Chapter

XIII Compiling and Completing the Global Matrix

Author(s):
International Monetary Fund
Published Date:
June 1992
Share
  • ShareShare
Show Summary Details

SUMMARY

Errors occur in the global capital account statistics shown in Part 2 of the Yearbook because certain countries do not report to the Fund and others report with excessive delay. In some instances, missing data are estimated by the Fund while, in others, data are completely missing from the global accounts. This chapter discusses improvements in global recording that would occur if more complete and timely reporting were achieved; it suggests ways in which the Fund estimates in Part 2 of the Yearbook could be improved; and it shows that inclusion of new information for the U.S.S.R. slightly affects the global discrepancy.

Introduction

Several topics related to the quality and completeness of global capital account statistics are not specifically covered in earlier chapters. This chapter deals with those topics. It begins by describing the basic data for this study of the measurement of international capital flows: the figures published by the Fund’s Statistics Department in the Balance of Payments Statistics Yearbook, Part 2.

The data in Part 2 reflect what has been both measured and reported by national statisticians and estimated by Fund staff. The following section focuses primarily on how the data are assembled and adjusted, and why and how Fund estimates are made. And another section discusses the impact of estimates on the global aggregates shown in Part 2.154

Some data are also completely missing from Part 2. For lack of information, the Fund has been unable to make any capital flow estimates for certain countries. Chapter 9 has already considered the matter of missing data for offshore financial centers. A final section of this chapter describes how the Working Party used new information on the U.S.S.R. to round out the global data.

Management of the Fund’s Balance of Payments Data Base

Publication of the Data

Most members of the IMF, together with a few non-members, submit a variety of domestic and international economic data to the Fund’s Statistics Department for publication. Balance of payments data are published, around November of each year, by the Statistics Department in two volumes of the Yearbook.155 Both volumes (Part 1 and Part 2) cover balance of payments statistics through the end of the preceding year.

Part 1 contains balance of payments statements for individual countries; each statement is ordered in the standard categories described in the Balance of Payments Manual and expressed in U.S. dollars. Data for 137 countries are included in the 1990 issue. Annual data included in this issue cover the eight years 1982 through 1989. Data are arranged in both an aggregated presentation that focuses on certain “analytic” balances and a detailed presentation that shows data for all of the standard current and capital account categories.

Part 2 aggregates the data given in Part 1 by balance of payments category. Each category displays data for countries, country groups, international organizations, and “total.” Part 2 consists of Part 1 data augmented by estimates for nonreporters, estimated updates for late reporters, figures for reporters that do not report in sufficient detail to be included in Part 1, and transactions of international organizations. Part 2, in effect, expands Part 1 data to an almost global scale and ensures that all the years (the seven years of 1983 through 1989 in the 1990 issue) are consistently covered.156 It therefore contains the global balances that concerned the Working Party.

Part 2 begins with three summary tables. Table 1 provides a country-group summary of selected balances on international transactions; Table 2 shows global balances for each of the main current account components; and Table 3 shows global current account balances adjusted for selected statistical discrepancies, in line with the methodology adopted in the Report on the World Current Account Discrepancy.

There follows a set of “A” tables that organize the data into a number of analytic balances which show national, regional, and global contributions to each type of balance. A set of “B” tables follows; these give global and country-group balance of payments statements structured to summarize the contribution of major types of transactions. Finally, there is a set of “C” tables that give country, country-group, and global data for each of the main individual categories of current and capital transactions in the Fund’s standard presentation. The “C” tables contain country data for individual types of transactions. These data were the Working Party’s primary area of concentration and the main focus of its analysis. The “C” tables were the basis for Table 3 in Chapter 1 and other tables in this report.157

Collection and Compilation of Capital Account Data

Designated “balance of payments correspondents” in reporting countries regularly submit time series of their national balance of payments statistics to the Fund’s Statistics Department. The forms in which countries present their capital account data in national publications differ greatly, so a standardized presentation such as that produced by the Statistics Department is required for global compilations. The form used by the Fund follows the classification scheme set forth in the Manual.158

The Statistics Department makes available a standardized report form to assist in the provision of data to the Fund. Not all countries return figures on this standard form. In cases of divergence, the Statistics Department (often in consultation with the countries concerned) rearranges data from the national submissions to conform to the standard presentation. Also, data on Fund transactions—for example, transactions in special drawing rights and in the Fund’s General Resources Account—are obtained from Fund sources rather than from national submissions.

