident commercial banks held by residents in Bhutan was US$337 million. The value recorded under this component in the IIP of Bhutan was US$2 million.
- Compilers indicated residents in Bhutan are not allowed to hold deposits in foreign currency abroad and should investigate the BIS values.
- The BIS database should be used to compile transactions and positions on currency and deposits assets of other sectors.

### IIP metadata and immediate recommendation
- The mission and compilers completed the IIP metadata questionnaire and submitted this questionnaire for the first time to STA for dissemination.
- Recommendations:
  - Check the consistency between the financial account of the balance of payments and the IIP before the quarterly data dissemination.
  - Review the values of currency and deposits assets of other sectors provided by the BIS. Assess if these values should be included in the financial account of the balance of payments and the IIP.

### Staff resources — External Sector Unit capacity and risks
- Organization and staffing:
  - The External Sector Unit consists of four staff members who are in charge of data collection, compilation, and dissemination of balance of payments, IIP, external debt, and CDIS statistics.
  - The four staff members are knowledgeable in the balance of payments methodology and dedicated to the assigned tasks; all have undergone training in ESS.
- Mission assessment:
  - The mission considers that the External Sector Unit staff should not be moved to another department to assure the improvement on the quality of the ESS of Bhutan.
  - Because compilers have to manually process most of the collected data, the mission recommended allocating an additional assistant to the External Sector Unit to assist in the processing of the data.
- Workload and retention risk:
  - The workload related to the compilation of ESS is continuously increasing due to:
    - the increase on the coverage of these statistics,
    - the launch of a new survey for hydro authorities,
    - the upcoming participation of Bhutan in the World Bank’s QEDS database,
    - the continuous improvement in the quality of the ESS through new validations and new estimates.
  - The mission considers that any staff turnover could undermine the quality of Bhutan’s ESS.
- Recommendations:
  - The RMA’s human resource policies should support skills retention to assure the further development of ESS. Staff should keep learning and applying their knowledge to the improvement of the quality of ESS of Bhutan.
  - Allocate an additional assistant to the External Sector Unit to assist in the processing of data.

---

### 6. Key statistics and revised vs published data (selected tables and formulas)

### Appendix II — External Debt Positions vs. IIP Liabilities (In Millions of USD)
- EDS from IIP — Total ED (From IIP):
  - 2016Q4 2,869
  - 2017Q1 3,172
  - 2017Q2 3,233
- Outstanding External Debt (Table 21) — Total ED (RMA’s Monthly Bulletin):
  - 2016Q4 2,252
  - 2017Q1 2,470
  - 2017Q2 2,505

### Appendix III — Loans Liabilities — Revised Data vs. Published Data (US Dollars)
- IIP Loans liabilities (published vs revised; Diff; %)
  - Dec-15: Published data 2,246,119,411; Revised data 2,174,949,413; Diff 71,169,998; % 3%
  - Mar-16: Published data 2,452,030,048; Revised data 2,396,856,198; Diff 55,173,850; % 2%
  - Jun-16: Published data 2,683,381,117; Revised data 2,611,193,502; Diff 72,187,616; % 3%
  - Sep-16: Published data 2,821,231,038; Revised data 2,744,747,293; Diff 76,483,745; % 3%
  - Dec-16: Published data 2,691,927,995; Revised data 2,592,999,757; Diff 98,928,238; % 4%
  - Mar-17: Published data 2,974,325,162; Revised data 2,887,422,773; Diff 86,902,389; % 3%
  - Jun-17: Published data 3,055,439,105; Revised data 2,959,062,406; Diff 96,376,700; % 3%
- BOP Loans liabilities (published vs revised; Diff; %)
  - Dec-15: Published data 15,837,601; Revised data 8,189,261; Diff 7,648,340; % 48%
  - Mar-16: Published data 192,152,134; Revised data 194,214,662; Diff (2,062,528); % -1%
  - Jun-16: Published data 269,599,798; Revised data 252,298,011; Diff 17,301,786; % 6%
  - Sep-16: Published data 107,298,202; Revised data 103,872,039; Diff 3,426,164; % 3%
  - Dec-16: Published data 38,937,308; Revised data (86,083,883); Diff 125,021,191; % 321%
  - Mar-17: Published data 171,141,564; Revised data 187,225,615; Diff (16,084,050); % -9%
  - Jun-17: Published data 50,331,879; Revised data 41,003,013; Diff 9,328,866; % 19%
- Interest (published vs revised; Diff; %)
  - Dec-15: Published data 43,578,593; Revised data 34,937,658; Diff 8,640,935; % 20%
  - Mar-16: Published data 36,213,013; Revised data 38,032,673; Diff (1,819,660); % -5%
  - Jun-16: Published data 48,785,767; Revised data 42,710,890; Diff 6,074,877; % 12%
  - Sep-16: Published data 42,789,449; Revised data 44,177,841; Diff (1,388,392); % -3%
  - Dec-16: Published data 53,141,356; Revised data 42,495,739; Diff 10,645,618; % 20%
  - Mar-17: Published data 43,807,616; Revised data 45,578,350; Diff (1,770,734); % -4%
  - Jun-17: Published data 56,838,871; Revised data 47,084,533; Diff 9,754,338; % 17%

### Appendix IV — Formulas on Accrued Interest for ESS (variables and formulas)
- ACCRUED INTEREST:
  - (Disbursement - Principal Payment) * Interest rate/4
- BOP FA Transaction:
  - Outstanding stock at the end of the quarter (in original currency) - Outstanding stock at the end of the previous quarter (in original currency)
- OUTSTANDING STOCK:
  - Disbursement (Accumulated) - Principal Payment (Accumulated) + Accrued interest not yet paid (Accumulated)
- Accrued interest not yet paid (Accumulated):
  - Accrued interest not yet paid of the previous period (accumulated) + Accrued interest not yet paid of this period (Total accrued Interest of the period - Interest paid (Accumulated interest at the end of the period - Accumulated interest at the end of the previous period))

