Argentina
Technical Assistance Report-Technical Assistance Mission on External Sector Statistics (November 14-25, 2016)

At the request of the National Institute of Statistics and Censuses (INDEC), a technical-assistance mission on external-sector statistics (ESS) visited Buenos Aires on November 14–25, 2016. Currently, INDEC’s National Directorate for International Accounts (DNCI) compiles and disseminates ESS following the guidelines of the fifth edition of the Balance of Payments Manual. The mission reviewed the ESS methodology, data sources, and dissemination policy in order to help enhance its quality and to assist compilers in migrating the methodology to the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6). The main data sources used to compile the current account and the capital account (excluding investment income, which is compiled along with the financial account and the IIP) are customs records, corporate surveys, the international-tourism survey, accounting information available to the public, administrative records, and information concerning the exchange balance disseminated by the Central Bank of Argentina (BCRA). The mission found data sources and compilation procedures to be sound. Although the mission identified improvements that could add to the quality of certain estimates, the balances of the current and capital accounts are expected to remain substantially unchanged.

Abstract

At the request of the National Institute of Statistics and Censuses (INDEC), a technical-assistance mission on external-sector statistics (ESS) visited Buenos Aires on November 14–25, 2016. Currently, INDEC’s National Directorate for International Accounts (DNCI) compiles and disseminates ESS following the guidelines of the fifth edition of the Balance of Payments Manual. The mission reviewed the ESS methodology, data sources, and dissemination policy in order to help enhance its quality and to assist compilers in migrating the methodology to the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6). The main data sources used to compile the current account and the capital account (excluding investment income, which is compiled along with the financial account and the IIP) are customs records, corporate surveys, the international-tourism survey, accounting information available to the public, administrative records, and information concerning the exchange balance disseminated by the Central Bank of Argentina (BCRA). The mission found data sources and compilation procedures to be sound. Although the mission identified improvements that could add to the quality of certain estimates, the balances of the current and capital accounts are expected to remain substantially unchanged.

I. Introduction

1. At the request of the National Institute of Statistics and Censuses (INDEC), a technical-assistance mission on external-sector statistics (ESS) visited Buenos Aires on November 14–25, 2016. At the INDEC, the mission held meetings with compilers from the National Directorate for International Accounts (DNCI) and the National Directorate of External Sector Statistics (DNSE) who are responsible for the surveys used to collect ESS, and assisted with improvements to ESS compilation and dissemination, as well as the migration towards the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6). The mission also held meetings at the Central Bank of the Republic of Argentina (BCRA) and the National Superintendency of Insurance (see Appendix I).

2. Section II of this report summarizes the current methodology applied to produce ESS in Argentina, and Section III describes the ESS dissemination and revision policy, as well as other aspects of ESS compilation in the country.

II. ESS Compilation Methodology, Dissemination Policy and Revision

3. The DNCI compiles Argentina’s balance of payments on a quarterly basis and disseminates it with a three-month lag, following a release calendar set in advance. The IIP is compiled on an annual basis and disseminated in July of the following year. Like the balance of payments, external-debt data are released quarterly. The methodology employed to compile ESS is available on the INDEC’s website. The statistics on the external sector are currently prepared in line with the fifth edition of the Balance of Payments Manual. The following paragraphs summarize the methodology and the main data sources used, and set out recommendations aimed at improving quality.

A. Current Account

4. The main data sources for the current account are customs records; DNSE surveys of corporations in the service sector (the table in Appendix II shows the number of corporations, aggregated by type of survey); the international-tourism survey conducted in coordination with the National Tourism Bureau; the National Survey of Large Corporations conducted by the INDEC, which covers 500 corporations and looks at their balance sheets; quarterly, generally available accounting information on publicly-traded corporations and securities issuers; administrative information provided by ministries, the National Superintendency of Insurance (SSN), the National Social Security Administration (ANSES), the National Migration Authority, and the stock exchange; and the exchange balance and the free and single foreign-exchange market (MULC) of the Central Bank of the Republic of Argentina (BCRA).

