Improving the Measurement of International Remittances

1. Improving the Measurement of International Remittances Neil Fantom Development Data Group World Bank

2. Statistics on international remittances • Main source is the Balance of Payments statistics • Established reporting system and conceptual framework managed by IMF • Typically, data are collected by Central Banks or National Statistical Offices • Published annually and quarterly in Balance of Payments Statistics Yearbook - some countries compile and publish monthly data as well

3. Some of the data issues • Currently, users have to calculate remittances from several BoP statistics aggregates • Quality problems: some users (e.g. World Bank) adjust the data for missing or implausible data • Some countries may not give remittances data components high priority within BoP statistics framework • “Bilateral” flow data are not currently collected by IMF, although some countries do publish data

4. Improvements have been made • G8 Summit Sea Island in 2005 called for data improvements • A careful international effort has resulted in: • New definitions and concepts for remittances agreed in the latest (sixth) revision of the BoP Manual • A new “compilation” guide, equally useful for data compilers and for users • Many countries have made efforts to improve their data • Other regional initiatives have helped countries improve estimates • IDB/MIF program for Latin America, executed by CEMLA • IMF regional workshops in Thailand, Tunisia, Lebanon, Singapore

5. New definitions • Work (led by UN Statistics Division) resulted in four aggregates • Personal transfers (narrowest) • Personal remittances • Total remittances • Total remittances and transfers to NPISHs (broadest)

6. Relationships Personal transfers + net compensation of employees and capital transfers between households Personal remittances = + social benefits Total remittances = + current and capital transfers to NPISHs Total remittances and transfers to NPISH =

7. What happens to the old definitions? • Workers’ remittances • Supplementary item (component of personal transfers) • Compensation of employees • Standard item in current account • Migrants transfers: no longer available

8. Compilation guide • Published by the IMF, core drafting by the “Luxembourg Group” • A voluntary ad-hoc working party of international agencies and data compilers from countries • Met three times: Luxembourg, Frankfurt, Brasilia

9. Albania Brazil Centre for Latin American Monetary Studies Eurostat Germany India International Monetary Fund Italy Japan Lebanon Moldova Spain Portugal Organization for Economic Cooperation and Development Philippines United States United Kingdom World Bank

10. Next steps for the BoP • Experts meeting in June at World Bank agreed to • Establish a new ad-hoc working group to continue to work on data improvements • Develop electronic forum for sharing bilateral data and metadata among data providers, particularly to assess data asymmetries • IMF support for compilers through annual regional workshops • Ljubljana (Nov 2009); Abu Dhabi (Nov 2010) • Country data compilers will need to adopt new definitions • Nature of remittances means that compilation of accurate estimates will remain challenging

11. Data from Household Surveys • Attractive data source for researchers • Allows comparison or remittances with other household variables (e.g. poverty, health, education) • And surveyor has control over questions asked (migration, remittances, transaction costs) • But not easy to get good data • Income-related variable impacts on quality of response • Sampling difficulties; respondents may be “rare” in general population, requiring special techniques • Surveys of remittance receiving countries more common than surveys in remittance sending countries • World Bank sponsors various household survey programs, including one specifically on migration/remittances in Africa

12. Suitland Group • Set up by Conference of European Statisticians to work on improving migration and remittances data collected through household surveys • Review of Methodologies Used to Estimate Emigration • Repository of Household Survey Questionnaires on Migration • Linking Registers and Other Sources of Administrative Data with Surveys • Questionnaire Module on Migration and Remittances • Categories, Definitions, and the Importance of Hard-to-Count Populations • Data Quality Issues • Sampling Frame and Sample Design Issues

13. Case study: adding questions to a survey in the United States • United States Current Population Survey administered by US Census Bureau • Migration and remittances questions added to one round of US labor force survey (known as the Current Population Survey) in 2008 • Remittance questions: frequency and average amounts over previous 12 months • 70,000 households in sample • Cost of additional questions estimated to be between $400,000-$850,000 • Overall, remittance questions seemed to work, for example: • 5% of households sent remittances • 87% response rate for average amount question asked to sending households • 27% of foreign-born reported sending remittances

14. Some final thoughts • BoP: definitions have improved, and practical guidance for compilers and users is available • Key issues in some countries are limited resources and capacity, or low priority given to remittances data in BoP • Household surveys: important data source • Adding questions to regular, large-scale nationally representative household surveys can work, but at a cost