- International Monetary Fund
- Published Date:
- March 1988
The application of the residence criterion gives results in a few cases which might require special treatment or a special presentation of the measure of external debt.
The problems arise mainly in connection with a) offshore banking units1; b) countries sponsoring “flag of convenience” or “brass plate” companies2; c) bank deposits owned by nationals living abroad (emigrants’ deposits) but used in part or totally for domestic expenditure; d) foreign currency deposits of residents; and e) accounts owned jointly by, or with joint access of, national and foreign donor governments. This appendix sets out the main issues involved in each case and some of the practices currently used by reporting countries concerning the inclusion of these items in external debt.
A. Countries sponsoring offshore banking units
A major reason for the difficulty in classifying the liabilities of offshore banking units in external debt statistics is the varying relationships of these units with the host economy. Some offshore banks have very limited financial relationships with the host country and banks may, in such countries, be limited by law almost entirely to dealing with non-residents; others may have significant transactions with residents, especially with local banks and the government. Moreover, the relationship of the host authorities to offshore banking units differs from case to case. One example is where the host monetary authorities act as lender of last resort; however, this responsibility will usually lie with the government of the country in which the parent bank is located. Authorities may treat offshore banking units as if they were non-residents in spite of their physical residency, in order to provide better data for monetary analysis where these units have insignificant domestic transactions. Also, where countries choose to hold substantial foreign exchange reserves with offshore banking units, inclusion of the assets and liabilities of offshore banking units in the economy would result in a decline in official foreign exchange reserves unless the country redefined its official reserves to include the foreign exchange holdings of banks.
In the case of these offshore units, the figures on their gross liabilities are likely to be misleading unless accompanied by information on their foreign assets.
Similar considerations might apply to portions of the external bank debt of industrial countries, where banks are engaged in largely extra-territorial deposit-taking and lending. However, in industrial countries, banks dealing in the international market also have complex financial relationships with the domestic economy, and the authorities usually assume a degree of responsibility, at least as lender of last resort, for the external liabilities of at least nationally-owned banks. It is therefore more difficult to assess which assets, or parts of assets, should be shown separately for industrial countries’ gross external bank liabilities. In these cases, the banks should be, and are, treated as residents.
B. Countries sponsoring “flag of convenience” or “brass plate” companies
The external debt of countries sponsoring “flag of convenience” or “brass plate” companies (other than banks) gives rise to the same considerations as for offshore centres. However, the problems become even more complex, owing to the lack of symmetry between the asset and liability sides of the balance sheets. Under present balance-of-payments (BOP) conventions, such companies are treated as resident. However, they are omitted from the debt statistics of most of the countries sponsoring such companies.
A similar problem occurs for some industrial and developing countries which have established free-trade or “export-processing” zones. The companies in these zones, like “flag of convenience” or “brass plate” companies, are exempted from the country’s normal regulations, with customs duties not applied to their imports but levied on transactions between the free-trade zone and the rest of the country. The BOP methodology, with its adherence to the residence criterion, includes any statistics concerning the free-trade zone in the statistics of the country within whose territory the zone lies, whether or not the country itself treats it as a foreign entity.
C. Workers’ remittances and emigrants’ deposits
Classification difficulties also arise in connection with certain specific deposits, primarily deposits in domestic and foreign currencies by non-residents.
The basic residence criterion in the BOP methodology, e.g., the location of the general interest of the depositor, does not in practice give an unequivocal guide to the residence of some depositors, and an arbitrary twelve-month rule for distinguishing between residents and non-residents has been used.
Several countries do not include deposits with domestic banks by nationals living abroad (workers’ remittances and emigrants’ deposits, deposits by sailors) in their measure of external debt, regardless of whether they are in foreign or domestic currency and regardless of the period spent abroad. In many cases, these deposits show the characteristics of domestic deposits, and withdrawals appear to be mostly or entirely for domestic use, e.g., members of the non-resident’s family are often authorised to use these deposits. In these cases the foreign currency deposit is maintained as a hedge against depreciation. From the macro-economic perspective of the country concerned, when these accounts are used by local designees, they should probably be viewed as part of the monetary aggregates, since they influence domestic expenditure decisions. However, under the residence criterion, these deposits are formally part of the external debt, and a change in the “deposit” behaviour of nationals living abroad is a potential drain on the foreign exchange holdings of the country. Depending on the foreign exchange regulations, the change could result in a decline in new deposits and/or withdrawal of present deposits. The current Balance of Payments Manual (Fourth Edition) does not address the question of access by residents.
There are cases where strict adherence to the residence criterion is difficult or not strictly correct. Some countries have practical problems in determining whether the “emigrant” is still abroad, since account-holders are allowed to keep their special “emigrant’s” account once it has been established. For these countries, emigrants’ deposits are held by both residents and non-residents in unknown proportions. Even when residence is known, strict adherence to the one-year rule of thumb can be questioned in cases where, for example, sailors are away for more than twelve months on a ship registered under a flag other than that of their home country. The financial interests of the sailors are presumably still in the home countries and so their deposits should be excluded from the external debt measures. This is also the case in countries in which the emigrants’ deposits behave in the same manner as domestic deposits.
D. Deposits in foreign currencies by residents
According to the residence criterion, deposits in foreign currencies by residents should not be included in external debt. However, the influence these deposits could have on the foreign exchange holdings of countries make them interesting for analytical purposes and information concerning them constitutes a useful complement to external debt data.
E. Joint accounts of donor and local governments (counterpart funds)
There are a number of instances in which donor governments provide commodity aid which is sold in the market and generates local currency balances. In certain cases these balances are deposited with the central bank under the joint control of the donor and recipient governments. Such balances, often called counterpart funds, present some problems with respect to their classification as external debt or restricted domestic deposits. The BOP treats the original transfer of the goods as a loan unless there is clear evidence that the transaction is in fact an unrequited transfer. It is normal practice to treat the balance with the banking system as neither a foreign liability to the donor government nor a deposit of the recipient government as long as there is joint control; the balances, where important, should be classified separately.
This is of prime interest for offshore banking centres where the balances of the offshore banking units are large compared with the size of the host economy.
Countries sponsoring “flag of convenience” or “brass plate” companies are countries with favourable tax rules and regulations attracting part or whole companies having their main business outside the country. The term “flag of convenience” comes from the fact that these companies were originally mainly in shipping, but they are now often engaged in production or services.
1. Definition of Residents
52. The residents of an economy comprise the general government, individuals, private nonprofit bodies serving individuals, and enterprises, all defined in terms of their relationship to the territory of that economy. Included with the territory of an economy are its territorial seas and those international waters beyond its territorial waters over which the economy has or claims to have exclusive jurisdiction; overseas territories and possessions may or may not be regarded as separate economies. (Paragraph numbers are the numbers in the BOP Manual.)
53. The concept of residence underlying the definitions and rules adopted for this Manual is intended to be essentially the same concept that is used in the United Nations’ A System of National Accounts (SNA). The following discussion concentrates on elaborating the aspects of residence that are especially pertinent in a balance of payments context; in particular, it defines the residence of entities in terms of the sectors or parts thereof that are relevant in applying the classification scheme recommended in Chapter 8. Any differences from the wording of the corresponding passages in the SNA should not be taken as recommending a different coverage for the residents of an economy.
2. General Government
54. The general government agencies that are residents of an economy include all departments, establishments, and bodies of its central, state, and local governments located in its territory and the embassies, consulates, military establishments, and other entities of its general government located elsewhere.
55. The general government of an economy covers all agencies of the public authorities not classified elsewhere: a) government departments, offices, and other bodies, irrespective of whether they are covered in ordinary or extraordinary budgets, or in extrabudgetary funds, that engage in administration, defense, and regulation of the public order, promotion of economic growth and welfare and technological development, provision of education, health, cultural, recreational, and other social and community services free of charge or at sales prices that do not fully cover their costs of production; b) other non-profit organisations primarily serving government bodies themselves; c) social security arrangements for large sections of the community imposed, controlled, or financed by the government, including voluntary social security arrangements for certain sections of the community and pension funds that are considered to be part of the public social security schemes; d) unincorporated government enterprises that mainly produce goods and services to the public, but that operate on a small scale; and e) public saving and lending bodies that are financially integrated with a government or that lack the authority to acquire financial assets or incur liabilities in the capital market.
