## 1uzbea2020003 ## Source details **Canonical URL:** [1uzbea2020003](https://www.imf.org/-/media/files/publications/cr/2020/english/1uzbea2020003.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2020/english/1uzbea2020003.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2020/english/1uzbea2020003.pdf.json) --- ### Mission summary and priority recommendations - Mission: IMF Statistics Department (STA) visited Tashkent from "September 30 through October 11, 2019". - Context: - Second TA mission under the Data for Decisions Fund and the third since the Presidential Order of "September 12, 2017". - Uzbekistan joined the enhanced General Data Dissemination System ("e-GDDS") in 2018. - Main objective: assist the Central Bank of the Republic of Uzbekistan (CBU) in improving collection, processing, and dissemination of BOP, IIP, and GED statistical data, including improvement of the International Transactions Reporting System (ITRS), and implementation of a medium-term program. - Mission tasks included assessment and assistance on: quality of BOP data (goods, services, primary income, DI, PI, trade credits, SDRs), IIP and GED production, compilation of consistent BOP time series for 2014–2015 in accordance with BPM6, inter-institutional data sharing, identification of additional data sources, ITRS improvements, and practical BOP compilation exercises. - Key deficiencies identified: - SSC used an incorrect algorithm for shareholder capital and reinvested income calculations. - Trade credits between affiliated companies were reflected under other investment instead of direct investment (debt instruments). - SDR allocations were not reflected in the BOP, IIP, or GED. - Immediate outputs: - Recommendations to improve goods, services (operating license), income, trade credits, debt securities, private sector credits, and other BOP items. - Developed a file to calculate SDR allocations and income on SDR allocations and holdings. - Corrected algorithms for DI and PI components and for processing primary data on nonguaranteed private debt. - Assistance to improve ITRS. - Trial BOP and IIP compiled for 2014–2015 and review of BOP data for H1 2019. - Agreed action plan with CBU management incorporating principal recommendations. ### Table of selected priority deliverables and responsibilities - "Маrch 2020" — Publish standard versions of BOP, IIP, and external debt tables on the CBU website in Excel format. Responsible: CBU. - "Маrch 2020" — Collect additional data from ministries, agencies, and state-owned corporations and commercial banks on cross-border operations performed in 2014–2015. Revise and update BOP data for 2014-15 in BPM6 format, drawing on the Ministry of Economy’s original estimates, and on additional data sources identified. Responsible: CBU. - "May 2020" — Take steps to improve the ITRS in accordance with the mission’s recommendations, including by extending coverage to CBU-initiated transactions. Responsible: CBU. ### Action plan — selected priority actions and target dates - Correct methodology for DI shareholder capital (nonfinancial corporations). Target Completion Date: "February 2020". Priority: H. - Correct methodology for PI shareholder capital (nonfinancial corporations). Target Completion Date: "February 2020". Priority: H. - Correct methodology for reinvested income (nonfinancial corporations). Target Completion Date: "February 2020". Priority: H. - Correct methodology for reinvested income (financial corporations). Target Completion Date: "Completed during the mission". Priority: H. - Reflect forgiveness of nonguaranteed private debt in BOP operations. Target Completion Date: "February 2020". Priority: H. - Introduce additional lines for insurance and leasing companies; correct intercompany loans methodology. Target Completion Date: "February 2020". Priority: H. - Reflect income on SDR allocations and holdings on a gross basis in primary income. Target Completion Date: "Completed during the mission". Priority: M. - Compare FDI data from ITRS and SSC at company level. Target Completion Date: "May 2020". Priority: H. - Divide trade credits from special bank system into affiliated and other trade credits. Target Completion Date: "December 2020". Priority: H. - Revise and update BOP data for 2014-15 in BPM6 format. Target Completion Date: "March 2020". Priority: H. - Extend ITRS to the CBU segment. Target Completion Date: "May 2020". Priority: H. - Develop files for government Eurobonds and SDR calculations. Target Completion Date: "Completed during the mission". Priority: H. - Publish standard BOP, IIP, and GED Excel tables on the Central Bank website. Target Completion Date: "March 2020". Priority: H. - Priority legend: H – High, M – Medium, O – Other. ### Goods: sources, issues, and recommended measures - Main source: customs declaration database (CDDB) from State Customs Committee (SCC), supplied monthly to the CBU. - Further adjustments: goods procured in airports by carriers (NAC), estimated shuttle trade (survey at border-crossing posts), conversion of CIF to FOB using weight and average cost of shipping per metric ton by transport type and trading region. - Identified issues: - No current estimate for unrecorded import/export transactions from underreporting in customs declarations. - Mirror comparisons were limited by lack of partner responses or low-detailed (two-digit) data. - Mirror comparison recommendations: - Select partners with sufficient trade volume and reliable statistics: "European Union", "Turkey", "Korea", "Japan", "China", "Russia", and "Kazakhstan". - Perform comparisons at four-digit code level and in FOB prices (convert CIF to FOB). - Use United Nations Comtrade database if partner data unavailable. - For each partner and commodity code: estimate discrepancy, calculate import/export correction coefficients, compute weighted average correction coefficient, and apply to all imports/exports except special goods (electricity, natural gas and oil transported by pipeline, humanitarian goods, goods relating to state-owned enterprises, and companies with a production sharing agreement). - Price-analysis recommendation: - Analyze individual declarations for the 20 main imported goods and 10 exported goods; adjust declarations with significant unit-price deviations to align with country-specific averages and reflect the value differences in the BOP. - Migrants’ goods: - Remove migrants’ imports/exports (personal effects) from Goods item. - Estimation methods: use CDDB declarations with 10+ entries and study descriptive field (estimate once and use coefficient) or use border-crossing surveys. - Explicit recommended measures (verbatim extract): - Perform analysis of prices based on individual declarations of the 20 main imported goods and 10 exported goods; adjust declarations with significant deviations and reflect value differences in the BOP. - Apply mirror comparison method to estimate unrecorded transactions and add obtained data to Goods. - Remove estimated data for imports/exports performed by migrants from Goods. ### Trade in services: sources, specific items, and recommendations - Improvements: - SSC survey data validated and revised; CBU developed alternative sources and estimation methods for certain services. - SSC remains main source; NAC, Uzbek Railway (UR), State Border Protection Committee (SBPC), Ministry of Foreign Affairs (MFA), and others provide supplementary information. - Railcar leasing: - Form developed for UR capturing foreign railcar use and Uzbek railcar use by foreign railways, including end-of-quarter debts and repayments; data include settlements in original currency. - Railcar leasing classified as operational leasing and recommended to be reflected under technical, trade-related, and other business services (operational leasing). - Pipeline transport: - Annual volume stable within US$600–700 million. - CBU receives data from SSC; Uztransgaz reports to SSC on pipeline freight but mission could not verify Uztransgaz data; mission recommends analysis of Uztransgaz reporting for BPM6 compliance. - Financial services and ITRS: - Recommendation: replace SSC financial-services data with data directly from commercial banks (DTCs), request quarterly information from banks starting with 2014. - To avoid double accounting, request SSC to present financial services separately for banking sector and other corporations. - Use ITRS actively for services lacking reliable data sources, including maritime transport freight services, road transport exports, postal/courier services, financial services of other sectors, payment for use of IP not elsewhere classified, telecommunications/computer/information services, and other hard-to-collect services. - Recommended measures (verbatim): - Collect information about financial services of deposit-taking corporations, except the central bank (DTCs), directly from commercial banks and the CBU. To avoid double accounting, request SSC data separately for commercial banks and for the rest of the corporations. - Contact Uztransgaz and obtain separate data for gas transit across the territory of Uzbekistan and for the transport of export and import deliveries. - After the ITRS has reached a sufficient level, make active use of the system to estimate missing data on trade in services. ### Primary and secondary income, SDRs, and government Eurobonds - Primary income improvements: - Deviations from BPM6 corrected; methods improved. - Wages and salaries credit previously overstated at over US$3.6 billion in H1 2018; current BOP figure around US$1.4 billion. - SSC incorrect algorithm for reinvested income of nonfinancial corporations corrected with mission assistance. - Eurobonds (issued Feb. 20, 2019): - Two Eurobond types (5-year and 10-year) issued; BOPSO recorded accrued interest and made correct BOP entries but IIP and GED recorded nominal values only. - Mission compiled an Excel file to calculate market-value and nominal-value data and income for first three quarters of 2019; further calculations require market prices from Foreign Exchange Reserves Management Department (FERMD). - Net market-price figures (Table 4: Net Market Price of Government Eurobonds (%)) - Feb. 20, 2019 — 5-year Eurobonds: 100.00; 10-year Eurobonds: 100.00 - March 29, 2019 — 5-year Eurobonds: 99.461; 10-year Eurobonds: 99.132 - June 28, 2019 — 5-year Eurobonds: 104.543; 10-year Eurobonds: 