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Remittances in the Balance of Payments Framework

Remittances in the Balance of Payments Framework. Prepared for International Technical Meeting on Measuring Remittances World Bank, Washington, D.C. January 24-25, 2005 Prepared by Jens Reinke and Neil Patterson Statistics Department International Monetary Fund. Overview.

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Remittances in the Balance of Payments Framework

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  1. Remittances in the Balance of Payments Framework Prepared for International Technical Meeting on Measuring Remittances World Bank, Washington, D.C. January 24-25, 2005 Prepared by Jens Reinke and Neil Patterson Statistics Department International Monetary Fund

  2. Overview 1. Existing information from balance of payments statistics Definitions Data Metadata Compilation guidance and technical assistance 2. Improvements in progress Conceptual Compilation guidance (?)

  3. 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

  4. Possibly relevant components in the balance 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.

  5. Possibly relevant components in the 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.

  6. Data 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 billion Employees -- inflows Workers’ remittances 79.5 billion -- inflows

  7. 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.

  8. Metadata Balance of Payments Statistics Yearbook, Part 3 Summarized version, focusing on migration claims, available on request GDDS metadata

  9. Compilation guidance and technical 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.

  10. Improvements 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 (?)

  11. 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 58369 Debit 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 90825 Debit 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 149194 Debit 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.

  12. Problems in extracting data from BOP 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

  13. Problems in extracting data from BOP framework (cont.) ▪ Transactions by private households—generally not available except for compensation of employees and transfers ▪ Net income of short-term workers

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