56. Embassies, consulates, military establishments, and other entities of a foreign general government are to be considered as extraterritorial by the economy in which they are physically located. The construction of embassies, structures and other works in extraterritorial enclaves by resident producers of the economy in which the enclaves are located is part of the production and exports of that economy. Wages and salaries paid to locally recruited staff of foreign diplomatic, military, and other establishments are payments to residents of the economy in which these establishments are located.
57. International bodies that do not qualify as enterprises (see paragraph 63), comprising most political, administrative, economic, social, or financial institutions in which the members are governments, form part of foreign general government for balance-of-payments purposes. Such bodies are not considered residents of any national economy, including that in which they are located or conduct their affairs. The employees of these bodies are, nevertheless, residents of a national economy, specifically, of the economy in which they are expected to have their abode for one year or more. In most cases, that economy will be the one in which the given international unit is located or in which the employees are engaged in technical assistance, peace keeping, or other activities on behalf of the international organisation. It follows that the wages and salaries paid by the international organisations to their own employees are payments to residents of the economy in which those employees are stationed for one year or more.
58. In contrast, enterprises that are owned jointly by two or more governments are not treated as international bodies but are, like other enterprises, considered to be residents of the economies on whose territories they operate.
59. The concept of residence adopted for individuals is designed to encompass all persons who may be expected to consume goods and services, participate in production, or engage in other economic activities in the territory of an economy on other than a temporary basis. These are the persons whose general centre of interest is considered to rest in the given economy.
60. In particular, the resident individuals of an economy are considered to comprise all persons living within the territory of the given economy except the following:
a) Visitors (tourists) i.e., persons in the given economy for less than one year, specifically for recreation or holiday, medical care, religious observances, family matters, participation in international sports events and conferences or other meetings, and study tours or other student programmes;
b) Crew members of vessels or aircraft who do not live in the given economy but who are stopping off or laying over there;
c) Commercial travellers who are to be in the given economy for less than one year and employees of non-resident enterprises who have come to the economy for less than one year for the purpose of installing machinery or equipment purchased from their employer;
d) Employees of foreign governments and international bodies who are on a mission of less than one year in duration;
e) Official diplomatic and consular representatives, members of the armed forces, and other government personnel of a foreign economy (together with their dependents) who are stationed in the given economy;
f) Seasonal workers, i.e., persons who are, and will be, in the given economy explicitly for the purpose of seasonal employment only.
61. The categories of individual enumerated above are to be considered residents of the economy in which they normally live, that is, have their general centre of interest. Border workers -persons who cross the border between two economies daily, or slightly less frequently but regularly, because they work in one economy but have their abode in the other economy - are residents of the economy in which they have their abode, not of the economy in which they are employed.
4. Private Non-profit Bodies Serving Individuals
62. All private non-profit bodies classed as serving individuals are resident economic entities of the economy in whose territory the bodies are located or conduct their affairs. Such bodies are not entirely, or mainly, financed and controlled by organs of general government, and they furnish educational, health, cultural, recreational, and other social and community services to individuals either free of charge or at sales prices that do not fully cover their costs of production.
a) General definition
63. Resident enterprises are the actual or notional units that engage in i) production of goods and services on the territory of a given economy, ii) transactions in land located within the territory of that economy, or iii) transactions in leases, rights, concessions, patents, copyrights, and similar non-financial intangible assets issued by the government of that economy.
b) Types of enterprise
64. Enterprises are either privately owned and/or controlled or publicly owned and/or controlled and include both monetary and non-monetary institutions.
65. Private enterprises include i) incorporated enterprises, e.g., corporations, joint stock companies, limited liability partnerships, co-operatives, or other forms of business association recognised as independent legal entities by virtue of registration under company and similar acts, laws, or regulations; ii) unincorporated enterprises, including those owned by non-residents; and iii) non-profit institutions and associations mainly serving business enterprises and entirely, or mainly, financed and controlled by them. The private monetary institutions are deposit money banks, i.e., banks having liabilities in the form of deposits payable on demand that are transferable by cheque or otherwise usable in making payments; such banks may alternatively be characterised as the commercial institutions whose demand deposit liabilities are important or form a large proportion of their total liabilities.
66. Public enterprises are i) public corporations (incorporated by virtue of company acts or other public acts, special legislation, or administrative regulations) that hold and manage the financial assets and liabilities, as well as the tangible and non-financial intangible assets, involved in their business, and ii) large, unincorporated government enterprises; both types sell to the public most of the goods or services they produce. The principal public monetary institution is usually the central bank, which is the publicly owned and/or controlled monetary authority; it issues currency and sometimes coin, and is commonly the chief holder of the international reserves of the country. The central bank also has liabilities in the form of the demand deposits of other banks and often of the government. Other public monetary institutions are deposit money banks.
6. Special Implications of Definition of an Enterprise
a) Break-up of single entities
67. The general rule governing the determination of the residence of enterprises (see paragraph 63) often makes it necessary to divide a single legal entity (e.g., a parent company operating in one economy and its unincorporated branch operating in another economy) or a single establishment (e.g., a pipeline or railway spanning the territory of two or more economies) into two or more separate enterprises. Each of these enterprises is to be regarded as a resident of the economy on whose territory its operations are carried out. The costs and proceeds of the separate units are to be calculated as if the units bought and sold at market prices, even though some, most, or all of what they receive from or transfer to the other units of the complex of which they form a part may be omitted from their records or entered only at a nominal value. The balance of payments entries should reflect the allocation to each member of the complex of an appropriate share of any common operating costs, including head office expenses and charges in respect of mobile equipment. The net income of the units should be shown as accruing to the economy where the head office is located.
b) Mobile equipment
68. Situations involving mobile equipment - for instance, aircraft, ships, highway and railway rolling stock, fishing vessels, and gas and oil drilling rigs - often seem to present problems of residence. These problems, however, can be partly illusory; it must be kept in mind that it is not the residence of the mobile equipment that is to be decided but rather the residence of the enterprise that employs the equipment in its productive activities. The resident status of all enterprises is in fact to be governed by the same rule (see paragraph 63), whether the capital equipment that they use is immovable or mobile; an enterprise is a resident of the economy on whose territory it engages in production.
69. Mobile equipment thus presents a problem of principle - in the sense that the residence of the enterprise operating it cannot logically be inferred from the above rule - only when it is used in production outside the territory of any national economy, i.e., in international waters or air space. Mobile equipment that merely moves between the territories of two or more economies should, in accordance with the above rule, be regarded as being operated by a separate enterprise in each of the economies where it is used in production. As a practical matter, however, equipment that moves frequently between the territories of various economies also poses a problem very similar to that of equipment used in international waters or air space. Therefore, a supplementary rule of thumb to deal with both of these cases is recommended in this Manual. This rule is that mobile equipment that is operated on more than one national territory during the course of the year, or outside any national territory, is to be attributed to a single enterprise with a determinate residence. That enterprise is considered to be the operator for aircraft, ships, highway and railway rolling stock, fishing vessels, gas and oil drilling rigs, or other mobile equipment that is not used for production primarily on the territory of any one economy for as much as a year or is used in international waters or air space.
70. In the decision on the residence of an enterprise conceived in accordance with the above rule, attention should be given to such attributes as the flag of registration of the equipment, the economy of incorporation of the company directing its operations, the residence of the owners of that company, and for an unincorporated enterprise the residence of the entity responsible for its operations. In addition, such circumstances as the fact that the equipment is subject to the laws, regulations, and protection of a particular economy, or that it is linked more closely to one economy than to others, could if necessary be taken into account.
