Methodology
The External Debt Guide
International financial crises in the 1990s underscored the importance of reliable and timely statistics on external debt as a critical element for the early detection of economies’ external vulnerability. Against this background, the TFFS undertook in 1998 to update the existing international guidelines on external debt statistics, set out in External Debt: Definition, Statistical Coverage and Methodology (a.k.a. the Grey Book), published in 1988 by four of the current TFFS Agencies (BIS, IMF, OECD, and World Bank). Improving the accuracy and timeliness of key external debt data and promoting convergence of recording practices around the world have been the focus in developing the new guidance. The IMF published in 2003 the External Debt Statistics: Guide for Compilers and Users (the Debt Guide), also available in Arabic, Chinese (File 1) and (file 2), French, Spanish, and Russian.
The Debt Guide provides a comprehensive conceptual framework, consistent with the 1993 System of National Accounts(1993 SNA) and the fifth edition of the Balance of Payments Manual (BPM5), for the measurement of gross external debt of the public and private sectors.
To keep abreast of economic developments and changing data needs in economic analysis, the 1993 SNA and BPM5 are being updated in 2008-09. The TFFS closely monitors the changes brought about by these updates, to assess their impact on the Debt Guide and identify any necessary changes.
On the whole, the Debt Guide remains largely consistent with the updated standards. Only a limited number of changes in the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6) will require methodological changes in the Debt Guide. Most changes in BPM6 imply either minor modifications in concepts and classification, or clarifications of the methodological treatment. These issues are discussed in the following paper, approved at the March 2009 meeting of the TFFS: Update of the External Debt Guide on Issues Emerging from BPM6. Public comments on this paper are welcome by end-October 2009 at the following address: tffs@imf.org.
The updated Debt Guide — reflecting updates emerging from the revision of the Balance of Payments Manual, clarifications, corrections, and all other revisions — is scheduled for release in 2013.
Work on Public Debt
As a result of global financial integration, domestic and international debt markets are substitute sources of public sector financing and should be considered jointly. Nonresidents hold substantial amounts of debt securities, while many economies issue domestic debt instruments denominated in, or indexed to, foreign currency. In this context, adequate data on debt liabilities are needed to understand the level and composition of public debt and its susceptibility to changes in underlying economic conditions.
Timely, accurate, and comprehensive data on public debt are critical for effective surveillance and are essential elements of a sound international financial architecture. For many economies, concerns have been raised about the magnitude and structure of public sector debt, in particular in connection with the ability of public sector institutions to discharge their debt service obligations. Such debt statistics are considered essential for improving assessments of vulnerability to shocks and the sustainability of government policies.
As agreed with the TFFS, the Statistics Department of the IMF drafted an outline of a Public Sector Debt Guide for compiling public sector debt statistics, which was presented at the April 2008 TFFS meeting for comments. A revised outline and a couple of draft chapters were presented at the March 2009 TFFS meeting. The IMF will prepare a full draft version of the Guide for agencies’ review at the 2010 TFFS meeting. TFFS agencies will also provide specific contributions for the Guide (boxes, tables, case studies, country cases). As was the case with the External Debt Guide, the Public Sector Debt Guide will be the result of a cooperative effort of all agencies.