5. The DNCI has produced a data series (starting in 1990) for the current account in line with the BPM6.

Goods

6. The main data source for the Goods Account are the statistics compiled by the DNSE based on customs records for trade transactions. The DNSE processes the information found in customs records and provides the DNCI with aggregate data. There is project underway to provide information broken down by importer/exporter, individually identified by their Single Tax Identification Code (CUIT), which is expected to streamline data analysis and cleaning. The project is on hold pending IT work.

7. The data provided by the DNSE are supplemented with information on export and import transactions not included in customs records, such as courier shipments, electric power traded between the Salto Grande and Yacyretá binational corporations, goods purchased at port by aircraft, and imports of ship’s stores.

8. Export and import data are recorded at f.o.b. value; additionally, imports are recorded at c.i.f. values. The Goods Account is compiled in line with the fifth edition of the Balance of Payments Manual; however, one of the data series conforms to the requirements of the BPM6. The BPM6-compliant data include sales and purchases of goods based on information from the MULC; manufacturing services on physical inputs owned by others, as well as maintenance and repair services, have been reclassified into the relevant service categories.

9. No information is available on informal trade or on goods imported and exported by travelers that exceed customs allowances. On the other hand, customs records allow compilers to identify migrants’ personal effects, which are included in the external-sector statistics.

Recommendation

  • Exclude migrants’ personal effects from the Goods Account (June 2017).

Services

10. Manufacturing services on physical inputs owned by others, and maintenance and repair services n.i.e., are mainly compiled using the results of the service-corporation survey conducted by the DNSE.

11. In the transport category, debits for freight transport are compiled from the customs information available to the INDEC, which includes amounts and carriers’ flags. Credits are compiled based on surveys of resident sea- and air-transport companies; for land freight services, credits are estimated by taking from the debit side the share of land freight in total imports by land and the share of resident corporations in total land freight, and applying both to the value of exports. Passenger transport by sea and by land is compiled using monthly data from corporations on travelers at ports and border crossings provided by the National Migration Authority, as well as information from corporations on ticket prices and supplemental data; for air transport of passengers, Argentine airlines with international flights are canvassed quarterly, together with nonresident airlines with offices in the country. This survey is augmented with data on the number of passengers disaggregated by nationality, airport, and carrier provided by the National Migration Authority, as well as price information derived from an in-house quarterly survey of companies that are either not included in the main survey or do not respond. For other transport-related services, the sources are surveys of corporations working in the relevant sector, as well as estimates if the information cannot be obtained directly from a specific corporation (for example, shipping agents’ commissions, expenses of land passenger-transport corporations, expenses of land freight-transport corporations that are nonresidents).

Recommendation

  • Include sea and land passenger-transport corporations in the survey of transport corporations (June 2017).

12. Postal and courier services are estimated based on the results of the service-corporation survey.

13. Travel information is compiled using the number of resident and nonresident passengers entering and exiting the country (provided by the National Migration Authority), the number of overnight stays in the country, and the estimated average expenditure per person in dollars, classified by origin and destination country, from the international-tourism survey. The latter is conducted by the INDEC in cooperation with the National Tourism Bureau at the four major border crossings (two airports in Buenos Aires, one in Córdoba, and the maritime terminal with connections to Uruguay). In 2017, additional survey points will be set up at the Mendoza airport and the border crossing from Mendoza to Chile. The primary challenge in this category is the estimation of debits, given that surveys are far from suitable as sources of information on the average expenditure of resident travelers.

Recommendation

  • Assess the data on the average expenditure of Argentine travelers in other countries and consider using them to estimate debits for Travel (June 2017).

14. Since 2009, construction services are compiled based on the outcome of the service-corporation survey (the National Registry of Public Works Builders was used until 2001, and exchange statistics between 2002 and 2009).

15. Insurance directly obtained abroad is expressly prohibited, with the exception of insurance for trade cargo, which is estimated using the available trade statistics and cost information provided by resident insurance companies. Regarding reinsurance, the SSN is responsible for monitoring the operation of insurance companies in the country and provides data on transactions between resident and nonresident corporations (outward premiums, reimbursed losses, commissions received) that can be used to estimate debits under reinsurance services. Credits for reinsurance services are estimated based on information concerning active reinsurance contracted with nonresident corporations; however, the cost of the services cannot be estimated using available information and the value of passive reinsurance is used instead. Given the inconsistency of accrual data on premiums and payouts, insurance services are estimated on a cash basis. The mission and the compilers met with the SSN in order to clarify the information on insurance services. The SSN agreed to provide accrual data on premiums and claims, as well as information on the technical reserves and foreign assets of reinsurance companies (which could subsequently be used to compile the financial account and the IIP, as explained below). Auxiliary insurance services are compiled based on the results of the service-corporation survey. Pension-fund and standardized-guarantee services with nonresidents are deemed virtually inexistent.

