## 1uryea2021001

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---

### Summary of mission outcomes and priority recommendations
- Mission: IMF STA MFS technical assistance mission visited Montevideo during February 3-14, 2020 to (i) review source data for other financial corporations (OFC) — insurance corporations (IC), pension funds (PF), and credit administration companies (CAC); and (ii) compile standardized monetary statistics for OFC (report form SRF 4SR) in line with the 2016 Monetary and Financial Statistics Manual and Compilation Guide (MFSMCG).
- OFC significance:
  - OFC’s financial assets account for more than 36 percent of total financial sector assets (as reported in the 2018 Annual Report of the BCU).
  - The BCU currently reports OFC data to STA covering foreign financial institutions (offshore banks) only, representing 0..01 percent of total other depository corporations (ODC) assets in December 2018.
- Mission assistance and outcomes:
  - Assisted BCU to develop standardized data for OFC using SRF 4SR to close a key data gap.
  - Inclusion of IC, PF, and CAC data allows (i) compilation of the financial corporations’ survey with expanded coverage per MFSMCG and (ii) improved balance sheet analysis (BSA) enabling inter-sectoral financial analysis and identification of vulnerabilities of the nonfinancial private sectors.
  - Recommended starting quarterly SRF 4SR reporting based on available source data; mapping exercise conducted for one reference period (2019Q3).
  - For PF and CAC, primary accounting catalogs were sufficient; for some IC accounts, currency, counterpart sector, or instrument breakdowns were estimated and can be improved using secondary sources.
- Implementation timetable:
  - BCU will begin reporting the quarterly SRF 4SR to STA by March 2021 with historical data starting in December 2014. SRF 4SR will include IC, PF, CAC, and foreign financial institutions (FFI).
  - New OFC data (SRF 4SR) will provide direct input into the IMF’s International Financial Statistics publication, WHD’s monetary file, and other analytical uses.
- Financial soundness indicators (FSI):
  - BCU reports FSI only on annual basis but indicated plans to move to quarterly frequency.
  - Mission stressed importance of increasing FSI frequency and timeliness and noted need to report FSI to STA according to the new FSI Guide (December 2019).
- Balance sheet approach (BSA):
  - Improved MFS coverage including OFC will allow regular BSA analysis.
  - Mission conducted a workshop on BSA, identified data gaps, and encouraged regular compilation of BSA matrices.
- Human resources constraint:
  - Team leader for MFS compilation will retire right after the mission; authorities estimate process to cover vacancy will take at least six months. New staff allocation recommended to avoid disruption.

### Priority recommendations (tabled)
- May 2020 — Finalize the compilation of the SRF 4SR for one period, covering IC, PF, CAC and FFI, and using secondary available data sources to improve currency, counterpart sector, and instrument classification for IC. — Responsible: BCU
- September 2020 — Increase periodicity of FSI by compiling quarterly data and report them with a lag of one quarter to STA. — Responsible: BCU
- December 2021 — Compile and disseminate the SRF 4SR on quarterly basis covering IC, PF, CAC and FFI starting from December 2014. Report the SRF 4SR to STA with less than three months lag. — Responsible: BCU

### Key statistics and data scope
- OFC assets reported (BCU 2018 Annual Report): USD5,011 million (IC), USD15,438 million (PF), and USD1,116 million (CAC).
- ODC total assets (Sep-19): 1,410,150.03 million pesos.
- OFCs represented around 56 percent of total ODCs (Sep-19).
- OFC composition (Sep-19, relative to ODC total assets):
  - Pension Funds: 551,533.00 (39)
  - Insurance Corporations: 188,103.56 (13)
  - Credit administration companies: 36,774.61 (3)
  - Foreign financial institutions: 1,908.68 (0)
  - Financial services companies: 3,051.03 (0)
  - Exchange houses: 1,273.12 (0)
- OFC institutional counts (Sep-19): 16 IC, 4 PF, 13 CAC, and 1 FFI.
- Frequency, lag, and time series availability of source data reported to BCU:
  - Insurance Companies — Quarterly — 30 days — September 2001
  - Pension Funds — Monthly — 10 business days — October 2002
  - Credit Administration Companies — Monthly — 7 business days — December 2012
  - Foreign Financial Institutions (offshore banks) — Monthly — 7 business days — December 2001

### Detailed technical assessment and recommendations
- General:
  - Source data for OFC are of good quality and allow compilation of quarterly SRF 4SR in line with MFSMCG.
  - Primary data sources (accounting catalogs) generally provide sufficient detail; secondary sources used where needed to improve mapping (currency, counterpart sector, instrument).
  - Preliminary SRF 4SR compiled according to new SRFs aligned with MFSMCG; mapping to current SRFs completed to enable reporting under both forms.
  - STA expected to start collecting MFS data in the new SRFs by end-2020.
  - Recommended compiling and disseminating SRF 4SR starting at least from December 2014 and reporting on quarterly basis covering IC, PF, CAC and FFI.
- Valuation and accounting:
  - Valuation broadly follows international accounting standards; provisions identified on asset side with negative sign but in SRF included as liabilities recorded in Provisions for losses - Other – other accounts payable.
  - Some negotiable instruments valued at nominal value; generally no fair value adjustments are made.
  - BCU moving towards broad implementation of IFRS; IFRS applied for banks and CAC since January 2019. Compilers to assess IFRS impact and document in metadata; preliminary view that quantitative impact is marginal but could affect asset valuation.