### Appendix V — Direct Investment — Revised Data vs Published Data (In Millions of USD)
- IIP Equity (OLD vs NEW; Diff; %)
  - Mar'15: OLD 7,874; NEW 7,580; Diff -294; % -4%
  - Jun'15: OLD 8,527; NEW 7,552; Diff -976; % -11%
  - Sept'15: OLD 7,436; NEW 7,712; Diff 276; % 4%
  - Dec'15: OLD 7,291; NEW 7,987; Diff 696; % 10%
  - Mar'16: OLD 7,356; NEW 7,835; Diff 478; % 7%
  - Jun'16: OLD 7,558; NEW 7,129; Diff -428; % -6%
  - Sept'16: OLD 8,807; NEW 7,095; Diff -1,711; % -19%
- IIP Loans (OLD vs NEW; Diff; %)
  - Mar'15 through Sep'15: OLD 3,624; NEW 3,624; Diff 0; % 0%
  - Dec'15: OLD 3,809; NEW 3,810; Diff 1; % 0%
  - Mar'16: OLD 3,786; NEW 1,636; Diff -2,149; % -57%
  - Jun'16: OLD 3,858; NEW 1,677; Diff -2,181; % -57%
  - Sept'16: OLD 3,795; NEW 1,622; Diff -2,173; % -57%
- BOP Equity (OLD vs NEW; Diff; %)
  - Mar'15: OLD 45; NEW 44; Diff -1; % -2%
  - Jun'15: OLD -12; NEW -12; Diff 0; % 0%
  - Sept'15: OLD 63; NEW 68; Diff 5; % 8%
  - Dec'15: OLD 83; NEW 168; Diff 85; % 103%
  - Mar'16: OLD 45; NEW 56; Diff 11; % 26%
  - Jun'16: OLD 73; NEW -591; Diff -664; % -913%
  - Sept'16: OLD -903; NEW 43; Diff 946; % -105%

### Appendix VI — Example: Transactions on Construction Projects by Nonresidents (2017Q1)
- NR Contractor 2017Q1 (components)
  - Import of goods: 1,000
  - Acquisition of goods from Bhutan: 600
  - Salaries: 500
    - Residents (foreign workers): 200
    - Nonresidents: 300
  - Import of Services: 100
  - Disbursement to local contractors: 400
  - Profit Margin: 50
  - Total Cost: 2,650
- Workers' remittances example: 70% of salaries to Resident foreign workers reflected as remittances (70% of 200 = 140).

---

*Source: IMF technical assistance mission report — 1. Priority Recommendations (April 2–13, 2018); excerpted content from IMF document cr18325.*

### 1. Priority Recommendations _____________________________________________________________________ 6

### 1. Priority Recommendations

### Mission overview and objectives
- A technical assistance (TA) mission on external sector statistics (ESS) was conducted during April 2–13, 2018, under the IMF-South Asia Regional Training and Technical Assistance Center (SARTTAC).
- The mission assisted the Royal Monetary Authority (RMA) in:
  - compiling and disseminating external debt statistics (EDS) consistent with the international investment position (IIP);
  - reviewing the compilation method of direct investment statistics;
  - assessing the coverage of external flows related to hydropower projects.

### Institutional responsibilities and current practices
- The RMA is responsible for compiling and disseminating the balance of payments, the IIP, and the EDS of Bhutan. The Macroeconomic Research and Statistics Department (MRSD) of the RMA compiles and disseminates these on a quarterly basis.
- The annual balance of payments is prepared on a fiscal year basis (July–June) with separate statements for: overall balance of payments, balance of payments with India, and balance of payments with countries other than India (COTI).
- The EDS currently published by the RMA comprises only debt liabilities in the form of loans.

### Key technical findings
- EDS should be bridged from IIP statistics on a quarterly basis and be consistent with IIP liabilities (Total IIP liabilities – direct investment equity = gross external debt).
- ESS must be recorded on an accrual basis, not on a settlement basis.
- An Excel-based loan-by-loan external debt database (covering from June 2009 onward) was reviewed and amended to:
  - estimate accrued interest of each loan to update the primary income account;
  - estimate accrued interest not yet paid to update the financial account;
  - estimate outstanding stocks including accrued interest not yet paid for the IIP and EDS.
- The database assumes accumulated accrued interest not yet paid at June 2009 was zero and that capitalized interest does not accrue interest.
- MRSD obtains FDI data from 38 companies out of 61 FDI companies; compilers plan visits to all 61 firms to improve coverage and request quarterly data.
- A new FDI worksheet was prepared and populated with quarterly FDI data for 2015 and 2016, mapped to balance of payments (overall, with India, and with COTI) and IIP components; validations were included to assure consistency.
- A new survey form to collect detailed data from hydropower authorities from 2007 was reviewed; compilers should visit all five hydro authorities with projects under construction.