106.395 - Sept. 30, 2019 — 5-year Eurobonds: 105.052; 10-year Eurobonds: 110.563 - Consolidated example calculations for third quarter of 2019 (Table 5; values shown as presented) - Principal – nominal value: June 30, 2019 = 1,000.0; Transactions = 0.0; Rate = 0.0; Price = 0.0; Other = 0.0; Sept. 30, 2019 = 1,000.0 - Debt on coupons: June 30, 2019 = 18.3; Transaction = -12.7; income entry = Х 12.7; Sept. 30, 2019 = 5.6 - Principal – market value: June 30, 2019 = 1,054.7; Other = 18.4; Sept. 30, 2019 = 1,073.1 - Nominal value - total: June 30, 2019 = 1,018.3; Transaction = -12.7; Sept. 30, 2019 = 1,005.6 - Market value - total: June 30, 2019 = 1,073.0; Transaction = -12.7; Other = 18.4; Sept. 30, 2019 = 1,078.7 - SDR allocations (finding and file developed): - Finding: Uzbekistan’s ESS do not contain data on SDR allocations. - Mission developed a file to record SDR allocations and calculate accrued interest on SDR allocations and SDR holdings using IMF website inputs (volume of SDR allocations, balances on SDR holdings, daily interest rate, exchange rates for SDRs). - Accrued interest calculated daily and totaled through the quarter; settlements performed quarterly in Feb, May, Aug, and Nov; data series begins on Dec. 31, 2011. - Table 6 (Model of Data Processed for SDR Allocations, first quarter of 2019; presented values) - SDR allocations – liabilities (data in SDRs) - SDR allocations principal amount: Balance as of Dec. 31, 2018 262,789,980 | Operations 0 | Exchange Rate Differences 0 | Other Changes 0 | Balance as of March 31, 2019 262,789,980 - Accrued interest on SDRs: Balance as of Dec. 31, 2018 471,424 | Operations 11,095 | Exchange Rate Differences 0 | Other Changes 0 | Balance as of March 31, 2019 482,518 - Total for SDR allocations: Balance as of Dec. 31, 2018 263,261,404 | Operations 11,095 | Exchange Rate Differences 0 | Other Changes 0 | Balance as of March 31, 2019 263,272,498 - Converted into U.S. dollars - SDR allocations principal amount: Balance as of Dec. 31, 2018 365,485,676 | Operations 0 | Exchange Rate Differences -667,487 | Other Changes 0 | Balance as of March 31, 2019 364,818,190 - Accrued interest: Balance as of Dec. 31, 2018 655,651 | Operations 15,112 | Exchange Rate Differences -907 | Other Changes 0 | Balance as of March 31, 2019 669,856 - Total for SDR allocations (in U.S. dollars): Balance as of Dec. 31, 2018 366,141,328 | Operations 15,112 | Exchange Rate Differences -668,393 | Other Changes 0 | Balance as of March 31, 2019 365,488,046 - Income on SDR holdings: X | 1,033,234 | X | X | X - Income on SDR allocations: X | 1,020,343 | X | X | X - Recommended measures (verbatim and summarized): - Add accrued interest calculated via the mission file to SDR holdings under reserve assets. - Use data calculated for SDR allocations in the BOP, IIP, and GED regarding liabilities on SDR allocations. ### Direct and portfolio investment: sources, processing fixes, and Invest-1 handling - Main DI sources: SSC Invest-1 survey (foreign economic activity of nonfinancial corporations), survey of commercial banks on direct investments of financial corporations, CBU survey of PSA companies. - Key finding: SSC-generated DI and PI data in original currency are not balanced (end-period balances and flows do not correspond); conversion to U.S. dollars widens imbalances due to exchange-rate differences. - Cause: incorrect SSC algorithm calculating net operations for DI and PI — relied only on change in total capital and ignored ownership changes without capital change and reclassification between DI and PI. - Actions taken: - Mission and BOPSO developed a new algorithm. - BOPSO prepared a cover letter and described the new algorithm to SSC for recalculation. - Methodology developed for BOPSO to process SSC data into BOP and IIP under DI and PI. - To simplify reporting, Invest-1 will send four sub-forms depending on investor stake changes; a summary Sub-form 1 (all lines) will be used for cross-checks; sum of four sub-forms should equal Sub-form 1. - Relevant Invest-1 lines (as listed in source): - Line 201 – Authorized/shareholder capital; - Line 202 – Additional capital; - Line 204 – Retained earnings from previous years; - Line 205 – Profit/loss for reporting period (actual retained earnings for the current year); - Line 206 – Reserve capital; - Line 207 – Other reserves; - Line 203 – Preferred shares held by direct investors; - Line 208 – Other financing from a nonresident direct investor (other than loans and reinvestment); - Line 209 – Other debt securities issued by a company, held by direct investors; - Line 210 – Dividends actually paid in the reporting period. - Classification from source: - Lines 204 and 205 classified as reinvested income; - Lines 203 and 209 as debt instruments; - The rest as equity and investment fund shares/units. - Sub-form logic (summarized): - Sub-form 3: investor’s stake beginning ≥ 10 percent or 0, end ≥ 10 percent or 0 — recorded under DI. - Sub-form 3.1: stake beginning ≥ 10 percent, end < 10 percent but > 0 — reflected in BOP as DI and in IIP under both DI and PI. - Sub-form 4: stake beginning and end < 10 percent — reflected under PI. - Sub-form 4.1: stake beginning < 10 percent but > 0, end ≥ 10 percent — analogous to sub-form 3.1. - Recommendation: include Line 208 in DI and have SSC include a brief-description cell for this financing type. ### Debt instruments, nonguaranteed loans, and trade credits — processing notes and remedies - Bank reporting for nonguaranteed private debt: - Detailed capture in original currency with codes for creditor type, mutual relationship, maturity, settlement currency; first-level disaggregation separates intercompany loans from other loans; second-level disaggregation by institutional sector; third-level disaggregation long-term vs short-term and by currency. - Tracked items: disbursement/repayment of principal, accrual/payment of interest, balances on principal/interest, capitalization of accrued interest, debt forgiveness, arrears. - Issues identified: - Intercompany loans of insurance and leasing companies included in other investment (recommend adding institutional-sector coding). - Capitalization of interest and debt forgiveness recorded as other changes (recommend moving to BOP operations). - Balances in original currency do not correspond to flows in the period, distorting exchange-rate-change calculations (recommend check/correct before conversion). - Mission advised contacting banks case-by-case to identify and correct discrepancies and possibly adjust series. - Trade credits: - Two sources: SSC Invest-1 (distinguishes affiliated vs other trade credits but limited coverage) and bank system (customs-linked contract server) with better coverage but drawbacks. - Bank-system drawbacks: - Does not distinguish trade credits between affiliated corporations and others → all recorded under other investment, underreporting DI. - Data on assets provided by banks converted into U.S. dollars; multi-currency fields complicate automated processing. - Contracts uploaded at customs clearance; goods in customs warehouses may not enter system; multi-item contracts may mix assets/liabilities; system retains historical trade credits not closed (some pre-2000). - Mission recommendations: - Introduce a field coding a direct-investor relationship between creditor and debtor; use nonguaranteed loan database to identify such companies. - Define a transaction as difference between balances only when information is provided in original currency; avoid using balances-conversion differences as BOP operations. - Exclude trade credits that arose five years ago or more from current reporting. - After CBU direct extraction capability in original currency obtained, perform regular company-level comparisons between bank-system trade-credit data and SSC survey data and arrange BOPSO–SSC reconciliation meetings. ### ITRS status, improvements, and recommended actions - Background: - Trial ITRS collection launched end-2018 involving only commercial banks; original ITRS designed to BPM5 and lacked BPM6-required fields/codes. - Improvements made: - Code system revised and expanded; workshops for commercial banks on ITRS purpose and coding errors. - CBU introduced client-type classification with 14 types and prepared conversion table to institutional sectors. - Interim working database for ITRS data from all banks is being developed; will include institutional-sector field with coding for Central Bank, DTC, general government sector, other financial corporations, nonfinancial corporations, households, and NPISHs. - Remaining deficiencies: - One ITRS addition suggested: code for wages of residents employed at foreign embassies and extraterritorial bodies within Uzbekistan. - CBU not yet providing ITRS-based reporting; technical issues remain and CBU segment inclusion pending. - Recommended measures: - Add embassy/extraterritorial wages code to ITRS. - Develop interim working database for processing/analyzing/storing ITRS information and include institutional-sector field. - Organize collection of ITRS data for the CBU and study feasibility of extending ITRS to nonbank financial institutions and nonfinancial corporations with accounts abroad. - Arrange regular workshops with commercial banks on ITRS coding; check balance of neutral transactions monthly and investigate discrepancies. ### Compilation of the BOP for 2014–2015: approach, assumptions, and mission recommendations - Task: compile 2014–2015 BOP and construct dynamic BOP, IIP, and GED series from 2014 amid limited historical data and low MOE detail. - Approach: used all available sources including MOE BOP; CBU requested data from ministries, agencies, and private corporations; initial estimates used where data not received; mission emphasized trial nature of 2014–2015 compilation pending receipt of actual data. - Goods and services handling: - CBU and MOE use common trade system but differ due to MOE adjustments (e.g., “personal goods”) and subsequent corrections. - For shuttle trade and goods procured in airports, CBU extrapolated 2016–2017 data proportionally for 2014–2015. - Mission recommended estimating unrecorded export transactions at 10 percent of money transfers and deducting from secondary income – personal transfers. - Freight valuation: prefer CBU’s freight estimates based on geography, weight, and average cost per metric ton rather than