The Statistics Department checks and processes data received from countries. Checking and editing of national submissions are regular procedures followed by the department. When necessary, the Fund confers with national balance of payments correspondents to seek clarification. In a few cases, reported data are amended or supplemented by data from other sources, and figures are entered into the Fund’s computer system. Around September of each year, country-reported data are supplemented by Fund estimates and other figures, and the tables in both Parts 1 and 2 are “frozen” for publication.

Relationship Between Part 1 and Part 2 Data

The country-reported data from Part 1 are carried directly into Part 2. Thus, data for individual countries in Part 2 are identical to figures in Part 1.159 The 1990 issue of Part 2 shows data for 142 countries: the 137 reporting countries represented in Part 1 and 5 more countries (Mozambique, Romania, Kiribati, Guyana, and the Netherlands Antilles) that appeared in earlier issues of Part 1 but that had not reported in recent years. These five countries are not the only “late reporters”; many others send figures but do not provide up-to-date data for inclusion in the Yearbook. Of the 142 countries listed in the 1990 issue, 38—or 27 percent, all in the “developing countries” group—did not provide data for 1989, and some of these also did not provide data for earlier years. When data reports are delayed, estimates made by Fund staff are inserted in Part 2. These estimates are not shown separately; the existence of an estimate is indicated by the entry “…” in the relevant cell of a table. Estimates are added into regional and global totals.

There are other significant instances in which capital flow data that appear in Part 2 do not appear in Part 1. First, the Fund adds entries for international organizations. These data are derived by the Statistics Department primarily from survey results.160 Second, the 1990 issue of Part 2 includes data for Bulgaria, Czechoslovakia, Hungary, Hong Kong, and Taiwan Province of China that are not found in Part 1. Data for the first three are included indistinguishably under the heading “Europe not specified.” Figures for the latter two are included under the heading “Asia not specified.” Third, Part 2 contains estimates made by the Fund for certain countries, some of them Fund members, that do not report data to the Fund. These countries, described here as “nonreporters,” are Cape Verde, Djibouti, Guinea, Cambodia, Viet Nam, Iraq, Lebanon, Qatar, and the United Arab Emirates.161 Fund estimates for these nonreporters are included indistinguishably in the lines for “Africa not specified,” “Asia not specified,” and “Middle East not specified,” as applicable, in the Part 2 tables.

Therefore, the only individual country data shown explicitly in Part 2 are those obtained directly from Part 1. However, because estimates for late reporters are indicated by the entry “…”, the regional and global totals often differ from the sum of the country figures printed in the “C” tables.

Because both reported data and estimates are lacking, for some countries there are no capital account data at all in the Part 2 tabulations. Among the countries without capital account data are Albania, Angola, Bhutan, Brunei, Cuba, the Democratic People’s Republic of Korea, Mongolia, Namibia, the U.S.S.R., and certain offshore financial centers such as Bermuda and the Cayman Islands.

As should be evident from the foregoing, nonreporting and late reporting of data by some countries can contribute to discrepancies in global capital flow totals, quite apart from errors that may reside in the figures submitted by reporting countries.162

Other Fund Data Bases

The principal sources of estimates needed to move from Part 1 to Part 2 are country specialists in area departments of the Fund.163 These specialists, in turn, rely on a variety of sources to maintain their country data bases. Typical sources are (a) national statistical agencies, (b) data obtained during official Fund visits to countries, (c) estimates made on the basis of partial information from countries, and (d) other sources such as the Statistics Department and international organizations. Area department data bases are maintained and processed independently by country specialists. These data bases may be kept in personal computer files, and they are not readily accessible in bulk.

