IMF Conference

The complexity of issues and the number of stakeholders involved both at international and national levels to address data gaps revealed by the global financial crisis require coordinated efforts. Following proposals from the IMF and FSB staffs, in consultation with the Inter Agency Group on Economic and Financial Statistics (IAG), the G-20 finance ministers and central bank governors endorsed 20 recommendations to address information gaps described in the report The Financial Crisis and Information Gaps—Report to the G-20 Finance Ministers and Central Bank Governors .

Recommendation 15 refers to developing a strategy to promote the compilation and dissemination of the balance sheet approach (BSA), flow of funds, and sectoral data more generally. This session will provide an overview of the G-20 recommendations to address data gaps and way forward for their implementation. Specifically, the session will discuss efforts required at the country and international levels for implementing Recommendation 15 by strengthening the sectoral balance sheets, flow of funds, and accumulation accounts disseminated by the G-20 plus advanced economies.

A paper analyzing available sectoral balance sheets, flow of funds, and accumulation accounts data from selected countries will be discussed to demonstrate how these data are useful for tracking important events in the economy. Three presentations will be made in this session.

The experiences on the development and use of balance sheet approach and flow of funds will be discussed by speakers. Flow of funds accounts showing the transactions on financial instruments between creditors and debtors support understanding of how surpluses are allocated (or deficits are financed) in the acquisition (incurrence of liabilities) of financial instruments and against whom they represent claims (liabilities). On the other hand, the balance sheet approach of the IMF shows positions on financial instruments (with a breakdown of maturity and currency) between creditor and debtor sectors.

The System of National Accounts provides the framework that integrates balance sheets and flow accounts to allow for compilation of whom-to-whom financial data on transactions and stocks of assets and liabilities, but the integrated compilation and presentation of whom-to-whom data is yet to be achieved. Some countries compile the complete sequence of accounts and also flow of funds accounts based on consistent data, however, in most cases the accumulation accounts are not fully integrated with the balance sheets and the flow of funds, and the detail available on sectors and financial instruments limits their usefulness for analysis and identification of financial risks.5 After a discussion of BSA, whom-to-whom datasets generally, and flow of funds; the session will discuss approaches for development of integrated financial accounts and balance sheets with whom-to-whom datasets that are internationally comparable.

This session will discuss the status in the compilation and dissemination of sectoral accounts in accordance with the 1993 SNA or 2008 SNA by the G-20 countries and other advanced economies. Following six presentations from international organizations will provide the basis for the discussion.

Developing and strengthening compilation systems for sectoral positions of financial assets and liabilities and accumulation accounts integrated with detailed flow of funds (whom-to-whom basis) requires additional efforts. Collection of data on stocks and flows of financial assets and liabilities by sectors of the economy is resource-intensive and also demands collaboration among several agencies and cooperation from respondents. These problems are particularly significant regarding data for the non-financial corporations and the household sector. Lack of experience may also be a constraint and clear compilation guidelines and technical assistance may be needed for countries, particularly those planning to develop these statistics.

This session will use country presentations to highlight problems and challenges faced by countries or different group of countries to develop and strengthen sectoral balance sheets and accumulation accounts integrated with whom-to-whom information. Countries making presentation will describe the sources and methods used for the compilation of the sectoral stocks of financial assets and liabilities and financial flows and the adherence of these estimates to the concepts and principles of recording and valuation in the national accounts. It will elaborate on the coverage and detail of the accounts produced in terms of assets and liabilities for each one of the accumulations (transaction and other flow accounts) and the balance sheet. Specific emphasis should be given to the compilation of data for nonbank financial institutions, non-financial corporations and the household sector; counterparty information for deriving whom-to-whom data; maturity breakdown; currency composition; and institutional issues.

The availability of sectoral data on flows and stocks of non-financial assets has also been highlighted by the financial crisis. The positions and changes in value of non-financial assets in the balance sheets of the household sector and the non-financial corporate sector can play an important role in identifying sectoral balance sheet weaknesses that can spill over to the financial sector, especially when fixed assets serve as collateral for debt instruments. This session will use country presentations to highlight problems and challenges faced by countries or different group of countries to develop and strengthen sectoral data on stocks of non-financial assets and accumulation accounts.

This session will inform participants of this Working Group’s progress on executing an implementation strategy for Recommendation 13. As part of this strategy the Irving Fisher Committee intends to sponsor a workshop in January 2011 to discuss the conceptual issues related to compiling consolidated balance sheets for multinational financial and non-financial corporations, such as determining nationality of control and its relationship to the residency (center of economic interest) concept of prevailing standards for macroeconomic statistics.7 Broader implementation of existing statistical standards on position and flow statistics is the focus of the Inter Agency Working Group on Recommendation 15 and the subject of this Conference.

This session’s main objective is to discuss and agree on work program and priorities for strengthening the development of sectoral accounts in G-20 and other advanced economies. A paper by the IMF will elaborate alternative approaches for development of these statistics which will serve as a basis for the discussion focusing on the following main objectives:

• Discuss and agree on priorities on the compilation and dissemination of internationally comparable minimum set of flow of funds, sectoral balance sheets and accumulation accounts preferably within three years.
• Elaborate the two-track approach in strengthening the development of these statistics with respect to G-20 plus other advanced economies and emerging market economies depending on whether further enhancements are needed to existing compilation system or a new compilation system is to be established.
• Elaborate on the international cooperation and assistance needed for successfully implementing the program for flow of funds, sectoral balance sheets and accumulation accounts.
• Discuss the institutional arrangements and collaboration among statistics producing agencies in compiling flow of funds, sectoral balance sheets and accumulation accounts.
• Discuss dissemination of internationally comparable data at the national level as well as possible institutional arrangements and modalities for the collection and dissemination of these data at the international level.