MAY 2007

The draft update of the IMF’s Balance of Paymentsand International Investment Position Manual(BPM6) was posted for comment on the Fund’s exter-nal website in March 2007 (http://www.imf.org/ex-ternal/np/sta/bop/bopman5.htm). This posting was theculmination of a number of years of work involving theIMF’s Committee on Balance of Payments Statistics(Committee), and its subgroups, and took account ofthe worldwide consultation on the Annotated Outlinein 2004.

Specific questions and comments on this draft versionof the BPM6 are welcome and should be sent, usingthe form available on the website, by June 15, 2007 tobpm5update@imf.org. These comments will then besubmitted to the members of the Committee and dis-cussed at its meeting of October 2007. A revised ver-sion of BPM6 will subsequently be posted on thewebsite, and a final version is to be produced in 2008.

Against this background, this article provides anoverview of the manual and of the update process.

Introduction

The edition of the Balance of Payments Manualbeing updated is the fifth edition (BPM5), whichwas released in 1993 and which marked the harmo-

nization of balance of payments statistics with na-tional accounts, with the publication, also in 1993,of the System of National Accounts (SNA 93). Tomaintain the harmonization, the BPM5 update hasbeen closely aligned with the revision of the SNA93, which is taking place in parallel. Many of themajor issues that have emerged or have becomemore important in international transactions andpositions also arise in the SNA revision process.The Committee nominated about twenty issues forthe current review of the SNA.1 The update alsotakes into account the methodological progressmade in recent years on international reserves, in-ternational trade in services, and external debt.2

Detailed listings of changes from BPM5 are pro-vided at the end of each chapter of the draft man-ual. Abstracting for specific issues, three mainthemes can be identified in the update: globaliza-tion, the increased emphasis on balance sheet is-sues, and financial innovation.

Driving Themes and Major Issues

Globalization has brought several issues to greaterprominence. An increasing number of individualsand companies have connections to two or moreeconomies, so that additional guidance is to beprovided on the residence concept. In particular,there has been increasing interest in informationon migrant workers and their associated remit-tances flows. As well, globalized productionprocesses have become more important, so treat-ments have been developed to provide a fuller andmore coherent picture of outsourced physicalprocesses (goods for processing) and sales or man-agement of manufacturing that are separated fromphysical possession (merchanting). Guidance isalso provided on the residence and activities of

In this issue Page

BPM6 posted on the Fund’swebsite 1

The work of the ReserveAssets Technical ExpertGroup 3

Remittances: Update onProgress with Definitionsand Compilation Guidance 4

Revision of the Manual onStatistics of InternationalTrade in Services 6

Coordinated PortfolioInvestment SurveyConference in Madrid 7

High Frequency ExternalSector Data Can HelpComplete Balance SheetAnalysis 9

International InvestmentPosition and External DebtComparison Project 12

Training 16

A new website for the JointBIS-IMF-OECD-World BankStatistics on External Debt:The Joint External Debt Hub 18

An interview with NeilPatterson, former AssistantDirector, Balance ofPayments and External Debt Statistics, Statistics Department 19

Regional Focus 22

IMF plans to launch aCoordinated DirectInvestment Survey 23

Upcoming events 24

What’s on the Web 24

Recent Publications 24

BPM6 Posted on the Fund’s Website

NEWSLETTER FROM THE BALANCE OF PAYMENTS AND EXTERNAL DEBT DIVISIONSVolume 13, number 1

BALANCE OF PAYMENTS STATISTICS

May 2007

1

StatisticsDepartment

INTERNATIONAL MONETARY FUND

The final version of the revised Manualis expected to be published in 2008

1 Information on the issues and decisions taken in theSNA review are available athttp://unstats.un.org/unsd/sna1993/issues.asp

2 The work incorporated International Reserves and ForeignCurrency Liquidity: Guidelines for a Data Template (2001),Manual on Statistics on International Trade in Services(2002), and External Debt Statistics: Guide for Compilers andUsers(2003), respectively.

special purpose entities and other legal structuresthat are used for holding assets and that have littleor no physical presence. For the first time, there isspecific guidance on the treatment of currencyunions, which is covered in a separate appendix.

The new manual reflects increased interest in ba-lance sheet analysis for understanding interna-tional economic developments in terms ofvulnerability and sustainability. The new manualprovides considerably more detailed guidance onthe international investment position, which is acountry’s balance sheet of external financial as-sets and liabilities. It also provides much greaterdiscussion of revaluations and other volumechanges and their impact on assets and liabilities.Specific publications have been developed overthe last decade on international investment posi-tion, external debt, financial derivatives, and re-serve assets. The results of this detailed work areincorporated into the new manual. In recogni-tion of the emphasis on balance sheet aspects,the new edition is entitled Balance of Paymentsand International Investment Position Manual, al-though the acronym BPM6 will be adopted.

Financial innovation includes the growth of newfinancial instruments and arrangements amonginstitutional units. Examples of instruments in-clude financial derivatives, index-linked securi-ties, and gold accounts, and examples ofinstitutional arrangements include special pur-poses entities. While the basic concepts of directinvestment remain essentially unchanged, with

growth of complex cross-border company struc-tures, there is a need to provide guidelines onidentifying direct investment in cases of long andcomplex chains of ownership. The direct invest-ment treatments are being revised in conjunctionwith the OECD, which is also revising itsBenchmark Definition of Foreign Direct Investment atthe same time.

The Update Process

The preparatory work for the update of the Manualincluded several rounds of input from compilersand users. Technical expert groups were estab-lished to deal with specific areas, namely, currencyunions, direct investment, and other issues (all in2003) and reserves (in 2005). The groups maderecommendations that were taken to theCommittee. The issues and proposals for dealingwith them were spelled out in an annotated out-line, which was sent to all member countries forcomment in April 2004 and published on theIMF’s website at the same time. Comments areagain invited on the new draft of the manual, witha final version to be produced in 2008.

This target date fits well with the proposal to com-plete the review of the SNA 93 by 2008; it is im-portant that the two systems remain consistent tothe maximum extent possible. Information on therevision of the SNA 93 is available on the UNWebsite at http://unstats.un.org/unsd/nationalac-count/snarev1.asp.

Contributor: Rob Dippelsman

May 2007

2

Box 1: IMF Committee on Balance of Payments Statistics

The nineteenth meeting of the IMF Committee on Balance of Payments Statistics (theCommittee) met at the European Central Bank in Frankfurt in October 2006. The primaryfocus of the meeting was on resolving the remaining issues for the update of BPM5. In addi-tion, the Committee:

• Reviewed progress on the Luxembourg Group on remittances (see article on page 4 ofthis newsletter)

• Discussed the modalities for a Coordinated Direct Investment Survey (CDIS) (see arti-cle on page 23 of the newsletter)

• Reviewed a report on the CPIS seminar held at the Bank of Spain in March 2006 (seearticle on page 7 of the newsletter)

May 2007

The IMF Committee on Balance of PaymentsStatistics (the Committee) established the ReserveAssets Technical Expert Group (RESTEG) in June2005 to advise the Committee on reserve assets in theprocess of revising the fifth edition of the Balance ofPayments Manual (BPM5). RESTEG comprises 25members representing monetary authorities involvedin the compilation of balance of payments statisticsand international reserves, as well as participantsfrom other international agencies, and other depart-ments of the IMF involved in the analysis of interna-tional reserves.

As a starting point for discussions withinRESTEG, the IMF presented a paper on reserve is-sues for the update of BPM5 to the Committee inJune 2005 (BOPCOM 05/70). Drawing on thispaper, eleven issues papers were presented for theconsideration of RESTEG members in December2005, and from the comments received throughelectronic correspondence, a discussion meetingwas held during May 11–12, 2006 at IMF head-quarters in Washington, D.C. Eleven RESTEGmembers from IMF member countries attendedthe meeting in Washington.

RESTEG members reached conclusions on sevenissues: clarification of pledged assets; clarificationof foreign currency; clarification on currency ofdenomination; marketability (liquidity); invest-ment funds; and treatment of pooled assets, andgold swaps and deposits. On four issues, RESTEGsummarized the outcomes of the discussions andsought the views of the Committee in its report(BOPCOM 06/28). These issues were: reserve re-lated liabilities; resident bank deposits; reversetransactions; and SDRs allocations. The issue ofreserve-related liabilities was the subject of a sepa-rate paper prepared by RESTEG’s Secretariat,(BOPCOM 06/29).

