Remittances in the Remittances in the Balance of Payments Balance of Payments

FrameworkFramework

Prepared for International Technical Meeting on Measuring Remittances

World Bank, Washington, D.C.January 24-25, 2005

Prepared by Jens Reinke and Neil PattersonStatistics Department

International Monetary Fund

Statistics Department 2

OverviewOverviewOverviewOverview

1. Existing information from balance of payments statistics

DefinitionsDataMetadataCompilation guidance and

technical assistance

2. Improvements in progressConceptualCompilation guidance (?)

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Overview (continued)Overview (continued)Overview (continued)Overview (continued)

3. Data accuracy and global discrepancies

Metadata

Global discrepancies

4 Problems in extracting data from the balance of payments framework

See IMF Paper

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Possibly relevant components in the Possibly relevant components in the balance of payments frameworkbalance of payments framework

Possibly relevant components in the Possibly relevant components in the balance of payments frameworkbalance of payments framework

▪ Compensation of employees—earnings by resident individuals for work performed in another economy and paid for by residents of this other economy.

▪ Workers’ remittances—current transfers by migrants who are employed in new economies and considered residents there (nonresidents of the home economy). Often involve related persons.

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Possibly relevant components in the Possibly relevant components in the balance of payments framework (cont.)balance of payments framework (cont.)

Possibly relevant components in the Possibly relevant components in the balance of payments framework (cont.)balance of payments framework (cont.)

▪ Migrants’ transfers—flow of goods and changes in financial items that occur with migration (to or from the migrant as resident to the same person as nonresident).

▪ The concept of residence is key.

▪ Transfers involve no quid pro quo.

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DataDataDataData

Shown in IMF’s Balance of Payments Statistics Yearbook, Part 1 (in country BOP statements) and Part 2 (in world tables by component). Contains no bilateral data.

____________________________________

World – 2003 U.S. dollars____________________________________

Compensation of 55.4 billionEmployees-- inflows

Workers’ remittances 79.5 billion-- inflows

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Data (continued)Data (continued)Data (continued)Data (continued)

Data weaknesses- Nonuniform application of concepts- Data source deficiencies and data omissions

Problems and solutions vary among countries. This is a difficult area of measurement and priorities/resources vary among countries.

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MetadataMetadataMetadataMetadata

Balance of Payments Statistics Yearbook, Part 3

Summarized version, focusing on migration claims, available on request

GDDS metadata

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Compilation guidance and Compilation guidance and technical assistancetechnical assistance

Compilation guidance and Compilation guidance and technical assistancetechnical assistance

IMF Balance of Payments Manual Balance of Payments Compilation Guide

Balance of Payments Textbook

Training

Technical assistance

Focused on all components of the BOP framework and not specifically on remittances. Specific issues are addressed as needed.

Not prescriptive as to a particular collection method.

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Improvements in progressImprovements in progressImprovements in progressImprovements in progress

(1) Conceptual▪ In revision of Balance of Payments

Manual, now in progress▪ In UN Technical Sub-Group on Movement

of Natural Persons▪ The work is coordinated

Issues include▪ Focus on workers or on migrants▪ Definition of migrants as the originating

unit of remittances

(2) Compilation guidance (?)

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Compensation of Employees and Workers’ Remittances, 1997 to 2003(In millions of U.S. dollars)

__________________________________________________________________________________________________

Year 1997 1998 1999 2000 2001 2002 2003__________________________________________________________________________________________________Compensation of employees

Credit 42527 42821 45617 43689 44453 50284 58369Debit 41024 43327 45875 45179 47775 53362 61431

Global discrepancies 1503 -506 -258 -1490 -3322 -3078 -3062_________________________________________________________________________________________________Workers’ discrepancies

Credit 62362 60590 62198 63870 69332 76405 90825Debit 52897 55211 55537 59107 61886 69833 75545

Global discrepancies 9465 5379 6661 4763 7446 6572 15280________________________________________________________________________________________________Sum of compensation of employees and workers’ remittances

Credit 104889 103411 107815 107559 113785 126689 149194Debit 93921 98538 101412 104286 109661 123195 136976

Global discrepancies 10968 4873 6403 3273 4124 3494 12218_________________________________________________________________________________________________Source: Balance of Payments Statistics Yearbook 2004, Part 2.

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Problems in extracting data from BOP Problems in extracting data from BOP framework framework

Problems in extracting data from BOP Problems in extracting data from BOP framework framework

▪ Not all funds remitted by migrants will be identifiable (e.g., to own bank own accounts or to acquire financial assets as real estate)

▪ Physical movements of good or cash across borders

▪ No bilateral data are collected by IMF, although conversions are described in the Balance of Payments Manual

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Problems in extracting data from BOP Problems in extracting data from BOP framework (cont.)framework (cont.)

Problems in extracting data from BOP Problems in extracting data from BOP framework (cont.)framework (cont.)

▪ Transactions by private households—generally not available except for compensation of employees and transfers

▪ Net income of short-term workers