Statistics & Data Warehouse Department (Balance of Payments Division) Revision Study on Balance of Payments Statistics

Introduction
Statistics & DWH Department of State Bank of Pakistan is responsible for compiling Balance of payments (BOP) statistics of Pakistan. It not only compiles data on BOP but also informs users about the concepts and methodologies used in collecting, processing, analyzing and disseminating such data.

Revisions
Revision is defined as any change in data released to the public by State Bank of Pakistan. The data pertains to flows insofar as it relates to BOP during a particular period. The data on BOP is revised on monthly, quarterly and annual basis. The interim data on BOP is prepared on monthly basis by 15th of the following month. The first revision is made by the end of the following month. The second revision referred to as quarterly revision follows a time lag of 60 days. Annual revision, however, is carried out by 9 months following the reference year. Revisions occur for a number of reasons such as: 1. To adopt improved methodology 2. To include improved source data 3. To correct errors 4. To capture routine recalculation

For revisions, users are informed about the causes and they accordingly have access to complete documentation on methodology and procedures.

Adoption of Balance of Payments Manual, fifth edition of the IMF (BPM5) for compilation of balance of payments statistics
In our endeavors to adopt International Standards and comparability of data worldwide, it is vital to have common understanding of concepts and definitions amongst data providers, compilers and users. Statistics and DWH Department of the State Bank of Pakistan being the sole compiler

of Balance of Payments Statistics has all along been determined in adopting standard practices of data collection, compilation and dissemination followed by member countries around the world. The compilation of Pakistans Balance of Payments statistics according to the guidelines provided in BPM5 began from July, 2003. A summary of changes in classification of standard components under BPM4 and BPM5 is available at Annex-I This data revision study on BOP statistics covers the period July, 2007 - June, 2008 (FY08). The major revisions made during the period have been due to adoption of improved methodology, incorporation of improved source data and on account of revisions made to correct errors. The summary data sheet on BOP showing various items of provisional and revised data is available at Annex - II.

Part 1. Revisions due to adoption of improved Methodology

There has been a practice of recording trade nostros of banks under other claims of reserve assets of SBP because these were thought to fall under the effective control of SBP. For these accounts to appear under other claims, these should essentially appear in SBPs books of accounts. A thorough investigation of such accounts however, revealed that these accounts pertain to banks and also appear in their books of accounts as such recording them as a part of reserves assets of SBP hardly serves any meaningful purpose. Therefore, it has been decided to exclude them from the claims of reserve assets of SBP and include them in banks assets by way of netting them off. For the reference period FY08, the changes made are as under: (Million US $)

Description
Trade Nostros of banks

Under old Methodology

Under new Methodology

250*

250

* In BOP negative sign indicates increase in assets and positive sign reflects decrease in assets and opposite is true in the case of liabilities.

Part 2. Revisions due to Improved Source Data

The compilation of BOP (interim) on monthly basis involves using in some cases estimates which are subsequently revised upon receipt of actual data. As the monthly BOP (interim) is disseminated on the SBP website by 17th of the following month so usually by that time some data are not received. Therefore, the practice followed for compiling monthly BOP involves in some cases estimates. The main areas where the revisions generally take place for non availability of actual data source are mentioned as follows:

2.1 Foreign Economic Assistance (FEA) Data (General Government).

The data is revised upon receipt of actual data. The practice followed for recording initial data is based on using information received through advices from Finance Department of the SBP. Subsequently, revisions are made when actual data on FEA reported in Status Report is received from Economic Affairs Division (EAD), Ministry of Finance (MOF). Major changes due to improved source data in FY08 are given below. (Million US $)

Description

Provisional data based on advices of Finance Department, SBP

Revised data based on Status Report of EAD,MOF

Foreign Economic Assistance (G.Govt.) i) Loans 3057 524 3078 527

ii) Grants

The FEA is received on cash and non-cash bases. The FEA on non- cash basis is split into imports, freight, insurance and technical assistance. Accordingly, the revisions against these heads are also carried out.