The Committee, at its meeting of October 2006,reviewed the outcome of the RESTEG discussionsand considered the issues put forward.

The Committee accepted the proposal that SDRsallocations be classified as debt; agreement wasreached in consultations after the Committeemeeting on reverse transactions, and theCommittee agreed the rest of RESTEG proposals(except the issue relating to gold) without discus-sion. On deposits with resident banks, there wasoverwhelming support among Committee mem-bers to exclude such assets from reserve assets. Onreserve related liabilities, there were split views onwhether these liabilities should be included in astandard component or identified as a memoran-dum item, with a small majority favoring a memo-randum item. A need for further consultation wasconsidered necessary on gold. Following theCommittee meeting, a further round of consulta-tions was conducted on these three issues with theCommittee and RESTEG members, and as a con-sequence, the draft BPM6 includes proposals foreach of these issues. Due to the range of views ex-pressed, the draft BPM6 contains a specific requestfor comments from reviewers on the issues of resi-dent bank deposits, reserve-related liabilities, andmonetary gold.

Also at its meeting, the Committee agreed forRESTEG to continue its work, and expressed itspreference to finalize the work on reserves in thenew draft manual first, and then proceed with therevision to the Guidelines pertaining to the DataTemplate on International Reserves and ForeignCurrency Liquidity. RESTEG is to report back tothe Committee meeting in 2007.

The Issues Papers, the papers setting out the issuesfor discussion, and the Outcome Papers are postedon RESTEG’s home page on the IMF’s website:http://www.imf.org/external/np/sta/bop/resteg.htm

Contributor: Antonio Galicia-Escotto

3

The Work of the Reserve Assets Technical Expert Group

Background

The importance of remittances, and improved sta-tistical data on them, was emphasized by the G8Heads of State meeting at Sea Island in 2004.Subsequently, the G7 Finance Ministers called forthe establishment of an international workinggroup, to be led by the World Bank, for improvingremittance data.

In January 2005, the World Bank hosted an inter-national meeting on the issue of statistics on re-mittances, with the objective of clarifying theneeds of data users and agreeing a strategy towardsimproving the availability and accuracy of data onremittances.

The meeting, jointly organized with the IMF, wasattended by almost 60 participants comprisingdata users and compilers from various countriesand international organizations. The G8 govern-ments were represented by an official from the USTreasury.3

At the meeting it was agreed that balance of pay-ments statistics are the appropriate framework forcollecting, reporting and improving official statis-tics on remittances; that balance of payments con-cepts and definitions relating to remittancesshould be reviewed; and that improved guidancefor collecting and compiling remittance statisticsis needed.

The following paragraphs review the progressmade in these areas since the 2005 meeting of theIMF’s Balance of Payments Committee (theCommittee) and work currently in progress.

Concepts and definitions

At the 2005 meeting of the Committee, a paperwas presented outlining the progress that had beenmade in improving methodology and compilationguidance. The Committee decided to adopt theproposal that migrants transfers and any referenceto “migration” be removed from the balance ofpayments framework and that residence remainthe only reference concept.

At the 2006 meeting of the Committee, two fur-ther papers were presented: one updated theCommittee members on further progress of the re-mittances project, the other contained the final

recommendations of the UN Technical Sub-groupon the Movement of Natural Persons (set up underthe aegis of the Task Force on International Tradein Services) for new definitions of remittances. Insummary, the papers recommended, and theCommittee agreed, subject to some clarifications,the replacement of “workers’ remittances” with“personal transfers” as well as the adoption of “per-sonal remittances”, “total remittances”, and “totalremittances and transfers to NPISHs4” as new, sup-plementary items. The outcome is incorporated inthe draft BPM6.

Compilation guidance and theLuxembourg Group

At the January 2005 meeting, compilers agreedthat it would be useful to develop detailed guid-ance for compiling remittances data. The proposedformat was a “City Group”, a voluntary group ofcompilers with relevant experience that would de-velop a set of good practices guidelines. Eurostatsubsequently hosted the first meeting on June26–27, 2006, thereby creating the LuxembourgGroup. The Group agreed to collect material thatwill allow the publication of a compilation guidefor remittance data. The Group will also collec-tively draft substantive parts of the guide. TheIMF, together with the World Bank, has offered toedit and publish the guide.

At its second meeting in Frankfurt on December4–5, 2006, the Group agreed an outline for thecompilation guide, identified relevant material forits chapters from the papers that members pro-duced, and agreed to continue drafting during thefirst half of 2007. The diverse composition of theGroup ensures that contributions on all topics, aswell as a variety of experiences and perspectives,are incorporated in the guide. A full first draft is ex-pected to be circulated within the Group prior toits third and final meeting on June 26–27, 2007.

As a first step towards identifying good compilationpractices, the Luxembourg Group reviewed the in-

May 2007

4

Remittances: Update on Progress with Definitionsand Compilation Guidance

3 Further information on the meeting, including all papersand presentations, is available athttp://www.worldbank.org/data/remittances.html.

4 NPISH: Non-Profit Institution Serving Households

ventory of successful compilation methods. TheGroup identified as the main compilation methodsthose that are based on international transactionsreporting systems, direct reporting, household sur-veys, and various approaches using models.

The Group agreed that no single source is likely toyield sufficient data for the improvement of remit-tance data in the longer term, as each has differentadvantages and drawbacks. Instead, the Groupconsidered that innovative combinations ofsources hold the promise of more significant im-provements in remittance data. Compilers need totake account of the circumstances of their coun-tries, such as institutional, legal and practical con-siderations. Further, they need to establishcompilation methods that result in complete andconsistent estimates of remittances drawn fromsometimes inconsistent or overlapping datasources. These issues will be addressed in the com-pilation guide.

An additional useful forum for reviewing compila-tion practices is the Center for Latin AmericaMonetary Studies (CEMLA) project to improvecentral bank remittance reporting and procedures.Technical advice for this work is being providedby an International Advisory Council, includingthe IMF and World Bank. CEMLA is also repre-sented in the Luxembourg Group.

Training

Seminars on the compilation of remittance dataare planned to take place following the publicationof the compilation guide. A pilot seminar was heldin February – March 2007 at the Center ofExcellence in Finance in Ljubljana, Slovenia, withparticipants from eight Eastern European coun-tries. The seminar conclusions strongly endorsedthe pending improvements in concepts and defini-tions and the approach to compilation guidancetaken by the Luxembourg Group. Remittances willalso continue to play a more prominent role in theIMF’s technical assistance program.

Reporting to G7 Finance Ministers

The international meeting in January 2005 agreedthat the World Bank, IMF and a few partner coun-tries, in collaboration with UN Statistics Division,would prepare regular reports for G7 FinanceMinisters. The final report, which is currentlybeing finalized, will describe the results of the con-ceptual work (now completed) in the context ofthe revision of the Balance of Payments andInternational Investment Position Manual (BPM6)and outline progress made in the ongoing work ofthe Luxembourg Group on the compilation guide.An interim report was prepared in late 2005.

Contributor: Jens Reinke

May 2007

5

Seminar on remittances at the Center of Excellence in Finance Ljubljana, Slovenia, February 26 - March 2 , 2007

within the balance of payments conceptualframework. STA is to contribute expertise (i) tothe UN Statistical Division Services DatabaseDevelopment Project on developing a worldwidedatabase on trade in services statistics detailed bypartner country, type of services, and mode of sup-ply; and (ii) to the OECD work on bilateral asym-metries and model of world flows of trade inservices. Work with the World TourismOrganization to develop compilation guidance tobe used both for the compilation of the travel andpassenger transportation components of the ba-lance of payments statistics and for the compila-tion of tourism statistics is also envisaged.

Further, STA will conduct at least one specializedtraining activity in the trade in services statistics in2007; this is to be a joint course with other mem-bers of the IATFSITS at the Joint AfricanInstitute in Tunis. The course will be based on thestandard IMF course on international trade in ser-vices statistics and the training module on trade inservices coordinated by the World TradeOrganization and the World Bank.