### Priority recommendations (target dates preserved)
- June 2018
  - Update the IIP and the balance of payments statistics from September 2013 to include the accrued interest of all loans. — Responsible: RMA
- September 2018
  - Expand the current coverage of the EDS by including all debt liabilities components and participate in the World Bank’s Quarterly External Debt Statistics (QEDS) database. — Responsible: RMA
- December 2018
  - Collect data from the five hydro projects using the new form. — Responsible: RMA

### Detailed action plan — selected priority actions and target completion dates
- Include the original maturity breakdown for all financial instruments in the balance of payments, the IIP, and the EDS. — May 2018
- Expand the current coverage of the EDS by including all debt liabilities components, based on data from IIP. — September 2018
- Participate in the World Bank’s Quarterly External Debt Statistics (QEDS) database, providing the tables prepared during the mission (tables 1 and 6). Check the consistency between the total external debt provided in these tables and the IIP. — September 2018
- Check the consistency between external debt positions and IIP liabilities before dissemination. — September 2018
- Compile CDIS data using the new FDI worksheet, review CDIS data from 2013, and check consistency between CDIS and direct investment data included in the IIP before submission. — October 2018
- Request from the FERD the financial statements of the FDI companies and cross-check the equity values with survey information. — May 2018
- Check consistency between the financial account of the balance of payments and the IIP before quarterly dissemination. — June 2018
- Review the Excel-based loan-by-loan external debt database to: (i) include missing loans; (ii) exclude swap facilities; and (iii) review sectoral allocation of each loan. — May 2018
- Update the IIP and the balance of payments from Sept 2013 to include: (i) accrued interest of loans (other than those under the grace period) in the primary income account; (ii) accrued interest not yet paid of the period in the financial account; and (iii) outstanding amount of interest in the IIP. — June 2018
- Maintain and update the loan-by-loan database quarterly to estimate accrued interest and loans liabilities transactions and positions. — September 2018
- Request direct investment data from all 61 FDI companies to improve coverage of FDI statistics. — September 2018
- Meet with the five hydropower authorities with projects under construction to explain the new report form and request submission of quarterly data. — September 2018
- Collect data from the five hydro projects under construction using the new form and check with current ESS data to assess revisions. — December 2018
- Once validated, review ESS data and submit revised data to STA. — March 2019
- Estimate the value of goods imported by foreign contractor to update percentage applied to construction cost to obtain values of construction services-debits. — March 2019
- Compare estimated values on compensation of employees and workers’ remittances with information provided by the hydro authorities in the survey forms. — March 2019
- Review values of currency and deposits assets of other sectors provided by the BIS to assess inclusion in the financial account and IIP. — September 2018
- Human resource recommendations: support skills retention for ESS development (ongoing); allocate an additional assistant to the External Sector Unit. — March 2019

### External Debt Statistics — detailed technical points
- Public external debt is compiled and disseminated by the Debt Management Division, Department of Macroeconomic Affairs (DMEA) of the Ministry of Finance (MOF); MOF provides detailed information on disbursements, principal payments, interest paid, interest rate, and outstanding stock for loans of government, RMA, and public companies (NFC).
- Values provided by MOF as outstanding stock do not include accrued interest not yet paid; hydropower construction loans have grace periods and MOF estimates capitalized accrued interest and provides this to RMA.
- The RMA’s published EDS excludes several IIP liabilities; the mission found the following IIP liabilities were not included in EDS:
  - Currency and deposits of the central bank and other deposit taking corporations;
  - Special drawing rights (SDR) allocations;
  - Trade credits;
  - Direct investment – Debt instruments.
- External debt instruments must be broken down by original maturity (short-term and long-term). Recommendations from the 2013 External Debt Statistics-Guide for Compilers and Users:
  - Include all currency and deposits in the short-term category unless detailed information is available to make the short-term/long-term attribution.
  - In the absence of information to make the short-term/long-term attribution, classify insurance, pension, and standardized guaranteed schemes as long-term.
  - Report SDR allocations as long-term external debt liabilities.
- Accrued interest treatment:
  - Hydropower loans during construction have interest capitalized (grace period); MOF provides these and they are recorded in the primary income account-debits and in the financial account as increase in loans liabilities; capitalized interest is added to outstanding loans in IIP and EDS.
  - Accrued interest not yet paid on other loans was not yet included in ESS before the database adjustments.
- The amended loan-by-loan database (June 2009 onward) should be updated every quarter to:
  - estimate accrued interest and update primary income;
  - estimate accrued interest not yet paid and update financial account;
  - produce outstanding loan stocks including accrued interest for IIP and EDS.
- Review findings from the database:
  - Few loans of the RMA and NFCs were missing from the database; swap facilities should be excluded (financial derivatives do not accrue interest).
  - Differences between calculated results and disseminated balance of payments and IIP values were small, but some differences in general government loans transactions need further analysis and sectoral allocation review.
- Recommendation to update ESS using new estimates from September 2013 (first quarter of the FY13), the date MRSD started disseminating quarterly IIP statistics. Formulas and standard components of the Excel-based loan-by-loan database are included in Appendix IV.
- The mission and compilers prepared EDS tables required for e-GDDS and SDDS countries to participate in the World Bank’s Quarterly External Debt Statistics (QEDS) (Tables 1 and 6) and recommended reporting quarterly data to the World Bank.
- The MOF agreed to provide loan information in a new Excel file instead of pdf to facilitate MRSD processing.
- MOF indicated principal and interest are paid when due, so arrears are not created. MOF’s reported interest paid includes “fees and charges” paid to nonresidents; MOF should provide separate information on these fees and charges and specify the services paid so items currently recorded in primary income can be reclassified to the services account.