71. In rare instances, considerations such as those in the preceding paragraph could point to more than one economy as being the residence of the enterprise operating, say, a transportation system or fishing fleet. In the case of an enterprise of that sort which is jointly organised and owned by residents of more than one economy, its transactions should be attributed to enterprises in the economies of each of its owners in proportion to the owner’s share in the financial capital of the joint enterprise.
c) Residence of enterprises engaged in installation
72. Without exception, a transaction should be attributed to the economy of the principal on whose behalf a transaction is undertaken and not to the economy of the agent representing or acting on behalf of that principal. However, the services rendered by the agent to the enterprise he represents should be attributed to the economy of which the agent is a resident.
73. Problems of defining the residence of an enterprise are encountered where employees of a resident enterprise of an economy go abroad in order to install machinery or equipment that the enterprise has sold to non-residents. In these instances, the installation services should be considered to be services that have been provided by the resident enterprise to a non-resident if the work of installation is carried out entirely, or primarily, by the employees in question and they complete the installation in less than one year. However, if a significant portion of the work of installation is performed by residents of the economy where the machinery or equipment is installed, the work of installation is likely to be substantial and will probably take a significant time to complete. Such services should then, in principle, be attributed to an enterprise resident in that economy.
e) Leased goods
74. The general rule determining the residence of an enterprise applies whether it is using its own or leased capital goods. If such goods have been obtained under a financial leasing arrangement, the rule for determining the attribution of ownership of those goods should also be consulted (see paragraph 217).
1. The Nature of Countries’ Liabilities to the Fund
Members of the Fund may draw on the Fund’s ordinary and borrowed resources to meet their balance-of-payments needs. In addition, members have access to resources that have been administered by the Fund on behalf of its members. When a member uses the Fund’s ordinary and borrowed resources, it uses its currency to purchase currencies of other member countries or SDRs held by the General Resources Account of the Fund. Access to administered resources has taken the form of direct loans. Resources under the new Structural Adjustment Facility, which is based on the repayments of Trust Fund Loans, is also provided in the form of direct loans; however, these loans are included under the use of Fund resources.
The financial resources of the Fund are made available through a range of facilities which differ mainly in regard to the type of underlying balance-of-payments problem they seek to address and the degree of conditionality attached to them. Purchases of Fund resources generally take place through a stand-by arrangement under the credit tranche policy which is designed to provide short-term balance of payments assistance, or under an extended Fund facility which is designed to take account of balance-of-payments difficulties that arise from problems that can only be corrected over a longer period.
Members of the Fund may draw on the Fund’s ordinary resources under “tranche” policies, with purchase of up to 100 per cent of their quota, or the extended Fund facility with purchase of up to 165 per cent of their quota (including the first credit tranche). In addition, there are two facilities for special purposes - the facility for compensatory financing of export fluctuations (established in 1963 and expanded in coverage in 1981 to compensate for fluctuations in cereal import costs) and the buffer stock financing facility (established in 1969). Members may also make use of temporary facilities established by the Fund with borrowed resources. These have included the oil facility, for 1974 and 1975, to help members meet the increased cost of imports of petroleum, and a supplementary financing facility which was established in 1978, and replaced by a policy of enlarged access to the Fund’s resources in 1981, to enable the Fund to provide supplementary financing in conjunction with the use of the Fund’s ordinary resources to all members facing serious payments imbalances that are large in relation to their quotas.
The amount of assistance under the enlarged access policy is determined according to guidelines adopted by the Fund from time to time. Present guidelines specify limits of 90-110 per cent of quota annually or 270-330 per cent over a three year period. At the same time, a limit of 400-440 per cent of quota (net of scheduled repurchases), applies on the cumulative net use of both ordinary and borrowed resources. Drawings under the special facilities are not included under this cumulative limit and members can, under these facilities, purchase an additional 45 per cent of quota in the case of the buffer stock financing facility, and 105 per cent of quota in the case of the compensatory financing facility.
Within a prescribed time, a member must reverse the transaction by buying back its own currency with SDRs or currencies specified by the Fund. Repurchases of ordinary resources under stand-by arrangements are required to be made within three to five years after the date of purchase, and within four and a half to ten years under the extended Fund facility. Resources used under the supplementary financing facility and enlarged access policy have to be repurchased within three and a half to seven years. In addition, a member is normally expected to repurchase earlier if its balance of payments and reserve position improve. The expectation of repurchase is based on the level of a members’ gross external reserves and on the changes in these reserves in the most recent six-month period. It amounts to 1.5 per cent of gross reserves plus (or minus) 5 per cent of the increase (or decrease) of gross reserves in the latest six-month period for which data are available. However, the Fund does not expect any one repurchase to be in excess of 4 per cent of the members’ gross reserves. In addition, repurchases are not expected to exceed 10 per cent of gross reserves during the year or to reduce gross reserves below a level of 250 per cent of quota.
The Fund levies charges, which are payable periodically, on the use of its resources. A service charge of 0.5 per cent of the amount of purchase is payable on each purchase other than reserve tranche purchases. The Fund also charges a stand-by fee of 0.25 per cent payable at the beginning of each twelve month period on the undrawn balance of a stand-by or extended arrangement. The fee is refunded proportionately to purchases made under the arrangement. The rate of charge for purchases in the credit tranches and under the extended Fund facility, the compensatory financing facility, and the buffer stock financing facility is determined at the beginning of each financial year on the basis of the estimated income and expenses of the Fund during the year and a target amount of net income; the rate of charge effective on January 16th 1986 was 7.87 per cent a year. Finally, there are separate charges for the use of the supplementary financing facility and of borrowed resources under the enlarged access policy, under which charges are equal to the cost of borrowing by the Fund plus a margin of 0.2-0.325 per cent a year.
The Structural Adjustment Facility (SAF) was established to provide balance-of-payments assistance to low-income developing countries on concessional terms. The SDR 2.7 billion in Trust Fund reflows (see below) expected to become available during 1985-91 are made available to eligible members at an interest rate of half of 1 per cent and provide for a five year grace period, with semi-annual repayments to be made over the subsequent five years.
With the exception of reserve tranche purchases, which comprise the use by a member of its own resources, drawings on the Fund’s own resources, including resources under the SAF, and on the facilities financed by borrowing resources are accounted in Fund statistics as “use of Fund credit”.
Members also had access through the Fund to resources that are administered by the Fund on behalf of its members. These have taken the form of direct loans denominated in SDRs and are accounted in the Fund’s accounts as “Trust Fund loans”.
a) The use of Fund credit
The use of Fund credit may be defined as the net use by a member of its conditional drawing rights in the Fund. It is the outstanding stock of credit owed by a member country to the Fund. The use of Fund credit, other than through the SAF, is completed through the exchange of domestic currency in return for other currencies or SDRs; it effectively raises the foreign exchange reserves of the purchasing country without altering the total of resources of the Fund. Rather, a purchase results in an increase in the Fund’s holdings of the purchasing member’s currency and a corresponding decrease in the Fund’s holdings of other currencies or SDRs. A member is required £0 repurchase its own currency according to repayment conditions for the particular drawing facility in question. In addition, it is expected to complete repurchases earlier than scheduled if its balance-of-payments situation improves sufficiently.
b) Trust Fund loans
The Trust Fund was established in May 1976 as a temporary facility to provide special balance-of-payments assistance to developing countries. The resources of the Trust Fund were derived from profits from the sale by public auction of a portion of the Fund’s gold, supplemented by transfers by some of the beneficiaries of direct distributions of gold sale profits and income from investment of assets. During the period January 1977 through March 1981, Trust Fund loans were made on concessional terms to eligible members who qualified for assistance if they could demonstrate a balance-of-payments need and that an effort was being made to strengthen their external position. Given that Trust Fund loans are direct loans, they do not require the purchase of Trust Fund resources with the member country’s own currency.