Finally, the Interagency Coordinating Group onTourism Statistics and its Technical Sub-group isundertaking a comprehensive comparison of theconcepts and definitions pertaining to travel- andtourism-related activities in the IRTS, the TSA,and the international migration statistics. Thiswork has triggered several changes and clarifica-tions in the draft BPM6 related to the definitionand classification of the balance of paymentstravel component, the measurement of the activ-ity of travel agencies and tour operators services,and the measurement and recording of activity re-lated to time-share activities.

Contributor: Nataliya Ivanik

May 2007

6

The relevant chapter of the draft BPM6 emphasizesconsistency with the basic concepts of the updatedSNA and the revised Manual on Statistics ofInternational Trade in Services (MSITS), and, to theextent possible, reinforces consistency with the statisti-cal guidelines contained in the InternationalRecommendations on Tourism Statistics (IRTS) andthe Tourism Satellite Account (TSA).

The Inter-agency Task Force on Statistics ofInternational Trade in Services (IATFSITS)5 hasbegun to update MSITS, building on the re-sponses to the consultation document and ques-tionnaire that were agreed by the internationalagencies and distributed worldwide. The processof drafting a first annotated outline of an updatedMSITS has been launched. The IMF’s StatisticsDepartment (STA) is committed to produce adraft annotated outline for Chapter III of the re-vised MSITS and to draft the revised chapter; toparticipate in the development of new materialon the modes of supply of services; and to workwith IATFSITS partners in updating the variousappendices to MSITS, including one showinglinks between the extended classification of ser-vices (EBOPS) and the Central ProductClassification (CPC v.2). After discussionswithin various expert groups, the revised MSITSis to be drafted in 2007, and in 2008 a program ofbroad consultation and review of the draft chap-ters will take place. It is expected that the revisedmanual will be submitted to the UN StatisticalCommission in 2009.

Also, work is being undertaken to improve dataprovision and the scope and coverage of the re-ported data on the international trade in services

Revision of the Manual on Statistics of InternationalTrade in Services

5 The members of the IATFSITS are the UN, Eurostat, theIMF, the OECD, UNCTAD, and the WTO.

May 2007

7

Users discuss statistics on global portfolio allocation atinternational conference in Madrid

On March 1 and 2, 2006, the Bank of Spainhosted an international conference on theCoordinated Portfolio Investment Survey (CPIS), an international survey conducted underthe auspices of the IMF. The purpose of the con-ference was to demonstrate how the survey canand has been used. Keynote speakers from theBank of Spain and the European Central Bankcited the CPIS as a model for international coop-eration to improve statistical reporting, as well as avaluable statistical source to address financial sta-bility and globalization issues. Despite this, withthe growth and volatility of international transac-tions, they noted that challenges remain to furtherenhance the data. The proceedings of the meetingare available at the following address:http://www.bde.es/doctrab/confere/confee_7.htm.

sector of holder and currency of issue is also pro-vided by several participating jurisdictions. A simi-lar breakdown of the securities held in reserveassets of many of the major reserve asset holdingeconomies, and securities of international organi-zations, is also collected (but these data are re-leased only in aggregate). The data and metadataare available on the IMF’s website athttp://www.imf.org/external/np/sta/pi/cpis.htm.

Papers were presented by both compilers and users.Papers from the European Central Bank, the Bankof Japan, the Bank of Spain, and the FederalReserve Board of the United States showed howthe CPIS database is used by compilers, amongother things, for improving data quality of (de-rived) liabilities (especially by residence of coun-terparty for holders of bearer instruments),increasing information breakdown on sector ofholder, and verifying (and/or improving) transac-tions data in the balance of payments. In this latter

Coordinated Portfolio Investment Survey Conferencein Madrid

Table 1: Summary Results of the Coordinated PortfolioInvestment Surveys end period positions 2001–2005

(In trillions of U.S. dollars)

Equities Long-term debt Short-term debt Total

2001 5.2 6.4 1.1 12.7

2002 4.8 8.0 1.3 14.1

2003 6.9 10.5 1.5 19.0

2004 8.7 12.7 1.9 23.3

2005 10.4 13.4 1.9 25.7

The CPIS is (primarily) an asset survey of the out-standing (year-end) cross-border holdings of secu-rities (equities, long-term and short-term debt) ofapproximately 70 jurisdictions, by counterpart ju-risdiction of issuer. The data are valued at marketprices and are provided annually for 2001–2005(for some jurisdictions, data are also available for1997, when an earlier survey of 29 jurisdictionswas conducted). Most of the major investing coun-tries and many offshore financial centers partici-pate in the CPIS. Additional information on

regard, not only is there better coverage and detailfor the CPIS in some instances than other datasources, but also, where the data are collected on asecurity-by-security basis, interpretative variables(such as price and exchange rate changes, as wellas transactions) are used to explain changes in endof year positions, thereby serving as an additionalquality check.

Papers by users of the CPIS data were presented bythe Federal Reserve Board of the United States,

the European Central Bank, and the IMF. Thefocus of much of their presentations was on “homebias”, that is, investors in all countries hold securi-ties issued in their home markets in a larger pro-

portion than theory would indicate in africtional-less, perfect knowledge environment. Inview of this, given that nonresidents are under-weight in their holdings of securities issued in theUnited States, there would appear to be capacityto continue to finance the current account deficitof the United States. A similar tendency was alsodemonstrated for local regional bias, that is, in-vestors seem more inclined to invest in their ownregions than elsewhere. It was suggested that com-mon language, legal origin, and common currency(in a currency union) are all major factors influ-encing investment bias. This was particularly no-ticeable within the euro area, where there hasbeen a heightened degree of integration of securi-ties markets since the inception of the euro.Furthermore, it was noted that the inclusion ofdata of many offshore financial centers in theCPIS has assisted in understanding their role in in-ternational securities markets.

Nonetheless, although the CPIS represents a majorstep tool for increasing understanding of portfolioallocation, many speakers suggested further im-provements, in the light of the increasing complex-

ity of securitiesmarkets. Amongthe proposed im-provements were:better timeliness;filling gaps; andmeasurement of re-purchase agree-ments. The datawere released bythe IMF’s StatisticsDepartment with alag of about 14months after thereference date atthe time of theConference; it isnow reduced toone year. Amongthe gaps in cover-age, it was sug-gested that China,P.R., and themajor exportingcountries in theMiddle East shouldbe brought into

the exercise at the earliest possible date. It was alsoproposed that another way through which gapsmight be filled is to obtain data on “third partyholdings,” that is, securities that are held by custo-dians in a jurisdiction other than that of the own-ers. This issue is particularly important forhouseholds as they are not directly surveyed by anyjurisdiction in the CPIS. Repurchase agreements(and related transactions) are a major measurementproblem as the international statistical standardstreatment is that they should be regarded as collat-eralized loans, and so the underlying transaction inthe security is not recognized. The StatisticsDepartment recognized that these are all areaswhere improvement can be made, though in someinstances, progress will be slower than in others.

Contributors: Messrs. Neil Patterson and John Joisce

May 2007

8

CPIS conference in Madrid — From left to right: Javier Santiso, OECD DevelopmentCentre, Steven Keuning, European Central Bank, José Viñals, Banco de España

(Chair), Philippe Mesny, Bank for International Settlements, Duncan McKenzie,International Financial Services London

“If (the IMF) is to be able to meet its remit then sur-veillance should focus at least as much on balancesheets as on exchange rates.” Mervyn King,Governor, Bank of England (2006).

Recent improvements in statistical methodologiesand data availability are enabling high frequency,timely analysis of currency and maturity mis-matches in sectoral financial balance sheets.Nevertheless, some gaps remain, particularly withrespect to the detail, frequency, and timely dissem-ination of relevant external sector data. Thus,there is scope for external sector data compilersworking in national statistical agencies and centralbanks to contribute to the operationalization ofBalance Sheet Analysis (BSA), an additional toolincreasingly viewed as a required element in theIMF’s macroeconomic surveillance toolkit.