### Insurance Companies — findings and recommendation
- Data adequacy:
  - Source data adequate to compile SRF 4SR for IC but for some items primary data lack breakdowns by currency, counterpart sector, and financial instrument; mapping used assumptions and secondary sources to improve classification.
- Counterpart sector challenges:
  - Secondary sources are highly granular (pivot tables), making counterpart sector extraction difficult.
  - Best practice: create list of institutional units mapped to institutional sectors in coordination with national accounts, external, and fiscal statistics to ensure consistent sectorization.
  - Units not in list treated residually as nonfinancial corporations or households.
- Asset and liability composition (Simplified Balance Sheet of IC):
  - Currency and deposits: 5 percent
  - Debt securities: 83 percent
  - Insurance, pension, and standardized guarantee schemes (IPSGS) - Asset: 2 percent
  - Other accounts receivable (OAR): 8 percent
  - Nonfinancial assets: 3 percent
  - TOTAL ASSETS: 100 percent
  - Insurance, pension, and standardized guarantee schemes (IPSGS) - Liability: 82 percent
  - Other accounts payable (OAP): 6 percent
  - Equity Liability: 12 percent
  - TOTAL LIABILITIES: 100 percent
- Peculiarities:
  - IC provide coverage to policyholders prior to premium payment, generating trade credit/advances.
- Recommendation:
  - Create a list of institutional units grouped into sectors in coordination with national accounts, external, and fiscal statistics.

### Pension Funds — findings and recommendation
- Size and structure:
  - In September 2019, total PF assets were 554 billion pesos, representing 39 percent of total bank assets.
  - PF administered by four AFAPs; AFAP balance sheets negligible compared to PF under administration.
- Asset and liability composition (Simplified Balance Sheet of Pension Funds):
  - Currency and Deposits: 10 percent
  - Debt securities: 88 percent
  - Loans and other accounts receivable: 2 percent
  - TOTAL ASSETS: 100 percent
  - Pension Entitlements: 99 percent
  - Other accounts payable: 1 percent
  - TOTAL LIABILITIES: 100 percent
- Source data quality:
  - PF accounting data provide enough instrument, currency, and counterpart sector detail for high quality SRF 4SR compilation.
  - Outstanding issue: classification of PF investments in financial trusts (represent 14 percent of PF assets); mission estimated these as debt securities assuming equity participations are small and advised further investigation.

### Credit Administration Companies (CAC) — findings and recommendation
- Definition and scope:
  - The CAC are natural or legal persons that regularly and professionally intervene in the financing of the sale of goods and services made by third parties, granting credit using cards, purchase orders, or other similar modalities.
  - Other entities considered as CAC:
    - Consumer cooperatives, civil associations and other legal entities with a non-financial line of business that regularly issue purchase orders, provided such activity is significant within their set of activities.
- Core business and market role:
  - The core business of the CAC is to finance household consumption and, to a lesser extent, small and medium enterprises.
  - The CAC facilitate the lending of money circumventing traditional financial intermediaries and charging a relatively high interest rate.
- Data sources, mapping, and compilation practices:
  - Source data for CAC are of good quality for 4SR compilation.
  - Readily available breakdowns: resident and nonresident counterparts; national and foreign currency; financial instrument.
  - Counterpart institutional sector information: available with some gaps.
  - Mapping approach:
    - Mapping between source data (accounting catalog) and the sectoral balance sheet 4SR was done in consultation with experts and using more detailed secondary data sources.
    - For items where counterpart sector was not specifically identified, allocation rules used:
      - Credit for consumption → allocated to households.
      - Commercial credit → allocated to nonfinancial corporations.
  - Compilation focus:
    - Mission focused on mapping all accounts with non-zero values.
    - Many accounting catalog accounts shared with banks are not applicable to CAC and have zero values; these were identified, flagged, and not mapped.
    - Instruction: If any previously zero-valued accounts show a non-zero value in the future (or if new accounts are created), compilers should map them into the 4SR.
- Balance sheet structure and key statistics (Table 6):
  - Assets composition:
    - Currency and deposits: 6
    - Debt securities: 3
    - Loans – Asset: 81
    - Other accounts receivable (OAR): 6
    - Nonfinancial assets: 3
    - TOTAL ASSETS: 100
  - Liabilities and equity composition:
    - Loans – Liability: 24
    - Other accounts payable (OAP): 40
    - Equity Liability: 36
    - TOTAL LIABILITIES: 100
  - Additional detail from text:
    - The bulk of CAC assets are loans (81 percent), of which 97 percent are extended to households.
    - Most of the loans (96 percent) are granted in national currency.
    - On the liability side:
      - 36 percent correspond to equity liabilities.
      - 40 percent to other accounts payable (of which 68 percent are provisions for losses).
      - 24 percent to loan liabilities (of which 34 percent are to ODC and 61 percent to nonfinancial corporations — mostly businesses adhered to the credit cards and purchase orders system).
- Gaps and other financial intermediaries:
  - Investment funds and financial trusts:
    - Data were not readily available during the mission; asset size information requested but not available.
    - Financial trusts do not follow a common accounting catalog, increasing the cost of compilation.
  - Recommendation:
    - Investigate the size and available data on investment funds and financial trusts. If their size is significant, include them in the SRF 4SR to be reported to STA.

