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Remittances Compilation practices and BPM6 Implementation Skopje, 2 -5 October 2013 Majela Collaku, Expert, Bank of Albania Bank of Albania.

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Presentation on theme: "Remittances Compilation practices and BPM6 Implementation Skopje, 2 -5 October 2013 Majela Collaku, Expert, Bank of Albania Bank of Albania."— Presentation transcript:

1 Remittances Compilation practices and BPM6 Implementation Skopje, 2 -5 October 2013 Majela Collaku, Expert, Bank of Albania Bank of Albania

2 General Characteristics Area: km 2 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

3 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

4 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 Compilation Methodology Skopje, 2 -5 October 2013

5 Residual Model Cash remittances (unknown) (CR) Cash exports* (CE)Cash imports** (CI) Cash travel (credit)* (CTC)Cash travel (debit)* (CTD) Other cash exports in services * (OCE)Other cash import in services * (OCI) Other inflows of FX*** (OIFX)Other outflows of FX*** (OOFX) 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.

6 Data Sources Custom data Surveys (travel, smuggling, trade credits). Banking system / MTO Foreign exchange bureaus data Estimations Skopje, 2 -5 October 2013

7 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

8 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 Meanwhile a new pilot survey on migrants is introduced in 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

9 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

10 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

11 Remittances-new concepts and definitions (cont’ed) Skopje, 2 -5 October 2013

12 “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 Remittances-new concepts and definitions (cont’ed)

13 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

14 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 BPM6 presentation ( Million of Euros) Personal Transfers (BPM6) Personal Remittances (BPM6) Total Remittances (BPM6) BPM5 presentation ( Million of Euros) Worker’s remittances Skopje, 2 -5 October 2013

15 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

16 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

17 THANK YOU FOR YOUR ATTENTION! Skopje, 2 -5 October 2013


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