The analysis of financial stock variables that char-acterizes BSA complements the more standardflow analysis of macroeconomic variables. It per-mits a point in time assessment of a country’s mainbalance sheets, by gauging currency, maturity, andcapital structure mismatches and individual sec-tor’s exposure to liquidity and solvency risks and,more generally a country’s vulnerability to shockstransmitted through changes in exchange rates,interest rates and prices of other financial assets.Many of the emerging market crises since the1990’s have been rooted in balance sheet mis-matches in certain sectors of the economy, reduc-ing foreign investor confidence, triggering capitalaccount crises, or spilling over to other sectorsthrough balance sheets linkages creating a full-fledged macroeconomic crisis.

While the IMF has been using insights from BSAin its surveillance work for some time, applicationof BSA across the entire membership has beenhindered by a lack of data. This situation is chang-ing as recent statistical initiatives are starting tobear fruit. In a recent IMF Working Paper,Mathisen and Pellechio6 offer practical guidanceon how the BSA framework proposed in 2002 byAllen et al7 can be operationalized, taking advan-tage of recent improvements in statistical method-ologies and data availability. In particular, use canbe made of sectoral financial balance sheet dataderived from standardized reporting forms (SRFs)on which IMF member countries report monthlymonetary and financial statistics to the IMF’s

Statistics Department for redissemination in theInternational Financial Statistics (IFS) and the quar-terly IFS Supplement on Monetary and FinancialStatistics, introduced in September 2006.

Sectoral balance sheet information derived fromSRFs are particularly attractive for BSA giventheir high frequency and timely availability, aswell as the fact that they draw on a single, consis-tent data source. SRF monetary and financial sta-tistics produced by member countries are based ona common statistical methodology, the IMF’sMonetary and Financial Statistics Manual (MFSM),which in turn, is linked to the InternationalFinancial Reporting Standards (IFRSs). Mathisenand Pellechio indicate that SRFs can provideabout 75 percent of the data required to conductBSA, permitting the evolution of balance sheetvulnerabilities to be tracked on a regular andtimely basis (monthly with a delay of only onemonth). Box 2 lists the economies included in theMarch 2007 edition of the IFS Supplement onMonetary and Financial Statistics, for which SRFdata can be used to generate monthly sectoral fi-nancial balance sheet data required for BSA.

A comprehensive high frequency balance sheetanalysis, however, requires detailed information onthe size, maturity and currency composition of theassets and liabilities in all sectoral balance sheets,including data on debt among residents and non-residents. Many of the ongoing efforts in improv-ing data provision to the Fund aim at balance sheetdata, and particularly the Rest of the World ele-ments of Figure 1. Over the past several years IMFmember countries have been encouraged:

• to compile the International InvestmentPosition (IIP), in line with the fifth edition ofthe Balance of Payments Manual (BPM5);

• to participate in the Coordinated PortfolioInvestment Survey (CPIS);

May 2007

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High Frequency External Sector Data Can HelpComplete Balance Sheet Analysis

6 Mathisen, Johan, and Anthony Pellechio, "Using theBalance Sheet Approach in Surveillance: Framework, DataSources, and Data Availability," IMF Working Paper06/100 (Washington: International Monetary Fund)

7Allen, Mark, Christoph Rosenberg, Christian Keller, BradSetser and Nouriel Roubini, 2002, "A Balance SheetApproach to Financial Crisis," IMF Working Paper 02/210(Washington: International Monetary Fund).

• to present debt data consistent with the newExternal Debt Statistics Guide(Debt Guide); and

• to move towards the preparation of the gen-eral government’s balance sheet according tothe new Government Finance Statistics Manual(GFSM 2001),

Together, these elements would characterize acountry’s external assets and liabilities by sector,

maturity and instrument. External data compilerscan make a valuable contribution by working toprovide the above mentioned data at the highestfeasible frequency with minimal delay. Once effec-tively in place, such data provision will signifi-cantly improve the IMF’s capacity to use thebalance sheet approach in surveillance work.

Contributor: John Cady

May 2007

10

Box 2: Economies Reporting Monthly Monetary and FinancialStatistics to the IMF Statistics Department via Standardized Report

Forms – IFS supplement, March 2007

Albania

Armenia

Azerbaijan

Belarus

Belize

Bhutan

Bolivia

Botswana

Brazil

Bulgaria

Cambodia

Canada

Chile

Croatia

Czech Republic

Denmark

Eastern Caribbean Currency Union

Anguilla

Antigua and Barbuda

Dominica

Grenada

Montserrat

St. Kitts & Nevis

St. Lucia

Source: IMF Statistics Department.

St. Vincent & the Grenadines

Ecuador

Egypt

El Salvador

Eritrea

Euro Area

Austria

Belgium

Finland

France

Germany

Greece

Ireland

Italy

Luxembourg

Netherlands

Portugal

Spain

Georgia

Guatemala

Guyana

Indonesia

Japan

Kazakhstan

Lesotho

Malaysia

Mauritius

Mexico

Moldova

Mozambique

Namibia

Nicaragua

Papua New Guinea

Paraguay

Romania

Serbia

Seychelles

Slovak Republic

South Africa

Suriname

Swaziland

Sweden

Thailand

Turkey

Ukraine

United States

Zambia

May 2007

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Source: Adapted from Rosenberg, Christoph, Ioannis Halikias, Brett House, Christian Keller, Jens Nystedt,Alexander Pitt, and Brad Setser, 2005, Debt-Related Vulnerabilities and Financial Crises: An Applicationof the Balance Sheet Approach to Emerging Market Countries, IMF Occasional Paper No. 240(Washington: International Monetary Fund).

Figure 1. Intersectoral Asset and Liability Positions for BSA

Issuer of Liability (Debtor)

Public sector (including central bank)

Monetary baseTotal other liabilities

Short-termDomestic currencyForeign currency

Financial private sectorTotal liabilities

Short-termDomestic currencyForeign currency

Medium- and long-termDomestic currencyForeign currency

Equity

Nonfinancial private sectorTotal liabilities

Short-termDomestic currencyForeign currency

Medium- and long-termDomestic currencyForeign currency

Equity

Rest of the worldTotal liabilitiesCurrency and short-termMedium- and long-termEquity

Rest of the world

Nonfinancialprivate sector

Financialprivate sectorPublic sector

Holder of Liability (Creditor)

The IMF’s Statistics Department developed a new ini-tiative to assess the consistency of external debt datareported by countries that participate in the WorldBank’s Quarterly External Debt Statistics (QEDS)database and corresponding data series in the interna-tional investment position (IIP) reported to the IMF.This project is geared towards improving countries’ ex-ternal debt and IIP data for effective use in economicsurveillance work. In 2006, comparator tables wereproduced for countries that reported both external debtdata to QEDS and IIP data to the IMF. The com-parator tables with end–2004 data were sent to coun-tries for verification of the discrepancies particularly insector, maturity, and instrument classification. Maindifferences were reviewed, and for some countries,specific actions for closing the gaps were identified. Theexercise is being repeated for end–2005 data.

Objective

In 2006, the IMF’s Statistics Department imple-mented a new project to assess the consistency of

external debt data reported to the World Bank’sQuarterly External Debt Statistics (QEDS) data-base by Special Data Dissemination Standard(SDDS) subscribers and corresponding data seriesin the international investment position (IIP) re-ported for publication to the IMF. This project wasexecuted with the view of improving countries’ ex-ternal debt and IIP data for effective use in eco-nomic surveillance work, and is being repeatedduring the first semester of 2007.

BackgroundTechnical assistance missions on balance of pay-ments and IIP statistics conducted by the StatisticsDepartment in 2005 identified large differences be-tween IIP and external debt data disseminated bysome SDDS countries. This led the StatisticsDepartment to assess the extent to which otherSDDS countries were facing a similar situation.

Currently, all SDDS subscriber countries (but two)report IIP data to the Statistics Department forpublication in the IMF’s Balance of PaymentsStatistics Yearbook (BOPSY) and the InternationalFinance Statistics. As of December 2006, 39 SDDSsubscriber countries reported annual data and 23subscribers reported quarterly data. IIP data forend–2005 were sent for publication in BOPSY2006 around September 2006.8

As of February 2007, 58 SDDS subscribers agreedto participate in the QEDS database9, out of which57 countries reported data on their gross externaldebt position for September 2006.