MOE assumption of freight and insurance = 10 percent of CIF. - Services: - Use MOE breakdown for exported transport services with further breakdown by transport type and service type in proportion to 2016 data; use CBU estimates for imports of transport services and travel. - Revise private travel estimates upward; reflect embassy maintenance under government goods and services. - Primary and secondary income: - CBU’s survey-based wages/salaries debit estimates (US$4–US$5 million per quarter) considered more realistic than MOE’s money-transfer-based approach (55 percent). - Financial-account coverage: - DI corrections applied; DI abroad negligible. - Portfolio investment and financial derivatives negligible and not estimated. - Other investment updated using MOF and bank reporting; MOE included repayments and some specific items. - Reserve assets: - Data from IRMD used for 2014–2015; main operations under deposits; no monetary-gold BOP transactions (changes in monetary gold reflected under other changes). - Mission recommendations: CBU to introduce own methodology for 2014–2015 series; request State Customs Committee data for 2014–2015; revise trial balances accordingly. ### Equity income, interest on other investments, and other compilation adjustments - Direct investment income: - MOE final table shows DI income as dividends and accrued interest; reinvested income appears in working files and likely included implicitly in "Income on equity (reinvestments and PSA earnings)". - Mission recommends correcting dividend data: deduct employment income, all types of interest income, and reinvested income from total income as a debit; record resulting amount as a debit under "Dividends and withdrawals from the income of quasi-corporations". - Interest on other investments: - Only information on interest payments was available; mission recommends replacing payments with accrued interest when MOF and bank accrual data become available. - Interim estimation: determine average annual interest rate by dividing total interest payments for the year by average annual balance; apply method to estimate quarterly accrued interest. - Migrants’ remittances: - MOE had reflected migrants’ remittances under capital transfers (not allowed under BPM6); mission removed these from experimental balance. - Debt forgiveness: possible for 2014–2015 pending debt data; none yet recorded under capital transfers. ### Other investment, government debt classification, and external debt statistics - Government and government-guaranteed loans: - New form separates loans into (i) general government sector loans; (ii) loans of other sectors guaranteed and serviced by government; (iii) loans of other sectors guaranteed by government and serviced by borrower. - Insufficient breakdown by institutional sector led to combining loans assumed by government and loans by corporations against government guarantees; reported government debt volume reached US$12 billion, approximately half of which should be reassigned to relevant sectors. - MOF committed to send updated breakdown and to complete uploading data to DMFAS in first half of 2020. - Compact reporting form developed with BOPSO to collect info on DTC loans obtained under government guarantees; to be sent only to banks that borrow funds against government guarantees. - Mission recommendations (extract, verbatim): - Break down government and government-guaranteed debt by relevant institutional sectors; reflect debts directly taken out by the government separately from guaranteed debts serviced by government and reassign other debts based on borrower’s sector. - In handling nonguaranteed private loans: move capitalization of accrued interest and forgiveness/cancellation of debt from other changes to BOP operations; add a field for classifying a loan as intercompany lending to the nonguaranteed private debt file. - Prior to currency conversion, check correspondence between end-period balances and flows and correct as necessary. - Add intercompany-lending classification field to bank system for trade credits; reconcile trade-credit data between bank system and SSC at company level. ### Data dissemination, staffing, training, and trial statistics - Dissemination: - Uzbekistan joined e-GDDS in May 2018. - CBU develops quarterly BOP and IIP in BPM6 in U.S. dollars and generates GED from IIP per External Debt Statistics Guide. - BOP and IIP submitted quarterly to IMF in standard form. - On CBU website, BOP and IIP published only in simplified form inside extensive analytical PDFs (some 70–80 pages quarterly); no standard BOP, IIP, GED tables published; GED published data differ from standard representation and omit some debt liability components. - Mission recommendations: - Publish quarterly BOP, IIP, and GED in standard form on CBU website (e.g., Excel tables) in addition to analytical materials. - Publish abbreviated presentations showing major items in parallel with standard presentations. - Accompany quarterly ESS publications with short press releases of 1–2 pages. - Staffing (as of October 2019): - Eight positions within BOPSO responsible for ESS; all positions filled. - Only three of eight had completed special training courses as of October 2019; four were invited to IMF courses before end-2019. - Key statistics from trial tables (exact values) - Trial Balance of Payments, Current account (million U.S. dollars): - 2014: 3,238 - 2015: 1,704 - 2016: 293 - 2017: 1,478 - 2018: -3,592 - Trial Balance of Payments, Financial account (million U.S. dollars): - 2014: 2,111 - 2015: 939 - 2016: 664 - 2017: -827 - 2018: -2,978 - Trial International Investment Position (million U.S. dollars): - Net international investment position: - 2014: 18,069 - 2015: 17,804 - 2016: 17,791 - 2017: 15,833 - 2018: 15,127 - Assets: - 2014: 35,593 - 2015: 37,663 - 2016: 40,444 - 2017: 41,796 - 2018: 42,332 - Reserve assets: - 2014: 24,140 - 2015: 24,307 - 2016: 26,429 - 2017: 28,077 - 2018: 27,081 - Trial Gross External Debt by sector (million U.S. dollars, Dec. 31): - General government: - 2014: 4,718.4 - 2015: 5,580.0 - 2016: 6,474.9 - 2017: 7,600.0 - 2018: 10,086.4 - Central bank: - 2014: 380.8 - 2015: 364.2 - 2016: 353.4 - 2017: 374.7 - 2018: 366.1 - Deposit-taking corporations, except the central bank: - 2014: 355.0 - 2015: 417.6 - 2016: 466.9 - 2017: 701.5 - 2018: 1,087.0 - Other sectors: - 2014: 5,890.3 - 2015: 6,354.6 - 2016: 6,687.7 - 2017: 7,233.7 - 2018: 6,659.1 - Direct investment: Intercompany lending (debt liabilities to direct investors): - 2014: 939.0 - 2015: 908.7 - 2016: 1,441.7 - 2017: 1,302.5 - 2018: 687.9 - Gross external debt total: - 2014: 12,283.6 - 2015: 13,625.1 - 2016: 15,424.6 - 2017: 17,212.4 - 2018: 18,886.6 *Source: 1uzbea2020003 - 1. Priority Recommendations (IMF STA mission report).* ### 1. Priority Recommendations _____________________________________________________________________ 5 ### 1. Priority Recommendations ### Summary of mission outcomes and priority recommendations - Mission: IMF Statistics Department (STA) visited Tashkent from "September 30 through October 11, 2019". - Context: - Second TA mission under the Data for Decisions Fund and the third since the Presidential Order of "September 12, 2017". - Uzbekistan joined the enhanced General Data Dissemination System ("e-GDDS") in 2018. - Main objective: assist the Central Bank of the Republic of Uzbekistan (CBU) in improving collection, processing, and dissemination of BOP, IIP, and GED statistical data, including improvement of the International Transactions Reporting System (ITRS), and implementation of a medium-term program. - Mission main tasks (as listed): - (i) assess the quality of BOP data and provide assistance in improving certain components (goods, services, primary income), and certain financial account items (direct and portfolio investment, trade credits, allocation of Special Drawing Rights); - (ii) assist in further improvement in the production of IIP and GED statistics; - (iii) assist in the compilation of consistent BOP time series for 2014–2015 in accordance with BPM6; - (iv) assess implementation of the medium-term program for the development of ESS and analyze achievements since the last mission, including inter-institutional data sharing and progress in data dissemination; - (v) consult on identification of additional data sources, including administrative data, and develop statistical methods for estimating missing data; - (vi) consult on further steps for improvement of the ITRS; - (vii) perform practical exercises in the compilation of BOP. - Key findings and deficiencies: - SSC used an incorrect algorithm for calculation of operations involving shareholder capital and reinvested income. - Trade credits between affiliated companies were reflected under other investment instead of direct investment (debt instruments). - SDR allocations were not reflected in the BOP, IIP, or GED. - Mission outputs and immediate actions: - Recommendations for improving quality of certain BOP indicators (goods, services under an operating license, income, trade credits, debt securities, private sector credits, and other BOP items). - Developed a file for calculation of operations and balances on SDR allocations and income on them, as well as income on SDR holdings. - Corrected algorithms for DI and PI components and for processing primary data on nonguaranteed private debt. - Provided assistance to improve ITRS. - Analyzed and compiled trial BOP and IIP for 2014–2015 with BOPSO; reviewed BOP data for the first half of 2019. - Developed and agreed an action plan with CBU management incorporating principal recommendations. ### Table 1 — Selected priority recommendations (planned dates and responsibilities) - "Маrch 2020" — Publish standard versions of BOP, IIP, and external debt tables on the CBU website in Excel format. Responsible: CBU. - "Маrch 2020" — Collect additional data from ministries, agencies, and state-owned corporations and commercial banks on cross-border operations performed in 2014–2015. Revise and update BOP data for 2014-15 in BPM6 format, drawing on the Ministry of Economy’s original estimates, and on additional data sources identified. Responsible: CBU. - "May 2020" — Take steps to improve the ITRS in accordance with the mission’s recommendations, including by extending coverage to CBU-initiated transactions. Responsible: CBU. ### Action Plan — Priority