### Balance Sheet Approach (BSA) — usage and recommendations
- BSA purpose:
  - Systematic analytical framework to explore how balance sheet weaknesses contribute to the origin and propagation of financial crises.
  - Focus on stock variables (positions) across sectoral and aggregate balance sheets to identify vulnerabilities.
- Uruguay context:
  - Improved MFS coverage including OFC will allow BSA analysis once 4SR historical series are compiled.
  - Important data sources available: quarterly international investment position and general government financial balance sheet.
- Workshop outcomes and key messages:
  - International interest since the 1990s in compiling intersectoral positions in addition to flow-of-funds.
  - Need for more frequent (quarterly vs annual) and timely data for macro-financial stability analysis.
  - Emphasis on a from-whom-to-whom approach to identify creditor and debtor sectors and financial dependence among them.
- Institutional notes:
  - Compilation of sectoral accounts by national accounts compilers is in an early stage.
  - Financial Analysis Department uses flow data mostly and could be a candidate for compiling BSA data; department responsible for macro-financial stability is another candidate.
  - BCU should be informed of any plans to compile and analyze BSA matrices by IMF users because BCU has more granular data that can replace STA estimates in BSA matrices.
  - Example: for items where international data do not provide counterpart sectors (such as direct investment), BSA entries are estimated using national data systems of predefined allocations.
- Recommendation:
  - Using more granular, national data than those available in STA, compile quarterly BSA matrices once the OFC historical series are available, and share these data with WHD on request.

### Financial Soundness Indicators (FSI) — frequency and coverage
- Current status:
  - More than 140 countries report FSI to STA; BCU only submits annual data.
  - Annual reporting prevents timely macro-financial stability analysis.
- Commitments and recommendations:
  - Authorities committed to start FSI data reporting on a quarterly basis.
  - Monthly FSI reporting should be considered as a medium-term goal.
  - FSI coverage could be expanded beyond deposit-taking corporations in line with the new FSI guide published in December 2019, which expands FSI for other sectors/subsectors and recommends sectoral financial statements and memorandum items for three types of non-bank financial intermediaries (IC, PF, and money market funds).
  - STA plans to launch the request for the new FSI in September 2020 and will request sectoral financial statements, memorandum items, and underlying series only.
  - The BCU stopped reporting sectoral financial statements in 2012; mission recommends resuming reporting of sectoral financial statements, memorandum items, and underlying series based on the new list of FSI.
  - Authorities showed interest in training or TA to meet these requirements.
- Recommendations:
  - (i) Increase periodicity of FSI by compiling quarterly data and report them with a lag of one quarter to STA, including the underlying statements (priority recommendation, by September 2020).
  - (ii) Start reviewing the new FSI guide and its requirements, including the new list of FSI (expected to be requested by STA starting in September 2020).

### Resources, technical assistance, accounting standards, and IMD
- Staffing:
  - The main MFS compiler is retiring at the end of the mission after more than 30 years’ experience.
  - Recommendation: BCU should allocate new staff for compiling MFS without delay to avoid disruptions and to implement report recommendations.
- Accounting standards and MFSMCG:
  - Implementation of IFRS-based reporting by banks and other financial intermediaries, and implementation of the MFSMCG for the central bank and ODCs, may require further TA.
  - BCU required banks to adopt IFRS in 2019, changing plans of accounts and catalog; the impact on MFS compilation was not analyzed in this mission and could be part of a follow-up mission.
- OFC compilation systems and Integrated Monetary Database (IMD):
  - Since 2007, BCU, STA, and WHD have shared an IMD used for publication and operational needs; IMD contains SRFs for central bank and ODC and corresponding surveys; contains data from December 2001 onward.
  - IMD should be upgraded to include available data for OFCs, with historical series starting in December 2014.
  - Upgraded IMD should contain data from three financial subsectors: central bank, ODC, and OFC.
  - With these data as source, IMD should generate surveys for: central bank (1SG), ODC (2SG), depository corporations (3SG), OFC (4SG), and financial corporations (5SG).
  - Mission encouraged dissemination of detailed monetary data from IMD on the IMF external website.
- Compilation files completed by mission (uses):
  1. IC-Compilation system: compiles the new 4SR for IC for one quarter.
  2. PF-Compilation system: compiles the new 4SR for PF for one quarter.
  3. CAC-Compilation system: compiles the new 4SR for CAC for one quarter.
  4. New to old 4SR: converts the new 4SR into the old (currently used to report data to STA) 4SR.
  5. IMD file: contains data for the entire financial sector, including CB, ODC, and OFC.
- Recommendation:
  - Consider authorizing STA to disseminate the IMD on the IMF external website.