Recommendation

  • Revise the estimates of insurance services against the new information to be provided by the SSN (March 2017).

16. Financial services charged explicitly are calculated using stock-exchange data on total income, nonresident holdings as a share of total securities in custody, and the results of the service-corporation survey, which includes information on debt-underwriting fees and other financial services. Debits are calculated by applying services fees to the stocks of assets held by residents abroad in order to estimate the related service; using information from the Secretariat of Finance at the Ministry of Finance about commissions for public-debt underwriting; and the results of the service-corporation survey on fees for debt underwriting and other private financial services. Financial intermediation services indirectly measured (FISIM) are not estimated.

Recommendation

  • Calculate FISIM (December 2017).

17. Charges for the use of intellectual property; telecommunications, computer, and information services; other business services; and personal, cultural, and recreational services are all compiled by means of the service-corporation survey.

18. Credits for government goods and services n.i.e. are based on the number and salaries of nonresidents accredited to work in embassies and consulates located in Argentina, as well as data from the Ministry of Foreign Affairs and Worship on consular revenues from Argentine diplomatic missions. Debits are based on information from the Secretariat of Finance at the Ministry of Finance concerning the official budget of every public agency represented abroad.

Primary income

19. Primary income is estimated using information provided by the Ministry of Foreign Affairs and Worship on the number of local hires at diplomatic missions in Argentina (credits) and at Argentine diplomatic missions (debits); accounting information from the Yacyretá binational corporation on the wages of resident and nonresident workers; and data provided by foreign maritime-shipping companies regarding local hires. Wages paid by air- and sea-transport companies and by land freight carriers (credits and debits), and by corporations to temporary workers, are extracted from the service-corporation survey; wages paid by land and sea passenger-transport companies are estimated as a fixed percentage (based on a corporate survey that was discontinued in 2011) of their revenue. However, as already indicated, a survey of land and sea passenger-transport companies is expected to be launched in 2017 and should be a direct input in these estimates.

Secondary income

20. The amounts for the general government are available from administrative sources (the Federal Tax Administration on current taxes, the ANSES on pension payments to beneficiaries who are residents abroad, the Secretariat of Finance at the Ministry of Finance on current international cooperation, and the Secretariat for Fishing on fines collected from residents abroad), as well as the results of the service-corporation survey on nonresidents’ contributions to Argentine social security.

21. Credits for personal transfers are derived from a quarterly survey of operators in the international-remittances market; debits are calculated by estimating the average remittance sent by nationals of Peru, Bolivia, and Paraguay who are older than 15 and residents in the country. Information on debits is available from remittance operators; however, it is only used for cross-checking purposes given the frequent use of unconventional means of transfer.

22. Under current transfers of financial and nonfinancial corporations, and households and NPISHs, current taxes are estimated by applying the income-tax rate, by type of service, to the amount credited for each service; social contributions are extracted from a corporate survey; social benefits are calculated using information from various countries on retirement and pensions paid to Argentine residents; nonlife-insurance net premiums and claims are based on statistics provided by the SSN; finally, the sources for miscellaneous current transfers are the Yacyretá binational corporation, service-corporation surveys, a survey conducted by Argentina universities on foreign scholarships earned by Argentine students, and official data from the Organisation for Economic Co-operation and Development (OECD) on transfers to the government that are not identified as such.

23. Income-tax withholdings on payments for services are estimated using assumptions deemed to be unsound; in turn, the corresponding receipts for services cannot be estimated given the lack of information on withholdings by counterparty countries. As a result, considering that the estimated amounts are not substantial, this estimation can safely be omitted without impacting the current-account balance.

Recommendation

  • Discontinue the imputation of tax withholdings under service exports (March 2017).