The Trust Fund was terminated as of 30th April 1981 and since then the responsibilities of the Fund as trustee have been confined to the receipt and disposition of interest and loan repayments and the completion of any unfinished business of the Trust Fund. Amounts accruing to the Trust Fund from interest and loan repayments are transferred to the Special Disbursement Account. In December 1980, the Fund’s Executive Board decided to commit up to SDR 750 million of these assets to the supplementary financing facility subsidy account to reduce the cost for low income developing country members of using the supplementary financing facility and approximately SDR 0.4 billion has been transferred to the Subsidy Account for that purpose. In March 1986, the Fund’s Executive Board established the SAF which would base its loans on the remaining Trust Fund reflows.
In the balance-of-payments presentation, separate practices are followed for the accounting of arrears of interest and amortization, debt rescheduling, debt refinancing and debt forgiveness. In practice, a debt reorganisation package, particularly if it is a multi-year arrangement, may combine elements of each of these. In a multi-year arrangement, it is also frequently the case that a rescheduling of obligations due beyond the current accounting period is subject to certain conditions being in place when the obligations fall due. Balance-of-payments accounting practice is to record entries only in the period when the particular conditions have been fulfilled and the debt reorganisation has been concluded.
The balance of payments uses two forms for presenting data: a detailed presentation which includes all the standard components (instruments), as discussed in the BOP Manual, and an aggregate presentation which classifies the standard components into seven standard groups considered relevant for analysing the international economic relationship of reporting countries in a uniform manner. The double-entry system used in balance-of-payments accounting implies that the balance of payments must be in balance and, therefore, arriving at a surplus or deficit in the aggregate presentation requires summing a sub-section of all external transactions and distinguishing the transactions “above the line” from those “below the line”. A broad approach is to place below the line only transactions undertaken to compensate for a balance-of-payments deficit on net autonomous transactions, i.e., to compensate for transactions undertaken for their own sake. In the aggregate presentation of the Balance of Payments Statistics the “below the line” items are liabilities constituting foreign authorities’ reserves, total change in reserves, and exceptional financing.
The relevant balance-of-payments entries for arrears and the various forms of debt reorganisation are summarised in the accompanying table. The balance-of-payments accounting shows payments due or past due below the line in the aggregate presentation, while payments not yet due are shown above the line regardless of whether the changes of the future payments are due to refinancing, rescheduling or debt forgiveness. For example, a refinancing of amortizations that are due comprises in the aggregate presentation debit entries under long-term capital and credit entries under exceptional financing, while a refinancing of amortizations that are not yet due comprises both debit and credit entries under long-term capital.
There are a number of difficulties due to the level of detail at which balance-of-payments data are currently compiled for deriving complete data on arrears and the various forms of debt reorganisation from balance-of-payments accounts. The balance-of-payments categories in which the relevant flows are recorded do not usually distinguish transactions associated with arrears and debt reorganisation from those which are autonomous.
|Type of transaction||Balance of Payments Presentation|
|Disbursements and Arrears|
|Disbursed interest payments||Reserves||Investment income||Reserves||Investment income|
|Interest arrears||Exceptional financing||Investment income||Short-term capital||Investment income|
|Short-term||Reserves||Short-term capital||Reserves||Short-term capital|
|Long-term||Reserves||Long-term capital||Reserves||Long-term capital|
|Short-term||Exceptional financing||Short-term capital||Short-term capital||Short-term capital|
|Long-term||Exceptional financing||Long-term capital||Long-term capital||Long-term capital|
|Interest||Exceptional financing||Investment income||Long-term capital||Investment income|
|Amortization||Exceptional financing||Exceptional financing||Long-term capital||Long-term capital|
|Payments past due:|
|Interest||Exceptional financing||Exceptional financing||Long-term capital||Short-term capital|
|Amortization||Exceptional financing||Exceptional financing||Long-term capital||Short-term capital|
|Payments not yet due:|
|Amortization||Long-term capital||Long-term capital||Long-term capital||Long-term capital|
|Interest||Exceptional financing||Investment income||Long-term capital||Investment income|
|Amortization||Exceptional financing||Long-term capital||Long-term capital||Long-term capital|
|Payment not yet due:|
|Amortization||Long-term capital||Long-term capital||Long-term capital||Long-term capital|
|Interest||Exceptional financing||Investment income||Unrequited transfers||Investment income|
|Amortization||Exceptional financing||Long-term capital||Unrequited transfers||Long-term capital|
|Payments past due:|
|Interest||Exceptional financing||Exceptional financing||Unrequited transfers||Short-term capital|
|Amortization||Exceptional financing||Exceptional financing||Unrequited transfers||Short-term capital|
|Payments not yet due:|
|Amortization||Unrequited transfers||Long-term capital||Unrequited transfers||Long-term capital|
The Fund uses the following terminology concerning debt refinancing and debt rescheduling: i) debt refinancing is either a roll-over of maturing debt obligations or the conversion of existing or future debt-service payments into a new medium-term loan; ii) debt rescheduling covers formal deferment of debt-service payments with new maturities applying to the deferred amounts.
Where the reorganisation takes the form of refinancing, what takes place in practice is that a new loan is arranged to cover the timely repayment of the original debt; thus the original contract is extinguished and replaced by a new one. As can be seen in the table, if the payments are not yet due, the entire accounting is indistinguishable from a normal repayment and an unrelated new loan in the balance-of-payments statistics. When a debt rescheduling takes place, the terms of the original loan, possibly even the creditor, are being changed. Rescheduling of official and officially-guaranteed debt is generally carried out under the auspices of the Paris Club, while rescheduling and/or refinancing of debt to international banks is often carried out under the auspices of a bank advisory committee, often called the London Club. These arrangements, particularly under the Paris Club, might result in a resectorisation, which could lead to problems of correctly capturing the data. For example, if the central bank of the debtor country assumes the debt of a non-bank, but the bank lender continues to report it under debt to non-banks, the total debt of the country will be overestimated when the reports of the debtor country are used together with the international banking statistics for the estimation.
Where the reorganisation takes the form of debt forgiveness, the balance-of-payments practice is to treat the amount of debt forgiven as an unrequited transfer to the debtor, with the consequence that the liability is reduced by the same amount.
In the case of a debt write-off, the creditor chooses to treat the sum as a bad debt, without extinguishing the debtor’s repayment obligations; this does not give rise to a balance-of-payments entry.
Developing countries renegotiate their debts in two multilateral fora: the Paris Club for debts to governments and for officially guaranteed private export credits, and ad hoc commercial bank advisory committees for debts to banks not officially guaranteed.
The Paris Club is an informal intergovernmental group convened to renegotiate debts to official creditors. Its chairman and secretariat are provided by the French Treasury. Initially, the Paris Club only covered officially guaranteed private export credits, but now debts to governments, including concessional credits and some military loans, are also included. Countries that are members of the Organisation for Economic Co-operation and Development are the principal members, but other creditor countries with similar claims are encouraged to participate in the meetings, though no Eastern European creditor has yet participated. Occasionally, a meeting of official creditors will be designated as a “creditor group meeting” and not a Paris Club meeting.
Interest, as well as principal, may be rescheduled. The consolidation period is typically twelve to eighteen months (but may be longer under a MYRA), and rescheduled debt is repaid between eight and ten years. After the Paris Club Agreed Minute has been signed, debt relief becomes effective only when bilateral implementing agreements negotiated with the individual participating signatory creditor countries establish the list of debts covered by the rescheduling and the interest charge on rescheduled debt (the so-called “moratorium interest rate”).
Commercial Bank Advisory Committees
These are often referred to in the press as London Club agreements, but there is no regular group that meets with debtor countries, as is the case with the Paris Club, nor do these meetings always take place in London. A special advisory committee, representing the major creditor banks, is formed for each negotiation. Membership in the advisory committee is based on the size of individual banks’ exposure and the need to spread representation among key creditor countries. Normally, only principal is rescheduled, and arrears are expected to be repaid when the restructuring agreement goes into effect.