*Source: IMF technical assistance mission report — 1. Priority Recommendations (April 2–13, 2018).*

### 21. The MOF disseminates the public external debt of Bhutan, but accrued interest not

### 21. The MOF disseminates the public external debt of Bhutan, but accrued interest not

### External debt data and EDS system
- Finding: The MOF disseminates the public external debt of Bhutan, but accrued interest not yet paid is not included in the outstanding stock; therefore, the values disseminated by the two institutions (RMA and MOF) are different.
- Action: The MRSD will send to the MOF the new excel file with all the calculations made to estimate the EDS, to inform the DMEA about the values that will be disseminated by the RMA.
- System: EDS source data from the DMEA are maintained in the Commonwealth Secretariat’s Debt Recording and Management System (CS-DRMS).
  - The information collected has to be manually uploaded to the system and the consolidated information has to also be manually downloaded from the system.
  - The system is only used to calculate stocks, forecasting or aggregates but does not yet allow producing all the information needed for compiling ESS in an automatic way.
  - The MOF should be trained to be able to apply all the functionalities of the CS-DRMS. The mission suggested contacting other compilers who may know about the functionalities of the system.
- Recommendations:
  - Include the original maturity breakdown for all financial instruments in the balance of payments, the IIP, and the EDS.
  - Review the Excel-based loan-by-loan external debt database: (i) include the missing loans; (ii) exclude the swap facilities from the estimates; and (iii) review the sectoral allocation of each loan.
  - Update the IIP and the balance of payments statistics from September 2013 to include:
    - (i) the accrued interest of the rest of the loans (other than those under the grace period) in the primary income account of the balance of payments,
    - (ii) the accrued interest not yet paid of the period in the financial account of the balance of payments and
    - (iii) the outstanding amount of interest in the IIP.
  - Request from the MOF information on fees and charges to reclassify these values from primary income-other investment-interest to the services account.
  - Expand the current coverage of the EDS by including all debt liabilities components, based on data from IIP.
  - Check the consistency between external debt positions and IIP liabilities previous to the dissemination.
  - Maintain and update the Excel-based loan-by-loan external debt database to estimate the accrued interest and the loans liabilities transactions and positions with quarterly periodicity.
  - Participate in the QEDS database, providing the tables prepared during the mission (Tables 1 and 6). Check the consistency between the total external debt provided in these tables and the IIP.

### Direct Investment (FDI)
- Data collection:
  - ESS form collects external transactions and positions including direct investment data: data on equity; debt instruments; and primary income (dividends, reinvested earnings, and interest).
  - Compilers obtain FDI data from 38 companies out of 61 FDI companies. The list of FDI companies is provided by the Ministry of Economic Affairs (MEA).
  - MRSD compilers plan to visit all these 61 companies in the coming weeks to explain the survey form and request the submission of quarterly data with quarterly timeliness; compilers expect to largely improve coverage after visits.
- Worksheet improvements:
  - The mission assisted in developing a more clean and integrated FDI worksheet to replace the current FDI compilation file.
  - The new file was populated with FDI data for two years, 2015 and 2016; aggregated data were calculated and mapped to standard components of the balance of payments (overall, with India, and with COTI) and IIP statistics; validations were included.
  - Mission found inconsistencies (e.g., a bank misreported equity; some values with the Indian number format were not added). Compilers will review and explain differences before disseminating updated data.
- Reinvested earnings:
  - Reinvested earnings are correctly calculated for each company as quarterly net profits before dividends multiplied by the percentage of foreign ownership.
  - When dividends are reported once per year, the dividends paid to foreign owners are deducted from the calculated reinvested earnings.
  - Accumulated reinvested earnings are included in the direct investment equity positions.
  - The mission prepared validations to assure consistency of reinvested earnings across primary income, financial account, and IIP and to cross-check the income account with the IIP.
- Interest on DI debt:
  - No data are reported under direct investment – interest, in the primary income account.
  - Some DI enterprises have loan liabilities to their direct investors but do not report incurred interest. Compilers noted some related-company loans do not accrue interest.
  - Mission explained potential "transfer pricing" adjustment (record market interest rate in primary income and increase liabilities-direct investment equity as contra-entry), but judged amounts not relevant and interest rates low, so adjustment should not be made at this moment.
- FERD financial statements:
  - FERD of the RMA collects financial statements of FDI companies; only four FDI companies currently submit monthly financial statements to FERD.
  - Example discrepancy: equity provided by an insurance company in financial statements was Nu 130 million and in the FDI survey was Nu 13 million — this should be investigated and corrected.
  - Financial statements collected by FERD should be periodically validated with information from FDI surveys.
  - FERD and MRSD plan joint visits in April to the 61 FDI companies to inspect and explain ESS survey form and request quarterly data submission.
- Valuation differences:
  - Estimated value of direct investment equity of a commercial bank in IIP was much larger than the value included in MFS; likely due to valuation methods (IIP: market value; MFS: book value). Estimated market value should be reviewed and confirmed.
- CDIS inconsistencies:
  - Large discrepancies exist between CDIS and direct investment positions in the IIP; CDIS metadata questionnaire cites “Misclassification of data and different compiler for CDIS and IIP”.
  - Compilers estimate values for nonresponding companies for CDIS by carrying forward previous period values; when estimates are received, IIP data are reviewed but CDIS is not updated. Mission explained CDIS should be annually reviewed when new FDI data are collected.
  - CDIS will be compiled using the same data sources as direct investment in the IIP. Mission explained how to use the new FDI worksheet to complete the CDIS form.
  - Confidentiality rule for CDIS: when one value includes amounts provided by less than three companies, this value will be considered confidential and provided as a “C”. The total unallocated data, including confidential, should be provided as an aggregated value.
- Recommendations:
  - Request direct investment data from all 61 FDI companies to improve coverage.
  - Use the new FDI worksheet to compile FDI data; regularly validate consistency between the balance of payments and the IIP.
  - Review and explain differences between FDI data compiled in the new file and the published FDI data.
  - Compile CDIS data using the new FDI worksheet, review CDIS data from 2013, and check consistency between CDIS and direct investment data included in the IIP before submission.
  - Update the CDIS metadata questionnaire to indicate that CDIS and IIP data are consistent.
  - Request from the FERD the financial statements of the FDI companies and cross-check equity values with information collected through FDI surveys.
  - Review the difference in the equity position reported by an insurance company in the FDI form and in the financial statements.
  - Review the difference between the market value and the book value of the equity position of a commercial bank.