actions, milestones, and target completion dates (selected) - Correct the methodology for calculating operations involving direct investment shareholder capital for nonfinancial corporations and reflect the results in the balance of payments. Target Completion Date: "February 2020". Priority: H. - Correct the methodology for calculating operations involving portfolio investment shareholder capital for nonfinancial corporations and reflect the results in the balance of payments. Target Completion Date: "February 2020". Priority: H. - Correct the methodology for calculating operations involving reinvested income for nonfinancial corporations and reflect the results in the balance of payments. Target Completion Date: "February 2020". Priority: H. - Correct the methodology for calculating operations involving reinvested income for financial corporations and reflect results in the balance of payments. Target Completion Date: "Completed during the mission". Priority: H. - Reflect forgiveness of nonguaranteed private debt in BOP operations. Target Completion Date: "February 2020". Priority: H. - Introduce additional lines to the report forms for insurance and leasing companies and correct the methodology for calculating intercompany loans based on banking information. Target Completion Date: "February 2020". Priority: H. - Reflect income on SDR allocations and holdings on a gross basis in primary income. Target Completion Date: "Completed during the mission". Priority: M (carried over from previous mission’s plan). - For banking information on nonguaranteed private sector debt, in each specific debt restructuring case contact the bank providing the given information and clarify all details involved in the restructuring. Make relevant corrections on the basis of the information obtained. Target Completion Date: "Regularly". Priority: M. - Remove capitalization of accrued interest and the restructuring of principal and interest into shareholder capital from other changes and reflect them in balance of payments operations. Target Completion Date: "February 2020". Priority: H. - Prior to conversion of external debt data in the settlement currency, check compatibility of the data and, if inconsistencies are found, identify reasons and eliminate them per mission recommendations. Target Completion Date: "Regularly". Priority: H. - Compare data on foreign direct investment obtained from the ITRS and from the SSC at the company level and identify reasons for discrepancies. Target Completion Date: "May 2020". Priority: H. - Divide trade credits obtained through the special bank system for recording cross-border accounts payable/receivable into trade credits between affiliated companies and other trade credits. Target Completion Date: "December 2020". Priority: H. - Adjust imports based on an analysis of import prices. Target Completion Date: "May 2020". Priority: H. - Collect additional data from ministries, agencies, state-owned corporations, and commercial banks on cross-border transactions performed in 2014–2015. Target Completion Date: "December 2019". Priority: H. - Revise and update BOP data for 2014-15 in BPM6 format, drawing on the Ministry of Economy’s original estimates, and on additional data sources identified. Target Completion Date: "March 2020". Priority: H. - Agree with the Ministry of Finance the format for submitting data on the principal and interest payment schedule for government and government-guaranteed debt. Target Completion Date: "February 2020". Priority: H. - Include a field in the interim ITRS database for the institutional sector according to the mission’s recommendations. Target Completion Date: "February 2020". Priority: H. - Make additions to the list of ITRS codes according to the mission’s recommendations and correct the text in terms of the name and application of the codes. Target Completion Date: "January 2020". Priority: H. - Extend ITRS to the CBU segment. Target Completion Date: "May 2020". Priority: H. - Develop a file for the calculation of government Eurobonds according to the mission’s recommendations. Target Completion Date: "Completed during the mission". Priority: H. - Develop a file for the calculation of operations and balances of SDR allocations and holdings (including accrued interest) in line with the mission’s recommendations. Target Completion Date: "Completed during the mission". Priority: H. - Organize the compilation of external debt statistics in accordance with the External Debt Statistics Guide (2013 edition). Target Completion Date: "March 2020". Priority: H. - Prepare mirror statistics to estimate unrecorded import and export transactions. Target Completion Date: "Regularly". Priority: H. - Request data from commercial banks on trade credit assets in the original currency. Target Completion Date: "December 2020". Priority: H. - Develop a workbook file for calculation of gross external debt transactions and positions to support quarterly external debt statistics tables. Target Completion Date: "July 2020". Priority: M. - Publish standard BOP, IIP, and GED Excel tables on the Central Bank website. Target Completion Date: "March 2020". Priority: H. - When publishing quarterly data in an Excel table, provide brief press releases of one or two pages. Target Completion Date: "March 2020". Priority: O. - Send staff responsible for compilation of the BOP, IIP, and external debt to ESS seminars arranged by the IMF, other international organizations, and central banks of other states. Target Completion Date: "Regularly". Priority: O. - Priority scale legend: H – High, M – Medium, O – Other. ### Goods and Services — main findings and recommended measures - Main source for goods: customs declaration database (CDDB) from the State Customs Committee (SCC), supplied monthly to the CBU. - Further adjustments for goods include: - Goods procured in airports by carriers (data from National Air Company (NAC)); - Estimated data for shuttle trade (special survey at border-crossing posts); - Conversion of CIF prices into FOB prices (methodology uses weight of goods and average cost of shipping one metric ton depending on transport type and trading region). - Issues identified: - No current estimate for unrecorded import/export transactions arising from underreporting of prices or volumes in customs declarations. - Attempts to use mirror comparisons with trading partners had limited success due to lack of responses or data only at two-digit codes, preventing quality mirror comparisons. - Mission recommendations on mirror comparisons: - Select trading partners for mirror comparison based on: sufficient trade volume and high quality/reliability of partner trade statistics. - Recommended partners for mirror comparisons: the "European Union", "Turkey", "Korea", "Japan", "China", "Russia", and "Kazakhstan". - Perform comparisons at the four-digit code level and in FOB prices (convert CIF to FOB as needed). - If partner data cannot be obtained, use United Nations Comtrade database. - For each partner, estimate actual size of discrepancies by commodity code; calculate import/export correction coefficient for each country; compute weighted average correction coefficient for imports and for exports; apply coefficients to all imports/exports except special goods (electricity, natural gas and oil transported by pipeline, humanitarian goods, goods relating to state-owned enterprises, and companies with a production sharing agreement). - Price analysis recommendation: - Analyze prices based on individual declarations for the 20 main imported goods and 10 exported goods. For declarations with significant unit price deviations from country-specific averages, adjust the price to align with the average and reflect the difference in value in the BOP. - Migrants’ goods: - Remove migrants’ imports and exports (personal effects) from the goods item. - Estimation methods: use CDDB declarations containing 10 or more entries and study the descriptive field; perform the estimate once and use the resulting coefficient for adjustment; alternatively, use surveys at border-crossing posts. - Recommended measures (explicit): - Perform an analysis of prices based on individual declarations of the 20 main imported goods and 10 exported goods; adjust declarations with significant deviations and reflect the value differences in the BOP. - Apply the mirror comparison method to estimate unrecorded transactions involving import/export of goods and add obtained data to the Goods item. - Remove estimated data for imports/exports performed by migrants from Goods. *Source: 1uzbea2020003 - 1. Priority Recommendations (IMF STA mission report).* ### 14. The CBU has made some progress in improving the collection and compilation ### 14. The CBU has made some progress in improving the collection and compilation system for trade in services ### Trade in services — general improvements and sources - Data from SSC survey on international trade in services were validated and revised, especially with regard to certain types of services for which the CBU developed alternative data sources and estimation methods. - The CBU was able to estimate certain types of services for which there was either no estimate in the SSC data, or for which the accuracy of estimate was inadequate. - Example: passenger transport, debit was estimated at practically zero. - An improvement was also made in the estimate of travel, which is a major services item. - The SSC remains the main source of information, but the NAC, the Uzbek Railway (UR), the State Border Protection Committee (SBPC), the Ministry of Foreign Affairs (MFA), and other agencies are also providing information. ### Railcar leasing and related data collection - A form was developed for the Uzbek Railway on the use of foreign railcars by the UR and the use of Uzbek railcars by foreign railways. - The form contains information on the provision of services (leasing of railcars) between Uzbekistan and the rest of the world and vice versa, and indicates the debt of the parties at the end of the quarter and repayment of this debt after mutual offsets. - Data on the use of railcars are provided together with data on settlements in original currency. - This allows calculation of imports/exports of railcar leasing and trade credits (assets and liabilities) arising in this activity. - Railcars are leased without a crew; this service is classified