### Action Plan — selected priority actions and target dates
- PR: Finalize the compilation of the SRF 4SR for one period, covering IC, PF, CAC and FFI, and using secondary available data sources to improve currency, counterpart sector, and instrument classification for IC. — May 2020
- PR: Compile and disseminate the SRF 4SR on quarterly basis covering IC, PF, CAC and FFI starting from December 2014. Report the SRF 4SR to STA with less than three months lag. — December 2021
- M: Create a list of institutional units grouped into sectors in coordination with other statistical domains. Identify methodological differences among domains. — December 2021
- M: Using more granular, national data than those available in STA, compile quarterly BSA matrices once the OFC historical series are available, and share these data with WHD on request. (Departamento de Análisis Financiero) — June 2022
- M: Consider authorizing STA to disseminate the IMD on the IMF external website. — June 2021
- M: Investigate the size and available data on investment funds and financial trusts. If their size is significant, include them in the SRF 4SR to be reported to STA. — March 2022
- PR: Increase periodicity of FSI by compiling quarterly data and report them with a lag of one quarter to STA. (Superintendencia de Servicios Financieros) — September 2020
- H: Start reviewing the new FSI guide and its requirements, including the new list of FSI (expected to be requested by STA starting in September 2020). (Superintendencia de Servicios Financieros) — March 2020

### Revaluation accounting under IFRSs; valuation adjustments and valuation of securities
- Revaluation accounting under IFRSs (paragraph 2.58):
  - IFRSs provide specific rules for recording gains or losses due to revaluations: either through the profit-or-loss accounts (gains as income; losses as expenses) or directly in equity.
  - The recording prescribed by IFRSs or by national financial reporting standards may be in:
    - Current year result (profit-or-loss accounts), or
    - Valuation adjustment.
  - In the Manual's methodology, revaluation is based on the valuation rules in Table 2.2.
  - Revaluations (within a reporting period) for each asset and liability need to be recorded separately in the revaluation account.15
  - For monetary statistics, the contra-entry for a gain or loss arising from asset/liability revaluation is to be recorded in Equity liability [MS], because both Current year result and Valuation adjustment are components of Equity liability [MS].
- Valuation adjustments (paragraph 4.131):
  - Valuation adjustment shows the net counterpart to changes in the value of assets and liabilities on the balance sheets of FCs, excluding those changes in value (i.e., gains or losses) that are recorded in net profit or loss for the period under IFRSs or national financial reporting standards (see paragraph 2.58).
- Valuation of securities (paragraph 5.104):
  - In source data, some debt securities may be valued at nominal rather than at market value.
  - Under IFRSs:
    - All debt securities holdings are valued at market or fair values except for securities classified as held-to-maturity investments, which are valued at amortized cost using the effective interest method.24
    - Liabilities in the form of debt securities are valued at amortized cost, except for those designated as financial liabilities at fair value (including at market value) through profit or loss (see International Accounting Standard [IAS] 39.47 and IFRS 9, paragraph 4.2.1).
  - The effective interest rates used in methods to measure interest on debt securities are analyzed in the subsection "Cálculo de intereses devengados de títulos de deuda" in this section.13
- Other Comprehensive Income:
  - Other Comprehensive Income comprises gains and losses that, according to IFRS standards, are excluded from net income on the income statement.
  - Gains and losses reported as Other Comprehensive Income are only those that have not been realized yet.
  - These unrealized gains/losses should be recorded under equity liabilities – valuation adjustments.