### Hydropower projects
- Coverage and classification:
  - Hydropower authorities submit quarterly data to MRSD on their international transactions related to hydropower projects.
  - MRSD collects quarterly data from five hydropower generating companies and from three hydro projects through the general ESS survey form; MRSD plans to request information from two new hydropower projects started in the last two years.
  - Most construction projects are long-term and undertaken by foreign contractors not registered in Bhutan and not paying income taxes; in principle activities related to construction of hydropower plants will be included in the balance of payments as construction services.
- Recording guidance when contractor is nonresident:
  - Construction services - debits should include the quarterly disbursement to foreign contractors for the cost of the project incurred during the quarter. The cost will mainly include:
    - (i) goods and services imported;
    - (ii) salaries paid;
    - (iii) acquisition of goods and services from Bhutan;
    - (iv) payments to local contractors; and
    - (v) the profit margin.
  - Goods imported by foreign contractors are included in the balance of payments as imports of general merchandise rather than construction services (misclassification that does not affect current account total).
  - MRSD estimates the rest of the cost (total construction cost minus goods imported) by applying a rate of 15 percent to the total contract amount for construction services; this percentage was estimated and provided by the MEA (implying imported goods represent 85 percent of total cost).
  - Mission recommended obtaining information on goods imported by foreign contractors and updating the 15 percent percentage, which could be underestimated.
  - Construction services - credits should include:
    - (i) acquisition of goods and services by foreign contractor from Bhutan; and
    - (ii) the quarterly disbursement to local contractors for the cost of construction.
  - Salaries paid to residents by foreign contractors should be included in primary income-compensation of employees-credits; this information is not yet included in the balance of payments.
- Resident contractor / FDI company:
  - When the company undertaking the construction project is resident and an FDI company is created, goods and services supplied between branch and parent (e.g., materials) should be included in FDI.
  - Value of goods imported for constructions should be classified as general merchandise; other imported services (architectural, engineering, technical) should be classified under relevant categories (other business services). If construction is provided by a resident company, no entries should be recorded under construction services.
- Other related transactions:
  - Exports of electricity collected through monthly reports from five completed hydropower plants.
  - Grants and loans: contra entries for payments should be recorded to loans or grants depending on financing; information provided by MOF.
- Trade credits on export of electricity:
  - MRSD estimates trade credits as the difference between exported amount minus received amount each quarter; complemented with survey values from non-hydro companies.
- Compensation of employees and workers’ remittances:
  - MRSD estimates these based on immigration department information on foreign workers (wages and salaries).
  - Foreign workers classified as residents (long-term) or nonresidents (short-term) based on skills (example: teachers classified as short-term because they stay nine months per year).
  - Salaries received by nonresident foreign workers are classified under compensation of employees - debits; 70 percent of salaries received by resident foreign workers are classified as workers’ remittances.
  - These estimates should be compared with information from hydro authorities' surveys.
  - Mission noted salaries earned by nonresident foreign workers from nonresident contractors should not be included in the balance of payments.
- New survey form and data validation:
  - MRSD prepared a new survey form to collect detailed hydropower transaction data from 2007; mission reviewed form and provided suggestions aligned with paragraph 33.
  - Compilers should visit all five hydro authorities with projects under construction to explain new report form and request quarterly information.
  - MRSD has collected customs information from the Department of Revenue and Customs on goods imported by three hydropower projects, but this was considered underestimated; MRSD is collecting similar information from individual hydro authorities via the new survey to check consistency with merchandise imports provided by MOF.
- Recommendations:
  - Estimate the value of goods imported by foreign contractor to update the percentage applied to construction cost to obtain construction services-debits.
  - Meet with the five hydropower authorities with projects under construction to explain the new report form and request submission of quarterly data.
  - Collect data from the five hydro projects using the new form and check new information with current ESS data to assess revisions.
  - Once collected data are validated, review ESS data, and submit revised data to STA.
  - Compare estimated values on compensation of employees and workers’ remittances with information provided by hydro authorities in survey forms and review the estimates.

### Other issues (IIP, BIS data, and consistency)
- IIP vs financial account:
  - IIP data should be consistent with the financial account of the balance of payments.
  - Mission prepared a file to validate consistency between financial account and IIP; following inconsistencies were found and corrected during the mission:
    - In December 2016, loans liabilities of the central bank reported in the IIP decreased from US$206 million to US$103 million and no transactions were reported in the balance of payments. Compilers found the value of the transaction was missing in the output file.
    - In December 2014, large increase in direct investment - debt instruments in the IIP was not recorded in the balance of payments because the input file had values instead of formulas.
    - From March 2016, some trade credit transactions were missing because the formula pointed to a blank line below the values.
    - In the IIP, currency and deposits assets of other sectors could be further classified under NFCs.
- BIS international banking statistics:
  - BIS collects and disseminates international banking statistics providing quarterly data on banks assets and liabilities with nonresident counterparts broken down by banks and nonbanks, and by economy.
  - Data for nonbanks (Table A6) can be used in compiling IIP assets - other investment - deposits - other sectors.
  - The nonbank sector includes not only other sectors but also the general government sector; compilers would have to estimate general government amounts to exclude these positions from the nonbank sector to avoid double counting.
  - In June 2017, the value provided in the BIS database of currency and deposits in nonresident commercial banks held by residents in Bhutan was US$337 million. The value recorded under this component in the IIP of Bhutan was US$2 million.
  - Compilers indicated residents in Bhutan are not allowed to hold deposits in foreign currency abroad and should investigate the BIS values.
  - The BIS database should be used to compile transactions and positions on currency and deposits assets of other sectors.