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International Investment Position and External DebtComparison Project

SDDS countries IIP reporters to the External Debt reporters Statistics Department to QEDS

Annual reporters 39

Quarterly reporters 23 5810

Nonreporters 2 6

Total 64 64

Table 2 : SDDS Countries Reporting IIP and External Debt Data

8 The SDDS prescribes the dissemination of annual IIPdata within nine-month lag, provided that quarterly exter-nal debt data are disseminated within one-quarter lag. TheIMF data dissemination initiatives are available athttp://www.imf.org/external/np/sta/dsbb/list.htm

9 Online database launched jointly by the World Bank andthe IMF in November 2004 that contains quarterly data se-ries updated within three-to-four months lag. Available athttp://web.worldbank.org/WBSITE/EXTERNAL/DATAS-TATISTICS/EXTDECQEDS/0,,menuPK:1805431~pagePK:64168427~piPK:64168435~theSitePK:1805415,00.html10 One non-SDDS country initiated its participation inQEDS in mid-2006.

Methodological Framework

The methodological guidelines for IIP and exter-nal debt data compilation are set forth in the fifthedition of the Balance of Payments Manual(BPM5)11 and the External Debt Statistics: Guide forCompilers and Users (Debt Guide)12, respectively.Both frameworks are consistent with the System ofNational Accounts 1993.

International investment positionThe IIP is the balance sheet of the stock of exter-nal financial assets and liabilities for an economy.The net IIP combined with an economy’s stock ofnonfinancial assets comprises the net worth of thateconomy. The financial items that comprise theIIP are classified into assets and liabilities, both ofwhich are further classified by function.13 The lia-bilities are divided into direct investment, portfo-lio investment, financial derivatives, and otherinvestment. Assets are divided the same way butwith one additional component (reserve assets).

The IIP functional categories are further classifiedby instrument, comprising equity capital and rein-vested earnings, other capital, equity securities,debt securities (bonds and notes, money market in-struments), financial derivatives, and other invest-ment (trade credits, loans, currency and deposits,and other assets/liabilities). A summary IIP state-ment that presents assets and liabilities classifiedby functional category and instrument is providedin Table 3.

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11 See chapter XIV. Further guidance is provided atInternational Investment Position: A Guide to Data Sources.

12 External Debt Statistics: Guide for Compilers and Users(Debt Guide) available athttp://www.imf.org/external/pubs/ft/eds/Eng/Guide/index.htm

13 See BPM5 (pages 108-111) and Financial Derivatives: Asupplement to BPM5 (pages 43-47).

Assets Liabilities

1. Direct Investment 1. Direct Investment

1.1. Equity capital and reinvested earnings 1.1. Equity capital and reinvested earnings

1.1.1. Claims on affiliated enterprises 1.1.1. Claims on direct investors

1.1.2. Liabilities to affiliated enterprises 1.1.2. Liabilities to direct investors

1.2. Other capital 1.2. Other capital

1.2.1. Claims on affiliated enterprises 1.2.1. Claims on direct investors

1.2.2. Liabilities to affiliated enterprises (*) 1.2.2. Liabilities to direct investors (*)

2. Portfolio Investmenta/ 2. Portfolio Investmenta/

2.1. Equity securities 2.1. Equity securities

2.2. Debt securities 2.2. Debt securities (*)

3. Financial derivativesa/ 3. Financial derivativesa/

4. Other Investmenta/ 4. Other Investment

4.1. Trade credits 4.1. Trade credits (*)

4.2. Loans 4.2. Loans (*)

4.3. Currency and deposits 4.3. Currency and deposits (*)

4.4. Other assets 4.4. Other a s (*)

5. Reserve assets

a/ Portfolio investment, financial derivatives, and other investment are classified by institutional sector (monetaryauthorities, general government, banks, and other sectors). Debt securities and other investment are also classifiedby maturity (short- and long-term on an original maturity basis).

Table 3 : Summary Presentation of the International Investment Position

a/ (*)

li bilitie

Gross external debt position

The gross external debt position, at any given time,is the outstanding amount of those actual current,and not contingent, liabilities that require pay-ment(s) of principal and/or interest by the debtorat some point(s) in the future and that are owed tononresidents by residents of an economy.14

The IIP instruments identified in italics (*) inTable 3 are debt liabilities to be included in theexternal debt position. Therefore, the gross exter-nal debt position data should be consistent withthe correspondent components of IIP data re-ported to the IMF. Table 1 of the QEDS databasepresents quarterly external debt position data bro-ken down by institutional sector and further classi-fied by maturity and instrument. This table isconsistent with the presentation of the externaldebt data position by sector recommended in theDebt Guide15, but differs from the BPM5 presenta-tion above.

Main Results

Comparator tables were produced for all SDDScountries that reported external debt data to theWorld Bank for QEDS and IIP data to the IMF forBOPSY (47 countries for end–2004 data and 48countries for end–2005 data).16 For a number ofcountries, minor adjustments based on informa-tion available in QEDS were needed due to lack ofdisaggregation of available IIP data. These adjust-ments implied the estimation of (a) the short/longterm maturity attribution for some debt instru-ments, and (b) the equity/debt attribution of othercapital liabilities of direct investment.

When appropriate, the comparator tables were sentto countries’ authorities responsible for the IIP andexternal debt data compilation for verification ofthe main discrepancies and comments. In general,external debt data reported by SDDS countries toQEDS were broadly consistent with IIP data sub-mitted to the IMF for publication (Table 4).

Twenty one countries presented minor differencesin the total external debt position for end–2004data, and two countries had no differences in thetotal or its components.

On the other extreme, ten countries had large dis-crepancies in the total debt stock and/or its com-ponents. Differences were mainly due to:

• Scope (e.g., in either IIP or external debt, in-sufficient coverage of private sector and/orshort-term debt, inclusion of securities issuedabroad and held by residents, exclusion of se-curities issued domestically and held by non-residents, inclusion of financial derivatives).

• Basis for recording (e.g., market valuation inIIP data and nominal valuation in QEDS data,

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14 Debt Guide, paragraph 2.3.

15 Debt Guide, Table 4.1, pages 34-35. Table 4.1 furtherdisaggregates other sectors into three subsectors (nonbankfinancial corporations, nonfinancial corporations, andhouseholds and nonprofit institutions serving households)and identifies arrears within short-term other debt liabili-ties and direct investment-intercompany lending.

16 As mentioned, six SDDS countries are not yet reportingexternal debt data for QEDS and 11 countries did not re-port IIP data timely for publication in BOPSY 2006

Difference in total Countries In percent

None 2 4%

Small (>0 and <= 1%) 19 41%

Moderate (>1 and <= 5%) 16 34%

Large (>5 and <=10%) 6 13%

Very large (>10%) 4 8%

Total 47 100%

Table 4: SDDS Countries Reporting IIP and External Debt Data for End–2004

Differences between total external debt data reported to QEDS and external debt derived from IIP data

interest costs accrued and not yet due not in-cluded either in IIP or external debt data).

• Classification (e.g., in either IIP or externaldebt, inadequate sector attribution of debt li-abilities to the IMF, different attribution ofdebt to loans or currency and deposits, differ-ent maturity attribution of trade credits andother debt liabilities, and different sector at-tribution of direct investment-intercompanylending).

• Dissemination issues (e.g. reporting data revi-sions). Some countries were not aware thatthe QEDS database could accept revisions ofhistorical data.

Way Forward

Preliminary results from the exercise being con-ducted for end–2005 data revealed that the differ-ences between both datasets were reducedsignificantly. Several counties have already over-come the different treatment of debt instrumentsin both set of statistics. Other countries indicatedthat they would resolve the differences in the nextdata submissions to QEDS and the IMF, and othershave identified next steps for closing the gaps. TheStatistics Department is to take stock of this exer-cise after the end–2005 data are analyzed, but in-tends to continue such crosschecking as part of itsexternal debt quality work program.