*Source: 1uryea2021001 — Priority Recommendations (IMF).*

### 1.    Priority Recommendations ___________________________________________________________________________ 5

### 1.    Priority Recommendations

### Summary of mission outcomes and priority recommendations
- Mission: IMF STA MFS technical assistance mission visited Montevideo during February 3-14, 2020 to (i) review source data for other financial corporations (OFC) — insurance corporations (IC), pension funds (PF), and credit administration companies (CAC); and (ii) compile standardized monetary statistics for OFC (report form SRF 4SR) in line with the 2016 Monetary and Financial Statistics Manual and Compilation Guide (MFSMCG).
- OFC significance:
  - OFC’s financial assets account for more than 36 percent of total financial sector assets (as reported in the 2018 Annual Report of the BCU).
  - The BCU currently reports OFC data to STA covering foreign financial institutions (offshore banks) only, representing 0..01 percent of total other depository corporations (ODC) assets in December 2018.
- Mission assistance and outcomes:
  - Assisted BCU to develop standardized data for OFC using SRF 4SR to close a key data gap.
  - Inclusion of IC, PF, and CAC data allows (i) compilation of the financial corporations’ survey with expanded coverage per MFSMCG and (ii) improved balance sheet analysis (BSA) enabling inter-sectoral financial analysis and identification of vulnerabilities of the nonfinancial private sectors.
  - Recommended starting quarterly SRF 4SR reporting based on available source data; mapping exercise conducted for one reference period (2019Q3).
  - For PF and CAC, primary accounting catalogs were sufficient; for some IC accounts, currency, counterpart sector, or instrument breakdowns were estimated and can be improved using secondary sources.
- Implementation timetable:
  - BCU will begin reporting the quarterly SRF 4SR to STA by March 2021 with historical data starting in December 2014. SRF 4SR will include IC, PF, CAC, and foreign financial institutions (FFI).
  - New OFC data (SRF 4SR) will provide direct input into the IMF’s International Financial Statistics publication, WHD’s monetary file, and other analytical uses.
- Financial soundness indicators (FSI):
  - BCU reports FSI only on annual basis but indicated plans to move to quarterly frequency.
  - Mission stressed importance of increasing FSI frequency and timeliness and noted need to report FSI to STA according to the new FSI Guide (December 2019).
- Balance sheet approach (BSA):
  - Improved MFS coverage including OFC will allow regular BSA analysis.
  - Mission conducted a workshop on BSA, identified data gaps, and encouraged regular compilation of BSA matrices.
- Human resources constraint:
  - Team leader for MFS compilation will retire right after the mission; authorities estimate process to cover vacancy will take at least six months. New staff allocation recommended to avoid disruption.

### Priority recommendations (tabled)
- May 2020 — Finalize the compilation of the SRF 4SR for one period, covering IC, PF, CAC and FFI, and using secondary available data sources to improve currency, counterpart sector, and instrument classification for IC. — Responsible: BCU
- September 2020 — Increase periodicity of FSI by compiling quarterly data and report them with a lag of one quarter to STA. — Responsible: BCU
- December 2021 — Compile and disseminate the SRF 4SR on quarterly basis covering IC, PF, CAC and FFI starting from December 2014. Report the SRF 4SR to STA with less than three months lag. — Responsible: BCU

### Key statistics and data scope
- OFC assets reported (BCU 2018 Annual Report): USD5,011 million (IC), USD15,438 million (PF), and USD1,116 million (CAC).
- ODC total assets (Sep-19): 1,410,150.03 million pesos.
- OFCs represented around 56 percent of total ODCs (Sep-19).
- OFC composition (Sep-19, relative to ODC total assets):
  - Pension Funds: 551,533.00 (39)
  - Insurance Corporations: 188,103.56 (13)
  - Credit administration companies: 36,774.61 (3)
  - Foreign financial institutions: 1,908.68 (0)
  - Financial services companies: 3,051.03 (0)
  - Exchange houses: 1,273.12 (0)
- OFC institutional counts (Sep-19): 16 IC, 4 PF, 13 CAC, and 1 FFI.
- Frequency, lag, and time series availability of source data reported to BCU:
  - Insurance Companies — Quarterly — 30 days — September 2001
  - Pension Funds — Monthly — 10 business days — October 2002
  - Credit Administration Companies — Monthly — 7 business days — December 2012
  - Foreign Financial Institutions (offshore banks) — Monthly — 7 business days — December 2001

### Detailed technical assessment and recommendations
- General:
  - Source data for OFC are of good quality and allow compilation of quarterly SRF 4SR in line with MFSMCG.
  - Primary data sources (accounting catalogs) generally provide sufficient detail; secondary sources used where needed to improve mapping (currency, counterpart sector, instrument).
  - Preliminary SRF 4SR compiled according to new SRFs aligned with MFSMCG; mapping to current SRFs completed to enable reporting under both forms.
  - STA expected to start collecting MFS data in the new SRFs by end-2020.
  - Recommended compiling and disseminating SRF 4SR starting at least from December 2014 and reporting on quarterly basis covering IC, PF, CAC and FFI.
- Valuation and accounting:
  - Valuation broadly follows international accounting standards; provisions identified on asset side with negative sign but in SRF included as liabilities recorded in Provisions for losses - Other – other accounts payable.
  - Some negotiable instruments valued at nominal value; generally no fair value adjustments are made.
  - BCU moving towards broad implementation of IFRS; IFRS applied for banks and CAC since January 2019. Compilers to assess IFRS impact and document in metadata; preliminary view that quantitative impact is marginal but could affect asset valuation.