Capital account

24. Gross acquisition and disposal of nonfinancial nonproduced assets includes data on the sale and purchase of sportspeople provided by the relevant clubs, and statistics on the sale and purchase of patents and brands compiled using the results of the service-corporation survey augmented with data from the ENGE and from corporate balance sheets.

25. Other capital transfers are obtained from records on budgetary transactions provided by the Secretariat of Finance at the Ministry of Finance.

B. Financial Account and International Investment Position

26. The main sources of information used to compile the financial account of the balance of payments, the IIP, and investment income are data compiled by the BCRA (information on the exchange balance or the MULC, direct-investment survey, and debt survey); accounting information, primarily balance sheets of publicly-traded corporations or securities issuers; balance sheets of DTCs and the BCRA, as well as of companies included in the ENGE; data from the Debt Management and Financial Analysis System (DMFAS) on general-government borrowing; information provided by the Office of Public Credit; stock-exchange statistics on securities deposited on behalf of nonresidents; counterparty information (BIS, CPIS, CDIS, deposits held by Argentine residents in Uruguay, government securities deposited by Argentine residents in the United States); information compiled by the DNCI concerning the assets of the largest Argentine corporations; and mission estimates of residents’ foreign assets (real estate, trade credits, foreign currency and deposits, and foreign securities).

27. The main challenge when measuring foreign assets and liabilities in the balance of payments and the IIP lies in the lack of suitable data sources for the compilation of transactions and stocks related to the foreign assets of the nonfinancial private sector. The DNCI uses decades-old information to estimate investments in real estate, holdings of foreign currency and deposits abroad, and investment in foreign securities. For real-estate investments, data on holdings in Uruguay dating back to the 1990s are extrapolated to other countries also deemed relevant. Investments by Argentine residents in foreign securities are estimated based on information provided by the United States Treasury, augmented with various percentages of nonresidents’ investments in Argentina whose ultimate beneficial owners are deemed to be Argentine residents. These percentages are the result of a survey conducted in the 1990s. Holdings of foreign currency by the nonfinancial private sector are estimated as the difference between incoming and outgoing currency flows processed by financial intermediaries, net of holdings by the BCRA and DTCs. Deposits abroad are estimated on the basis of changes in foreign deposits in Uruguay, the United States, and BIS data. Trade credits and advances from Argentine residents to nonresidents are estimated from the difference between the INDEC’s trade figures and the BCRA’s exchange balance or MULC statistics. The mission believes that priority should be given to reviewing the assumptions that serve as a basis for these estimates and to updating the underlying information. The tax-regularization campaign centered on unreported foreign assets that is underway until March 2017 might throw light on these estimates.

Recommendation

  • Update the information used to estimate foreign assets held by the nonfinancial private sector (June 2017).

28. The Central Bank of the Republic of Argentina (BCRA) compiles and disseminates the International Reserves and Foreign Currency Liquidity template (monthly), detailed information on direct investment in Argentina (annually), debt liabilities of the private sector (quarterly), and the exchange balance (monthly). The DNCI relies on that information in order to compile ESS; however, its usefulness is limited by the level of disaggregation of the data available at the DNCI. Given that some information is in the form of aggregates and resident corporations are not identified, there is a risk of double accounting; in addition, consistency in the information on transactions and positions cannot be ensured using aggregate data, nor can the results obtained by both agencies for the same categories be reconciled.

29. In November 2016, the INDEC and the BCRA signed an agreement to share information at the level of microdata in order to use it more intensively. Both are now collaborating on aligning the definitions and concepts used by the BCRA with the BPM6 and on reconciling the results obtained by each agency. Working with the DNCI, the mission reviewed the technical documentation and the methodology used to survey the debt and direct investment of the private sector; subsequently, in a meeting with the BCRA, the mission proposed a number of changes aimed at smoothing the migration to the BPM6 methodology and improving the quality of the quarterly releases on the financial account and the IIP. The BCRA welcomed these suggestions and will address them in an upcoming review of compilation procedures. The mission considers that strengthening the cooperation with the BCRA and creating channels to exchange, compare, and reconcile information quickly are of the utmost importance.

Recommendation

  • Create procedures for the smooth exchange of information and data conciliation with the BCRA (March 2017).