as operational leasing. - Mission recommendation: leasing of railcars should be reflected under the technical, trade-related, and other business services item, which includes operational leasing. ### Pipeline transport - The credit under pipeline transport is a fairly large services item, the annual volume of which remains stable within the range of US$600–700 million. - The CBU receives information about this service from the SSC; one enterprise, Uztransgaz, reports to the SSC on freight via pipeline transport. - The mission could not meet with Uztransgaz representatives and received no response to a letter sent. - The mission concluded that an analysis of Uztransgaz reporting data is needed to verify compliance with BPM6 standards. - Current Uztransgaz report contains only the cost of transit transport through Uzbekistan and the cost of transporting exports and imports of petroleum products. - The mission did not succeed in clarifying which main pipelines are located within Uzbekistan. ### Financial services and use of ITRS - To improve quality of data on financial services for which an explicit fee is charged, the mission recommends replacing SSC data with data received from commercial banks. - Rationale: main consumers and providers of financial services are banks; it makes more sense to obtain data from them on financial services provided and received. - A letter was drafted and sent to commercial banks asking them to provide quarterly information on financial services received and provided starting with 2014. - Detailed information will also be obtained from the SSC. - To avoid double accounting, the CBU will ask the SSC for a separate presentation of financial services from the banking sector and from other corporations. - ITRS recommendation: make active use of ITRS data, especially for services lacking reliable data sources, including: - maritime transport freight services (maritime transport does not appear in the country’s BOP due to geographical specifics, but imports of maritime transport freight services exist); - road transport exports; - postal services and courier services; - financial services of other sectors; - payment for the use of intellectual property not elsewhere classified; - telecommunications, computer, and information services; and - other types of services difficult to collect via regular surveys. Recommended Measures (extracted verbatim): - Collect information about financial services of deposit-taking corporations, except the central bank (DTCs), directly from commercial banks and the CBU. To avoid double accounting, request SSC data separately for commercial banks and for the rest of the corporations. - Contact Uztransgaz and obtain separate data for gas transit across the territory of Uzbekistan and for the transport of export and import deliveries. - After the ITRS has reached a sufficient level, make active use of the system to estimate missing data on trade in services. ### Primary and Secondary Income — improvements and remaining issues - Over the past year the CBU improved statistical data on primary income. - Following guidance of the previous mission, deviations from BPM6 standards were corrected and statistical methods for estimates were improved. - The credit under wages and salaries in the previous version of the CBU’s balance was significantly overstated and exceeded US$3.6 billion in the first half of 2018; in the current version of the BOP the analogous figure is around US$1.4 billion. - The SSC used an incorrect algorithm in the calculation of reinvested income of nonfinancial corporations; the mission helped correct the algorithm for calculation of transactions by direct investment components, including reinvested income. - On February 20, 2019, the Uzbekistan Ministry of Finance (MOF) issued two types of Eurobonds with maturities of 5 and 10 years. These are the country’s first debt securities. - The BOPSO calculated the accrued interest on these securities and made the correct entries in the BOP. - Together with BOPSO staff, the mission developed a file for recording government Eurobonds at market prices. - The mission found that SDR allocations are missing from the ESS, and accordingly income on SDR allocations does not appear in other investment income. - Data on income on reserve assets do not contain information on accrued interest on SDR holdings. - The mission developed and presented to the BOPSO a file for calculating accrued interest on SDR allocations and holdings. Information from this file is suitable for the financial account and for quarterly external debt statistics tables. Recommended Measures (extracted verbatim): - Reinvested income of nonfinancial corporations needs to be calculated according to an updated formula – in line with the mission’s recommendations. - Income on government Eurobonds needs to be calculated using the file developed by the mission for the calculation of data on Eurobonds. - Income on SDR allocations and holdings should be calculated according to the methodology proposed by the mission. Income on SDR allocations should be reflected under income on other investment – debit, and income on SDR holdings should be added to income on reserve assets. ### Direct and Portfolio Investment — sources, processing issues, and methodological fixes - Main DI data sources: SSC (survey of foreign economic activity of nonfinancial corporations – form Invest-1); survey of commercial banks on direct investments of financial corporations (data from DTCs and nonbank financial corporations, including microfinance institutions, insurance companies, and leasing companies); CBU survey of companies with a production sharing agreement (PSA) based on an updated form. - SSC also collects investments abroad (assets), but they represent a negligible amount. - The format allows compilation of statistics for both balances and transactions. Findings: - The mission analyzed DI data provided by the SSC to the CBU and found that data in the original currency are not balanced: balances at the end of the reporting period and flows during the period do not correspond to each other. - When converted into U.S. dollars, the imbalance is widened by the exchange rate difference, increasing the discrepancy between BOP operations and changes between balances at the beginning and end of the period. - Cause identified: incorrect algorithm for calculation of net operation for DI and PI used by the SSC when generating reports for the CBU. - Existing algorithm relied only on change in a company’s total capital; if ownership changed without capital change, transactions were not captured and zero values assigned to transactions. - Algorithm did not account for reclassification of a direct investor into a portfolio investor and vice versa. Actions taken: - Together with BOPSO staff, the mission developed a new algorithm eliminating these deficiencies. - The BOPSO prepared a cover letter and a file with a description of the new algorithm to be sent to the SSC for calculation of data on DI and portfolio investment. - The mission developed a methodology for calculation of data that BOPSO will use to process SSC data and reflect them in the BOP and IIP under DI and PI. - To simplify compilation, instead of a single table on DI, four sub-forms will be sent to the SSC with different conditions depending on investor’s stake at the beginning and end of the reporting period; information will be reflected in each sub-form based on specific lines in form Invest-1. Relevant Invest-1 lines (as listed in source): - Line 201 – Authorized/shareholder capital; - Line 202 – Additional capital; - Line 204 – Retained earnings from previous years; - Line 205 – Profit/loss for reporting period (actual retained earnings for the current year); - Line 206 – Reserve capital; - Line 207 – Other reserves; - Line 203 – Preferred shares held by direct investors; - Line 208 – Other financing from a nonresident direct investor (other than loans and reinvestment); - Line 209 – Other debt securities issued by a company, held by direct investors; - Line 210 – Dividends actually paid in the reporting period. - Classification from source: - Lines 204 and 205 are classified as reinvested income; - Lines 203 and 209 as debt instruments; - The rest are equity and investment fund shares/units. Processing notes and sub-form logic (summarized from source): - In the SSC file, flows and balances are balanced for all lines except 204 and 205 (retained earnings). - For lines 204 and 205, the BOP operation for each investor is calculated as the change in the company’s retained earnings multiplied by the investor’s average stake. - Under this approach flows for retained earnings and their balances at the beginning and end of each period will not be balanced; residual category equals that part of retained earnings for which payment was made in cash and should be added to equity transactions to ensure IIP balance. - Sub-form definitions: - Sub-form 3: investor’s stake beginning ≥ 10 percent or 0, end ≥ 10 percent or 0 — recorded under DI. - Sub-form 3.1: stake beginning ≥ 10 percent, end < 10 percent but > 0 (direct investor becomes portfolio investor) — reflected in BOP as DI and in IIP under both DI and PI (detailed calculation tables provided in source). - Sub-form 4: stake beginning and end < 10 percent — reflected under portfolio investments. - Sub-form 4.1: stake beginning < 10 percent but > 0, end ≥ 10 percent (portfolio investor becomes direct investor) — analogous to sub-form 3.1 and reflected under DI in BOP and as DI and PI in IIP (detailed calculation tables provided in source). - The CBU did not take into account Line 208 (other financing from a nonresident direct investor, other than loans and reinvestment); companies include in this residual category transactions that do not fit other items. - Mission recommendation: include data under Line 208 in DI and the SSC should include an additional cell in the form for a brief description of this kind of financing. - SSC Invest-1 will contain a summary sub-form (Sub-form 1) containing all lines without conditions and without dividing into DI and PI; CBU will use Sub-form 1 to check data. Sum of four sub-forms should equal Sub-form 1. Debt instruments, loans, and trade credits — data quality and inconsistencies - SSC collects data from companies (other than PSAs) regarding credits and trade credits. CBU also