In addition to restructuring outstanding loan maturities, commercial bank creditors may provide new money (normally extended in proportion to existing exposure) and maintain or extend short-term credit facilities. The advisory committee and the debtor-country government must first reach an agreement in principle for a restructuring, which must then be signed by all creditor banks. The agreement goes into effect when a specified proportion of creditors signs the agreement and other conditions are met, e.g., the payment of arrears.
In an effort to eliminate uncertainties associated with year-by-year reschedulings, commercial banks have concluded multi-year restructuring agreements (MYRAs) with selected debtor countries consolidating principal payments due over a three-to-five year period. Debt restructured under MYRAs is typically repayable over much longer periods than under conventional year-by-year agreements. The average original maturity for MYRAs with middle-income countries has been twelve and a half years, in contrast with seven years for previous reschedulings. In September 1986, the maturity on the Mexican MYRA was extended from fourteen to twenty years.
Countries receiving MYRAs are, in principle, perceived to be working their way out of the payment difficulties that led to their debt-servicing problems. Formal arrangements to monitor economic performance are an essential part of MYRAs. The debtor country is required to have an upper-credit tranche programme in place with the IMF or to arrange for enhanced surveillance by the IMF, whose reports may be transmitted by the debtor-country government to bank creditors.
Debts to governments not participating in the Paris Club are renegotiated individually. On occasion, the debtor country will also meet with representatives of commercial (non-bank) creditors not covered by official export credit insurance and thus falling outside the Paris Club. The Paris Club requires that the terms of rescheduling by all of these creditors (and by commercial banks) be at least as favourable to the debtor country as the agreement with official creditors.
|Industrialised reporting countries||Quarterly system||Semi-annual system|
|Germany (Federal Republic)||X||X|
The United States authorities also provide data on positions of US bank branches located in Panama
|Other banking centres|
The United States authorities also provide data on positions of US bank branches located in Panama
A. BANK FOR INTERNATIONAL SETTLEMENTS
Data for the individual countries in a group are invariably presented in tables in which a total is shown for that group.
B. INTERNATIONAL MONETARY FUND
Classification of Countries
Industrial countries: (classification used since December 1979)
|Australia||Germany, Fed. Rep. of*||New Zealand|
(The countries asterisked are referred to collectively as the major industrial countries.)
Developing countries: all other Fund members (as of 1st January 1986) together with certain essentially autonomous dependent territories for which adequate statistics are available. Regional breakdowns: see IFS (in this classification, Egypt and Libyan Arab Jamahiriya are part of the Middle East, not Africa).
Fuel exporters (exports in SITC 3 over 50 per cent of total in 1980):
|Bahrain||Kuwait||Syrian Arab Rep.|
|Congo||Libyan Arab Jamahiriya||Trinidad and Tobago|
|Gabon||Nigeria||United Arab Emirates|
|Iran, Islamic Rep. of||Qatar|
Primary product exporters, (exports of agricultural and mineral primary products other than fuel + SITC 0, 1, 2, 4 and diamonds and gemstones over 50 per cent of total in 1980):
|Afghanistan||Côte d’Ivoire||Liberia||Solomon Islands|
|Bangladesh||Dominican Rep.||Malawi||South Africa|
|Belize||Equatorial Guinea||Malaysia||Sri Lanka|
|Benin||Ethiopia||Mali||St. Christopher and Nevis|
|Burundi||Guinea-Bissau||Papua New Guinea||Thailand|
|Central African Rep.||Haiti||Peru||Turkey|
|Colombia||Kenya||Sao Tomé and Principe||Viet Nam|
|Comoros||Lao People’s Dem. Rep.||Senegal||Zambia|
|Costa Rica||Sierra Leone||Zimbabwe|
(of which: mineral exporters):
Agricultural exporters: other non-fuel primary product exporters that are not mineral exporters.
Exporters of manufactures: exports of manufactures SITC 5-8 less diamonds and gemstones over 50 per cent of total in 1980):
Service and remittance countries: receipts from services (such as tourism) and private transfers (such as workers’ remittances) at least 50 per cent of their exports of goods and services):
|Antigua and Barbuda||Egypt||Nepal||St. Vincent|
|Burkina Faso||Kampuchea. Dem.||Panama||Yemen Arab Rep|
|Cape Verde||Lebanon||Portugal||Yemen, People’s Dem. Rep. of|
Non-fuel exporters: primary product exporters, exporters of manufactures, and service and remittance countries taken together.
Capital exporting developing countries (developing countries that, on average, recorded a current account surplus during the period 1979-81 and were aid donors over the same period):
|Iran, Islamic Rep. of||Libyan Arab Oman||Saudi Arabia|
|Iraq||Jamahiriya Qatar||United Arab Emirates|
Capital importing countries: all other developing countries. Of which: Market borrowers (countries which obtained at least two thirds of their external borrowings from 1978 to 1982 from commercial creditors):
|Antigua and Barbuda||Côte d’Ivoire||Malaysia||Portugal|
|Bahamas||Gabon||Panama||Trinidad and Tobago|
|Bolivia||Greece||Papua New Guinea||Uruguay|
Official borrowers:. Countries, except China and India, which obtained two thirds or more of their external borrowings from 1978 to 1982 from official creditors:
|Bhutan||Grenada||Mauritania||Syrian Arab Rep.|
|Central African Rep.||Honduras||Rwanda||Viet Nam|
|Chad||Jamaica||Sáo Tomé and Principe||Western Samoa|
|Comoros||Jordan||Yemen Arab Rep.|
|Djibouti||Lao People’s Dem. Rep.||Senegal||Yemen, People’s Dem Rep. of|
|Dominican Rep.||Liberia||Sierra Leone||Zaire|
|Equatorial Guinea||Malawi||St. Lucia|
Diversified borrowers: all other capital importing developing countries that are not market or official borrowers, with China and India.
Other Analytical Groups
Capital importing fuel exporters (also referred to as “indebted fuel exporters”): the 12 fuel exporters that are not capital exporters.
15 heavily indebted countries:
Low-income countries: per capita GDP, as estimated by the World Bank $410 or less in 1980:
|Afghanistan||Comoros||Lao People’s Dem. Rep.||Rwanda|
|Bangladesh||Equatorial Guinea||Sáo Tomé and Principe|
|Bhutan||Gambia, The||Malawi||Sierra Leone|
|Central African Rep.||India||Nepal||Togo|
Small or smaller low-income countries: above group, less China and India.
Sub-Saharan Africa: all African countries (as defined in IFS) except Algeria, Morocco, Nigeria, South Africa, and Tunisia.
Other groups (classification in use from 1980-1984)
Oil exporting developing countries (1978-80 average) oil exports (net of any imports of crude oil) both at least two thirds of total exports and at least 100 million barrels a year:
|Indonesia||Libyan Arab Jamahiriya||Saudi Arabia|
|Iran, Islamic Rep. of||Nigeria||United Arab Emirates|
Non-oil developing countries: all others, of which: net oil exporters: (oil exports exceeded oil imports in most years of the 1970’s)
|Bahrain||Gabon||Syrian Arab Rep.|
|Bolivia||Malaysia||Trinidad and Tobago|
Net oil importers: all other non-oil developing countries.
Except where otherwise specifically indicated, the Union of Soviet Socialist Republic and other non-member countries of Eastern Europe, Cuba, and North Korea are excluded from tables, as are a number of small countries or territories for which trade and payments data are not available.
a) Debtor Groups
|Low income (* = Least developed)||Lower middle income||Upper middle income|
|Anguilla||Belize||Antigua and Barbuda|
|Cape Verde*||Grenada||Cayman Islands|
|Central African Rep.*||Guatemala||Chile|
|Ethiopia*||Pacif. Isl. (Trust Tr.)||Gabon|
|Gambia*||Papua New Guinea||Gibraltar|
|Guyana||St. Lucia||Hong Kong|
|Haiti*||St. Vincent and Gr.||Iran|
|Laos*||Wallis & Futuna||Libya|
|Sao Tomé & Principe*||Polynesia, French|
|Solomon Islands||Saudi Arabia|
|St. Helena||St. Pierre & Miquelon|
|Tokelau||Trinidad & Tobago|
|Turks & Caicos Islands||United Arab Imirates|
As well as developing countries and territories as defined above by income group, and shown in Financing and External Debt of Developing Countries, indebtedness of further countries is shown in external debt statistics. These are: CMEA (Bulgaria, Czechoslovakia, Germany Dem. Rep., Hungary, Poland, Romania and USSR) Albania, Andorra and South Africa. The joint OECD/BIS publication, Statistics of External Indebtedness, shows data for all the above countries and in addition for Australia, Finland, Iceland, New Zealand and Norway.
b) Creditor Groups
DAC Member countries are as follows: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany (FR), Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Sweden, Switzerland, United Kingdom and United States.