2.2 Adjustments in Exports / Imports data

The data on exports / imports is gathered through International Transactions Reporting System (ITRS) of banks which is based on exchange records. The initially released (interim) trade data is formed by adding to data collected through exchange records the estimates of trade data received through other means which do not involve payments through banks like Land borne Trade and Export Processing Zones (EPZs) data. Upon receipt of actual data from Federal Bureau of Statistics (FBS) and EPZs, the trade statistics is revised. In FY08, the trade statistics witnessed the following changes:
(Million US $)

Description

Provisional data based on estimates

Revised data based on actual numbers

i)

Exports

20,122 - 35,417

ii) Imports*

2.3 Adjustments in Services data

Here again the initial dissemination of data on services which involves estimates is revised subsequently upon receipt of actual data from Pakistani / foreign air and shipping companies, EAD, MOF. The revision made in services data during FY08 is reflected as follows:

Description

Provisional data based on estimates

Revised data based on actual numbers

i)

Exports of services

3590 - 9897

ii) Imports of services

Part 3: To correct errors

As already mentioned, the data on flows is received through ITRS of banks. There has been an instance where direct investment was made, but, it was not recorded through ITRS. The other sources, however, identified such occurrence. As a result, an investigation was made and the data on direct investment was revised accordingly.
Changes made in direct investment for FY08 are as follows: (Million US $)

Description
Direct Investment

Provisional Data
5,153

Revised data
5,410

Annex-I Summary of Changes in Classification of Balance of Payments (BOP) items under 4th and 5th edition of IMF's Manual on BOP Standard Components of BPM4 Standard Components of BPM5 Major Changes

A. Goods, Services and Income

1. Current account A. Goods and services

Goods, Services and Income account under BPM4 has been bifurcated into Goods and Services Account and Income account under BPM5 No Change Under BPM5,it records the gross vlaue of goods instead of processing fee only in the services account Recassified under BPM5 to include in Goods from the services account under BPM4 Recassified under BPM5 to include in Goods from the services account under BPM4 New under BPM5

1. Merchandise f.o.b.

a) Goods 1. General merchandise 2. Goods for processing

3. Repairs on goods

4. Goods procured in ports by carriers 5. Nonmonetary gold 5.1 Held as a store of value 5.2 Other b) Services

2. Shipment 3. Other transportation 1.Transportation

Under BPM5,detailed classification has been provided against 11 heads of Services Account Reclassified under BPM5 to include under transportation-freight Under BPM5,detailed classification has been provided against transportation which includes shipment under BPM4

4. Travel

1.1 Sea transport 1.1.1 Passenger 1.1.2 Freight 1.1.3 Other 1.2 Air transport 1.2.1 Passenger 1.2.2 Freight 1.2.2 Other 1.3 Other transport 1.3.1 Passenger 1.3.2 Freight 1.3.2 Other 2.Travel 2.1 Business 2.2 Personala

Under BPM5,detailed classification has been provided

6. Other goods,services & income 6.1 Official Labor income Property income 6.2 Others

11.Government services, n.i.e. Shifted to income account under BPM5 Shifted to income account under BPM5 3. Communication services 4. Construction services 5. Insurance servicesb 6. Financial services 7. Computer and information services

New methodology for recording insurance services Expanded scope to include implicit services charge in foreign exchange trading

Annex-I Summary of Changes in Classification of Balance of Payments (BOP) items under 4th and 5th edition of IMF's Manual on BOP Standard Components of BPM4 Standard Components of BPM5 Major Changes

8. Royalties and license fees 9. Other business services 9.1 Merchanting and other trade related services 9.2 Operational leasing services 9.3 Miscellaneous business, professional, and technical a services 10. Personal, cultural, and recreational services 10.1 Audiovisual and related services 10.2 Other cultural and recreational services B. Income 1.Compensation of employes

Under BPM5 ,this reflects labor income earned by non-resident workers during their stay abroad for less than one year.Also included are the local staff of foreign embassies,consulates. Detailed classification has been povided for invetment income under BPM5

5. Investment income 5.3 Other

2. Investment income 2.1 Direct investment 2.1.1 Income on equity 2.1.2 Income on debt (interest) 2.2 Portfolio investment 2.2.1 Income on equity (dividends) 2.2.2 Income on debt (interest) 2.2.2.1 Bonds and notes 2.2.2.2 Money market instruments and financial 2.3 Other investment 2.3.1 Financial intermediation charge indirectly measured 2.3.2 Other interest