### Insurance Companies — findings and recommendation
- Data adequacy:
  - Source data adequate to compile SRF 4SR for IC but for some items primary data lack breakdowns by currency, counterpart sector, and financial instrument; mapping used assumptions and secondary sources to improve classification.
- Counterpart sector challenges:
  - Secondary sources are highly granular (pivot tables), making counterpart sector extraction difficult.
  - Best practice: create list of institutional units mapped to institutional sectors in coordination with national accounts, external, and fiscal statistics to ensure consistent sectorization.
  - Units not in list treated residually as nonfinancial corporations or households.
- Asset and liability composition (Simplified Balance Sheet of IC):
  - Currency and deposits: 5 percent
  - Debt securities: 83 percent
  - Insurance, pension, and standardized guarantee schemes (IPSGS) - Asset: 2 percent
  - Other accounts receivable (OAR): 8 percent
  - Nonfinancial assets: 3 percent
  - TOTAL ASSETS: 100 percent
  - Insurance, pension, and standardized guarantee schemes (IPSGS) - Liability: 82 percent
  - Other accounts payable (OAP): 6 percent
  - Equity Liability: 12 percent
  - TOTAL LIABILITIES: 100 percent
- Peculiarities:
  - IC provide coverage to policyholders prior to premium payment, generating trade credit/advances.
- Recommendation:
  - Create a list of institutional units grouped into sectors in coordination with national accounts, external, and fiscal statistics.

### Pension Funds — findings and recommendation
- Size and structure:
  - In September 2019, total PF assets were 554 billion pesos, representing 39 percent of total bank assets.
  - PF administered by four AFAPs; AFAP balance sheets negligible compared to PF under administration.
- Asset and liability composition (Simplified Balance Sheet of Pension Funds):
  - Currency and Deposits: 10 percent
  - Debt securities: 88 percent
  - Loans and other accounts receivable: 2 percent
  - TOTAL ASSETS: 100 percent
  - Pension Entitlements: 99 percent
  - Other accounts payable: 1 percent
  - TOTAL LIABILITIES: 100 percent
- Source data quality:
  - PF accounting data provide enough instrument, currency, and counterpart sector detail for high quality SRF 4SR compilation.
  - Outstanding issue: classification of PF investments in financial trusts (represent 14 percent of PF assets); mission estimated these as debt securities assuming equity participations are small and advised further investigation.

### Credit Administration Companies — (assessment summary)
- Primary data: accounting catalogs enable SRF 4SR compilation for CAC; detailed mapping and use of secondary sources applied as needed.
- Frequency and timeliness: Monthly reporting to BCU with 7 business days lag; time series from December 2012.

*Source: 1uryea2021001 — Priority Recommendations (IMF).*

### 30.      The CAC  are natural or legal persons that regularly and professionally intervene in

### 30.      The CAC  are natural or legal persons that regularly and professionally intervene in the financing of the sale of goods and services made by third parties, granting credit  using cards, purchase orders, or other similar modalities.

### Definition and scope of Credit Administration Companies (CAC)
- The CAC are natural or legal persons that regularly and professionally intervene in the financing of the sale of goods and services made by third parties, granting credit using cards, purchase orders, or other similar modalities.
- Other entities considered as CAC:
  - Consumer cooperatives, civil associations and other legal entities with a non-financial line of business that regularly issue purchase orders, provided such activity is significant within their set of activities.

### Core business and market role
- The core business of the CAC is to finance household consumption and, to a lesser extent, small and medium enterprises.
- The CAC facilitate the lending of money circumventing traditional financial intermediaries and charging a relatively high interest rate.

### Data sources, mapping, and compilation practices
- Source data for CAC are of good quality for 4SR compilation.
- Readily available breakdowns: resident and nonresident counterparts; national and foreign currency; financial instrument.
- Counterpart institutional sector information: available with some gaps.
- Mapping approach:
  - Mapping between source data (accounting catalog) and the sectoral balance sheet 4SR was done in consultation with experts and using more detailed secondary data sources.
  - For items where counterpart sector was not specifically identified, allocation rules used:
    - Credit for consumption → allocated to households.
    - Commercial credit → allocated to nonfinancial corporations.
- Compilation focus:
  - Mission focused on mapping all accounts with non-zero values.
  - Many accounting catalog accounts shared with banks are not applicable to CAC and have zero values; these were identified, flagged, and not mapped.
  - Instruction: If any previously zero-valued accounts show a non-zero value in the future (or if new accounts are created), compilers should map them into the 4SR.

