In March, the IMF, the Bank for International Settlements (BIS), the Organization for Economic Cooperation and Development (OECD), and the World Bank announced the joint publication of the first of a new series of quarterly releases of statistics for 176 developing and transition countries (see IMF Survey, March 22, 1999, pages 90–91). In mid-June, the second quarterly release of the Joint BIS-IMF-OECD-World Bank Statistics on external debt was posted on the websites of the contributing organizations. In early July, an on-line data access facility will be included to allow users to download and manipulate time series for each of the data categories covered. This article provides guidance to users to help them interpret the time series presented on the website (see www.imf.org/external/pubs/pubs/per.htm).
The Joint Debt Statistics are an ongoing project of the Inter-Agency Task Force on Finance Statistics, chaired by the IMF, and including members from the BIS, the European Central Bank, Eurostat, the OECD, the United Nations (represented at recent meetings by the United Nations Conference on Trade and Development (UNCTAD)), and the World Bank. The Paris Club and the Commonwealth Secretariat have also participated in recent meetings.
The joint statistics are part of a series of initiatives by the IMF and other organizations to strengthen the international financial system through greater transparency, and the task force is studying further enhancements. In particular, the need for more timely, accurate, and comprehensive information on external debt and international reserves was stressed, including by the Group of Seven and the Interim Committee of the IMF at the political level; by the Committee on Global Financial Systems of the Group of 10 central banks and the Group of 22 Working Group on Transparency and Accountability at the technical level; and by the Institute of International Finance at the level of private market participants.
IMF work has identified weaknesses in existing external debt data—principally, incomplete coverage of sectors, debt instruments, and types of transactions—that limit the ability of policymakers and market participants to assess external vulnerabilities and price risks and to allocate capital across countries. Data on short-term debt and offshore financial centers present additional significant problems.
While the task force was in broad agreement that national debt compilers should be urged to strengthen efforts to remedy these shortcomings, it recognized that, in the short run, creditor source data should be exploited more fully. There was also a broadly shared conviction not only that data should be meaningful and accurate, but that compilers should also explain their methodology and sources. The joint debt statistics attempt to fill these gaps.
Hyperlinking. Labels identifying each of the time series covered are hyperlinked from the joint website to information on their methodological characteristics and sources.
Sources. The joint debt statistics are derived mainly from creditor and market sources. For example, data on borrowing from banks are from creditor positions reported by banks and other financial institutions to the BIS; data on trade credits are collected by the OECD from credit guaranty agencies in member countries; and data on securities are compiled by the BIS primarily from commercial records. Information on Brady bonds is collected by the World Bank from national debt agencies—and not published elsewhere. Similarly, the data on securities positions with a maturity of one year are not published elsewhere.
Timeliness. Data presented in the joint statistics range from two months for securities to nine months for bilateral loans, but, for now, the quarterly releases are synchronized with the publication of the BIS banking statistics, which constitute the principal input into the joint debt statistics and are released five and a half months following the reference date.
Residency principle. Virtually all the data included in the joint statistics are based on the residency principle, which, from an analytical point of view, offers the advantage of facilitating their use in conjunction with balance of payments data. However, domestically issued securities—such as large amounts of securities issued by the Russian Treasury—acquired by nonresidents, are covered by the joint statistics only to the extent that they are acquired by BIS-reporting banks. An additional shortcoming is the assumption that all internationally issued securities are held by nonresidents of the debtor country.
Short-term banking data. The short-term banking data from the BIS’s consolidated banking statistics, as well as securities positions, are presented on a residual one-year basis, instead of an original maturity basis. This may be helpful for assessing countries’ external vulnerability.
Off-balance-sheet items and offsetting financial assets. Two important issues that have complicated the analysis of debt data are off-balance-sheet items and the impact of offsetting financial assets relating to the concepts of external vulnerability and “net” debt. Offsetting assets are addressed, in part, by the inclusion of information on international reserve assets in the joint statistics. The external debt data presented here and in most other publications are not a substitute for data on the International Investment Position, which, based on the IMF’s Balance of Payments Manual (Fifth Edition), presents the complete balance sheet of the stock of external financial assets and liabilities. The IMF’s Special Data Dissemination Standard recognizes the importance of the International Investment Position by prescribing the dissemination of annual data for it and encouraging quarterly data.
The joint statistics do not provide information on off-balance-sheet items—with some exceptions for trustee business—such as derivative financial instruments or guarantees, which may alter the extent of the external vulnerability of countries. The compilation of statistics on off-balance-sheet items is being studied by the Inter-Agency Task Force on Finance Statistics. Other “on-balance-sheet” instruments—financial leases, subordinated loans, and intercompany loans other than interbank positions—are covered only for positions vis-à-vis BIS reporting banks by the joint debt statistics and continue to constitute significant gaps.
Developed country data. Currently, the joint debt statistics do not present data for developed economies, which might reinforce the erroneous notion that external debt issues concern developing nations and emerging markets only. Discussions are under way to expand the coverage of the joint debt statistics to include all countries. Also, the joint debt statistics devote a special section to offshore financial centers.
Nonbank trade credits. The data on nonbank trade credits cover official and officially guaranteed credit only, which, depending on the type of country for which the data are reported, may underestimate the coverage more or less significantly. Similarly, to improve the timeliness of the data, the multilateral category covers IMF and World Bank credits only—whose effect on individual country data may vary significantly. Improvements in this area are under discussion.
Source comparisons. Comparisons between external debt data based on debtor and creditor sources show differences that are more or less significant for individual countries. Some of the differences are related to shortcomings of the debtor source data, but creditor and market source data are also subject to shortcomings.
While the joint debt statistics add some value for analysts, the data essentially provide an overview of important debt categories for the countries concerned. Significant gaps and overlaps remain, which explains why the contributing agencies have chosen not to present total debt aggregates as part of this publication.
Photo Credits: Denio Zara and Padraic Hughes for the IMF.