30. The mission provided assistance in the compilation of the financial account and of investment income for the first quarter of 2015, and of the IIP as of December 31, 2014, and March 31, 2015, in line with the BPM6. This can be accomplished using information available at the DNCI, although it requires identifying Other financial corporations within Other sectors in order to extract separate information from the BCRA surveys. In addition, data on foreign assets held by insurance companies is available from the SSN and the Argentine Mutual Funds Association (CAFCI).

31. Compiling the IIP on a quarterly basis with a three-month lag should be feasible, although some categories would yield provisional estimates. The availability of the BCRA compilations mentioned above (primarily, the debt survey and the exchange balance, together with the capacity to conduct the direct-investment survey on a quarterly basis, even with a limited sample of corporations) is critical in this connection. The DNCI expects to start compiling and disseminating the IIP on a quarterly basis with data as of March 31, 2017, with a scheduled release in June 2017.

Recommendations

  • Compile the financial account of the balance of payments and the IIP on a quarterly basis, in line with the BPM6 methodology, for the period 2010–2016, using currently available data sources (June 2017).

  • Identify Other financial corporations within Other resident sectors in the financial account and the IIP, and add information on foreign assets held by insurance companies (including technical reserves) and mutual funds (June 2017).

Direct investment

32. Both in the financial account and the IIP, direct-investment assets are calculated using information compiled by the DNCI on the basis of the balance sheet of major Argentine corporations (including their inward and outward investment counterparty), accounting information on DTCs that includes equity in branches and shares in subsidiaries abroad, and estimated real-estate investments held by Argentine residents abroad (see above). In addition, the exchange balance is used to compile transactions. Loans from direct-investment enterprises to their direct investors or to nonresident affiliates are not identified (the information could be obtained from the notes to the balances sheets of major Argentine direct- investment enterprises). The BCRA disseminates statistics about direct investment in Argentina broken down by first- and second-tier geographic counterparty. For second-tier investments, data showing counterparties in Argentina can be used to estimate the direct investments of Argentine corporations that reinvest in the country (inward and outward investment).

33. The DNCI estimates direct investment in Argentina using information from balance sheets of DTCs and large publicly-traded local corporations, as well as MULC statistics and press releases. Income is based on earnings reported by publicly-traded corporations and reinvested earnings are estimated by deducting the dividends paid through the MULC. Subsequently, ENGE data are added, as well as the BCRA’s aggregate data on investment and information from the debt survey on intercompany lending. However, as the information is aggregated, not all data from the BCRA’s direct-investment survey can be incorporated. The availability of detailed information from the BCRA and the cooperative arrangements implemented between the two agencies will make it possible to use the direct-investment survey more intensively and to reconcile the disseminated results.

34. The direct-investment survey conducted by the BCRA provides biannual information on direct investment in Argentina. The BCRA expects it to become an annual exercise. One of the issues raised during the meeting attended by the mission, the DNCI, and the BCRA is the need to collect quarterly information both for direct investment in Argentina and on direct investment abroad (excluding real-estate investment). These quarterly data could be restricted to key corporations. In addition, various changes and clarifications to the instructions to reporting corporations were discussed with the aim of better aligning them with the definitions in the BPM6; for example, the identification in the debt survey of lending from nonresident direct-investment enterprises to Argentine direct investors, the identification of equity shares of less than 10 percent potentially held by affiliated enterprises, indirect shares, additional clarifications regarding windfall profits, and tax treatment. The BCRA showed great willingness to introduce these changes in the survey instructions, which are currently being revised. Nevertheless, prior to this meeting, the BCRA expected to move to an annual survey. Staff expressed doubts concerning the ability to obtain meaningful results using a survey geared towards to collecting information on direct-investment assets held abroad. The DGCI and the BCRA will continue to cooperate in this area within the framework of their newly-signed agreement.

Recommendations

  • Identify lending from nonresident direct-investment enterprises to resident direct investors in the BCRA’s debt survey, as well as lending from the largest resident direct-investment enterprises to nonresident direct investors, and compare direct investment abroad with the information included in the BCRA’s direct-investment survey for the second tier (December 2017).