Contributor: Eduardo Valdivia-Velarde

May 2007

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Training on External Debt StatisticsProvided by TFFS Agencies:May 2002–March 2007

In the past five years, agencies participating in theInter-Agency Task Force on Finance Statistics(TFFS)17 have made a significant contribution indisseminating international best practices in thecompilation of external debt statistics through jointcapacity building training activities. These trainingactivities have used the External Debt Statistics:Guide for Compilers and Users, produced by theTFFS in 2003 (available at http://www.imf.org/exter-nal/pubs/ft/eds/Eng/Guide/index.htm).

In May 2002, the IMF began a new series of exter-nal debt training courses directed at mid-levelcompilers, in collaboration with representatives ofother TFFS agencies. Since mid 2005, training ac-tivities on external debt statistics have includedthe use of the Data Quality Assessment Framework(DQAF) for external debt statistics produced by

the IMF in consultation with the TFFS (availableat http://dsbb.imf.org/Applications/web/dqrs/dqrsdqaf/).COMSEC and UNCTAD have also organized re-gional training seminars/workshops in collabora-tion with TFFS agencies and regional traininginstitutions (MEFMI and WAIFEM).

In total, during the period May 2002-March 2007,twenty courses/seminars have provided training toover 600 mid-level compilers from 147 countries(see table 5).

Contributor: Eduardo Valdivia-Velarde

May 2007

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Training

17 The Inter-Agency Task Force on Finance Statistics(TFFS) was created in 1992 under the auspices of theUnited Nations Statistical Commission. Its current mem-bers are the Bank for International Settlements, theCommonwealth Secretariat, the European Central Bank,Eurostat, the IMF, the Paris Club Secretariat, theOrganization for Economic Cooperation andDevelopment, the UN Conference on Trade andDevelopment, and the World Bank.

East AFRITAC – External Debt Statistics Regional Workshop Held at Kenya School of Monetary Studies, NairobiFebruary 19 – March 2, 2007

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Table 5: Training on External Debt Statistics Provided by TFFS Agencies: May 2002-March 2007

Seminar and VenueLead

Agency Collaborating agencies CountriesNumbertrained

1. Joint Vienna Institute (Vienna),May 6-17, 2002.

IMF BIS, ECB, Paris ClubSecretariat, and UNCTAD

21 30

2. ECCB Regional Debt Workshop(Basseterre), July 2002

COMSEC IMF, World Bank 15 47

3. Inter-Regional Debt Workshop(London), March 2003

COMSEC IMF, World Bank 14 23

4. Brazil Training Center (Brasilia),May 12-23, 2003.

IMF BIS, Paris Club Secretariat,and UNCTAD

16 34

5. Singapore Training Center(Singapore), September 22-October 3, 2003.

IMF BIS and COMSEC 16 29

6. Joint Africa Institute (Yaoundé),November 17-28, 2003

IMF BIS and Paris Club Secretariat 17 28

7. Joint Vienna Institute (Vienna),July 12-23, 2004.

IMF BIS, ECB, Paris ClubSecretariat, and UNCTAD

21 29

8. IMF Headquarters, (WashingtonD.C.), July 11-29, 2005.

IMF World Bank, UNCTAD, andParis Club Secretariat

39 39

9. China Training Center (Dalian),August 8-19, 2005

IMF BIS 1 55

10 Joint Vienna Institute (Vienna),September 5-16, 2005.

IMF BIS, ECB, COMSEC, andUNCTAD

28 30

11. Joint Africa Institute (Tunis),November 7-18, 2005

IMF BIS, COMSEC, Paris ClubSecretariat, and UNCTAD

17 26

12. Eastern & Southern Africa(Kampala), November 21-25,2005.

COMSECMEFMI

IMF and UNCTAD 11 29

13. Arab Monetary Fund (Abu Dhabi),January 15-26, 2006.

IMF BIS and UNCTAD 16 34

14. Brazil Training Center (Brasilia),March 20-31, 2006.

IMF BIS, Paris Club Secretariat,and UNCTAD

18 31

15. Argentina Regional Workshop(Buenos Aires), April 27-28, 2006.

UNCTAD IMF 6 22

16. Eastern & Southern Africa(Kampala), July 10-11, 2006.

UNCTADMEFMI

IMF 3 19

17. West Africa Regional Course(Freetown), August 8-10, 2006.

COMSECWAIFEM

IMF 5 32

18. CARTAC Course (Barbados)September 18-29, 2006.

IMF COMSEC 17 26

19. West AFRITAC (Dakar)February 5-8, 2007

IMF West AFRITAC, WAEMUand BCEAO

10 31

20. East AFRITAC Course (Nairobi)February 19-March 2, 2007

IMF East AFRITAC 7 22

TOTAL (*) 616(*) 616 external debt compilers from 147 countries have received training in external debt statistics conductedby TFFS agencies during May 2002 - March 2007.

Table 5: Training on External Debt Statistics Provided by TFFS Agencies:May 2002-March 2007

A one-stop source for comprehensive external debt sta-tistics is now on the web—a product of the joint effortsof the IMF, the Bank for International Settlements(BIS), the Organization for Economic Cooperationand Development (OECD), and the World Bank.Rob Edwards, the Director of the IMF StatisticsDepartment, called the creation of the Joint ExternalDebt Hub (JEDH - www.jedh.org) an important mile-stone “in using technological innovation to bring timelyand high quality external debt statistics to global users.”

The new website—which replaces the Joint BIS-IMF-OECD–World Bank Statistics on External Debt(JDS) launched on the OECD website in 1999—pro-vides timely access to quarterly external debt statistics.The information is expected to be particularly usefulfor macroeconomic analysis and for cross-country anddata source comparisons.

What’s on the site

The new hub offers comprehensive national exter-nal debt data provided by 58 subscribers to theIMF’s Special Data Dissemination Standard(SDDS); data from creditor and market sources forexternal debt and selected foreign assets for over200 countries/territories; and information describ-

ing the data provided (metadata). The new web-site—through its national and creditor and marketseries—also allows users to compare individualcountry data for three broad categories: loans anddeposits, debt securities, and trade credits. Thewebsite collects information from two sources.National data are drawn from the SDDS reports re-disseminated on the World Bank’s QuarterlyExternal Debt database (QEDS). The BIS, theIMF, the OECD, and the World Bank providecreditor and market data, including loans andother credits, debt securities, international re-serves, cross-border deposits with foreign banks,and portfolio investment assets (drawn from theIMF’s Coordinated Portfolio Investment Survey).While creditor and market sources offer incom-plete coverage of external debt, they do cover awider range of countries than national sources.

Continuing pursuit of better data

The Joint External Debt Hub builds on a number ofinitiatives that the Inter-Agency Task Force onFinance Statistics has taken to make comprehen-sive and consistent external debt statistics moreavailable. In addition to the JDS website created in1999, the task force’s work led to the publication in2003 of External Debt Statistics: Guide for Compilersand Users; the dissemination, since September2003, of quarterly data on national external debtpositions (with a one-quarter lag) by SDDS sub-scribers; the launch of the QEDS website in 2004;and the IMF’s recently developed framework for as-sessing the quality of external debt statistics.

The new website also reflects a determination toapply technological innovation to generate effi-ciencies—in this case by converging data flowsinto a common framework. The hub is a pilot pro-ject of the Statistical Data and MetadataExchange, which, under the sponsorship of theBIS, the European Central Bank, Eurostat, theIMF, the OECD, the UN, and the World Bank, isfostering standards for the exchange of statisticalinformation. The participating agencies see thenew website as a mechanism to enhance the trans-parency, timeliness, and availability of externaldebt statistics for a global user community.

Contributors: Paul Austin and Jean GalandMay 2007

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A New Website for the Joint BIS-IMF-OECD-World BankStatistics on External Debt: the Joint External Debt Hub

Shaida Badiee (World Bank) and Rob Edwards (IMF)sign the Service Level Agreement defining the responsi-bilities of the four Agencies involved in the JEDH

in the Balance of Payments Statistics Yearbook andthe monthly International Financial Statistics in theBPM5 format and use it for national publicationpurposes. Others were the establishment of the in-ternationally Coordinated Portfolio InvestmentSurvey, and the survey on the implementation of

methodological standards for direct investment,development of new statistical guidelines for themeasurement of financial derivatives, and researchwork that increased understanding of other com-plex financial instruments, and collaboration withother agencies on the development of interna-tional guidelines for the measurement of interna-tional trade in services and working with them onthe implementation of these guidelines.

