Key Issues in Recording of Remittances in the Balance of Payments and Recent Improvements in Concepts and Definitions International Technical Meeting on Remittances Statistics The World Bank Washington, D.C., June 11-12, 2009

2 Overview Background on the decision to improve remittance statistics New concepts and definitions Recent work undertaken by the IMF in remittances Data issues and classification problems

3 Current Data on Remittances Recent Growth of Remittance Flows Remittance receipts exceed exports of goods and services in some economies Impact of rising migration, labor mobility, liberal financial markets, and improved data Evidence that data on remittances are less reliable than many other items in BOP accounts

4 Current Data on Remittances Defined as Compensation of Employees and Workers’ Remittances Global level, remittance receipts has exceeded remittance payments consistently from Gap reflects incomplete coverage, inaccurate and inconsistent recording; underreporting possible Problems related to nature of remittances flows Remittances-related items in BPM5 made identification of remittances difficult

5 Calls for Improvements in Remittances Data Good quality data highlighted by G8 Heads of State in 2004 Called for improvements in both definitions of key aggregates and estimation techniques Called for a World Bank-led working group to improve data 2005 conference agreed to improve remittance data Simply clarify, and expand definitions of remittance-related items Use BOP framework for collecting reporting and improving statistics Improve guidance for collecting and compiling remittance statistics

6 Work on New Definitions UN Technical Sub-Group on Movement of Persons developed the framework Developed the new and improved definitions Introduced several new supplementary items to the BOP framework Expanded definition of remittance-related to meet users’ needs The TSG reported its proposals to BOPCOM and the AEG

7 Economic Concept of Remittances BPM6 defines economic concept of remittances, standard components and supplementary items Remittance represent household income from foreign economies―cash and noncash BOP framework is broader than movement of persons―not based on migration or family ties BPM6 definition linked to the residency concept Remittance linked to compensation of employees Remittances linked to personal transfers

8 Supplementary Measures of Remittances New standards identify three supplementary items related to remittances Personal remittances Total remittances Total remittances and transfers to NPISH Total remittances and transfers to NPISH approximate economic definition

9 Guidance on Remittances Compilation Compilation guidance on remittances undertaken by the Luxembourg Group Remittance Compilation Guide (RCG) developed during The IMF coordinated and edited text of RCG RCG summarizes concepts and provides practical compilation guidance RCG identifies the main compilation methods and data sources and their strengths and weaknesses Mainly ITRS, MTOs, Household Surveys, Models, etc.

10 Promotion of New Guidance BPM6 Compilation Guide and BPM6 Textbook will provide more guidance Work on BPM6 Compilation Guide to begin in 2009 IMF’s support for dissemination of remittance data in BOPSY including supplementary data Need improved metadata with BOPSY or other remittance website

11 Compiling Remittances Data BPM6 brings more clarity in concepts and definitions-facilitate compilation and analysis BPM6 more oriented to users’ needs―standard and supplementary measures provide more information Users can compile different measures beyond those in BPM6 for analysis Compilation problems will be encountered

12 Remaining Challenges in Compiling Remittances Data Countries encounter different problems and apply different solutions Data weaknesses and omissions normally result from lack of access to source data Heterogeneous transactions by individuals in small amounts pose challenges Identification of all possible sources will present challenges