1. CMFB Task Force on Consistency between National Accounts and Balance of Payments Phase 2 – Final Report
Bertrand Pluyaud
Working Group on Balance of Payments
Luxembourg – April 25-26, 2018

2. Mandate of the Task Force
The aim of the TF is to examine the reasons of the discrepancies and make recommendations to reduce avoidable differences between NA and BoP.
The TF will not address the discrepancies due to different revision dates.

3. Mandate of the Task Force
The investigation is organized in two phases:
Phase 1 : consistency in the non financial accounts of NA and the current account and capital account of the BoP, with particular emphasis to goods and services. In addition, the TF would also work on asymmetries on merchanting. 
Phase 2 : focus on differences in other part of non-financial statistics, like primary incomes, and on differences between financial accounts and balances of NA and the financial account and international investment position of BoP.

4. Organization of Phase2 The aim of the TF in Phase 2 has been twofold:
first, to provide a technical assessment of the STC Work Programme to achieve the full BOP-NA consistency;
second, to examine the reasons for the discrepancies between NA and BOP due to divergences in the manuals (i.e., BPM6, ESA2010 and 2008 SNA) or in their possible interpretation and make recommendations to reduce avoidable differences.

5. Assessment of the STC WP communicated to the CMFB in June 2017
“The STC WP builds on a comprehensive assessment of the discrepancies between NA and BOP that are based on a stock-taking exercise in which all European Union (EU) countries participated, and has been submitted to a written procedure within the STC. Owing to a close cooperation between the European Central Bank (ECB) and the CMFB TF, actions of the STC Working Groups have been coordinated so far (distinct fields of investigation in 2016, but using similar classifications for the causes for discrepancies), which make it easy for the STC WP to coexist with the TF own work”.

6. Assessment of the STC WP communicated to the CMFB in June 2017
“There is still the need to assess the discrepancies in secondary income and capital accounts. As the results of the last Eurostat BOP/ROW survey showed that the extent of the related discrepancies appear rather limited and related to country-specific issues, a direct consultation of these countries could be sufficient to provide the information required to enhance the STC WP.”

7. Assessment of the STC WP communicated to the CMFB in June 2017
“The STC WP identified different steps to reconcile NA and BOP domains, with some discrepancies to be reduced by March 2017 (“quick-wins”) and other by September 2018 (“short to medium term” issues) or September 2019 (“structural” issues). […] Although this staged strategy is welcome, it appears necessary to reassess it, at least for the quick wins, which should have already been implemented, but so far only approximately 1/3 was accomplished.”

8. Assessment of the STC WP communicated to the CMFB in June 2017
“concerning the structural issues, the deadline was set to 2019 bearing in mind that this would likely be the year for the next benchmark revision. […] given that the next benchmark revision could be postponed to a later year in some countries, it seems appropriate to abandon the reference deadline of September 2019 for a more general goal referring to the “next national benchmark revision”.”
“At the same time, given the importance of arising awareness about the need to avoid NA-BOP discrepancies under SNA 2008/ESA2010 and BPM6 framework, the TF encourages a clear wording in this regard, in the sense that NA and BOP should be fully aligned by the next benchmark revision.”

9. TF investigations during Phase 2
Investigations on the reasons for the discrepancies between NA and BOP due to divergences in the manuals (i.e., BPM6, ESA2010 and 2008 SNA) or in their possible interpretation.
Based on the discrepancies identified through previous surveys.
Specific recommendations on the identified issues proposed in the Final Report for Phase 2, along with more general recommendations.

10. Thematic Issues Identified
Financial Derivatives
Investment funds shares
Other accounts payable/receivable from banking statistics
Eurobank notes and coins
Loans and deposits: borderline cases and cash/accrual principles
EU funds registering
Equity in the IMF
Classification of instruments as loans, deposits and debt securities
Social benefits and contributions
Other current transfers

11. Design of the “individual reports” on thematic issues identified
Methodological framework according to ESA 2010 and BPM6.
In-depth analysis of the discrepancies found in this issue by country.
Recommendations to Reduce or Eliminate Discrepancies.

12. General considerations on the investigations led during Phase 2
The findings by the TF members following their investigations on the thematic issues raised in the IRs correspond in some cases to different estimation methods and compilation practices rather than heterogeneous interpretation of the manuals.
While the TF work focused on methodology in its second phase, mainly to avoid duplicating efforts with other initiatives, the role of different publication and revision practices and the lack of coordination on the use of sources and methods should not be downplayed.

13. Main recommendations of the Phase 2 report
Coordination efforts of compilers should be pursued, with the support of Eurostat and the ECB. Data sharing among compilers should be encouraged, when possible, in accordance with confidentiality constraints related in particular to granular data.
In the long-term, a full convergence of the manuals should be achieved. Exact wording of texts would be welcome in order to avoid different interpretations. For this purpose, additional coordination in the drafting of the new manuals (and the institutions taking care of this update) is of utmost importance.
In the short-term, a clearer guidance at the European level on the interpretation of the manuals, implying close cooperation between the ECB, Eurostat and the national compilers, is welcome. In this regard, the manuals (BPM6, ESA2010 or 2008 SNA) providing the most comprehensive guidance should be considered the reference, but a case-by-case analysis should be followed.

14. Conclusions of the CMFB
Excerpt from the final minutes of the CFMB meeting of 1-2 February 2018:
“in principle, the Committee agreed to the general recommendations. For the 2019 benchmark revision, full alignment should be achieved at least for the headline indicators. Full consistency at granular level remains the objective, however, over the medium term. ESS and ESCB substructures should take up the technical issues and any remaining methodological interpretation issue. A CMFB follow-up questionnaire will be carried out in the course of October 2018.”

15. Annex - Task Force composition for Phase 2