*IMF country report excerpt: Bhutan (selected paragraphs on external debt, FDI, hydropower, and IIP consistency).*

### 41. The IIP metadata questionnaire was submitted to STA. The mission and compilers

### 41. The IIP metadata questionnaire was submitted to STA. The mission and compilers

### IIP metadata submission and immediate recommendation
- The mission and compilers completed the IIP metadata questionnaire and submitted this questionnaire for the first time to STA for dissemination.
- Recommendations:
  - Check the consistency between the financial account of the balance of payments and the IIP before the quarterly data dissemination.
  - Review the values of currency and deposits assets of other sectors provided by the BIS. Assess if these values should be included in the financial account of the balance of payments and the IIP.

### F. Staff Resources — External Sector Unit (ESS) capacity and risks
- Organization and staffing:
  - The ESS are compiled by the External Sector Unit of the RMA’s MRSD.
  - The External Sector Unit consists of four staff members who are in charge of data collection, compilation, and dissemination of balance of payments, IIP, external debt, and CDIS statistics.
  - The four staff members are knowledgeable in the balance of payments methodology and dedicated to the assigned tasks; all have undergone training in ESS.
- Mission assessment:
  - The mission considers that the External Sector Unit staff should not be moved to another department to assure the improvement on the quality of the ESS of Bhutan.
  - Because compilers have to manually process most of the collected data, the mission recommended allocating an additional assistant to the External Sector Unit to assist in the processing of the data.
- Workload and retention risk:
  - The workload related to the compilation of ESS is continuously increasing due to:
    - the increase on the coverage of these statistics,
    - the launch of a new survey for hydro authorities,
    - the upcoming participation of Bhutan in the World Bank’s QEDS database,
    - the continuous improvement in the quality of the ESS through new validations and new estimates.
  - The mission considers that any staff turnover could undermine the quality of Bhutan’s ESS.
- Recommendations:
  - The RMA’s human resource policies should support skills retention to assure the further development of ESS. Staff should keep learning and applying their knowledge to the improvement of the quality of ESS of Bhutan.
  - Allocate an additional assistant to the External Sector Unit to assist in the processing of data.

### Officials met during the mission (roles and affiliations)
- Mr. Dasho Penjore — Governor/RMA
- Ms. Yangchen Tshogyel — Deputy Governor/RMA
- Mr. Gopal Giri — Director/Macroeconomic Research and Statistics Department, RMA
- Ms. Phuntsho Dolma — Chief Research Officer, External Sector, Macroeconomic Research and Statistics Department, RMA
- Mr. Tashi Gyelthshen — Senior Research Officer, ES, Macroeconomic Research and Statistics Department, RMA
- Mr. Sangay Tashi — Asst, Research Officer, ES, Macroeconomic Research and Statistics Department, RMA
- Mr. Tshering Dorji — Research Fellow, ES, Macroeconomic Research and Statistics Department, RMA
- Mr. Sonam Tobgye — Senior Research Officer, MFS, Macroeconomic Research and Statistics Department, RMA
- Ms. Dorji Choden — Research Assistant, ES, Macroeconomic Research and Statistics Department, RMA
- Mr. Tshewang Lhendup — Asst. Forex Officer, Foreign exchange and Reserve Management Department, RMA
- Ms. Lhaden Lotay — Chief Program Officer, Debt Management Division, Department of Macroeconomic Affairs, MOF
- Mr. Tshewang Dorji — Program Officer, Debt Management Division, Department of Macroeconomic Affairs, MOF
- Ms. Tashi Choden Bhutia — Sr. ICT Technical Associate, Debt Management Division, Department of Macroeconomic Affairs, MOF

