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

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

Statistics Department 3 Overview (continued) 3. Data accuracy and global discrepancies Metadata Global discrepancies 4Problems in extracting data from the balance of payments framework See IMF Paper

Statistics Department 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.

Statistics Department 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.

Statistics Department 6 DataData 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’ remittances79.5 billion -- inflows

Statistics Department 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.

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

Statistics Department 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.

Statistics Department 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 (?)

Statistics Department 11 Compensation of Employees and Workers’ Remittances, 1997 to 2003 (In millions of U.S. dollars) __________________________________________________________________________________________________ Year __________________________________________________________________________________________________ Compensation of employees Credit Debit Global discrepancies _________________________________________________________________________________________________ Workers’ discrepancies Credit Debit Global discrepancies ________________________________________________________________________________________________ Sum of compensation of employees and workers’ remittances Credit Debit Global discrepancies _________________________________________________________________________________________________ Source: Balance of Payments Statistics Yearbook 2004, Part 2.

Statistics Department 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

Statistics Department 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