Summary of WP/94/131: “The Meaning of Balance of Payments Statistics in an Interdependent World”

Authors of Working Papers are normally staff members of the Fund or consultants, although on occasion outside authors may collaborate with a staff member in writing a paper. The views expressed in the Working Papers or their summaries are, however, those of the authors and should not necessarily be interpreted as representing the views of the Fund. Copies of individual Working Papers and information on subscriptions to the annual series of Working Papers may be obtained from IMF Publication Services, International Monetary Fund, 700 19th Street, Washington, D.C. 20431. Telephone: (202) 623-7430 Telefax: (202) 623-7201 This compilation of summaries of Working Papers released during July-December 1994 is being issued as a part of the Working Paper series. It is designed to provide the reader with an overview of the research work performed by the staff during the period.

Abstract

Authors of Working Papers are normally staff members of the Fund or consultants, although on occasion outside authors may collaborate with a staff member in writing a paper. The views expressed in the Working Papers or their summaries are, however, those of the authors and should not necessarily be interpreted as representing the views of the Fund. Copies of individual Working Papers and information on subscriptions to the annual series of Working Papers may be obtained from IMF Publication Services, International Monetary Fund, 700 19th Street, Washington, D.C. 20431. Telephone: (202) 623-7430 Telefax: (202) 623-7201 This compilation of summaries of Working Papers released during July-December 1994 is being issued as a part of the Working Paper series. It is designed to provide the reader with an overview of the research work performed by the staff during the period.

The adequacy of available international economic data--in particular, the balance of payments and international investment position, which constitute the standard set of international accounts--has recently been the subject of widespread criticism. Several studies have proposed that othe data be integrated with these accounts and/or that the residency criterion be revised or replaced by an ownership criterion. Such proposals, if accepted, would compromise the structure of both international and national accounts. Given that the two most important international standards for measuring these accounts--the 1993 System of National Accounts (SNA) and the fifth edition of the IMF Balance of Payments Manual--were recently issued and closely harmonized, efforts to change them would be misguided.

The central role of residence is identical in both sets of guidelines because the residency status of producers in an economy determines the limits of domestic production, affects the measurement of GDP--among other variables--and is the basis for compilations of balance of payments transactions and for the rest-of-the-world sector in the national accounts. Nonetheless, it is recognized that no one statistical measure can satisfy all possible purposes. The development and use of complementary or supplementary data is therefore both necessary and valuable for policy purposes, in particular, for trade negotiations. However, if such data are combined with standard measures to derive new “net balances” (e.g., for transactions in international goods and services), they should not be confused with, accorded the same weight as, or take precedence over, the standard measures.

It is more important for countries to adhere to the conceptual, definitional, and classification standards of the SNA and the Balance of Payments Manual than to revise or “adjust” standard measures. Such conformity can help reduce existing bilateral, regional, and global asymmetries in the international accounts and thereby improve the statistical basis for analysis and policy formulation.

Significant international, regional, and national initiatives are under way to refine and improve the coverage and measurement of international transactions within the framework of the Balance of Payments Manual and the SNA. Increasingly, partner countries are working toward harmonizing and exchanging data. These developments will enhance the relevance and usefulness of the standard measures. This is not to say that the structure and concepts of the Balance of Payments Manual and the SNA should not be reassessed at some future time, and certainly within a shorter interval than the 16 years and 25 years, respectively, between the previous and latest editions of the two international standards.

Working Paper Summaries (WP/94/77 - WP/94/147)
Author: International Monetary Fund