- International Monetary Fund
- Published Date:
- June 2003
1.1 The purpose of the External Debt Statistics: Guide for Compilers and Users (the Guide) is to provide comprehensive guidance for the measurement and presentation of external debt statistics. It also provides advice on the compilation of these data and on their analytical use. The intention is to contribute to both an improvement in, and a greater understanding of, external debt statistics. In doing so, the Guide is responding to the concerns of markets and policymakers for better external debt statistics to help assess external vulnerabilities at a time when increasing international capital flows are resulting in greater market interdependence.
The Grey Book
1.2 Previous guidance on the measurement of gross external debt was provided in External Debt: Definition, Statistical Coverage and Methodology (the “Grey Book”), published jointly in 1988 by the Bank for International Settlements (BIS), International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), and the World Bank. The Grey Book provided an agreed definition of what constituted external debt, with the intention of encouraging a greater consistency of approach in the measurement of external debt:
Gross external debt is the amount, at any given time, of disbursed and outstanding contractual liabilities of residents of a country to nonresidents to repay principal, with or without interest, or to pay interest, with or without principal.
1.3 The measure of external debt using this definition is commonly known as disbursed and outstanding debt (DOD) and is valued on a nominal-value basis. Under this definition, there must be a contractual liability to make principal or interest payments, or both. The contractual liability—used in the wide sense of entailing a legal obligation—must be a claim of a nonresident on a resident to qualify as external debt, and only that part of the liability that is outstanding and disbursed qualifies as debt.
1.4 The DOD approach is a basic cornerstone of external debt statistics and provides the conceptual basis for the majority of the existing external debt compilation systems, including those of countries using the Commonwealth Secretariat and United Nations Conference on Trade and Development (UNCTAD) debt-management systems, and those of the OECD and World Bank. It has facilitated vulnerability, debt-sustainability, and creditworthiness analyses and can provide a transparent standard for comparable statistics across countries. For instance, the World Bank’s Global Development Finance and the OECD’s External Debt Statistics present and analyze data on a DOD basis.
1.5 To a considerable extent, the Grey Book reflects the traditional focus of external debt statistics, which is on borrowing from banks and government sources, often by the public sector. For the purposes of public debt management, a DOD measure of external debt allows a debt manager to determine how much is owed, to make budgetary projections, and to inform policymakers of the borrowing position in relation to any authorized limits. Also, DOD can serve as a baseline for debt managers to analyze the impact of exchange rate movements and indexation of principal on the stock of debt outstanding. In a number of countries, DOD is typically a measure derived from a debt-management system that records contractual obligations on existing debt, which are essential for cash-flow management and for implementing payments.
Conceptual Approach in the Guide
1.6 Depending on the stage of economic development, borrowing by the public sector from banks and government sources may still remain the focus of external debt analysis for a number of countries. But for many countries, the growth during the 1990s of cross-border private sector capital flows, the exposure of the private sector to foreign borrowing, the widespread issuance of debt securities, and the use of financial derivatives and similar instruments, have necessitated a wider scope of external debt analysis. In other words, in addition to the traditional focus, a need has increasingly arisen to monitor the cross-border financial borrowing activities of the nonbank private sector, including external borrowing by all sectors of the economy in the form of debt securities.
1.7 In responding to these developments, the Guide introduces a comprehensive conceptual framework that is derived from that contained in the System of National Accounts 1993 (1993 SNA)1 and the IMF’s Balance of Payments Manual, fifth edition (BPM5)2 for measuring the gross external debt position. This approach facilitates consistency and comparability among external debt statistics and other macroeconomic statistics, such as balance of payments, the international investment position (IIP), and national accounts. Under this conceptual framework, external debt includes all liabilities as defined in the 1993 SNA (excluding equity liabilities and financial derivatives) that are owed to nonresidents, and the total amount of such liabilities is presented as the gross external debt position.
1.8 This new conceptual framework draws on many of the concepts introduced in the Grey Book. For instance, external debt continues to include those instruments that are owed to nonresidents, require payments of interest and/or principal, and are outstanding. Thus, compilation systems developed to produce data on the basis of the Grey Book, particularly for the public sector, can be a statistical building block for the measurement of the gross external debt position outlined ahead. But the new framework also discusses and clarifies many items not discussed or decided in the Grey Book, particularly in respect to the range of instruments that are classified as external debt.