### Balance sheet structure and key statistics (Table 6)
- Assets composition:
  - Currency and deposits: 6
  - Debt securities: 3
  - Loans – Asset: 81
  - Other accounts receivable (OAR): 6
  - Nonfinancial assets: 3
  - TOTAL ASSETS: 100
- Liabilities and equity composition:
  - Loans – Liability: 24
  - Other accounts payable (OAP): 40
  - Equity Liability: 36
  - TOTAL LIABILITIES: 100
- Additional detail from text:
  - The bulk of CAC assets are loans (81 percent), of which 97 percent are extended to households.
  - Most of the loans (96 percent) are granted in national currency.
  - On the liability side:
    - 36 percent correspond to equity liabilities.
    - 40 percent to other accounts payable (of which 68 percent are provisions for losses).
    - 24 percent to loan liabilities (of which 34 percent are to ODC and 61 percent to nonfinancial corporations — mostly businesses adhered to the credit cards and purchase orders system).

### Gaps and other financial intermediaries
- Investment funds and financial trusts:
  - Data were not readily available during the mission; asset size information requested but not available.
  - Financial trusts do not follow a common accounting catalog, increasing the cost of compilation.
- Recommendation:
  - Investigate the size and available data on investment funds and financial trusts. If their size is significant, include them in the SRF 4SR to be reported to STA.

### Balance Sheet Approach (BSA) — usage and recommendations
- BSA purpose:
  - Systematic analytical framework to explore how balance sheet weaknesses contribute to the origin and propagation of financial crises.
  - Focus on stock variables (positions) across sectoral and aggregate balance sheets to identify vulnerabilities.
- Uruguay context:
  - Improved MFS coverage including OFC will allow BSA analysis once 4SR historical series are compiled.
  - Important data sources available: quarterly international investment position and general government financial balance sheet.
- Workshop outcomes and key messages:
  - International interest since the 1990s in compiling intersectoral positions in addition to flow-of-funds.
  - Need for more frequent (quarterly vs annual) and timely data for macro-financial stability analysis.
  - Emphasis on a from-whom-to-whom approach to identify creditor and debtor sectors and financial dependence among them.
- Institutional notes:
  - Compilation of sectoral accounts by national accounts compilers is in an early stage.
  - Financial Analysis Department uses flow data mostly and could be a candidate for compiling BSA data; department responsible for macro-financial stability is another candidate.
  - BCU should be informed of any plans to compile and analyze BSA matrices by IMF users because BCU has more granular data that can replace STA estimates in BSA matrices.
  - Example: for items where international data do not provide counterpart sectors (such as direct investment), BSA entries are estimated using national data systems of predefined allocations.
- Recommendation:
  - Using more granular, national data than those available in STA, compile quarterly BSA matrices once the OFC historical series are available, and share these data with WHD on request.

### Financial Soundness Indicators (FSI) — frequency and coverage
- Current status:
  - More than 140 countries report FSI to STA; BCU only submits annual data.
  - Annual reporting prevents timely macro-financial stability analysis.
- Commitments and recommendations:
  - Authorities committed to start FSI data reporting on a quarterly basis.
  - Monthly FSI reporting should be considered as a medium-term goal.
  - FSI coverage could be expanded beyond deposit-taking corporations in line with the new FSI guide published in December 2019, which expands FSI for other sectors/subsectors and recommends sectoral financial statements and memorandum items for three types of non-bank financial intermediaries (IC, PF, and money market funds).
  - STA plans to launch the request for the new FSI in September 2020 and will request sectoral financial statements, memorandum items, and underlying series only.
  - The BCU stopped reporting sectoral financial statements in 2012; mission recommends resuming reporting of sectoral financial statements, memorandum items, and underlying series based on the new list of FSI.
  - Authorities showed interest in training or TA to meet these requirements.
- Recommendations:
  - (i) Increase periodicity of FSI by compiling quarterly data and report them with a lag of one quarter to STA, including the underlying statements (priority recommendation, by September 2020).
  - (ii) Start reviewing the new FSI guide and its requirements, including the new list of FSI (expected to be requested by STA starting in September 2020).

### Resources, technical assistance, and accounting standards
- Staffing:
  - The main MFS compiler is retiring at the end of the mission after more than 30 years’ experience.
  - Recommendation: BCU should allocate new staff for compiling MFS without delay to avoid disruptions and to implement report recommendations.
- Accounting standards and MFSMCG:
  - Implementation of IFRS-based reporting by banks and other financial intermediaries, and implementation of the MFSMCG for the central bank and ODCs, may require further TA.
  - BCU required banks to adopt IFRS in 2019, changing plans of accounts and catalog; the impact on MFS compilation was not analyzed in this mission and could be part of a follow-up mission.