  • Establish a quarterly collection exercise for foreign direct investment as part of the BCRA survey or, if not feasible, as an in-house exercise (December 2017).

Portfolio investment

35. The DNCI compiles information on foreign assets included in portfolio investment based on accounting information provided by the BCRA, government data on own holdings of debt securities (mainly, outstanding Brady Plan warrants), and DTCs’ balance sheets. The estimate of private-sector assets mentioned above is also included; although its revision is encouraged. At the meeting with the DNCI and the SSN mentioned previously, the mission learnt of the existence of information about the sector’s foreign assets that the SSN could make available periodically. Additionally, there is information on foreign assets held by mutual funds that could be reflected in the compilation of ESS.

36. The direct sources for portfolio-investment liabilities are the balance sheets of the BCRA and DTCs, the DMFAS, data on central-government issuances, stock-exchange information on nonresident holders of government debt securities, stock of publicly-traded Argentine corporations, and issuance of ADRs. The stock exchange keeps information on private-sector securities held on behalf of nonresidents that should be included under portfolio-investment liabilities.

37. Aligning the financial account and the IIP with the BPM6 methodology requires detailed information on instruments in arrears so that they can be correctly assigned to the relevant category and concept. Whenever this information was unavailable to the mission, arrears were temporarily assigned to the category with the largest liabilities (mainly, portfolio investment).

Recommendation

  • Include information available from the CNV on nonresident holdings of private-sector securities issued locally. (March 2017).

  • Explore the availability of information broken down by instruments in arrears for reclassification in line with the BPM6.

Financial derivatives

38. Currently, this category only includes GDP coupons issued by the Argentine government, with a return based on national GDP growth. There is an organized market for derivatives in the city of Rosario, where nonresident operators might be conducting transactions. The existence of accounting information at the BCRA on derivatives operations between nonresidents and DTCs should also be explored.

Recommendation

  • Explore the existence of information on financial derivatives with nonresidents, both in the accounting information of DTCs (available at the BCRA) and in the Rosario derivatives market (June 2017).

Other investment

39. Foreign assets under Other investment are compiled using accounting information from the BCRA, the central government, and DTCs. Statistics on foreign assets held by the private sector in the form of currency and deposits, and trade credits and advances, are under review (see paragraph 27). At the DNSE, the mission and the DNCI raised the possibility of adding to the survey of corporations a question about average receipt periods for exports of goods and services in order to estimate trade credits, both as assets and as liabilities of Argentine corporations with the rest of the world. The DNSE agreed to consider this suggestion.

40. Liabilities under Other investment are compiled using accounting information from the BCRA and DTCs, DMFAS data, and the debt survey conducted by the BCRA, which shows the debt liabilities of the private sector. In connection with the debt survey of the private sector, the mission and the DNCI requested that the BCRA make a number of changes in the compiled data and in the compilation procedures to align them with the BPM6 recommendations. BCRA staff were open to including those changes in the next review of procedures.

Recommendation

  • Keep in touch with the DNSE to discuss the potential inclusion of information required to estimate average receipt and payment periods of exports and imports.

III. ESS Dissemination and Other Aspects of ESS Production in Argentina

41. The quarterly balance of payments is released around the twentieth of the third month following each quarter’s end. The annual IIP is released in the month of July following each reference year. At every release point, the DNCI reviews the published historical series in its entirety.

Recommendation

  • Redefine the revision policy of ESS in order to better match information sources and compilation procedures slated for adoption.

42. The DNCI has 12 staff, including support and management. Following the general policy adopted by the new INDEC management, the DNCI has been building the capacity of its staff through training courses and seminars devoted to the ESS methodology, the implementation of statistical operations, and IT tools.

43. ESS compilation is currently performed by means of Excel spreadsheets managed by compilers primarily on the basis of aggregate data. The DNCI will start receiving large amounts of information at the level of microdata—that is, identifying resident corporations— concerning customs, the exchange balance (MULC), and the BCRA’s debt and direct-investment surveys. The use of this information for the purpose of compiling ESS will require updated IT tools and migration to adequate databases. Consequently, in addition to training current staff, the DNCI will need at least three suitably qualified new staff.

Recommendation

  • Expand staff training to include the use of complex databases, and hire at least three staff (March 2017).