collects same data via commercial banks. - Banks provide data on all companies that received credits in monetary form, and also on their own credits. - Coverage of bank-collected data is greater than SSC data; for this reason CBU uses bank system data. - Mission studied collection and processing of data on credits and trade credits through the bank system and discovered a number of inconsistencies with generally accepted standards. - Quality of processing system for nonguaranteed loans is quite high; minor deficiencies can be corrected: - (i) intercompany loans of insurance and leasing companies are included in other investment — can be corrected by expanding coding of institutional sectors; - (ii) capitalization of interest and cancelation/forgiveness of principal and interest are included in other changes — can be corrected by adjusting calculation formula; - (iii) there is not a balance between balances and flows in the original currency. - The mission provided BOPSO staff with methods to find causes of discrepancies; next steps: contact each respondent bank, identify causes, and make corrections (possible need to correct data series). Trade credits specific issues - The CBU system for recording trade credits does not allow division between trade credits among affiliated companies and other trade credits. - Therefore, all trade credits are reflected under other investment: DI is underreported and other investment is overreported. - SSC data can distinguish trade credits from parent companies and from independent nonresidents, but quality needs improvement. - A large discrepancy was found between SSC and ITRS data for DI in the second quarter: - According to SSC, DI totaled US$923 million (this figure is reflected in the BOP). - According to ITRS, DI was around US$300 million. - Such a large difference raises doubts about reliability of both data collection systems. - CBU and SSC have not yet managed to reach an agreement on sharing of primary data, which would improve data comparisons. - At the last meeting, an agreement was reached on reconciliation of primary data (company data) on DI and trade credits. - A meeting of BOPSO and SSC representatives is planned for data reconciliation. *Source: IMF staff assessment as presented in the provided chapter excerpt.* ### 42. In 2019, Uzbekistan issued its first series of debt securities. The government ### 1uzbea2020003 - 42. ### Eurobonds issuance and valuation (paras 42–43, Tables 4–5) - In 2019, Uzbekistan issued its first series of debt securities. The government performed a large placement of Eurobonds on February 20, 2019, which were purchased for the most part by nonresidents. - The BOPSO made the correct entries in the BOP, but no calculations were made based on market value. These Eurobonds were recorded at nominal value in the IIP and GED. - An Excel file was compiled (with mission assistance) to calculate data on these securities both at market prices and at nominal value, and to compute income on them. The file contains calculations for the first three quarters of 2019; further calculations require market prices at the end of the reporting quarter, which the BOPSO should obtain from the Foreign Exchange Reserves Management Department (FERMD). A schedule for the payment of coupons was also calculated. Key market-price figures (Table 4: Net Market Price of Government Eurobonds (%)) - Feb. 20, 2019 — 5-year Eurobonds: 100.00; 10-year Eurobonds: 100.00 - March 29, 2019 — 5-year Eurobonds: 99.461; 10-year Eurobonds: 99.132 - June 28, 2019 — 5-year Eurobonds: 104.543; 10-year Eurobonds: 106.395 - Sept. 30, 2019 — 5-year Eurobonds: 105.052; 10-year Eurobonds: 110.563 Consolidated example calculations for both Eurobond series (Table 5: Third Quarter of 2019; values shown as presented) - June 30, 2019 balances and Sept. 30, 2019 balances (consolidated): - Principal – nominal value: June 30, 2019 = 1,000.0; Transactions = 0.0; Rate = 0.0; Price = 0.0; Other = 0.0; Sept. 30, 2019 = 1,000.0 - Debt on coupons: June 30, 2019 = 18.3; Transaction = -12.7; income entry = Х 12.7; Sept. 30, 2019 = 5.6 - Principal – market value: June 30, 2019 = 1,054.7; Other = 18.4; Sept. 30, 2019 = 1,073.1 - Nominal value - total: June 30, 2019 = 1,018.3; Transaction = -12.7; Sept. 30, 2019 = 1,005.6 - Market value - total: June 30, 2019 = 1,073.0; Transaction = -12.7; Other = 18.4; Sept. 30, 2019 = 1,078.7 ### Recommended measures arising from Eurobond work - Correct the formulas for calculating shareholder capital and reinvested income in the file used by the SSC in preparing output tables for the CBU and forward the updated file to the SSC. - Process the data on DI and PI received from the SSC in accordance with the mission’s recommendations. - Add intercompany loans of insurance and leasing companies to direct investment debt instruments. - Introduce the interconnected companies attribute into the bank system for the recording of trade credits and divide trade credits into (a) trade credits between interconnected companies and (b) trade credits between independent companies on the basis of this attribute. - Add trade credits between affiliated companies as liabilities under the direct investment, debt instruments item. - Reflect trade credits between affiliated companies in the IIP and GED, in addition to the BOP, in accordance with the mission’s recommendations. - Reconcile DI data obtained through the ITRS and SSC data at the level of specific companies, identify causes of discrepancies, and find ways to eliminate them if possible. - Reconcile data on trade credits obtained through the special bank system and through the SSC at the level of specific companies, identify causes of discrepancies, and find ways to eliminate them if possible. ### Other investment and reserve assets: data collection and processing (paras 44–57) - Progress and deficiencies: - Some success in collection and processing of other investment items, but the mission identified deficiencies and deviations from generally accepted standards; some corrected during the mission and recommendations made for the rest. - Government and government-guaranteed loans: - A form was developed and put into use to divide government-guaranteed loans into three parts: (i) loans of the general government sector; (ii) loans of other sectors guaranteed and serviced by the government; (iii) loans of other sectors guaranteed by the government and serviced by the borrower. - Insufficient breakdown by institutional sector of borrower; subsequent requests to the CBU to revise presentation failed to produce results. As a result, loans assumed directly by the government and loans by corporations (primarily state-owned) against government guarantees were combined and reflected as debts of the general government sector, producing a reported volume of government debts totaling US$12 billion, approximately half of which should be redistributed to the relevant sectors. - MOF commitments and DMFAS: - MOF committed to send updated data broken down as: (i) loans assumed directly by the government; (ii) loans assumed by corporations against government guarantees, with those serviced by state budget funds identified separately. - MOF committed to complete uploading data to the Debt Management and Financial Analysis System (DMFAS) in the first half of 2020, after which it is prepared to discuss providing data with the required level of detail. - Compact reporting form: - A compact reporting form was developed with BOPSO staff to collect information on loans of the DTC sector obtained against a government guarantee; to be sent only to banks that borrow funds against government guarantees (mainly banks with government controlling stakes). - Identified processing deficiencies and recommendations: - CBU bank reporting captures nonguaranteed private debt in detail; loans are recorded in original currency and coded for creditor type, mutual relationship, maturity, and settlement currency. - First-level disaggregation separates intercompany loans from other loans; mission recommends adding a field to the banks’ file to code intercompany loans and ensure consistent application (unique loan number to carry code forward). - Two conditions for an intercompany loan: (a) direct investment relationship between creditor and debtor; (b) neither creditor nor debtor is a financial corporation for which financial intermediation is daily operational. - Second-level disaggregation: loans by institutional sector (DTC, nonbank financial corporations, nonfinancial corporations). - Third-level disaggregation: long-term vs short-term, then by currency; tracked items include disbursement and repayment of principal, accrual and payment of interest, balances on principal and interest, capitalization of accrued interest, debt forgiveness (principal and interest), arrears on principal and interest; data submitted monthly (some cumulative, some net). - Conversion to dollars and exchange rate difference computed after aggregation. - Deviations noted: (i) debt forgiveness operations recorded as other changes; (ii) capitalization of interest recorded under other change; (iii) balances in original currency at end of reporting periods do not correspond to flows in the reporting period, causing distorted exchange rate change calculations. - Mission recommends: reflect debt forgiveness/cancellation in BOP operations as debt payment and total separately for capital transfers; record capitalization of accrued interest as accrual of interest plus increase in debt; check correspondence between balances and flows in original currency before conversion into U.S. dollars. - Imbalance causes: changes in classification of loans between quarters and appearance of previously unrecorded loans; mission recommends contacting reporting bank to clarify and adjust series as needed. ### Trade credits: sources, system features, and recommendations (paras 58–65) - Two data sources for trade credits at the CBU: - SSC data collected via Invest-1 survey (foreign economic activity of nonfinancial corporations): presents trade credits between affiliated companies (to be included in direct investment debt instruments) separately and other trade credits separately; provided in original currency; drawback: limited coverage and underestimated trade credits. - Bank system (customs-linked contract server): better coverage; contracts uploaded to Uzbek Customs