### Appendix I — Progress on recommendations from May 2015 mission (selected items and status)
- Based on data available in the customs declarations database, conduct an estimation of ratio of freight and insurance in total cost of imported goods from COTI, as well as of freight and insurance of goods imported from India.
  - Institution in Charge: RMA, DRC
  - Completion Date: 2017
  - Progress: Completed but not implemented.
- Use data from the RAMIS to estimate the ratio of freight and insurance in total cost of imported goods from India and COTI, and discounts received from imports from India.
  - Institution in Charge: RMA, DRC
  - Completion Date: 2017
  - Progress: Completed.
- Launch an ad-hoc survey of undeclared import of goods by individuals.
  - Institution in Charge: RMA
  - Completion Date: November 2015
  - Progress: To be completed by 2018/19.
- Complete the consolidation of EDS source data from the DMEA (CS-DRMS) and from the RMA into a single database.
  - Institution in Charge: RMA, MOF
  - Completion Date: November 2015
  - Progress: Completed.
- Submit a formal request to the management of Hydro authorities (Thimphu office) to access the monthly reports submitted to them by the major contractor.
  - Institution in Charge: RMA
  - Completion Date: November 2015
  - Progress: Ongoing (To be completed by 2018/19 (June 2019)).
- Use data sourced from the contractors’ reports and include the value of goods and services acquired from domestic entities under construction services credit.
  - Institution in Charge: RMA
  - Completion Date: November 2015
  - Progress: Ongoing.
- Use the data sourced from the contractors’ reports to review current methodology of estimating construction services debit (other than applying the current 15 percent).
  - Institution in Charge: RMA
  - Completion Date: November 2015
  - Progress: Ongoing.
- Explore the possibility of collecting monthly reports from other hydro authorities in order to have a sufficient coverage of import of hydropower goods. If feasible the data should be used to deduct the value of imported hydropower goods from general merchandise and to include it under construction services.
  - Institution in Charge: RMA
  - Completion Date: November 2015
  - Progress: Ongoing.
- Classify as secondary income – current taxes – general government – credit the data on taxes paid on vehicles sourced from the reports obtained from contractors.
  - Institution in Charge: RMA
  - Completion Date: November 2015
  - Progress: To be completed by 2018/19.
- Investigate in cooperation with the Monetary and Financial Statistics compilers the list of foreign exchange account holders collected by the FERD in order to segregate deposits of residents and nonresidents. Based on the results compilers should revise previous compilation of nonresidents’ deposits in commercial banks accordingly.
  - Institution in Charge: RMA
  - Completion Date: June 2015
  - Progress: To be completed by 2018/19.
- In cooperation with the TCB, estimate revenue from travel services in addition to the value from the Tashel system and include in balance of payments under travel services, credit.
  - Institution in Charge: RMA
  - Completion Date: December 2015
  - Progress: To be completed by 2019/20.
- Disseminate quarterly EDS on the RMA’s website and through the World Bank’s Quarterly EDS webpage.
  - Institution in Charge: RMA, MOF
  - Completion Date: July 2015
  - Progress: To be completed by September 2018.

### Appendix II — External Debt Positions vs. IIP Liabilities (In Millions of USD)
- EDS from IIP
  - General Government: 2016Q4 571; 2017Q1 602; 2017Q2 631
    - Long-term: 571; 602; 631
    - Loans: 571; 602; 631
  - Central Bank: 2016Q4 171; 2017Q1 177; 2017Q2 177
    - Short-term (Currency and deposits): 2016Q4 60; 2017Q1 61; 2017Q2 60
    - Long-term (Loans): 2016Q4 111; 2017Q1 116; 2017Q2 116
    - Special drawing rights (allocations): 2016Q4 8; 2017Q1 8; 2017Q2 8
    - Loans: 103; 108; 108
  - Deposit-Taking Corporations, except the CB: 2016Q4 31; 2017Q1 37; 2017Q2 35
    - Short-term (Currency and deposits): 31; 37; 35
  - Other Sectors: 2016Q4 2,039; 2017Q1 2,299; 2017Q2 2,334
    - Short-term (Trade credit and advances): 21; 30; 30
    - Long-term (Loans): 2,018; 2,269; 2,304
    - Direct Investment: Intercompany Lending — Debt liabilities of direct investors to DIE: 57; 57; 57
  - Total ED (From IIP): 2016Q4 2,869; 2017Q1 3,172; 2017Q2 3,233
- Outstanding External Debt (Table 21)
  - Convertible Currency Debt: 2016Q4 601; 2017Q1 631; 2017Q2 663
    - Public: 571; 601; 633
    - Private: 30; 30; 30
  - Rupee Debt: 2016Q4 1,650; 2017Q1 1,840; 2017Q2 1,842
    - Hydropower debt: 1,547; 1,732; 1,734
    - Other: GOI Line of Credit: 103; 108; 109
  - Total ED (RMA’s Monthly Bulletin): 2016Q4 2,252; 2017Q1 2,470; 2017Q2 2,505

### Appendix III — Loans Liabilities — Revised Data vs. Published Data (US Dollars)
- IIP Loans liabilities (published vs revised; Diff; %)
  - Dec-15: Published data 2,246,119,411; Revised data 2,174,949,413; Diff 71,169,998; % 3%
  - Mar-16: Published data 2,452,030,048; Revised data 2,396,856,198; Diff 55,173,850; % 2%
  - Jun-16: Published data 2,683,381,117; Revised data 2,611,193,502; Diff 72,187,616; % 3%
  - Sep-16: Published data 2,821,231,038; Revised data 2,744,747,293; Diff 76,483,745; % 3%
  - Dec-16: Published data 2,691,927,995; Revised data 2,592,999,757; Diff 98,928,238; % 4%
  - Mar-17: Published data 2,974,325,162; Revised data 2,887,422,773; Diff 86,902,389; % 3%
  - Jun-17: Published data 3,055,439,105; Revised data 2,959,062,406; Diff 96,376,700; % 3%
- BOP Loans liabilities (published vs revised; Diff; %)
  - Dec-15: Published data 15,837,601; Revised data 8,189,261; Diff 7,648,340; % 48%
  - Mar-16: Published data 192,152,134; Revised data 194,214,662; Diff (2,062,528); % -1%
  - Jun-16: Published data 269,599,798; Revised data 252,298,011; Diff 17,301,786; % 6%
  - Sep-16: Published data 107,298,202; Revised data 103,872,039; Diff 3,426,164; % 3%
  - Dec-16: Published data 38,937,308; Revised data (86,083,883); Diff 125,021,191; % 321%
  - Mar-17: Published data 171,141,564; Revised data 187,225,615; Diff (16,084,050); % -9%
  - Jun-17: Published data 50,331,879; Revised data 41,003,013; Diff 9,328,866; % 19%
- Interest (published vs revised; Diff; %)
  - Dec-15: Published data 43,578,593; Revised data 34,937,658; Diff 8,640,935; % 20%
  - Mar-16: Published data 36,213,013; Revised data 38,032,673; Diff (1,819,660); % -5%
  - Jun-16: Published data 48,785,767; Revised data 42,710,890; Diff 6,074,877; % 12%
  - Sep-16: Published data 42,789,449; Revised data 44,177,841; Diff (1,388,392); % -3%
  - Dec-16: Published data 53,141,356; Revised data 42,495,739; Diff 10,645,618; % 20%
  - Mar-17: Published data 43,807,616; Revised data 45,578,350; Diff (1,770,734); % -4%
  - Jun-17: Published data 56,838,871; Revised data 47,084,533; Diff 9,754,338; % 17%

