Issue paper Definition of remittances Technical Subgroup on

Issue paper: Definition of remittances Technical Subgroup on Movement of Persons – Mode 4 (New York, 22 - 24 February 2006) 1

Overview • • Background Personal transfers Personal remittances Total remittances 2

Background • • TSG on Movement of Persons-Mode 4 submitted its recommendations to BOPCOM and the AEG Recommendations bring BPM 6 flows in line with 1993 SNA using items in the Annotated Outline AEG and BOPCOM conclusions diverge slightly What next? Reconcile the differences and resubmit to AEG and BOPCOM 3

Personal transfers • Definition Personal transfers consist of all current transfers in cash or in kind made, or received, by resident households to or from other nonresident households BOPCOM: Agree with definition. Workers remittances supplementary item to maintain time series. AEG: Suggests possible inclusion of capital transfers [Question 1] 4

Personal remittances • • • Definition Personal remittances = compensation of employees – social contributions + personal transfers + capital transfers between households Essentially household-to-household transfers Excludes: non-life insurance premiums and claims, investment income 5

Personal remittances (Cont’ed) BOPCOM: Agree with definition and “netting” COE of social contribution, taxes on income, travel and transportation costs related to short term employment. Þ Should personal remittances (“netting” COE) be part of the standard presentation? Þ Should capital transfers be included in the definition? • 6

Personal remittances (Cont’ed) AEG: Favors broader definition, proxy to disposable income from abroad: Personal remittances + social benefits Social benefits is likely to be an item of the standard presentation. Þ Should the new concept of disposable income from abroad be retained – in addition to personal remittances? • 7

Total remittances Definition Total remittances = personal remittances + social benefits + current transfers to NPISHs BOPCOM: Agree with above definition. AEG: Agree but raise issue of whether to include capital transfers. Þ Should current transfers to NPISHs be considered part of the standard presentation? Þ Should capital transfers to NPISHs be included in the definition? • 8

Suggested Standard Components related to Remittances in BPM 6 (AO) 9

Questions to the TSG 1. What is the opinion of the TSG on whether to include capital transfers between resident and non-resident households in the definition of personal transfers in para 6? 2. Does the TSG agree with the definition of personal remittances as a household-to-household transfer defined as in para 12? 3. Is the TSG in favour of “netting” compensation of employees as part of the BOP standard presentation? 4. Does the TSG agree with the inclusion of capital transfers between households in the definition of personal remittances? Should capital transfers to/from households be a BOP standard component or a supplementary item? 10

Questions to the TSG (Cont’ed) 5. Does the TSG agree with the definition of disposable income from abroad defined as the sum of personal remittances and social benefits? 6. Does the TSG agree with the definition of total remittances as defined in para 22? 7. What is the opinion of the TSG on whether to include capital transfers to NPISHs in the definition of total remittances? a. If in favour, should capital transfers to NPISHs be a BOP standard component or a supplementary item? 11