Area department data bases are used in reports on “Recent Economic Developments” (REDs) of individual countries. The specific forms of data found in REDs vary by country, but they frequently conform with “national presentations” or contain only limited detail. REDs were not designed to be integrated with the statistical operations of the Statistics Department. They rarely show balance of payments detail in the standard classifications recommended by the Fund’s Manual. The result is that RED statistics can diverge noticeably from those maintained by the Statistics Department.164

Area department documents and studies are designed to aid policy, especially for countries having or seeking Fund programs. They constitute, in addition, basic raw material needed for publication of the Fund’s semiannual World Economic Outlook (WEO). To produce this global synthesis, national balance of payments and other statistics are transmitted from country experts to WEO staff, who centralize and standardize them in the WEO data base. This data base contains both the historical and projected estimates necessary for a broad assessment of the global outlook. The standardized WEO format contains only a limited number of capital flow categories.165 Because WEO data are in centralized computer files, they are readily accessible to the Statistics Department for estimation of missing Part 2 balance of payments components.

Estimation Procedures

Six categories of capital flows are maintained in the WEO data base, and these are the principal sources of Yearbook estimates when moving from Part 1 to Part 2. When there is no balance of payments report for a particular country covered in Part 2, the Statistics Department maps the six WEO accounts into six Yearbook accounts that are part of its standard capital account format. Table 65 shows the correspondence between WEO and Yearbook entries.

Table 65.Correspondence between WEO and Statistics Department Categories of Capital Flows
Statistics Department account
WEO account(Yearbook table)
1. Direct investment, net1. Direct investment in the reporting economy, n.i.e., (Table C-14)
2. Other medium and long-term liabilities, net2. Other long-term liabilities of other sectors, n.i.e., (Table C-28)
3. Other asset transactions, net3. Other short-term assets of other sectors, n.i.e., (Table C-31)
4. Other short-term liabilities, net4. Other short-term liabilities of other sectors, n.i.e., (Table C-31)
5. Exceptional financing5. Exceptional financing (Table C-32)
6. LCFAR6. LCFAR (Table C-32)
n.i.e. = not including exceptional financing and LCFAR.
n.i.e. = not including exceptional financing and LCFAR.

Except for short-term assets, Table 65 shows that in each case the net amount carried in WEO files is assigned to the liabilities side of a country’s accounts in the Yearbook. Except for direct investment, exceptional financing, and LCFAR, the sectorization is to “other sectors.” This extraction of WEO figures is supplemented by the mapping of IFS data on “international reserves” (after the deduction of Fund transactions included in reserves) for the standard Yearbook capital account component “foreign exchange reserves.”166

Role of Fund Estimates in the Global Totals

The Statistics Department does not make any independent balance of payments estimates for countries (or years) if estimates are required to complete the “world picture.” The translation from WEO and IFS into Yearbook format is purely mechanical. Three observations are in order about this procedure:

  • In the case of late reporters, the procedure results in discontinuities in time series measurement within capital flow categories. For example, no estimates are entered under the portfolio investment category; the WEO estimates that include missing portfolio flows are “misclassified” under the other long-term capital category. In this example, however, the procedure would not cause discontinuities at the level of the global capital account discrepancy.
  • Also in the case of late reporters, the procedure can result in biases at the global capital account level. Problems occur when, for a particular country, there are gaps or overlaps between the coverage of IFS “international reserves” and WEO data. The Working Party identified several cases in which significant biases occur for this reason.
  • For nonreporting countries for which estimates are entered, such estimates extend over all the years shown in Part 2. Since the data are all drawn from WEO and IFS files, the number of “line items” is limited, and the estimates may have the appearance of continuity. The underlying problem is the uncertainty about the correspondence between the entries made and the true nature of the capital flows. In other words, if there is “misclassification,” it may be systematic and extend over long periods of time. For example, no portfolio investment is ever attributed to nonreporters.