5.1 IMF 5.2 Official external debt

B.CURRENT TRANSFERS

8. Official

2.3.3 imputed income to households from net equity in life insurance reserves and in pension funds C. Current transfers Current transfers under BPM4 includes Capital transfers also,under BPM5,it has been separated to include in Capital Account. 1. General government 1.1.1 Current taxes on income, wealth etc. 1.1.2 Other taxes on production

Annex-I Summary of Changes in Classification of Balance of Payments (BOP) items under 4th and 5th edition of IMF's Manual on BOP Standard Components of BPM4 Standard Components of BPM5 Major Changes

7. Private

C. Capital Account

9. Direct investment abroad

10. Direct investment in Pakistan

1.1.3 Other subsidies on production 1.1.4 Social contribution 1.1.5 Social benefits 1.1.6 Other current transfers of general government 2. Other sectors 2.1 Worker's remittances 2.2 Other transfers 2.2.1 Current taxes on income, wealth, etc. 2.2.2 Other taxes on production 2.2.3 Other subsidies on production 2.2.4 Social contribution 2.2.5 Social benefits 2.2.6 Other current transfers of other sector 2. Capital and Financial Account A. Capitial Account 1. Capital transfers Includes migrant's transfers, debt forgiveness, taxes on capital transfers such as estate duties; and investment grants. 1.1 General government 1.1.1 Debt forgiveness 1.1.2 Other 1.2 Other 1.2.1 Migrants' transfers 1.2.2 Debt forgiveness 1.2.3 Other 2. Acquisition of non- produced non - financial assets B. Financial Account Under BPM5,Financial Account includes reserve assets.It also provides detailed classification under direct investment,portfolio investment and other investment. 1. Direct investment 1.1 Abroad 1.1.1 Equity capital 1.1.1.1 Claims on affiliated enterprises 1.1.1.2 Liabilities on affiliated enterprises 1.1.2 Reinvested earnings 1.1.3 Other capital 1.1.3.1 Claims on affiliated enterprises 1.1.3.2 Liabilities to affiliated enterprises 1.2 In reporting economy (Pakistan) 1.2.1 Equity capital 1.2.1.1 Claims on direct investers

Annex-I Summary of Changes in Classification of Balance of Payments (BOP) items under 4th and 5th edition of IMF's Manual on BOP Standard Components of BPM4 Standard Components of BPM5 Major Changes

11. Portfolio investment Public sector bonds Other bonds Corporate equities

12-17 Other Capital Long-term capital Resident official sector Deposit money banks Other Sectors Short-term capital Resident official sector Deposit money banks Other Sectors D.RESERVES Monetary Gold Special Drawing Rights Reserve Position in the Fund Foreign Exchange - Central Bank Foreign Exchange - Deposit Money Banks F. Exceptional Financing Limited Coverage

1.2.1.2 Liabilities to direct investers 1.2.2 Reinvested earnings 1.2.3 Other capital 1.2.3.1 Claims on direct investors 1.2.3.1.1 Debt securities issued by direct investors* 1.2.3.1.2 Other claims on direct investors* 1.2.3.2 Liabilities to direct investors 1.2.3.2.1 Debt securities issued by affiliated Other 1.2.3.2.2 liabilities to direct investors 2. Portfolio investment Equity securities The list has been expanded to accomodate Debt securities new developments in the financial markets. Bonds and notes Money market instruments 3. OtherFinancial derivatives investment Classification in BPM4 is firstly maturity Trade credits wise, then sectors and then assets, loans and Loans liabilities wise. In BPM5, the classification Currency and deposits is firstly for Assets,the by types then by Others sectors (new sector Monetary Authority included) and then by maturity (Long-term / Short-term).The similar pattren is followed for liabilities. It is not advisable to make line to line comparison in the two sets of components. 4. Reserve assets In BPM4, the reserves of economy were Monetary Gold classified as a separate head.Under BPM5,it Special Drawing Rights is a part of Financial Account. Reserve Position in the Fund Foreign Exchange-Central Bank

Exceptional Financing Expanded Coverage (Supplementary information)