### Appendix IV — Formulas on Accrued Interest for ESS (variables and formulas)
- ACCRUED INTEREST:
  - (Disbursement - Principal Payment) * Interest rate/4
- BOP FA Transaction:
  - Outstanding stock at the end of the quarter (in original currency) - Outstanding stock at the end of the previous quarter (in original currency)
- OUTSTANDING STOCK:
  - Disbursement (Accumulated) - Principal Payment (Accumulated) + Accrued interest not yet paid (Accumulated)
- Accrued interest not yet paid (Accumulated):
  - Accrued interest not yet paid of the previous period (accumulated) + Accrued interest not yet paid of this period (Total accrued Interest of the period - Interest paid (Accumulated interest at the end of the period - Accumulated interest at the end of the previous period))
- Variables provided by MOF:
  - DISBURSEMENT: Aggregated from start of loan
  - INTEREST PAID: Aggregated from start of loan
  - Fees and Charges: Flows
  - PRINCIPAL PAYMENT: Aggregated from start of loan
  - INTEREST RATE: (In columns)
- BOP and IIP Data Standard Components:
  - ACCRUED INTEREST — BOP- Primary Income- Other investment- Interest
  - BOP Flows — BOP- Financial Account- NIL- Other Investment- Loans-Sector – short/long term (by sector: GG, CB, NFCs)
  - OUTSTANDING STOCK — IIP- Liabilities- Other Investment-Loans-Sector – short/long term (by sector: GG, CB, NFCs)

### Appendix V — Direct Investment — Revised Data vs Published Data (In Millions of USD)
- IIP Equity (OLD vs NEW; Diff; %)
  - Mar'15: OLD 7,874; NEW 7,580; Diff -294; % -4%
  - Jun'15: OLD 8,527; NEW 7,552; Diff -976; % -11%
  - Sept'15: OLD 7,436; NEW 7,712; Diff 276; % 4%
  - Dec'15: OLD 7,291; NEW 7,987; Diff 696; % 10%
  - Mar'16: OLD 7,356; NEW 7,835; Diff 478; % 7%
  - Jun'16: OLD 7,558; NEW 7,129; Diff -428; % -6%
  - Sept'16: OLD 8,807; NEW 7,095; Diff -1,711; % -19%
- IIP Loans (OLD vs NEW; Diff; %)
  - Mar'15 to Sept'16: OLD 3,624; NEW 3,624; Diff 0; % 0% for Mar'15 through Sep'15; Dec'15 OLD 3,809 NEW 3,810 Diff 1 % 0%; Mar'16 OLD 3,786 NEW 1,636 Diff -2,149 % -57%; Jun'16 OLD 3,858 NEW 1,677 Diff -2,181 % -57%; Sept'16 OLD 3,795 NEW 1,622 Diff -2,173 % -57%
- BOP Equity (OLD vs NEW; Diff; %)
  - Mar'15: OLD 45; NEW 44; Diff -1; % -2%
  - Jun'15: OLD -12; NEW -12; Diff 0; % 0%
  - Sept'15: OLD 63; NEW 68; Diff 5; % 8%
  - Dec'15: OLD 83; NEW 168; Diff 85; % 103%
  - Mar'16: OLD 45; NEW 56; Diff 11; % 26%
  - Jun'16: OLD 73; NEW -591; Diff -664; % -913%
  - Sept'16: OLD -903; NEW 43; Diff 946; % -105%

### Appendix VI — Example: Transactions on Construction Projects by Nonresidents (2017Q1)
- NR Contractor 2017Q1 (components)
  - Import of goods: 1,000
  - Acquisition of goods from Bhutan: 600
  - Salaries: 500
    - Residents (foreign workers): 200
    - Nonresidents: 300
  - Import of Services: 100
  - Disbursement to local contractors: 400
  - Profit Margin: 50
  - Total Cost: 2,650
- Treatment in BOP/IIP (example entries provided for construction work for residents of the compiling economy by nonresident construction enterprises (debit) and goods/services acquired in compiling economy by these nonresident contractors (credit)). Entries reference:
  - Current Account
  - Financial Account
  - BOP Transactions (Construction Services; Assets- C&D)
  - Specific flows and asset adjustments with amounts: 2,650; 200; 600; 400; 140 (Workers' remittances of 70% salaries to Resident foreign workers).

### Appendix VII — Compensation of Employees and Workers’ Remittances (structure and notation)
- Table structure uses abbreviations:
  - R = residents, NR = nonresidents
- Rows/columns outline:
  - Salaries paid by Foreign Contractors (nonresidents), by other nonresidents, by residents
  - Salaries paid to Residents, Bhutanese
  - Compensation of employees (credit/debit), Foreign Compensation of employees (credit), Estimates remittances (debits) (% of salary)
  - The appendix provides a matrix-style template for allocating compensation of employees and workers’ remittances across resident/nonresident payer and recipient categories.

*Excerpted from IMF document cr18325 — mission report content provided.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2018/cr18325.pdf_