The creditor group “OECD” includes DAC Members and also Greece, Iceland, Luxembourg, Portugal, Spain and Turkey.
CMEA creditors are CMEA debtors (see above) and also Albania, Korea PDR and Mongolia.
OPEC (Organisation of Petroleum Exporting Countries); Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates (including Abu Dhabi) and Venezuela.
D. WORLD BANK
Classification by Income Group1
|Low-income Africa||Low-income Asia||Middle-income Importers|
|Benin, People’s Republic of||Bangladesh||Argentina||Lesotho|
|Cen. African Rep.||Maldives||Bolivia||Mauritania|
|Equatorial Guinea||Vanuatu||Cape Verde||Nicaragua|
|Gambia, The||Oil Exporters||Colombia||Papua New Guinea|
|Guinea Bissau||Congo, People’s Rep. of the||Cyprus||Philippines|
|Malawi||Egypt, Arab Rep. of||El Salvador||Seychelles|
|Sao Tomé & Prin.||Nigeria|
|Sierra Leone||Syrian Arab Rep.||Honduras||Turkey|
|Somalia||Trinidad & Tobago||Hong Kong||Uruguay|
|Togo||Israel||Yemen Arab Rep.|
|Jamaica||Yemen, People’s Dem. Rep. of|
|Zaire||Korea, Rep. of||Yugoslavia|
“Low-income” refers to countries in which 1985 GNP per capita was no more than $400. “Middle-income” refers to countries in which GNP per capita was $401 or more.
Haiti, with GNP per capita of $350 in 1985, is the only low-income Latin American country reporting under the DRS. To preserve the regional integrity of the other low-income classifications, it is included in “middle-income oil importers”.
Classification by Geographic Region
|Africa, South of the Sahara||East Asia and Pacific||Latin America and the Caribbean||North Africa and the Middle East|
|Benin, People’s Republic of||China||Argentina||Algeria|
|Fiji||Bahamas||Egypt, Arab Rep. of|
|Burundi||Korea, Rep. of||Bolivia||Morocco|
|Cape Verde||Papua New Guinea||Chile||Syrian Arab Rep.|
|Central Af. Rep.||Philippines||Colombia||Tunisia|
|Chad||Singapore||Costa Rica||Yemen Arab Rep.|
|Comoros||Solomon Islands||Dominican Rep.||Yemen, People’s Dem. Rep. of|
|Congo, People’s Rep. of the|
|Vanuatu||El Salvador||South Asia|
|Côte d’Ivoire||Western Samoa||Grenada|
|Kenya||Panama||Europe and the|
|Lesotho||Africa, South of the||Peru|
|Liberia||Sahara (cont’d)||St. Vincent||Cyprus|
|Madagascar||Trinidad & Tobago||Greece|
|Sao Tomé & Prin.|
|Argentina||Egypt, Arab Rep. of||Israel||Mexico|
|Brazil||India||Korea, Rep. of||Turkey|
Disbursed and outstanding long-term debt above $17 billion in 1985.
Highly Indebted Countries
Private Non-guaranteed Debt: Reporting
|Africa, South of the Sahara||East Asia and Pacific||Latin America and the Caribbean||South Asia|
|Cameroon||Korea, Rep. of||Brazil||India|
|Honduras||Europe and the|
Private Non-guaranteed Debt: Non-reporting
|Africa, South of the Sahara||East Asia and Pacific||Latin America and the Caribbean||North Africa and the Middle East|
|Côte d’Ivoire||Fiji||Argentina||Egypt, Arab Rep. of|
|Tanzania||Papua New Guinea||El Salvador||Europe and the Mediterranean|
Individual country data are not published, but estimates are included in all totals and regional aggregates.
NOTES (Give other pertinent information not covered in main body of the form)
(1) Code for type of cancellation or adjustment: 1 = write-off or forgiveness of principal. 2 = extinguished through multiple rescheduling. 3 = transfer from extinguished outstanding balances through multiple rescheduling. 4 = change in currency of repayment to local currency. 5 = cancellation from undisbursed. 6 = write-off, forgiveness or cancellation of interest. 7 = loan generated by transfer from balances of one or more other loans. 8 = extinguished through transfer to another loan. 9 = other.
1. This form is used to report data to TC/ECG, DAC and IBRD
2. Enter code 8 or 9 as appropiate ; 8 = private non-guaranteed in borrowing country ; 9 = official or officially guaranteed in borrowing country
1. This form is used to report data to TC/ECG, DAC and IBRD
2. Enter code 4, 5, 6 or 7 as appropiate ; 4 = Supplied credit, private non-guaranteed in borrowing country, 5 = Supplied credit, official or officially guaranteed in borrowing country, 6 = Financial credit, private non-guaranteed in borrowing country, 7 = Financial credit, official or officially guaranteed in borrowing country.
3. Enter code to show whether amounts in column 9 ; 1 = include interest, 2 = exclude interest, 3 = partly include interest.
1/ Equal installments of principal plus interest in which the size of the principal repayments increases as the size of the interest payments decreases.