The procedures followed by the Fund for inserting estimates into global capital flows may be somewhat problematic, but it is difficult to envisage a better general approach, given present data availability and the need to make estimates within a very short period of time. Inserting WEO estimates may not impart any bias to the global discrepancy if country specialists from area departments can make relatively good estimates about total capital flows and reserves. The paucity of detail, however, will result in great uncertainty about the “true” contents of individual line items.

The contribution, by value, of Fund estimates to global capital flow balances is relatively small, but not insignificant. This can be seen in Table 66, which presents, for years 1986 through 1989, data that are consistent with those in the 1990 Yearbook. For example, the global capital account balance of $66.4 billion in 1989 includes a net estimated amount of $2.3 billion to account for the missing data of late reporters and –$1.6 billion to account for the missing data of nonreporters. The estimates for 1989 contribute –$10.4 billion to global capital account assets and $11.0 billion to global capital account liabilities (about 1 percent of each total).

Table 66.Contribution of Country Reports and Fund Estimates to Global Balances, 1986–891(In billions of U.S. dollars; outflows ( – ))
Fund estimates
Country reports2Late reportsNonreportersTotal
1986198719881989198619871988198919861987198819891986198719881989
Total capital account, net13.139.252.065.70.1−2.0−5.02.35.6−3.8−1.3−1.618.833.445.766.4
Assets−822.2−978.9−817.5−1,090.1−0.90.1−3.80.6−7.9−6.3−6.6−821.5−987.7−823.6−1,100.4
Liabilities835.31,018.1869.51,155.80.1−1.0−5.26.14.94.14.94.9840.31,021.1869.21,166.8
Direct investment, net3−14.1−26.4−19.5−4.3−2.7−4.80.20.50.50.5−13.9−26.0−21.7−8.6
Abroad−89.9−135.7−159.7−190.3−89.9−135.7−159.7−190.3
In reporting economy75.7109.3140.2186.0−2.7−4.80.20.50.50.576.0109.7138.0181.8
Portfolio investment, net3−3.3−5.1−17.829.2−3.3−5.1−17.829.2
Assets−186.5−124.8−198.9−278.2−186.5−124.8−198.9−278.2
Liabilities183.1119.7181.1307.4183.1119.7181.1307.4
Other capital, net3−2.976.451.221.6−2.2−5.10.62.8−2.4−1.7−1.5−1.271.744.420.8
Reserves, net−30.2−148.4−41.7−49.7−0.91.62.2−2.3−0.4−1.0−28.0−151.6−40.6−50.7
Exceptional financing and LCFAR63.7142.780.068.90.11.21.26.50.40.40.30.364.2144.381.575.6

Data derived from the “C” tables in the Balance of Payments Statistics Yearbook, Part 2, 1990.

Also includes international organizations and actual data for Bulgaria, Czechoslovakia, Hungary, China.

Does not include exceptional financing and LCFAR.

Data derived from the “C” tables in the Balance of Payments Statistics Yearbook, Part 2, 1990.

Also includes international organizations and actual data for Bulgaria, Czechoslovakia, Hungary, China.

Does not include exceptional financing and LCFAR.

Despite the relatively small net sizes of Fund estimates, revisions made (mainly as actual data become available) to these estimates contribute quite significantly to revisions to global aggregates. This is illustrated in Table 67, which shows the contribution of various types of revisions between the first published and latest published figures for the three reference years 1986 through 1988. The table shows, for example, that the first-published figure (in the 1987 issue of Part 2) for the 1986 global capital account balance was $15.3 billion; that the revised balance (in the 1990 issue) was $18.8 billion; that the revision can be explained by various positive and negative revisions to underlying data; and that the net impact of replacing Fund estimates with reported data or revised Fund estimates is –$6.1 billion. The contributions of revisions to Fund estimates to first-published data for 1987 and 1988 are of a similar magnitude, about $6 billion each.