The international financial crises of 1997 and 1998reinforced the importance of sound economic data,and detected areas in which the coverage and accu-racy of external sector statistics needed to be fur-ther enhanced. Needs for improved data onreserves, foreign currency liquidity, external debt,and international investment positions were identi-fied. Highlights that followed were, after consider-able international consultations and deliberations,decisions by the Fund’s Executive Board tostrengthen the Special Data DisseminationStandard to more adequately cover the above-men-tioned data, intensive work, in collaboration withother relevant agencies and with countries, to de-velop new or enhanced statistical guidelines for re-

Neil Patterson retired from his position of AssistantDirector at end-August 2006. Neil had a long associa-tion with balance of payments data and was well-known among the international statistical community.Neil had overseen the development and implementa-tion of many of the initiatives seen in external statisticsin recent years. Just before his retirement, he was in-terviewed by the Newsletter editor, Jean Galand.

Neil, you will soon be on retirement. Thank you forsetting aside some time for this interview in your busyagenda. Can you outline for us the highlights of yourtime working on external statistics in the Fund?

There were several. The first was working for theFund’s International Working Party on theMeasurement of International Capital Flows andcontributing to its report (the “Godeaux Report”)that, together with the earlier “Esteva Report” onthe world current account discrepancy, set muchof the agenda for improvements in external sectorstatistics over the following decade or so. I joinedthe Fund in 1990 to work on this project. TheGodeaux report, published in 1992, emphasizedthe importance, in an increasingly deregulated andglobalized world economy in which measurementwas becoming more complex, of adopting interna-tional statistical guidelines, enhancing compila-tion methods, and sharing data and expertiseacross countries. International cooperation wascrucial and the Working Party recommended thecreation of a committee of senior internationalexperts to advise on the implementation of its re-port’s recommendations. This became the IMFCommittee on Balance of Payments Statistics(the Committee).

After several years working on government fi-nance statistics, I returned to external sector sta-tistics in 1997 as Chief of the Balance of Paymentsand External Debt Division I. Subsequent high-lights involved working with the internationalcommunity of external sector statisticians to fol-low through on the Godeaux and Esteva recom-mendations and to implement the fifth edition ofthe Balance of Payments Manual (1993). A particu-lar success was that most countries report balanceof payments statistics to the Fund, for publication

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May 2007

An Interview with Neil Patterson, Former AssistantDirector, Balance of Payments and External DebtStatistics, Statistics Department

Neil Patterson

serves and foreign currency liquidity, and externaldebt, and to promote the improved reporting of ex-ternal position data more generally. This has bornefruit in new international databases on reserves andexternal debt, and greatly expanded reporting ofinternational investment position data to theFund. This has been encouraged and supported byan extensive program of technical assistance andexternal training covering the balance of paymentsand international investment position, trade in ser-vices, Coordinated Portfolio Investment Survey,direct investment, reserves and foreign currencyliquidity, and external debt.

Several years ago, it became increasingly evidentthat, in the light of the increased focus on posi-tions data, economic globalization, and the statis-tical initiatives that the balance of paymentsmanual required updating. Another highlight hasbeen the worldwide process of discussions and con-sultations that has led to international agree-ments, that were reviewed and endorsed by theCommittee, on the needed methodologicalchanges, and the preparation of the first draft ofthe updated manual that will soon be posted onthe Fund’s external website.

We all know that you have been a major driving forcebehind the work of the Committee. From your perspec-tive, what are the major changes that have been imple-mented by the Committee?

The Committee played a fundamental role in al-most all of the initiatives described above. Its par-ticular achievements have included theCoordinated Portfolio Investment Survey,progress on the implementation and updating ofbalance of payments statistical guidelines, andcontributions to and review of research into cut-ting edge methodological and compilation issues.This work has been described in the Committee’sAnnual Report and numerous papers that are pub-lished on the Committee’s external website.

Neil, what are the main challenges that you see remainto face in the field of external statistics? What are thestatistical issues arising from globalization?

There will always be challenges in this work.Keeping up with the changes in the internationaleconomy and the needs of users, while seeking tomaintain coherence within and across systems,will always be demanding. Some of the most im-portant challenges are being addressed by the ini-tiatives already underway. Issues related toeconomic globalization, including the activities of

multinational corporations and international mi-gration, will be at the forefront. Some of these arebeing addressed in the revision of the balance ofpayments manual. Also, in consultation withcountries and other international agencies, wehave completed a study of the feasibility of con-ducting an internationally-coordinated survey ondirect investment positions and this survey seemslikely to be initiated. Also, we have taken a lead-ing role, in cooperation with other agencies andcountry experts, to identify best international prac-tices in measuring “personal remittances” that aremost usually associated with the movement of per-sons between countries.

More generally, what do you consider to be the key is-sues emerging for those involved in compiling macro-economic statistics?

As for external statistics, there are many. One im-portant issue is to ensure harmonization of the var-ious macroeconomic statistical systems that arepresently under review in line with the revision ofthe balance of payments manual. These includethe System of National Accounts, the IMF/OECD’sforeign direct investment guidelines, and the inter-agency guidelines on statistics of internationaltrade in services. There is recognition by all agen-cies involved that harmonization is critical to pro-mote inter-system analysis and to avoidduplication of collection efforts.

The increased focus on balance sheets for theanalysis of global economic stability has been facil-itated by the advances in external sector positiondata. Extending this work within and beyond theexternal sector—to the financial corporations andpublic sectors, for example—is underway and im-portant. For the analysis of globalization, data ondirect investment within the balance of paymentsframework, trade in goods and services, and remit-tances are very important, but also identified byusers as important are data on the impact on thedomestic economy of foreign-affiliated enterprises,as foreshadowed in the manual on statistics of in-ternational trade in services and described in theOECD’s manual of globalization indicators. Theanalysis of offshoring and outsourcing activities re-quires statistics that include but also go beyond thescope of external sector statistics. These additionalstatistics may not lie within the Fund’s mandate tosupport, but we need to be engaged to ensure har-mony and consistency with our systems, and tosupport Fund analytic work. Another challengewill be to find the capacity to keep up with these

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May 2007

May 2007

developments in the Fund’s constrained budgetaryenvironment.

Neil, would you care telling us of your projectsfor the future?

I may undertake the occasional short-term statisti-cal consultancy project, but in the main I will beseeking challenges in non-statistical fields. While

I cannot think of a more rewarding area than theone I have had so far in statistical work inAustralia, at the United Nations, and at the Fund,I retired early to find time to branch out in new di-rections. The first challenge will be to get reestab-lished in Australia. I am looking forward to it.

Back in Australia, what will you miss most from whenyou lived in Washington?

I will miss the collegiality, professionalism, anddedication of my colleagues in the two balance ofpayments divisions of the Fund who successfully

21

undertook so many challenging projects. I willmiss my other colleagues in the StatisticsDepartment and elsewhere in the Fund for theirdedication to the Fund’s mission, and I will missworking with the Committee members, and withthe dedicated statistical professionals in manycountries and international agencies. I will missthe country counterparts that I worked with in

many ROSC, technical assistance, and trainingmissions and in various technical expert groupsover the years. I will not miss the long workinghours, or the administrative trivia. But I will missliving in Washington, except for the winters.

Neil, thank you very much for your time and your insight inpast and future developments in external statistics. On behalf ofmy colleagues in both divisions, I wish you a successful resettle-ment in your home country.

Contributors: Neil Patterson and Jean Galand

The skyline of Perth, Neil Patterson's hometown

The ANDESTAD ProjectThe ANDESTAD project of the Andean Community(member states: Bolivia, Ecuador, Colombia, andPeru) was launched in June 2005, materializing a con-vention of technical cooperation between the AndeanCommunity and the European Union.

The principal objectives of the project includeharmonizing statistical concepts and proceduresbased on international statistical guidelines, andstrengthening the capacities of the institutions re-sponsible for the collection, processing, and dis-semination of official statistics.

The beneficiaries of the project include all institu-tions that form the national statistical systems (in-cluding National Statistics Offices, Central Banks,Ministries, Superintendencies, among others) andthe Secretariat of the Andean Community.