The definitions in the following list are those used currently by the four organisations covered by the report, and, in most cases, by the financial community in general. Where a term is used by one of the organisations in a particular or more restricted sense, this is indicated in the definition.Accrued interest
Interest which has accumulated but which is not legally due before a specified payment date.Affiliates
(Of banks): Branches, subsidiaries and joint ventures.Amortization
Repayment of principal balances during a given accounting period.Arrears
Amounts of principal and/or interest due but not paid as of the reporting date.Banking offices
Affiliates and head offices.Banks
Generally defined as those institutions that are entitled by law to conduct banking business, usually (but not necessarily) including the acceptance of deposits from the general public.BOP
Balance of Payments; in abbreviated form, refers to the balance-of-payments statistical system operated by the IMF (as in “BOP Manual”).Bridging (Bridge) loan
A short-term advance pending receipt of funds by the borrower from the same or another source.Buyer (buyer’s) credit
Loan obtained by the overseas purchaser of goods or services, with the supplier being paid in cash; also known as financial credit.Cancellations
(WB): The annulment of undisbursed portions of loans or credits.Capitalisation
(Of interest): The conversion of accrued or future interest into a capital liability.Certificates of deposit (CDs)
Negotiable bearer documents representing evidence of a deposit with a bank repayable on a fixed date.Claims
(Of banks): Financial assets (balance-sheet items only).Commitment
A contractual obligation to lend a specific sum. (OECD): (of government loans) a firm obligation expressed in an agreement or equivalent contract to furnish funds of a specified amount under specified terms and conditions and for specified purposes.Commitment, date of
The date on which a loan agreement is signed.Concessional loans
Loans with a grant element of 25 per cent or more.Consolidated
(Of a bank’s balance sheet): Balance sheet grouping assets and liabilities of parent company and subsidiaries, after elimination of all unrealised profits on intra-group trading and of all intra-group balances.Contingent (contingency)
Used of a liability which may or may not be incurred, depending on a future event (contingency).Creditor country
The country in which the lender is resident.Creditor Reporting System (CRS)
Statistical system operated by the OECD (see Chapter VI, section 1.3.1).Cross-border operations
Transactions between residents of different countries.Cross-border positions
Asset and liability positions visà-vis banks and non-banks located in a country other than the country of residence of the reporting bank (also referred to as “external” positions).Currency of repayment
The currency in which payment is due according to the loan agreement.Debt conversion
Exchange of debt for another liability.Debt/equity swaps
Transaction in which debt (usually of a country) is exchanged for equity participation in one of the country’s firms.Debt forgiveness
The extinction of a loan, in whole or in part, by agreement between debtor and creditor.Debtor country
The country in which the debtor is resident.Debtor Reporting System (DRS)
Statistical system operated by the World Bank (see Chapter VII, section 1.3.1).Debt relief
Cancellation of unpaid principal (whether or not already due), of interest payments already due, and (OECD) reduction in interest rates.Debt reorganisation
General term for operations altering the amount or terms of outstanding debt (includes debt relief, rescheduling, refinancing, etc.).Debt restructuring
Alternative general term for debt reorganisation.Debt service
The sum of interest payments and repayment of principal.Debt service ratio
The ratio of debt service payments made by or due from a country to that country’s export earnings.Deposit banks
A term covering deposit money banks and other bank-like institutions accepting deposits.Deposit money banks (DMBs)
(IMF): Financial institutions other than monetary authorities that have liabilities in the form of deposits payable on demand and transferable by cheque or otherwise in making payment.Deposits
Sums placed with a financial institution for credit to a customer’s account.Developing countries
See Appendix 7.Direct investment
Investment made to acquire a lasting interest in an enterprise operating in an economy other than that of the investor, with the aim of having an effective voice in the management.Disbursement
The placement of resources at the disposal of the borrower.End-of-period exchange rate
Exchange rate ruling on the final working day of a given period.Equities
Ownership interests of stockholders in a firm, usually in the form of stock (not bonds).Equity
The value of the interest of an owner or partial owner in an asset.Equity participation
Interest in a firm in the form of equities.Euro-currency
Used of transactions (e.g. deposits) in a currency other than that of the country in which the other party to the transaction is located.Euro-market
Market for transactions in currencies other than the currency of the country in which the financial institution is located.European Currency Unit (ECU)
Currency unit of the European Economic Community used primarily for accounting and financial purposes, whose value is based on a “basket” of European Community currencies.Exceptional financing
(IMF): A special “below-the-line” category in IMF BOP reporting used to accommodate transactions undertaken on behalf of the monetary authorities to compensate for any overall imbalance.Export credit
A loan for the purpose of trade which is not represented by a negotiable instrument.Financial credit
See buyer credit.Financial (finance) lease
See Chapter III, section 126.96.36.199.Flag of convenience countries
Countries with favourable tax rules and other regulations attracting part or whole companies whose main business (originally shipping, now often production or services) is outside the country.Floating-rate notes (FRNs)
Negotiable and transferable securities with flexible interest rate, fixed interest periods, and issued in pre-determined and uniform amounts.Foreign bank
Bank with head office outside the country in which it is located.Foreign currency transactions
(BIS): transactions denominated in a currency other than the domestic currency of the country in which the banking office is located.Frame agreement
An arrangement which authorises a series of individual loans up to a specified amount.Government Finance Statistics (GFS)
Statistical system operated by the IMF (see Chapter V, section 1.3.1). GFSY: Government Finance Statistics Yearbook (IMF publication); GFSM: Government Finance Statistics Manual (IMF publication).Grant element
Face value of a loan commitment less the sum of the discounted present value of the debt service payments to be made on the loan, using a discount rate of 10 per cent.Grant-like
(OECD): Used of a transaction where the donor country retains a formal title to repayment but has expressed its intention in the commitment to hold the proceeds of repayment in the borrowing country.Host country
(Of banks): the country where a bank’s foreign affiliate is located; (of private investment) the country in which a direct investor’s investment is located.IMF credit
See Use of Fund Credit.Interbank positions
Asset and liability positions of banks vis-à-vis other banks.International banking business
(BIS): Banks’ transactions in whatever currency with non-residents and transactions in foreign (non-local) currency with residents.International Banking Statistics (IBS)
Statistical system operated by the IMF (see Chapter V, section 1.3.1). Also used in a generic sense to refer to the BIS’s international banking statistics.International Capital Markets (ICM)
An IMF “Occasional Paper” containing considerable material on debt (see Chapter V, sections 1.2.2 and 6).International Financial Statistics (IFS)
Monthly IMF publication containing financial and economic statistics for most countries of the world.International interbank market
An international money market in which banks lend to each other – either cross-border or locally in foreign currency – large amounts of money, usually for periods between overnight and six months.International license banks
Alternative term for offshore banking units, referring to the fact that special licenses or other authority are needed for them to operate.Intra-bank
Refers to transactions between parts of the same bank.Infra-company
Refers to transactions between parts of the same company or the same group.Joint venture
(Of banks): A banking enterprise in which two or more parties hold major interests.Leasing
Renting of an asset for a given period of time, as an alternative to outright purchase. (See Chapter III, section 188.8.131.52).Long- term
Used of claims with an original or extended maturity of more than one year.Maturity (original)
Period from commitment or disbursement to final repayment of a loan.Maturity (residual)
Time remaining to final repayment of a loan.Maturity structure
(BIS): Breakdown of claims or liabilities according to their residual maturity (also known as “maturity profile” or “maturity distribution”).Multi-year rescheduling agreement (MYRA)
Agreement consolidating principal payments due over a period of several years (generally three to five).Nationality
(Of banks): Country of residence of head office.Net debt
See Chapter III, section 2.2.Net flow
Excess of new lending over amortization receipts.Non-banks
All entities, other than official monetary authorities and deposit banks. Includes individuals.Note-issuance facility (NIF)
A medium-term legally-binding commitment under which a borrower can issue a short-term paper in its own name, underwritten by banks which are committed either to purchase any notes the borrower is unable to sell, or to provide credit.Official creditors
International organisations, governments and government agencies, including official monetary institutions.Official Development Assistance (ODA)
(OECD): Official assistance for development purposes. Includes grants and concessional loans.Official development bank
A non-monetary financial intermediary, controlled by the public sector, primarily engaged in making long-term loans that are beyond the capacity of other financial institutions.Officially-guaranteed
(OECD): Used of debt whose repayment is guaranteed by a government or by an entity of the official sector in the creditor’s country.Officially-supported
(OECD): Portmanteau term for “official and officially-guaranteed”.Official monetary institutions
Mainly central banks or related national or international bodies.Offshore banking centres
Countries with banking sectors dealing primarily with non-residents. For countries reporting to the BIS see Appendix 6.Offshore banking units (OBUs)
Alternative term for international license banks.Operational (operating) lease
See Chapter III, section 184.108.40.206.Other Official Flows (OOF)
(OECD) Flow Statistics: Officially-financed flows other than Official Development Assistance. Debt statistics: also excludes direct official export credits (classified as export credits).Outside-area countries
(BIS): Countries and territories outside the BIS “reporting area”.Paris Club
Forum of official creditors for negotiating debt restructuring. See Appendix 5.Period-average exchange rate
Arithmetic average of the reported monthly exchange rates during a given period.Perpetual
(Of bonds): Of indefinite maturity.Portfolio investment
Investment other than direct investment.Provisioning (provisions)
Setting aside of sums (provisions) to meet an eventuality (in the debt context, usually to provide against a doubtful debt).Public external debt
(WB): An obligation to a non-resident creditor of national or local governments or of enterprises that are at least 50 per cent government-owned.Publicly-guaranteed
(WB): Used of debt whose repayment is guaranteed by a government or by an entity of the public sector in the debtor country.Quarterly (reporting) system
One of the two main BIS statistical systems (see Chapter IV).Refinancing
The extension of a new loan to enable the repayment of all or part of the amounts outstanding on earlier borrowing, possibly including amounts not yet due.Reporting area
(BIS): The whole group of countries reporting to the BIS (see Appendix 6).Reporting banks/institutions
(BIS): Generally all those deposit-taking institutions (plus some non-deposit-taking financial institutions specialising in foreign trade finance) within a reporting country which have international assets and liabilities of any size.Reporting centres/countries
(BIS): The industrial countries and offshore banking centres listed in Appendix 6.Repudiation
(Of debt): Unilateral disclaiming of a liability by a debtor.Rescheduling
a) The postponement of all or part of one or more maturities of one or more loans, the creditor and the debtor remaining unchanged;
b) A general term for the outcome of discussions on debt reorganisation for a borrowing country.