1.9 Tables are provided for the presentation of the gross external debt position, and related data, both for the whole economy and by sector of debtor. Using the concepts provided in Chapters 2 and 3, data compiled and presented in the format of the table in Chapter 4 provide a comprehensive and informed picture of the gross external debt position for the whole economy. Subsequently in Chapter 5, the gross external debt position is presented in a table that highlights the role of the public sector, a table particularly relevant for countries where the public sector is centrally involved in external debt borrowing activity, as a borrower and/or guarantor.
1.10 Further, the Guide provides additional accounting principles to assist in compiling data series of analytical use in understanding the gross external debt position. The priority that individual countries give to compiling each of these data series will vary depending on circumstances. But such data series as the debt-service schedule—that is, a schedule that provides information on the expected amounts and timing of future payments—and the foreign currency composition of external debt—one indication of the exposure of the economy to movements in the exchange rate—can reveal essential information on potential external vulnerabilities facing an economy. Similarly, the Guide advises on the measurement and presentation of the net external debt position—gross external debt less external assets in the form of debt instruments. For economies whose private sector is active in international financial markets, this concept, and indeed, that of the net asset position of the IIP,3 is particularly relevant in assessing sustainability of the external position.
Structure of the Guide
1.11 The Guide is presented in four parts:
1.12 The structure of Part I is as follows:
Chapter 2 provides a definition for gross external debt and explains in detail the accounting principles required for the measurement of the gross external debt position. Chapter 3 discusses the identification of institutional sectors and financial instruments.
Chapter 4 sets out a table for the presentation of the gross external debt position. Highest priority is given to institutional sectors, followed by maturity and then type of instrument. Chapter 5 provides a table for the presentation of data on public and publicly guaranteed external debt.
Chapter 6 provides further accounting principles for compiling additional data series of analytical use in understanding the gross external debt position. Chapter 7 provides further presentation tables (for example, a debt-service payment schedule and foreign currency debt tables).
Chapter 8 discusses the dissemination of appropriate information on the impact of debt reorganization on external debt. Chapter 9 considers contingent liabilities and provides a table for the presentation of external debt on an ultimate-risk basis.
Compilation: Principles and Practice
1.13Chapter 10 provides an overview of compilation methods, and Chapters 11, 12, and 13 cover compilation methods for government and public sector data; banks and “other sectors” data; and data on traded securities, respectively. Chapter 14 contains case studies of country experience in the compilation of external debt statistics.
Use of External Debt Statistics
1.14Chapters 15 and 16 cover the analytical use of external debt data. These chapters are included to help compilers place their work in context and to assist users in interpreting the range of information that can be available. Chapter 15 briefly describes debt-sustainability analysis and explains some of the most commonly used debt ratios. Chapter 16 highlights the need to analyze external debt data in a broad context.
Work of International Agencies
1.15Chapter 17 sets out the external debt data available from the BIS, IMF, OECD, and the World Bank, all of which have been developed to meet specific analytical needs. Chapter 18 covers the debt-monitoring systems of the Commonwealth Secretariat and UNCTAD. Chapter 19 discusses technical assistance activities in external debt statistics, and related macroeconomic statistics, of the international agencies involved in production of the Guide.
1.16Appendix I provides detailed definitions and classifications of debt instruments, and specific transactions. Appendix II discusses reverse security transactions and how they should be recorded in the gross external debt position. Appendix III provides a glossary of external debt terms. Appendix IV describes the relationship between the national accounts and the IIP. Finally, Appendix V explains the Initiative for Heavily Indebted Poor Countries (the HIPC Initiative).
The 1993 SNA was published jointly by the Commission of the European Communities (Eurostat), IMF, OECD, United Nations, and World Bank. The 1993 SNA is a comprehensive, consistent, and flexible set of macroeconomic accounts intended to meet the needs of government and private sector analysts, policymakers, and decision takers. Also, it is the point of reference in establishing standards for related statistics, such as government finance and monetary and financial statistics.
BPM5 was published by the IMF in 1993 and provides international guidelines for the compilation of data for an articulated set of international accounts encompassing the measurement of external transactions (balance of payments), on the one hand, and the stock of financial assets and liabilities (the international investment position, or IIP), on the other. There is harmonization to the maximum extent possible with the national accounts as articulated in the 1993 SNA.