Table 67.Total Capital Account Flows and Discrepancies: Effects of Revisions, 1986–88(In billions of U.S. dollars; outflows ( – ))
198619871988
AssetsLiabilitiesNetAssetsLiabilitiesNetAssetsLiabilitiesNet
1. First-published figures1−784.5799.815.3−956.4979.322.9−802.5839.537.0
2. Revisions resulting from:
(1) Selected coverage changes214.4−2.112.3−7.218.911.74.3−5.8−1.5
(2) Other (“normal”) revisions2
(a) Revisions to data reported to the Fund−44.241.5−2.7−16.221.14.9−25.228.73.5
(b) Revisions to Fund estimates−7.21.1−6.1−7.91.8−6.1−0.26.86.6
Total revisions−37.040.53.5−31.341.810.5−21.129.78.6
3. Latest figures (1 + 2)3−821.5840.318.8−987.71,021.133.4−823.6869.245.6

Data derived from Table C-13, “Capital Account: Assets and Liabilities” in the 1987–89 issues of the Balance of Payments Statistics Yearbook, Part 2. They include small amounts of exceptional financing in the current account.

As defined in Appendix VIII.

Data are derived from Table C-13 in the Yearbook, Part 2, 1990.

Data derived from Table C-13, “Capital Account: Assets and Liabilities” in the 1987–89 issues of the Balance of Payments Statistics Yearbook, Part 2. They include small amounts of exceptional financing in the current account.

As defined in Appendix VIII.

Data are derived from Table C-13 in the Yearbook, Part 2, 1990.

Clearly, problems arise for global capital flow measurement from the lack of timely reporting and the need for the Fund to estimate missing components of these flows. For this reason the Working Party urges countries to compile and submit to the Fund capital account data, and subsequent revisions to these data, on a timely basis, to reduce the need for estimation by the Fund. The most significant nonreporters for which estimates are inserted by the Fund are Hong Kong and certain Middle Eastern countries. Also, a few countries with significant capital flows have been late in their reporting in recent years: Algeria, Cameroon, India, Libya, Oman, Saudi Arabia, and Brazil. The Fund should give high priority to obtaining adequate and timely reports from these countries.

The Hong Kong authorities do not compile a balance of payments statement (see Chapter 9), although data are published for certain international transactions. The Statistics Department used these data to make Part 2 entries through 1986, and for this reason Hong Kong is not classified as a nonreporter in Table 66. (However, since the department did not update its data beyond 1986, WEO-based estimates for Hong Kong are included in the “late reports” columns of Table 66 for 1987 through 1989.) The Hong Kong data make a significant contribution to “Asia not specified” in the Part 2 tables.

Investigations by the Working Party indicate that there is further scope to harmonize the WEO, area department, and Statistics Department data bases and to make some technical improvements to the process by which Fund estimates are incorporated into Part 2. Improvements in Part 2 data can be achieved through greater collaboration among staff in different departments of the Fund and by better articulation of area department and WEO data bases on international transactions. The Statistics Department and other departments of the Fund should aim to achieve a greater harmonization of available balance of payments statistics and should seek to improve estimates for countries that do not report or report late.

Effects of the U.S.S.R.’s Balance of Payments Data on the Global Capital Account Discrepancy

Balance of payments statistics for the former U.S.S.R. have not been reported to the Statistics Department and therefore are not included in the Yearbook, but balance of payments statistics for some U.S.S.R. partner countries are included. This difference in coverage contributes to the asymmetries in the global capital account. During the course of the Working Party’s research, the Fund and other international organizations obtained data on the U.S.S.R.’s external transactions in nonconvertible currencies with socialist countries and with nonsocialist countries as groups. Some of the socialist countries are covered in the Yearbook; among these are Bulgaria, the People’s Republic of China, Czechoslovakia, Hungary, Poland, Romania, and several others. Others are not included—notably Albania, Cuba, the former German Democratic Republic, and North Korea—and therefore they do not contribute to the asymmetry. In addition, data were obtained on the U.S.S.R.’s total external transactions in convertible currencies, which were assumed to be entirely with nonsocialist countries. Using a combination of these data, the Working Party was able to make adjustments to reduce the U.S.S.R.-related asymmetry in existing capital flow figures.