Annex-II

Summary of Changes from BOP( Provisional) FY 08

Provisional Current account balance Current account balance without off. transfers Goods: Exports f.o.b Goods: Imports f.o.b Trade Balance Services: Credit Services: Debit Balance on Goods & Services Income: Credit Income: Debit Balance on Gds & Serv. & Inc Current Transfers:Credit Of which: Workers' Remittances FCA Residents Saudi Oil Facility Current Transfers :Debit Capital Account, Capital Account : Credit Project grants Capital Account... Debit Financial Account Direct Investment Abroad Dir. Invest. In Rep. Econ. Portfolio Investment Assets Portfolio Investment Liab. Equity Securities Debt Securities Other Investment Assets Monetary Authorities General Government Banks Other Sector Other Investment Liab. Monetary Authorities General Government Disbursements Amortization Other Liabilities Banks Other Sector Disbursements Amortization Other Liabilities Net Errors and Omissions Overall Balance Reserves and Related Items Reserve Assets Foreign Exchange ( SBP ) Foreign Exchange ( DMB ) Use of Fund Credit and Loans Purchases / Repurchases Exceptional Financing
-14036 -14463 20122 35417 -15295 3590 9897 -21602 1613 5522 -25511 11617 6451 444 0 142 119 126 109 7 7657 -75 5153 -5 41 20 21 -219 0 5 276 -500 2762 490 1787 3057 1249 -21 66 419 1031 334 -278 503 -5757 5757 5930 5680 250 -173 0 173 0 9385

Revised
-13735 -14163 20427 35472 -15045 3577 9834 -21302 1613 5522 -25211 11618 6451 444 0 142 121 128 111 7 8182 -75 5410 -5 41 20 21 32 0 5 525 -498 2779 490 1808 3078 1249 -21 66 415 1027 334 -278 -75 -5507 5507 5680 5680 0 -173 0 173 0 9385

Changes
301 300 305 55 250 -13 -63 300 0 0 300 1 0 0 0 0 0 2 2 2 0 525 0 257 0 0 0 0 251 0 0 249 2 17 0 21 21 0 0 0 -4 -4 0 0 -578 250 -250 -250 0 -250 0 0 0 0 0

Gross SBP Reserves

Summary of Changes from BOP( Interim ) July,2008

Interim Provisional Changes Current account balance Current account balance without off. transfers Goods: Exports f.o.b Goods: Imports f.o.b Trade Balance Services: Credit Services: Debit Balance on Goods & Services Income: Credit Income: Debit Balance on Gds & Serv. & Inc Current Transfers.:Credit Of which: Workers Remittances FCA Residents Saudi Oil Facility Current Transfers :Debit Capital Account, Capital Account, : Credit Capital Account... Debit Financial Account Direct Investment Abroad Dir. Invest. In Rep. Econ. Portfolio Investment Assets Portfolio Investment Liab. Equity Securities Debt Securities Other Investment Assets Monetary Authorities General Government Banks Other Sector Other Investment Liab. Monetary Authorities General Government Disbursements Amortization Other Liabilities Banks Other Sector Disbursements Amortization Other Liabilities Net Errors and Omissions Overall Balance Reserves and Related Items Reserve Assets Foreign Exchange ( SBP ) Foreign Exchange ( DMB ) Use of Fund Credit and Loans Purchases / Repurchases Exceptional Financing
-1010 -1010 1921 3117 -1195 263 691 -1623 65 405 -1963 968 627 100 0 15 2 2 0 -168 -1 341 -8 -120 -119 -1 20 0 -1 46 -25 -400 0 -192 51 221 -22 -17 -191 37 30 -198 -401 -1577 1577 1600 1338 262 -23 0 23 0 8048 -1040 -1080 1917 3146 -1230 223 694 -1701 65 405 -2041 1016 627 100 0 15 3 3 0 -324 -1 341 -8 -120 -119 -1 -190 0 -1 -207 18 -346 0 -189 54 221 -22 -16 -141 72 30 -183 -237 -1598 1598 1621 1335 286 -23 0 23 0 8048 -29 -69 -5 30 -34 -40 3 -77 0 0 -77 48 * 0 0 0 0 0 1 1 0 -156 0 0 0 0 0 0 -210 0 0 -253 ** 43 54 0 3 3 0 0 1 50 35 0 15 163 -21 21 21 -3 24 0 0 0 0 0

Gross SBP Reserves