Service server prior to import/export; commercial banks and the CBU have access; contracts have unique IDs and may cover multiple goods/batches; trade credits recorded per contract and in original currency; CBU currently receives trade credit liabilities from commercial banks in original currency and assets converted into U.S. dollars. - Drawbacks of the bank system: - System does not distinguish trade credits between affiliated corporations and other credits; thus CBU reflects all trade credits under other investment. - Data on assets provided by banks are converted into U.S. dollars, complicating valuation and exchange rate difference calculation; currency field is multi-currency making automated processing difficult. - Data on goods are entered at customs clearance, so goods in customs warehouses/storage do not enter the system; system can mix assets and liabilities for multi-item contracts; system retains historical trade credits not closed, some pre-2000. - Mission recommendations for trade-credit system improvements: - Introduce a field for a code indicating a direct investment relationship between creditor and debtor (the nonguaranteed loan database can be used to identify such companies; banks queried in special cases). - Define a transaction as the difference between balances only when information is provided in the original currency; avoid using balances-conversion differences as pure BOP operations. - Exclude trade credits that arose five years ago or more from current reporting. - After CBU obtains direct extraction capability from the server in the original currency (expected by end-2019), perform regular company-level comparisons between bank-system trade-credit data and SSC survey data; BOPSO to arrange meeting with SSC representatives to discuss data. *International Monetary Fund — Republic of Uzbekistan chapter excerpt (content unit 1uzbea2020003 - 42).* ### 66. The mission notes that Uzbekistan’s ESS do not contain data on SDR allocations. ### 1uzbea2020003 - 66. The mission notes that Uzbekistan’s ESS do not contain data on SDR allocations. ### SDR allocations: recording, calculations, and data series - Finding: Uzbekistan’s ESS do not contain data on SDR allocations. - The mission developed a file for: - recording SDR allocations, - calculating accrued interest on SDR allocations and on SDR holdings. - Data inputs for calculations are drawn from the IMF website: volume of SDR allocations, balances on SDR holdings, daily interest rate, and exchange rates for SDRs. - Accrued interest is calculated daily and totaled throughout the quarter. - Mutual settlements on SDR allocations and SDR holdings are performed once per quarter in February, May, August, and November; settlements are based on accrued interest for the previous three months and the net amount is added to SDR holdings. - The data series in the file begins on December 31, 2011. - Table 6: Model of Data Processed for SDR Allocations (first quarter of 2019) - SDR allocations – liabilities (data in SDRs) - SDR allocations principal amount: Balance as of Dec. 31, 2018 262,789,980 | Operations 0 | Exchange Rate Differences 0 | Other Changes 0 | Balance as of March 31, 2019 262,789,980 - Accrued interest on SDRs: Balance as of Dec. 31, 2018 471,424 | Operations 11,095 | Exchange Rate Differences 0 | Other Changes 0 | Balance as of March 31, 2019 482,518 - Total for SDR allocations: Balance as of Dec. 31, 2018 263,261,404 | Operations 11,095 | Exchange Rate Differences 0 | Other Changes 0 | Balance as of March 31, 2019 263,272,498 - Converted into U.S. dollars - SDR allocations principal amount: Balance as of Dec. 31, 2018 365,485,676 | Operations 0 | Exchange Rate Differences -667,487 | Other Changes 0 | Balance as of March 31, 2019 364,818,190 - Accrued interest: Balance as of Dec. 31, 2018 655,651 | Operations 15,112 | Exchange Rate Differences -907 | Other Changes 0 | Balance as of March 31, 2019 669,856 - Total for SDR allocations (in U.S. dollars): Balance as of Dec. 31, 2018 366,141,328 | Operations 15,112 | Exchange Rate Differences -668,393 | Other Changes 0 | Balance as of March 31, 2019 365,488,046 - Income on SDR holdings: X | 1,033,234 | X | X | X - Income on SDR allocations: X | 1,020,343 | X | X | X - The mission recommends that the data obtained be used for the BOP, IIP, and GED with regard to liabilities on SDR allocations. - Finding: Information on reserve assets provided by the International Reserves Management Department (IRMD) does not contain data on accrued interest on SDR holdings; such data are added to the file developed for calculation as a missing component. - Recommendation: Add accrued interest calculated using the file compiled together with the mission to SDR holdings under reserve assets. - Recommendation: Reflect the data calculated for SDR allocations under the respective item in the financial account. ### Recommended measures on debt classification and recording (extract) - Break down government and government-guaranteed debt by the relevant institutional sectors. Reflect debts directly taken out by the government as well as guaranteed debts which are serviced by the government in the government sector; other debts should be reassigned based on the borrower’s respective sectors. - In the handling of nonguaranteed private loans: - move the capitalization of accrued interest and the forgiveness/cancellation of debt from other changes to BOP operations; - add a field for classifying the given loan as intercompany lending to the file for nonguaranteed private debt. - Correct the process for the disaggregation of nonguaranteed private loans into intercompany loans and other loans according to the mission’s recommendations. - Prior to recalculation of nonguaranteed private debt data from the original currency into U.S. dollars, check the correspondence between the balances at the end of the period and flows during the period, and make the relevant corrections if necessary. - Add a field for the classification of a given loan as intercompany lending to the bank system for the recording of trade credits. - Reconcile data on trade credits received through the special bank system and through the SSC at the company level; identify reasons for discrepancies and find ways to eliminate them if possible. ### ITRS: status, improvements, and recommended actions - Background: - At end-2018 Uzbekistan launched trial collection of ITRS-based data; only commercial banks were involved. - Original ITRS was designed to BPM5 requirements and lacked fields and codes needed for BPM6 (e.g., no institutional sector code; insufficient code system; data collected only from commercial banks). - Improvements made following mission recommendations: - Code system revised and expanded. - Workshops held for commercial banks to explain ITRS purpose and typical coding errors. - Remaining deficiencies and findings: - The code system now meets current requirements; one addition suggested is a code for wages of residents employed at foreign embassies and other extraterritorial bodies within Uzbekistan. - The CBU introduced a client-type classification with 14 types (Table 7) to identify resident participant types; a conversion table was prepared to map client type to institutional sector (Table 8). - The CBU is developing an interim (working) database for ITRS data from all banks; a field for institutional sector code will be added to that database, with sectors coded to include Central Bank, DTC, general government sector, and other sectors (other financial corporations and nonfinancial corporations), as well as households and NPISHs. - The CBU does not yet provide ITRS-based reporting; technical issues remain to be resolved to enable reporting and CBU segment inclusion. - Recommended measures: - Add a code for wages of residents employed at foreign embassies and other extraterritorial bodies within Uzbekistan to the ITRS codes. - Develop an interim working database for processing, analysis, and storage of ITRS information. - Include a field for institutional sectors in the interim database. - Organize the collection of ITRS data for the CBU. - Study the feasibility of extending the ITRS to the remaining two segments (nonbank financial institutions and nonfinancial corporations with accounts abroad). - Arrange regular workshops with commercial banks on determination of ITRS codes and typical coding errors. - Check the balance of neutral transactions monthly; credit and debit entries for neutral transactions should be approximately the same value and discrepancies investigated (often due to coding inconsistencies). ### Compilation of the Balance of Payments for 2014–2015: approach, issues, and recommendations - Task: Assist CBU in compiling 2014–2015 BOP and constructing dynamic series for BOP, IIP, and GED starting with 2014, amid limited reliable historical data and low detail in MOE balances. - Approach: - Used all available data sources, including MOE BOP. - CBU requested data from ministries, agencies, and private corporations; initial estimates used where data were not yet received. - 2014–2015 BOP prepared during the mission should be treated as a trial version and may change after receipt of actual data. - Goods: - MOE and CBU use a common trade system but arrive at different results; differences arise from subsequent corrections and MOE adjustments for “personal goods.” - MOE estimates unrecorded exports as 20 percent of money transfers; CBU estimates shuttle trade from border surveys and adds goods procured in ports/airports by carriers. - For 2014–2015, CBU calculated shuttle trade and goods procured in airports by carriers based on 2016–2017 analogous data through proportional change in exports/imports excluding nonmonetary gold. - Comparison: CBU’s estimates of shuttle trade for exports are one-fourth to one-fifth of MOE’s upward adjustments; for 2015 imports CBU slightly above MOE; for 2014 imports equal to 80 percent of MOE figure. - Mission recommendation on unrecorded exports: estimate unrecorded export transactions at 10 percent of money transfers and deduct this amount from secondary income – personal transfers. - Recommendation: CBU should introduce its own methodology for compiling 2014–2015 series and request data from the State Customs Committee for 2014–2015, with corresponding correction in trial balance. - Note on freight: CBU used MOE assumption that freight