Bank of Albania
Remittances
Compilation practices and BPM6
Implementation
Majela Collaku,
Expert, Bank of Albania
Skopje, 2 -5 October 2013
General Characteristics
Area: 28 748 km2
Population : 2.8 million
Capital: Tirana
Neighbor countries: Kosovo,
Macedonia, Montenegro,
Greece and Italy.
GDP/Capita: $3,900 (2012 est.)
Skopje, 2 -5 October 2013
Introduction
 Albania is a remittances recipient country,
 immigration phenomenon became evident for the very first time by
mid 1990,
 around 1.2 million Albanian migrants,
 680 million of euros inflow of workers’ remittances for 2012,
 7 % of GDP,
 34 % of Trade Balance.
 Main destination : Italy and Greece
Skopje, 2 -5 October 2013
Compilation Methodology
Main Source: Residual Model
Complementary source : Surveys
Basic Assumptions of Residual Model:
First: The money remitted by migrants in the home country is converted
into domestic currency (ALL) and used to buy goods and services.
Second: Foreign exchange market is in equilibrium, which means that,
the amount of foreign exchange inflows is equal to the outflows.
FX INFLOWS = FX OUTFLOWS
Skopje, 2 -5 October 2013
Residual Model
Foreign Exchange Inflows
Cash remittances (unknown)
(CR)
Cash exports*
(CE)
Cash travel (credit)*
(CTC)
=
Foreign Exchange Outflows
Cash imports**
(CI)
Cash travel (debit)*
(CTD)
Other cash exports in services * (OCE)
Other cash import in services *
(OCI)
Other inflows of FX***
Other outflows of FX***
(OIFX)
(OOFX)
* Not channeled through banking system
** Total imports - imports through banks – trade credit – aid – good for processing
imports)
*** The net change in the position of FX holding by banks and exchange bureaus
CR = CI + CTD + OCI – CE – CTC – OCE + NetFX (OOFX-OIFX)
RB = Remittances reported by banks and MTO’s
ER: estimated remittances
ER= CR + 20% x RB
On BoP it is applied:
ER * 0.9 = workers’ remittances and
ER * 0.1 = compensation of employees.
Data Sources
 Custom data
 Surveys (travel, smuggling, trade credits).
 Banking system / MTO
 Foreign exchange bureaus data
 Estimations
Skopje, 2 -5 October 2013
Limitations of Residual Model
 Relies on accuracy of data on which estimation is based (any
errors and omissions in that data will be reported as remittances)
 Cash balances of domestic sectors are difficult to estimate
(private sector holds undisclosed amounts of foreign currency)
 Cannot distinguish between purposes for which money are sent
(money could be sent for deposits in migrant accounts or
purchase of assets)
Skopje, 2 -5 October 2013
Complementary Sources - Surveys
 Quarterly survey on households (recipients of remittances)
 Temporary suspended due to the lack of a reliable register of
households. Planned to be resumed based on data from the
Population Census of 2011.
 Meanwhile a new pilot survey on migrants is introduced in 2011.
 So far, data retrieved from both surveys are not applied on BoP
components, but are considered as complementary source for
analytical purposes.
Skopje, 2 -5 October 2013
Complementary Sources – Surveys (Cont’ed)
Dimensions of surveys:
 Geographic Location.
 Characteristics of the emigrants/recipient households
 Emigrant’s monthly income
 Amount remitted as percentage to monthly/annually income
 Frequency of the remittances.
 The channels used to remit.
 The use of the remittances.
Skopje, 2 -5 October 2013
Remittances-new concepts and definitions
BPM6 introduces 4 aggregates:
1. Personal transfers (narrowest)
2. Personal remittances
3. Total remittances
4. Total remittances and transfers to NPISHs (broadest)
Skopje, 2 -5 October 2013
Remittances-new concepts and definitions (cont’ed)
Skopje, 2 -5 October 2013
Remittances-new concepts and definitions (cont’ed)
 “Personal transfers” will cover all current transfers between
resident and nonresident households.
 The concept is based neither on migration nor employment
status.
 Personal remittances are the sum of personal transfers and
compensation of employees less taxes, travel expenses etc.
Skopje, 2 -5 October 2013
BPM5-BPM6 changes
Main changes introduced in BPM6 regarding remittances:
 Introduction of the concept of “personal transfers” to
replace “workers remittances” in the BPM5;
 Definition of personal remittances and its introduction in
the balance of payments as a memorandum item;
 Change in recording of migrants’ transfer.
Skopje, 2 -5 October 2013
Remittances-BPM5 and BPM6 Presentation
 Personal Transfers = Worker’s Remittances in BPM5
 Personal Remittances = Household-household transfers + net
compensation of employees.
 Total Remittances = Personal Remittances + Social Benefits
BPM6 presentation ( Million of Euros)
2010
2011
2012
Personal Transfers (BPM6)
696.5
669.6
680.2
Personal Remittances (BPM6)
871.4
808.2
798.6
Total Remittances (BPM6)
871.4
808.2
798.6
696.5
669.6
680.2
BPM5 presentation ( Million of Euros)
Worker’s remittances
Skopje, 2 -5 October 2013
Data Availability by Components
 Compensation of employees - Model
 Personal transfers – MTO, BANKS, Model
 Travel and transportation related to temporary employment - Not





Available
Taxes and social contributions related to temporary employment –
Not Available
Capital transfers between households – Banks ITRS
Social benefits – Not Available
Current transfers to NPISHs – Not Available
Capital transfers to NPISHs - Not Available
Skopje, 2 -5 October 2013
Implementation Plans
 BoA will follow closely the remittances performed through






formal channels (MTO, Banks)
Revision of existing model/design of a new model
Conduct new survey on migrants (adding additional
question regarding travel expenses, social contributions,
salaries etc.)
Corporation with National Statistical Agency (INSTAT) and
other institutions for more reliable data.
More aggregated data from banks and MTO
Bilateral data sources
Additional data sources.
Skopje, 2 -5 October 2013
THANK YOU FOR YOUR ATTENTION!
Skopje, 2 -5 October 2013