Adjustments to global capital account balances to remove existing asymmetries can be made in one of either two ways: (1) by entering into the data the U.S.S.R.’s transactions with countries for which balance of payments data already are included in the Yearbook; or (2) by excluding from Yearbook data the capital account transactions with the U.S.S.R. of those same countries.

Available data permit a mixture of these adjustments to fill this gap in the global statistics. The Working Party has added to Yearbook data the U.S.S.R.’s transactions in nonconvertible currencies with nonsocialist countries and those in convertible currencies with the rest of the world, and it has excluded from Yearbook data the separately available data on the transactions of Bulgaria, Czechoslovakia, Hungary, Poland, and Romania with the U.S.S.R.167

These capital account adjustments are, naturally, approximate and do not eliminate all sources of asymmetry. They succeed in building a capital flow statement for the U.S.S.R. vis-à-vis all nonsocialist countries and a number of socialist countries, but the coverage remains imbalanced as regards four countries for which data are included in the Yearbook: the People’s Republic of China, the Lao People’s Republic, Viet Nam, and Yugoslavia.

The capital account balance included in the Yearbook for countries covered by U.S.S.R.-related adjustments, the adjustments, and the adjusted capital account total are shown in Table 68. Over the four years the net adjustments average –$2.4 billion and thus somewhat reduce the global capital account imbalance in the Yearbook statistics. Inclusion of balance of payments data for the U.S.S.R. and successor states plainly is a matter of importance to the quality of the global accounts, and the Working Party recommends that these statistics be incorporated into the Yearbook as soon as possible.

Table 68.Capital Account Balances and Adjustments for U.S.S.R. and Selected Socialist Countries, 1986–89(In billions of U.S. dollars; outflows ( – ))
19861987198819891986–89

average
Capital account, total1
U.S.S.R.
Selected socialist countries21.1−1.4−3.0−2.6−1.5
Less: transactions of selected socialist countries with U.S.S.R.−0.3−1.3−2.0−3.3−1.7
Plus: transactions of U.S.S.R. with nonsocialist countries−4.39.6−4.11.8−4.1
Net adjustments−4.0−8.3−2.15.1−2.4
Adjusted capital account, total−2.9−9.8−5.12.5−3.8

Balance of Payments Statistics Yearbook, 1990.

Bulgaria, Czechoslovakia, Hungary, Poland, and Romania.

Balance of Payments Statistics Yearbook, 1990.

Bulgaria, Czechoslovakia, Hungary, Poland, and Romania.

Conclusions and Recommendations

Errors and misclassifications occur in global capital account recording because certain countries do not report to the Fund and others report with excessive delay. In some instances, estimates of missing data are made by Fund staff while, in others, data are completely absent from the global accounts. Improvements to Fund estimates included in Part 2 of the Yearbook could be achieved by more collaboration between staff in different departments and by better articulation of area department and WEO data bases. Estimates also can be made for economies, such as offshore financial centers and the U.S.S.R., that are completely missing from Part 2. Chapter 9 has illustrated how these estimates can be made for offshore financial centers. This chapter shows how new data for the U.S.S.R. helps to round out the global picture.

The Working Party recommends that:

  • Countries should compile and submit to the Fund their capital account data, and subsequent revisions to these data, on a timely basis.
  • The Fund should give high priority to obtaining adequate and timely reports from nonreporters and late reporters that have significant capital transactions.
  • The Statistics Department and other departments of the Fund should aim to achieve greater harmonization of available balance of payments data and should seek to improve estimates for countries that do not report or that report late.
  • Statistics for the U.S.S.R.—and its successor states—should be incorporated in the Yearbook.

    Other Resources Citing This Publication