See Appendix 2.Restructuring
See debt reorganisation.Revolving credit
A credit with a clause for automatic renewal (under certain conditions).Revolving Underwriting Facility (RUF)
Medium-term facility on which the borrower can draw at any time of its life, usually certificates of deposit (CDs) or short-term promissory notes.Rollover (credit)
Renewal of an existing credit (or credits).Sectoring
Breaking down of external debt according to classifications of various kinds.Semi-annual (reporting) system
One of the two main BIS statistical systems (see Chapter IV).Short-term
Used of claims with a maturity of one year or less.Special Drawing Rights (SDRs)
Special reserve assets, value based on a basket of currencies, issued by the IMF. Also used as a unit of account.Standby credit
A commitment to lend up to a specified amount for a specific period, to be used only in a certain contingency.Stock figures
(BIS): Amounts outstanding on a particular date.Supplier (supplier’s) credit
Credit extended by the supplier of goods or services to an overseas purchaser.Swaps
See Chapter II, Section 220.127.116.11.System of National Accounts (SNA)
United Nations statistical system of national accounts.Trade credit
(IMF): Credit extended in connection with the sale or purchase of goods or services (covers both supplier’s credits and buyer’s credits).Trade financing
(WB): Equivalent to trade credit.Trade-related credit
(OECD, BIS): Equivalent to trade credit.Undisbursed
Used of amounts committed but not yet utilised. (BIS): (of credit commitments): open lines of credit which for the lending banks are legally binding.Use of Fund Credit (UFC)
Liabilities to the International Monetary Fund resulting from use of the IMF General Resources Account (e.g., drawings under credit tranches, use of the compensatory financing and buffer stock facilities). (See footnote 4 of Chapter II).Vis-à-vis country
(BIS) Country of location of the counterparty to a financial contract.World Economic Outlook (WEO)
Annual IMF publication containing information on debt (see Chapter V, sections 1.2.2. and 6).Write-off
The removal from the creditor’s books of disbursed debt and/or of interest arrears.
I. GENERAL REFERENCE
|I.1. BIS||Manual on Statistics Compiled by International Organisations on Countries’ External Indebtedness, Basle, March 1979, p. 109|
|This manual, which is largely replaced by the present publication, provides information on statistics available from international organisations on external indebtedness as of 1979.|
|I.2. IMF||Balance of Payments Manual, Fourth Edition, Washington, 1977|
|The basic source for all matters connected with the compilation and reporting of balance-of-payments statistics, explaining the fundamental concepts underlying their compilation.|
|I.3. IMF||A Manual on Government Financial Statistics, Washington, 1986|
|This Manual deals with the compilation of statistics on the finances of government and provides a common system of definitions and classifications. It generally follows the lines of institutional sectorisation laid down in the United Nations’ SNA, but goes further in differentiating between performance of government and financial institutions in the economy.|
|I.4. IMF||A Guide to Money and Banking Statistics in International Financial Statistics (IFS), Draft, 1984 (not available to the public)|
|Explains the methodology followed in producing the money and banking data published in the IFS.|
|I.5. IMF||Staff Papers|
|A quarterly publication that presents the results of studies by IMF staff on monetary and financial problems.|
II. ANALYTICAL STUDIES
|II.1. BIS||The International Interbank Market|
|A descriptive study, BIS Economic Paper No. 8, July 1983|
|II.2. IMF||Joslin Landell-Mills, The Fund’s International Banking Statistics, Washington, 1986|
|This pamphlet describes the Fund’s international banking statistics project. The data resulting from this project are now published in three pairs of world tables in the IFS. Compilation issues and procedures are discussed in detail, together with the possible uses of the data.|
|II.3. IMF||Bahram Nowzad and Richard C. Williams, External Indebtedness of Developing Countries, Washington, 1981|
|The paper presents a quantitative account of the major developments in the external debt of developing countries during 1972-1979, and analyses the significant changes in the debt structure. The paper also includes a description of the multilateral debt renegotiations undertaken with official and bank creditors.|
|II.4. IMF||Staff team headed by E. Brau and R.C. Williams, with P.M. Keller and M. Nowak, Recent Multilateral Debt Restructuring with Official and Bank Creditors, Washington, 1983|
|This paper reviews developments in external indebtedness of developing countries, with emphasis on a description of the arrangements made for restructuring official and commercial bank debt from 1978 to October 1983. The study includes a comparison of this experience with the findings of the 1981 study (see II.3 above).|
|II.5. IMF||Foreign Private Investment in Developing Countries, IMF Research Department, Washington, 1985|
|The study discusses trends in the size and composition of foreign private investments and in income payments on such investments in the 1970s and early 1980s. It also examines the role of direct investments in the transfer of resources and the possibilities for substitution between direct investments and other forms of resource transfer.|
|II.6. IMF||E. Brau and C. Puckahtikom, Export Credit Cover Possibilities and Payments Difficulties, Washington, 1985|
|This paper is a special study undertaken to review the policies and practices of the ten major official export credit agencies following the difficulties in servicing external debt experienced since 1982. It deals with the adaptation of approaches in the changed environment and reviews the experience of the agencies with a sample of eleven debtor countries in the period 1980 to mid-1984.|
|II.7. IMF||K.B. Dillon, C.M. Watson, G.R. Kincaid and C. Puckahtikom, Recent Developments in External Debt Restructuring, Washington, 1985|
|This study is a sequel to the 1981 and 1983 papers on the subject (see II.3 and II.4 above) and deals with the arrangements for restructuring commercial bank and official debt from 1983 to early 1985. The paper reviews the major sources of recent debt-servicing difficulties and discusses approaches that have been taken by debtors and creditors to resolving these problems. It compares the treatment of various groups of creditors and different types of debt.|
|II.8. IMF||B. Dillon and Gumersindo Oliveros, Recent Experience with Multilateral Official Debt Rescheduling, Washington, 1987|
|The latest in the series of papers covering this area, describing developments in multilateral debt renegotiations in the 18 months to the end of June 1986. Recently, official creditors have concluded multi-year rescheduling agreements (MYRAs) with countries considered to have made considerable progress in their adjustment efforts.|
|II.9. IMF||H. Mahran (ed.), External Debt Management, Washington, 1985|
|This book is the outcome of a seminar on external debt management organised by the Fund in December 1984. The introduction places the seminar in perspective and is followed by a section dealing with the debt problem on a global basis. A final section describes the external debt management experience of individual countries.|
|II.10. OECD||Export Credit Financing Systems in OECD Countries, Paris, 1987|
|Describes the institutional framework and procedures governing the financing and guaranteeing of export credit transactions. Updates earlier studies of the same topic.|
|II.11. World Bank||Gordon W. Smith and John T. Cuddington (eds.), International Debt and the Developing Countries, 1985|
|This book contains edited contributions to the World Bank symposium held in April 1984. It examines the theory and recent experience of international lending, its contribution to the growth of developing countries and its role in the international financial system.|
|II.12. World Bank||Kathie L. Krumm, The External Debt of Sub-Saharan Africa, Staff Working Papers, 1985|
|This study reviews the origins, magnitude and implications of Sub-Saharan Africa’s debt problems.|
|II.13. World Bank||International Capital and Economic Development, World Development Report, 1985|
|Prepared by a World Bank staff team led by Francis Colaco, the 1985 World Development Report focuses on the contribution of international capital to economic development, and reviews both the institutional and the policy environment of international lending.|
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(43 88 02 1) ISBN 92-64-13039-X