The project oversees the work of 20 WorkingGroups covering a wide variety of statistics areas,among them National Accounts, Balance ofPayments, Foreign Direct Investment, PublicFinance, and Monetary and Financial Statistics.The Working Groups, formed by statistics expertsfrom each member state, benefit from the techni-cal assistance provided by the European technical

May 2007

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cooperation as well as the active participation ofinternational organizations, such as the IMF’sStatistics Department. Other activities of the pro-ject include research studies, direct technical assis-tance, and training.

What makes the project different from other tech-nical cooperation projects that contemplate theimprovement of statistics, are the legal instrumentsthat facilitate the harmonization of statistical con-cepts and procedures. Through the project, theWorking Groups and Secretariat of the AndeanCommunity prepare Decisions and Resolutions

that, after approval by the Commission of theAndes Community and the Secretary General ofthe Secretariat respectively, constitute binding leg-islation in each member state.

The project, with a budget of eight million Euros,has a duration of four years and is based in Lima,Peru, where the Secretariat of the AndeanCommunity is based. More information about theproject is available on the project’s website:http://secgen.comunidadandina.org/andestad .

Contributor: Jesper Venema, Comunidad Andina,Lima

Regional Focus

First meeting of the ANDESTAD Working Group on Balance of Payments Statisticsin Caracas, Venezuela

May 2007

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dorsed the findings and conclusions of the study atits annual meeting last year.

Major features

The intention is for the survey to have the follow-ing major features:

• data to be collected on positions (both equityand debt) by immediate counterpart country.

• equity to be valued at “own funds at bookvalue”; for those investments that are listed,market valuations will be encouraged.

• an international task force to be set up toprepare a compilation guide.

Similar to the CPIS, the bilateral data requestedwill provide “mirror” information on direct invest-ment into all economies, both those participatingand those not participating in the survey.

Also, a CDIS can be expected to improve interna-tional investment position (IIP) data and dataavailability. In addition to monitoring an impor-tant aspect of globalization, IIP statistics are ameans of understanding the impact of interna-tional capital flows and global external sector im-balances. Position data are also increasinglyneeded for Fund surveillance. A global databaseon the geographical distribution of the stock ofFDI capital will augment the bilateral data avail-able from the CPIS and other data in the JointExternal Debt Hub, further developing the data-base for regional and multilateral surveillance.

Overview of modalities

The main elements of a work program for the con-duct of an end–2009 CDIS include:

Development phase: with the involvement ofSTA’s interagency partners, to create a task forceof national compilers to write a survey guide to as-sist compilers to prepare for their participation ina CDIS.

Implementation phase: convening selected regionalworkshops of national compilers, to review thestate of preparation for participation in a CDIS aswell as to provide technical and other assistance insupport of their participation in a CDIS.

The IMF plans to launch a Coordinated DirectInvestment Survey (CDIS) for reference to end–2009.This article explains the background to the plannedlaunch and the modalities of the initiative.

A discussion paper prepared for an informal IMFExecutive Board seminar on foreign direct invest-ment (FDI) statistics held in November 2003highlighted a range of deficiencies in the availablestatistics on FDI capital. Problem areas includeddiscrepancies in global balance of payments statis-tics on FDI, asymmetries in data on bilateral FDIpositions, and, notwithstanding improvements inrecent years, uneven implementation of interna-tional guidelines for the recording of FDI statisticspromulgated by the IMF and the OECD. The dis-cussion paper proposed a feasibility study on theconduct of a CDIS. Such a survey could help meetthe growing data requirements for more compre-hensive and comparable data on direct invest-ment. It could be modeled along the lines of theIMF-sponsored Coordinated Portfolio InvestmentSurvey (CPIS), which is now conducted annually(see the article on page 7 of this Newsletter). TheBoard supported the need for improved FDI statis-tics and endorsed the proposal for the IMF’sStatistics Department (STA) to undertake the fea-sibility study.

The feasibility study was undertaken in collabora-tion with several of STA’s interagency partners.18

The views of the Fund’s membership were alsosought. The study concluded that it would be fea-sible and beneficial to national compilers and usersof FDI statistics for STA and its interagency part-ners to undertake a CDIS involving inward andoutward FDI in respect of an end–2009 referenceyear19 and that there was strong support for such aninitiative across the Fund’s membership. The IMFCommittee on Balance of Payments Statistics en-

IMF Plans to Launch a Coordinated Direct InvestmentSurvey

18 The interagency task force that prepared the study in-cluded the ECB, Eurostat, OECD, UNCTAD, and theWorld Bank.

19 This reference date coincides with the benchmark sur-vey of U.S. direct investment abroad to be conducted bythe Bureau of Economic Analysis of the U.S. Departmentof Commerce.

Balance of Payments StatisticsYearbook 2006

The IMF has released Volume 57 of theBalance of Payments Statistics Yearbook(BOPSY). Issued in three parts, this annualpublication contains balance of payments andinternational investment position data. Part1 of the 2006 BOPSY provides detailed tableson balance of payments statistics for approxi-mately 175 countries and international in-vestment position data for 105 countries. Part2 presents tables of regional and world totalsof major balance of payments components.Part 3 contains description of methodologies,compilation practices, and data sources usedby reporting countries.

Statistics published in Parts 1 and 2 of theYearbook are also available on CD-ROM. Themonthly CD-ROM provides updates and revi-sions of Part 1 data as they become available.

Recent Publications

IMF Balance ofPayments Statistics

NewsletterVolume XIII, Number 1

May 2007

(http://www.imf.org/external/pubs/ft/bop

/news/index.htm)

The IMF Balance of

Payments Statistics

newsletter is published by

the Statistics Department

of the International

Monetary Fund. The pur-

pose of the newsletter is to

inform balance of payments

data compilers and users

about national and interna-

tional developments in the

collection of such data.

Editions are published in

Chinese, English, French,

Russian, and Spanish. The

opinions and material con-

tained in this newsletter do

not necessarily reflect the

official views of the IMF.

Draft submissions are wel-

come and should be ad-

dressed to Jean Galand,

Editor, IMF Balance of

Payments Statistics

Newsletter, Balance of

Payments and External

Debt Division II, Statistics

Department, HQ2-10B259

International Monetary

Fund, Washington, D.C.

20431, U.S.A. Telephone:

(202) 623-7363

Fax: (202) 623-8017.

Graphic design for this

newsletter is provided by

Kathy Tilmans.

May 2007

24

The six-week course on balance of payments sta-tistics will be held in Washington during May 14 –June 22, 2007. This course is designed for officialswhose main responsibility is compiling balance ofpayments statistics.

A three-week course on external debt statistics willalso be held in Washington, during September10–28, 2007, for external debt statistics compilers.

The annual meeting of the Balance of PaymentsCommittee will be held in Washington in the lastweek of October 2007.

The results of the 2005 Coordinated PortfolioInvestment Survey (CPIS) are posted on the IMF’sexternal website (http://www.imf.org/external/np/sta/pi/datarsl.htm).

Papers from the nineteenth meeting (October23–26, 2006) of the IMF Balance of PaymentsCommittee are posted on the external website athttp://www.imf.org/external/pubs/ft/bop/2006/19.htm

In January 2007, STA launched the Balance ofPayments Statistics (BOPS) Online service, joiningthe International Financial Statistics (IFS) Onlineservice. This user-friendly database is subscriptionbased, and provides fast information retrieval ofbalance of payments and international investmentposition time series data back, in some instances,to 1948. More information is available athttp://www.imfstatistics.org/BOP/

What’s on the Web

Upcoming EventsCollection phase: STA and its interagency partnersto collect data compiled from national FDI surveysand the associated metadata.

Dissemination phase: to develop a system to processthe results of national surveys and associated meta-data. A report on the results of the CDIS will beprepared for the Committee with a view to postingthe compiled data on the IMF’s public website.

Inquiries about these publications should be addressed to:

Publication Services, International Monetary Fund Washington, D.C. 20431, U.S.A, Telephone: (202) 623–7430

Telefax: (202) 623–7201 E-mail: Publications@imf.orgInternet: http://www.imf.org