Typical street scene in Santa Ana, El Salvador. (Photo: iStock)
May 15, 2015
It is a capital mistake to theorize before one has data (Sherlock Holmes).
Census officials in Lagos, Nigeria. Collecting reliable data in developing countries is often challenging (Akintunde Akinleye/Reuters/Corbis)
CLOSING THE DATA GAPS
Good data can help policymakers identify and manage financial vulnerabilities. And while the quality of data from advanced economies is getting better and more accessible to the public, data from some developing countries is often lacking altogether.
In an interview with IMF Survey, Louis Marc Ducharme, Director of Statistics, says the IMF has launched a new initiative to help fill those data gaps.
IMF Survey: As the developing and advanced economies of the world become increasingly interconnected, what is the IMF doing to ensure there is adequate data for surveillance?
Ducharme: The IMF Executive Board recently approved measures to promote the regular publication of data necessary to monitor macroeconomic conditions in developing countries. These measures aim at prodding developing countries, particularly frontier markets that have tapped capital markets in recent years, to publish data according to advance release calendars. Publication of statistics that are timely, internally consistent, and comparable across countries is essential for monitoring global financial stability and detecting emerging vulnerabilities.
The recent growth in funding provided to frontier economies—including by non-bank financial corporations in advanced economies—has increased the need for data to measure credit risks. This demand for data is likely to increase further once monetary conditions in key advanced markets normalize and the aggressive search for yield moderates. While advanced and emerging economies have made steady progress in closing data gaps and are adopting higher data dissemination standards, many developing countries have a long way to go, despite concerted international efforts to promote data transparency.
IMF Survey: While it seems advanced and some emerging market economies acknowledge the benefits of sharing their data, why are developing countries less forthcoming? And will there be any consequences going forward for those countries that are lagging behind?
Ducharme: Most advanced and emerging markets publish timely and high quality macroeconomic data which meet or exceed the demanding requirements of the IMF’s Special Data Dissemination Standard (SDDS). However, many developing countries have made insufficient progress in publishing good quality data, and even fallen short of meeting the requirements of the basic, less demanding General Data Dissemination System (GDDS), let alone transition to the higher standard.
This can be attributed to many factors, including insufficient high level attention to disciplined data dissemination, inadequate resource allocation to statistical work across government agencies, and incipient technical expertise and IT infrastructure. In some cases, these factors also prevent timely rebasing of key data series, such as the national accounts.
Stakeholders—including rating agencies and other market participants—agree that bolder actions are needed to bring change. Since 2007, 24 frontier economies—including Bolivia, Ethiopia, Ghana, Honduras, Kenya, Mongolia, Senegal, Pakistan, Tanzania, Vietnam and Zambia—have accessed capital markets, but are yet to subscribe to the SDDS.
Lack of sufficient data transparency impedes analysis of the risks facing investors in frontier economies, including illiquid markets and substandard financial reporting. It was against this backdrop that the IMF Board approved the enhanced GDDS (e-GDDS) to impart stronger incentives for the publication of critical macroeconomic data, by calling on GDDS participants to publish voluntarily the data required by the IMF for its surveillance work, which effectively would allow everyone else to access and use the same data for their own analysis of economic conditions.
IMF Survey: What are the key differences between the lowest and the highest data dissemination standards, and could you give us some examples of the types of data the IMF requires for their surveillance activities?
Ducharme: In addition to the new e-GDDS, we’ve had three IMF data dissemination standards that cover 184 countries, almost the entire membership:
• SDDS Plus: 8 advanced countries are publishing—in a disciplined manner—extensive macroeconomic and financial data in line with stringent timeliness requirements and subject to IMF monitoring;
• SDDS: 64 advanced and emerging economies are publishing a smaller set of macroeconomic and financial data with somewhat lower timeliness consistent with advance release calendars and subject to IMF monitoring;
• GDDS: A majority of IMF members—112—have published information on the data they produce as well as plans for improvement, but have not committed to publication.
All in all, 71 countries disseminate timely standardized data that can be accessed through the Data Standard Bulletin Board, with 8 adhering to the highest tier of the IMF’s data standards, the SDDS Plus, introduced in February 2015.
The e-GDDS should go a long way in improving dissemination of economic and financial statistics, building on the IMF’s long track record of promoting data transparency. The e-GDDS also is expected to foster stronger linkages with other international initiatives, including production of indicators to monitor the new Sustainable Development Goals. We intend to partner with the World Bank and the regional development banks—the African Development Bank, the Inter-American Development Bank, the Asian Development Bank, and the Islamic Development Bank—in the implementation of the e-GDDS.
IMF Survey: While a lot of resources are being put towards improving global data standards, some developing countries are struggling to find the resources for basic data collection. Does the IMF provide technical assistance for data collection?
Ducharme: Data production is costly, involving long-gestating source data projects that in many cases require strong political support to be successful. Nevertheless, policymakers know that substantial investments are required to ensure that data needed for policy purposes are available to them, markets and the public at large.
Our job is to encourage the authorities to make the commitment to data transparency—including by voluntarily observing dissemination standards that remove publication uncertainty for data users. In addition, we stand ready to support the authorities through technical assistance and training. Indeed, we plan to field around 800 capacity development missions in 2016.
