Measuring Remittances in the Western Hemisphere

1. Centro de Estudios Monetarios Latinoamericanos Y Fondo Multilateral de Inversiones (FOMIN-BID) Improvement of Central Bank Information and Procedures in the Area of Remittances Measuring Remittances in the Western Hemisphere United Nations, New York February 24th, 2006 Kenneth G. Coates Director General CEMLA

2. 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.

3. 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.

4. 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.

5. 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)

6. 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

7. 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

8. 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 IFI’s). • 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 Group’s • 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.