### OFC compilation systems and Integrated Monetary Database (IMD)
- IMD background:
  - Since 2007, BCU, STA, and WHD have shared an IMD used for publication and operational needs; IMD contains SRFs for central bank and ODC and corresponding surveys; contains data from December 2001 onward.
- Upgrade recommendations:
  - IMD should be upgraded to include available data for OFCs, with historical series starting in December 2014.
  - Upgraded IMD should contain data from three financial subsectors: central bank, ODC, and OFC.
  - With these data as source, IMD should generate surveys for: central bank (1SG), ODC (2SG), depository corporations (3SG), OFC (4SG), and financial corporations (5SG).
- Dissemination:
  - Mission encouraged dissemination of detailed monetary data from IMD on the IMF external website.
- Compilation files completed by mission (uses):
  1. IC-Compilation system: compiles the new 4SR for IC for one quarter.
  2. PF-Compilation system: compiles the new 4SR for PF for one quarter.
  3. CAC-Compilation system: compiles the new 4SR for CAC for one quarter.
  4. New to old 4SR: converts the new 4SR into the old (currently used to report data to STA) 4SR.
  5. IMD file: contains data for the entire financial sector, including CB, ODC, and OFC.
- Recommendation:
  - Consider authorizing STA to disseminate the IMD on the IMF external website.

### Action Plan — selected priority actions and target dates
- Priority/Outcome indicators and target completion dates (selected entries):
  - PR: Finalize the compilation of the SRF 4SR for one period, covering IC, PF, CAC and FFI, and using secondary available data sources to improve currency, counterpart sector, and instrument classification for IC. — May 2020
  - PR: Compile and disseminate the SRF 4SR on quarterly basis covering IC, PF, CAC and FFI starting from December 2014. Report the SRF 4SR to STA with less than three months lag. — December 2021
  - M: Create a list of institutional units grouped into sectors in coordination with other statistical domains. Identify methodological differences among domains. — December 2021
  - M: Using more granular, national data than those available in STA, compile quarterly BSA matrices once the OFC historical series are available, and share these data with WHD on request. (Departamento de Análisis Financiero) — June 2022
  - M: Consider authorizing STA to disseminate the IMD on the IMF external website. — June 2021
  - M: Investigate the size and available data on investment funds and financial trusts. If their size is significant, include them in the SRF 4SR to be reported to STA. — March 2022
  - PR: Increase periodicity of FSI by compiling quarterly data and report them with a lag of one quarter to STA. (Superintendencia de Servicios Financieros) — September 2020
  - H: Start reviewing the new FSI guide and its requirements, including the new list of FSI (expected to be requested by STA starting in September 2020). (Superintendencia de Servicios Financieros) — March 2020

*Source: Excerpt from IMF mission report chapter on CAC, Uruguay (provided content).*

### 2.58 In the  IFRSs, specific rules apply for the recording of gains or losses due to revaluations,

### 1uryea2021001 - 2.58 In the  IFRSs, specific rules apply for the recording of gains or losses due to revaluations,

### Revaluation accounting under IFRSs (paragraph 2.58)
- IFRSs provide specific rules for recording gains or losses due to revaluations: either through the profit-or-loss accounts (gains as income; losses as expenses) or directly in equity.
- The recording prescribed by IFRSs or by national financial reporting standards may be in:
  - Current year result (profit-or-loss accounts), or
  - Valuation adjustment.
- In the Manual's methodology, revaluation is based on the valuation rules in Table 2.2.
- Revaluations (within a reporting period) for each asset and liability need to be recorded separately in the revaluation account.15
- For monetary statistics, the contra-entry for a gain or loss arising from asset/liability revaluation is to be recorded in Equity liability [MS], because both Current year result and Valuation adjustment are components of Equity liability [MS].

### Valuation adjustments (paragraph 4.131)
- Valuation adjustment shows the net counterpart to changes in the value of assets and liabilities on the balance sheets of FCs, excluding those changes in value (i.e., gains or losses) that are recorded in net profit or loss for the period under IFRSs or national financial reporting standards (see paragraph 2.58).

### Valuation of securities (paragraph 5.104)
- In source data, some debt securities may be valued at nominal rather than at market value.
- Under IFRSs:
  - All debt securities holdings are valued at market or fair values except for securities classified as held-to-maturity investments, which are valued at amortized cost using the effective interest method.24
  - Liabilities in the form of debt securities are valued at amortized cost, except for those designated as financial liabilities at fair value (including at market value) through profit or loss (see International Accounting Standard [IAS] 39.47 and IFRS 9, paragraph 4.2.1).
- The effective interest rates used in methods to measure interest on debt securities are analyzed in the subsection "Cálculo de intereses devengados de títulos de deuda" in this section.13

### Other Comprehensive Income
- Other Comprehensive Income comprises gains and losses that, according to IFRS standards, are excluded from net income on the income statement.
- Gains and losses reported as Other Comprehensive Income are only those that have not been realized yet.
- These unrealized gains/losses should be recorded under equity liabilities – valuation adjustments.

*Source: 1uryea2021001 - excerpts (paragraphs 2.58, 4.131, 5.104) from the provided IMF chapter text.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2021/english/1uryea2021001.pdf_