Responding to the Financial Crisis

Adelheid Burgi-Schmelz Director, IMF Statistics Department

Overview

  The financial crisis that started in advanced economies is spreading to emerging markets and low-income countries.

This is reflected in lending by the IMF to member countries; a year ago lending was depressed, in recent months it has now bounced back strongly.

IMF Credit: Amounts Outstanding and undrawn balances

$70 $60 $50 $40 58.7

$30 $20 $10 20.6

$0 End of 2005 End of 2006 Source: IMF Financial Resources and Liquidity Position Target for IMF lendable resources: $500 bn Managing Director: 2/13/09 14.4

End of 2007 60.0

Jan. 2009

Overview

 To further emphasize the severity of the situation, the IMF recently concluded an agreement with Japan to borrow $100 billion,  to boost the funds available for lending to member countries,  given the potential scale of borrowing the Fund is anticipating as the crisis spreads.

Overview

  Many aspects of the crisis story were available in the official statistics:   increasing assets to capital ratios of financial institutions imbalances in current accounts   fiscal deficits, and financial cross-border positions for industrial countries growing significantly faster than real activity.

The financial crisis is not the result of a lack of proper macroeconomic statistics.

Overview

 Indeed, the emergence over the past several years of a consistent economic statistics system and the data transparency initiatives, such as the IMF’s Special Data Dissemination Standard, remain highly relevant.

 However, as we see the recent financial crisis spread to the real economy and across borders this is not the time to be complacent about economic and financial statistics.

 What can we do to help?



Policy needs for Data

  One conclusion we have reached is that the recent events underline the importance to go beyond traditional statistical production approaches to obtain a set of timely and higher-frequency economic and financial indicators, at least for systemically important countries in more innovative ways. Indeed, the speed at which the crisis developed highlighted the need for indicators that could support early warning efforts.

Policy needs for Data

   This entails, among other things, a new perspective in assessing the trade-off between timeliness and completeness, and  a new look at the traditional statistical production model to meet the needs of today’s world.   In short, we need to ensure the continued relevance of economic and financial statistics in timeliness and frequency, and in the evolution from first estimates to solid statistics.

Interagency group on economic and financial statistics

 Also, despite the robust nature of the economic statistical system, the crisis has highlighted the need to address certain data gaps.

 Against this background, international agencies closely involved in economic and financial statistics have come together to establish the Interagency Group on Economic and Financial Statistics,  under the chair of the IMF, with the BIS, ECB, Eurostat, OECD, the UN, and the World Bank.

Interagency group on economic and financial statistics

 The group met for the first time on Friday, following two teleconferences.

 In many of these fields, work is already progressing and we want to ensure that there is not duplication of efforts at the international level  But to strengthen data availability the group agreed on two priority areas:

Interagency group on economic and financial statistics

   First, the group agreed to set up a public on-line website that   displays a set of economic and financial indicators for a group of systemic countries, with links to relevant websites, including the agencies on the group. The intention is that each agency would contribute data to the website.

The intention is to initially launch the website in the next 4-8 weeks with available information.  The website will expand over time

Interagency group on economic and financial statistics

 The development will draw on the IMF experience with its newly created internal Data Link.  The Data Link:  focus on systemically important countries and provides cross country comparisons;  make a wide range of data sources available to users; and  include information that is much more timely and frequent

Interagency group on economic and financial statistics

  In developing this site it has become evident that not all data are as up-to-date as we would hope  even for major economies.

Also, in the area of fiscal statistics in particular the idea of providing consistent and comparable data across countries has been a challenge.

Interagency group on economic and financial statistics

  Second, the group is identifying gaps in the available economic and financial datasets. For instance:  The financial sector has a central role in the crisis, and there is a need to enhance data availability,  not least for those segments of the financial sector where the reporting of data is not well established.

Interagency group on economic and financial statistics

   Balance sheet data particularly the nonfinancial corporates and household sectors.

of the other sectors,  The importance of sectoral balance sheets has been highlighted by the crisis: The impact of worth has been highly relevant to the current crisis, but country practice in compiling these data is uneven. house prices on household net And issues relating the instruments ultimate risk/credit transfer

Interagency group on economic and financial statistics

  Looking forward, in the near term the group is to:  develop an inventory of gaps,   identify whether an existing group is investigating, or not, and agree a way forward. But of course, we all face strong pressures of work in response to the crisis.

Conclusions

    The financial crisis is not the result of a lack of proper macroeconomic statistics. However, it is vital at this critical time that economic statisticians are attuned to the legitimate data needs of policy makers. And to develop a work program to fill the data gaps that the crisis has revealed. We look forward to the support of national authorities as we progress on this work.