Measuring Remittances in the Western Hemisphere

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Measuring Remittances in the Western Hemisphere
Centro de Estudios Monetarios Latinoamericanos Y
Fondo Multilateral de Inversiones
(FOMIN-BID) Improvement of Central Bank
Information and Procedures in the Area of
Remittances

• United Nations, New York
• February 24th, 2006

Kenneth G. Coates Director General CEMLA
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Why CEMLA?

• Regional Association of central banks for LAC
  (1952).
• Central banks are responsible for BOP statistics
• CEMLA has mandate from CB governors and funding
  from IDB (MIF) to improve measurement of
  remittances.
• CEMLA provides CBs with capacity-building in
  statistics (BOP, SNA93, Fiscal and Monetary
  Financial).
• Project must converge with other international
  initiatives underway in order to avoid
  duplication.
• Agreement on new recipient-friendly BOP
  definitions (personal transfers, personal
  remittances and total remittances) is a very
  positive step.

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The Program

• Justification
• Remittances are becoming increasingly important
  to the region, raising issues of macroeconomic
  stability, poverty alleviation and financial
  inclusion, among others.
• But statistics on remittances are, by and large,
  unreliable
• Purpose
• The development and adoption of a standard
  methodology for measuring international
  remittances in the region, based on best
  practices in this field
• To provide permanent institutional arrangements
  for revising the methodology and for systematic
  discussion of the issues.
• To improve the regulatory environment and policy
  framework, contributing to lower remittance
  costs.

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Measurement Problems

• Discrepancy of information from different sources
• Lack of knowledge of market structures and
  channels
• Lack of precision in measurement techniques
• Lack of registration for market operators
  (informality)
• Little use of household surveys
• Lack of agreement on a precise definition of
  remittances
• Insufficient resources at central banks
• The CEMLA/MIF project seeks to interact and
  coordinate with other international initiatives
  in this field (G-7, TSG, IMF/WB/CPSS), and
  contribute by providing a practical attempt to
  adopt common practices at the field level by
  central banks.

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Program Components

• Preparation, design and implementation of
  procedures for measuring remittances
• Institutional arrangements, Issues paper,
  Launching seminar, Task Forces and Compilation
  Guidance)
• Strengthening knowledge of remittance markets
• (Survey missions, Implementation workshops,
  and Technical assistance)
• Transfer of knowledge
• (Preparing reports and publishing documents)
• Training and sensitization
• (Training courses, Sensitization events and
  Website)

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Institutional Arrangements

• CORDINATION UNIT CEMLA
• Technical, Administrative and Logistical
  Coordination.
• Preparing Papers, Events, Missions, Publications
  and Reports
• Technical Secretariat for the Working Group and
  Steering Committee
• WORKING GROUP IN REMITTANCES (WGR-LAC)
• Representatives of 23 participating central banks
  in the region (mainly BOP Statistics staff with
  seniority to promote change in their
  institutions)
• Periodic meetings to track project progress,
  participate in the design of project procedures
  and methodologies, prepare terms of reference for
  missions, and in general, further their knowledge
  of remittances through presentation of project
  output.
• REMITTANCES INTERNATIONAL STEERING COMMITTEE
  (RISC)
• Experts from stakeholder institutions and
  international organizations with recognized
  expertise in the statistical measurement and
  analysis of remittances.
• They shall bring international experience to the
  program, provide methodological guidance, ensure
  consistency with best practices and supply
  additional technical assistance resources.
• Task Forces on
• Country Missions Manual
• Bilingual Glossary of Terms
• Methodology and Compilation Guidance

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Task Force Conclusions

• Task Force 1 Country Mission Manual
• Contributions from RISC, WGR, CEMLA and other
  multilateral entities experts and consultants
• Visit all relevant stakeholders and include all
  the relevant data on national markets
• Establish a General Structure of the Country
  Report (Table of Contents and Annexes)
• Recommendations on statistical procedures and
  normative (regulatory) aspects
• Include implementation workshops after each
  mission (as part of BOP Statistics Training)
• Task Force 2 Glossary
• English-Spanish
• Include all the relevant terms, concepts and
  definitions in remittances measurement
• Task Force 3 Methodology and Compilation
  Guidance
• Coordinate with TSG and the Luxembourg Group
• Focus on new definitions in BPM6 Manual
• Take the lead in regional implementation and
  preparing the ground for changes.
• The Guide would be for voluntary adoption.
• Primary source ITRS modified vis-à-vis household
  or arrival surveys
• Needs for legislation and compliance mechanisms
  would be studied
• Data sharing among CBs requires an explicit
  framework

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Current Status

• Country Mission Manual
• To be ready by June 2006. Consultant assigned.
• First Country Mission to take place in August
  2006
• Mission staffing CEMLA, consultant,
  international experts (central banks or IFIs).
• Glossary
• First draft to be ready by June 2006. Consultant
  assigned.
• The draft of the Glossary will be circulated to
  RISC and WGR for comment.
• Methodology and Compilation Guide
• Given the current changes in definitions
  recommended for BPM6, this work should proceed
  simultaneously with the emerging consensus, and
  in close coordination with efforts such as the
  Luxembourg Groups
• The Program is willing to provide a testing
  ground for the new definitions and associated
  methodologies, and present the Draft Guide for
  discussion at an upcoming meeting. Consultant
  pending.