and insurance equal 10 percent of CIF, but recommends using CBU’s own freight estimates based on geography and weight and average cost per metric ton; imports from neighboring countries along land border should be considered. - Services: - CBU estimated services based entirely on MOE balance, distributing MOE consolidated transport services proportionally by types and transport service types; cargo insurance included in imports of transport services. - CBU used MOE exports of travel without change; estimated imports of travel following its own methodology; other services distributed proportionally to 2016–2017 data. - Mission recommendations: - For exports of transport services, use MOE breakdown by types of transport (air, rail, road, pipeline) and break down each by types of transport services in proportion to 2016 data. - Use MOE balance for exports of travel services; break down remaining services in proportion to 2016. - For imports of transport services, perform similar breakdowns and use CBU’s own estimates for imports of services and travel rather than MOE estimates. - Revise estimates of private travel upward. - Reflect maintenance of embassies under government goods and services, not under other categories. - Primary and secondary income: - Wages and salaries in CBU balance estimated in proportion to number of citizens crossing the state border; MOE uses money transfers (55 percent). - MOE estimates debit under wages and salaries in range US$30–40 million per quarter; CBU survey yields US$4–US$5 million per quarter. - Mission finds CBU survey results more realistic given labor surplus and unlikely significant foreign worker presence; CBU believes debit under wages and salaries is not as significant and estimated it in line with the opposite trend. *Source: 1uzbea2020003 - 66. The mission notes that Uzbekistan’s ESS do not contain data on SDR allocations.* ### 83. In the final table in the MOE balance, “direct investment income” is represented by ### 1uzbea2020003 - 83. In the final table in the MOE balance, “direct investment income” is represented by ### Direct investment income: composition and recording issues - In the final table in the MOE balance, “direct investment income” is represented by two lines—dividends and accrued interest. - In the MOE working files there is another line—reinvested income—which does not play a direct role in the final calculations but is more likely implicitly included in the line “Income on equity (reinvestments and PSA earnings),” to which the line “dividend” refers in the final version of the balance. - Investment income includes PSA income, which is income on equity, although it is shown on a separate line. ### Mission findings and recommended corrections on equity income - CBU treatment in trial compilation: - Under the reinvested income item, the CBU reflected reinvested income from the MOE balance. - Under the “Dividends and withdrawals from the income of quasi-corporations” item, the CBU reflected data from the dividends line, although the mission considers this equity income. - Data on PSA income were ignored by the CBU in this context. - Mission agreement and recommendation: - The mission agrees with the CBU regarding recording of reinvested income. - The mission recommends correcting the data on dividends as follows: deduct employment income, all types of interest income, and reinvested income from total income as a debit. The resulting amount should be recorded as a debit under the “Dividends and withdrawals from the income of quasi-corporations” item. ### Interest on other investments: payments versus accruals - Only information about interest payments was available and recorded in the trial balance. - Sources for interest payment data: MOF and the bank system for recording of nonguaranteed loans. - Mission recommendation: replace interest paid with accrued interest as soon as relevant information is received from the MOF and commercial banks. - Interim estimation method (recommended until accrued interest data are available): - Stage 1: determine the average annual interest rate. - Divide total interest payments for the year by the average annual balance to estimate the average rate. - The mission demonstrated the method for estimating quarterly accrued interest to BOPSO staff using government and government-guaranteed debt as an example. ### Other compilation issues and adjustments - Income on reserve assets: - Updated IRMD data were reflected in income on reserve assets. - Income on SDR holdings was added to this data (though elsewhere noted SDR income does not appear in final working file). - Personal transfers: defined as a residual category from money transfers and cash imports on one hand, and net wages of short-term workers on the other hand. - Migrants’ remittances: - MOE’s balance reflected migrants’ remittances under capital transfers, which is not allowed under BPM6; these transfers were removed from the experimental balance. - Debt forgiveness: possible for 2014–2015 when debt data are received; no such entry yet under capital transfer items. ### Financial account and investment coverage observations - Foreign direct investment: - Mission made corrections to foreign direct investment. - MOE calculation of direct investment used only shareholder equity and borrowed capital; reinvested income present in working file did not appear in DI calculation. - For 2014–2015, CBU took shareholder equity and borrowed capital from MOE’s balance; reinvested income was also taken from MOE’s balance. - Direct investment abroad is negligible. - Portfolio investment and financial derivatives: negligible in Uzbekistan and were not estimated in the trial balance. - Other investment: - Not sufficiently represented in MOE’s balance; broken down into government and government-guaranteed loans and nonguaranteed loans. - Updated data from MOF reflected under government sector credits; credits of DTCs and other sectors taken from commercial banks’ reporting. - MOE’s balance included data on credits granted by the Uzbekistan Ministry of Finance (in practice on repayment; new credits not granted recently); mission used these data and added Georgia’s repayment to Uzbekistan based on mirror records. - Banking sector assets in currency and deposits: - MOE balance figures do not coincide with commercial banks’ data. - IRMD indicates CBU does not have external assets in non-reserve currencies; all deposits in non-reserve currencies are held at resident banks. - Deposits of the DTC sector were estimated from bank reporting; deposits of other sectors (households) estimated using expert estimates based on imports/exports of foreign currency and likely household inflows/outflows. - Mission considered these estimates overstated and needing further revision. - CBU requested banks to provide data on liabilities in cash and deposits of the banking sector (mainly loro accounts); until received, mission recommends using MOE balance data. - Reserve assets: - BOPSO received reserve asset data from IRMD for 2014–2015 compilation. - Main operations are performed under deposits category. - No BOP transactions involving monetary gold are performed; changes related to monetary gold are classified under other changes and reflected in trial BOP and IIP. ### Data dissemination, staff, and training - Uzbekistan joined the e-GDDS in May 2018. - Current dissemination practice: - CBU develops quarterly BOP and IIP statistics based on BPM6 in U.S. dollars. - GED is generated from the IIP according to the External Debt Statistics Guide. - BOP and IIP data are submitted quarterly to the IMF in standard form. - On the CBU website, BOP and IIP are published only in a simplified format within extensive analytical materials (some 70–80 pages quarterly in PDF). - No standard representations of BOP, IIP, and GED are published; GED published data differ significantly from standard representation and omit some debt liability components. - Mission recommendations on dissemination and training: - Publish quarterly BOP, IIP, and GED in standard form on the CBU website (e.g., as Excel tables) in addition to analytical materials. - Publish abbreviated presentations showing major items in parallel with standard presentations. - Accompany quarterly ESS publications with short press releases of no more than 1–2 pages. - Continue training: invite BOPSO employees to IMF workshops; recommend new employees attend regional training centers and more experienced staff attend in-depth courses in Washington. - Staffing status (as of October 2019): - Eight positions within BOPSO responsible for ESS; all positions filled. - Many new employees; only three of eight had completed special training courses as of October 2019; four were invited to IMF courses before end-2019. ### Key statistics from trial tables (exact values) - Trial Balance of Payments, Current account (million U.S. dollars): - 2014: 3,238 - 2015: 1,704 - 2016: 293 - 2017: 1,478 - 2018: -3,592 - Trial Balance of Payments, Financial account (million U.S. dollars): - 2014: 2,111 - 2015: 939 - 2016: 664 - 2017: -827 - 2018: -2,978 - Trial International Investment Position (million U.S. dollars): - Net international investment position: - 2014: 18,069 - 2015: 17,804 - 2016: 17,791 - 2017: 15,833 - 2018: 15,127 - Assets: - 2014: 35,593 - 2015: 37,663 - 2016: 40,444 - 2017: 41,796 - 2018: 42,332 - Reserve assets: - 2014: 24,140 - 2015: 24,307 - 2016: 26,429 - 2017: 28,077 - 2018: 27,081 - Trial Gross External Debt by sector (million U.S. dollars, Dec. 31): - General government: - 2014: 4,718.4 - 2015: 5,580.0 - 2016: 6,474.9 - 2017: 7,600.0 - 2018: 10,086.4 - Central bank: - 2014: 380.8 - 2015: 364.2 - 2016: 353.4 - 2017: 374.7 - 2018: 366.1 - Deposit-taking corporations, except the central bank: - 2014: 355.0 - 2015: 417.6 - 2016: 466.9 - 2017: 701.5 - 2018: 1,087.0 - Other sectors: - 2014: 5,890.3 - 2015: 6,354.6 - 2016: 6,687.7 - 2017: 7,233.7 - 2018: 6,659.1 - Direct investment: Intercompany lending (debt liabilities to direct investors): - 2014: 939.0 - 2015: 908.7 - 2016: 1,441.7 - 2017: 1,302.5 - 2018: 687.9 - Gross external debt total: - 2014: 12,283.6 - 2015: 13,625.1 - 2016: 15,424.6 - 2017: 17,212.4 - 2018: 18,886.6 *Source: IMF mission notes and trial BOP, IIP, and GED tables in the MOE/CBU working files for 2014–2018.* --- _Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1uzbea2020003.pdf_