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Explore Albania's remittance practices, BPM6 methodology, limitations, and complementary data sources. Understand changes from BPM5 to BPM6 and new concepts introduced. Data availability and implementation insights.
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Bank of Albania Remittances Compilation practices and BPM6 Implementation Majela Collaku, Expert, Bank of Albania Skopje, 2 -5 October 2013
General Characteristics Area:28 748 km2 Population: 2.8 million Capital: Tirana Neighbor countries: Kosovo, Macedonia, Montenegro, Greece and Italy. GDP/Capita: $3,900 (2012 est.) Skopje, 2 -5 October 2013
Introduction • Albania is a remittances recipient country, • immigration phenomenon became evident for the very first time by mid 1990, • around 1.2 million Albanian migrants, • 680 million of euros inflow of workers’ remittances for 2012, • 7 % of GDP, • 34 % of Trade Balance. • Main destination : Italy and Greece Skopje, 2 -5 October 2013
Compilation Methodology Main Source: Residual Model Complementary source :Surveys Basic Assumptions of Residual Model: First: The money remitted by migrants in the home country is converted into domestic currency (ALL) and used to buy goods and services. Second:Foreign exchange market is in equilibrium, which means that, the amount of foreign exchange inflows is equal to the outflows. FX INFLOWS = FX OUTFLOWS Skopje, 2 -5 October 2013
Residual Model Foreign Exchange Inflows = Foreign Exchange Outflows * Not channeled through banking system ** Total imports - imports through banks – trade credit – aid – good for processing imports) *** The net change in the position of FX holding by banks and exchange bureaus CR = CI + CTD + OCI – CE – CTC – OCE + NetFX (OOFX-OIFX) RB = Remittances reported by banks and MTO’s ER= CR + 20% x RB ER: estimated remittances On BoP it is applied: ER * 0.9 = workers’ remittances and ER * 0.1 = compensation of employees.
Data Sources • Custom data • Surveys (travel, smuggling, trade credits). • Banking system / MTO • Foreign exchange bureaus data • Estimations Skopje, 2 -5 October 2013
Limitations of Residual Model • Relies on accuracy of data on which estimation is based (any errors and omissions in that data will be reported as remittances) • Cash balances of domestic sectors are difficult to estimate (private sector holds undisclosed amounts of foreign currency) • Cannot distinguish between purposes for which money are sent (money could be sent for deposits in migrant accounts or purchase of assets) Skopje, 2 -5 October 2013
Complementary Sources - Surveys • Quarterly survey on households (recipients of remittances) • Temporary suspended due to the lack of a reliable register of households. Planned to be resumed based on data from the Population Census of 2011. • Meanwhile a new pilot survey on migrants is introduced in 2011. • So far, data retrieved from both surveys are not applied on BoP components, but are considered as complementary source for analytical purposes. Skopje, 2 -5 October 2013
Complementary Sources – Surveys (Cont’ed) Dimensions of surveys: • Geographic Location. • Characteristics of the emigrants/recipient households • Emigrant’s monthly income • Amount remitted as percentage to monthly/annually income • Frequency of the remittances. • The channels used to remit. • The use of the remittances. Skopje, 2 -5 October 2013
Remittances-new concepts and definitions BPM6 introduces 4 aggregates: 1. Personal transfers (narrowest) 2. Personal remittances 3. Total remittances 4. Total remittances and transfers to NPISHs (broadest) Skopje, 2 -5 October 2013
Remittances-new concepts and definitions (cont’ed) Skopje, 2 -5 October 2013
Remittances-new concepts and definitions (cont’ed) • “Personal transfers” will cover all current transfers between resident and nonresident households. • The concept is based neither on migration nor employment status. • Personal remittances are the sum of personal transfers and compensation of employees less taxes, travel expenses etc. Skopje, 2 -5 October 2013
BPM5-BPM6 changes Main changes introduced in BPM6 regarding remittances: • Introduction of the concept of “personal transfers” to replace “workers remittances” in the BPM5; • Definition of personal remittances and its introduction in the balance of payments as a memorandum item; • Change in recording of migrants’ transfer. Skopje, 2 -5 October 2013
Remittances-BPM5 and BPM6 Presentation • Personal Transfers = Worker’s Remittances in BPM5 • Personal Remittances = Household-household transfers + net compensation of employees. • Total Remittances = Personal Remittances + Social Benefits Skopje, 2 -5 October 2013
Data Availability by Components • Compensation of employees - Model • Personal transfers – MTO, BANKS, Model • Travel and transportation related to temporary employment - Not Available • Taxes and social contributions related to temporary employment –Not Available • Capital transfers between households – Banks ITRS • Social benefits – Not Available • Current transfers to NPISHs – Not Available • Capital transfers to NPISHs - Not Available Skopje, 2 -5 October 2013
Implementation Plans • BoA will follow closely the remittances performed through formal channels (MTO, Banks) • Revision of existing model/design of a new model • Conduct new survey on migrants (adding additional question regarding travel expenses, social contributions, salaries etc.) • Corporation with National Statistical Agency (INSTAT) and other institutions for more reliable data. • More aggregated data from banks and MTO • Bilateral data sources • Additional data sources. Skopje, 2 -5 October 2013
THANK YOU FOR YOUR ATTENTION! Skopje, 2 -5 October 2013