Indicator 17.3.2 Volume of remittances (in United States dollars) as a proportion of total GDP

Indicator 17.3.2: Volume of remittances (in United States dollars) as a proportion of total GDP

Target 17.3: Mobilize additional financial resources for developing countries from multiple sources

World Bank (WB)

Definition:

Personal remittances received as proportion of GDP is the inflow of personal remittances expressed as a percentage of Gross Domestic Product (GDP).

Concepts:

Personal remittances comprise of personal transfers and compensation of employees. Personal transfers consist of all current transfers in cash or in kind made or received by resident households to or from non-resident households. Personal transfers thus include all current transfers between resident and non-resident individuals. Compensation of employees refers to the income of border, seasonal, and other short-term workers who are employed in an economy where they are not resident and of residents employed by non-resident entities. Data are the sum of two items defined in the sixth edition of the IMF's Balance of Payments Manual: personal transfers and compensation of employees.

The concepts used are in line with the Sixth Edition of the IMF's Balance of Payments and International Investment Position Manual (BPM6).

Percent (%)

Volume of personal remittances data are sourced from IMF’s Balance of Payments Statistics database and then gap-filled with World Bank staff estimates.

GDP data, sourced from the World Bank’s World Development Indicators (WDI) database is used as the denominator. GDP data collection is conducted from national and international sources through an annual survey of economists in the Bank’s country office network – the World Bank’s principal mechanism for gathering quantitative macroeconomic information on its member countries.

The national data provider of personal remittances is the institution in charge of the collection and compilation of the Balance of Payments statistics. This responsibility varies and is country specific (i.e. Central Bank). World Bank staff estimates for personal remittances data are used for gap-filling purposes. Personal remittances data are not reported directly to the World Bank from the national data provider. They are reported to the International Monetary Fund (IMF), which is the institution in charge of overseeing balance of payment stability as part of its institutional mandate.

GDP data are sourced from the World Bank’s World Development Indicators (WDI) database and are compiled in accordance to the System of National Accounts, 2008 (2008 SNA) methodology. GDP data collection is conducted through the Unified Survey process, the World Bank’s principal mechanism for gathering quantitative macroeconomic information on its member countries.

The accurate measurement and compilation of remittance data continue to pose challenges for several reasons.

(i) Remittance transactions through unofficial channels: A significant portion of remittances flows through informal channels, such as cash hand-carried by migrants when they return home. These transactions are difficult to track and often go unrecorded in official statistics. Furthermore, digitalization through Fintech solutions have significantly impacted the remittance industry but are difficult to track. Data on mobile wallets that receive remittances as well as blockchain and cryptocurrencies to facilitate cross-border remittances have yet to be incorporated into countries’ data compilation frameworks.

(ii) Inadequate adherence to the residency concept: With increasing numbers of refugees, including transit migrants (who do not establish permanent residency in their transit countries) as well as the new phenomenon of remote workers with dual residency status, further clarification and practical guidelines are needed to ensure comprehensive coverage.

(iii) Misclassification: Classifications used for remittance statistics are often not in conformity with guidelines outlined in the IMF’s Remittances Guide for Compilers or its Balance of Payments Manual (RCG/BPM6). Some non-remittance transactions, travel revenues and expenditures, or inward direct investment flows are often misclassified as inward remittances. And small trade payments, gifts to charitable organizations, or bank deposits are also sometimes misclassified as personal remittances, further complicating data accuracy.

(iv) Incompatibility of source data: There are several key limitations in the source data, including its lack of comprehensiveness, susceptibility to country-specific conditions, and incompleteness for proper transaction classification according to defined criteria in terms of scope, classifications, valuation, and required timing of recording.

Personal remittances are the sum of two items defined in the sixth edition of the IMF's Balance of Payments Manual: personal transfers and compensation of employees. World Bank staff estimates on the volume of personal remittances data are used for gap-filling purposes. GDP data, sourced from the World Bank’s World Development Indicators (WDI) database, are then used to express the indicator as a percentage of GDP.

2024-09-27

World Bank (WB)

The related indicator to SDG indicator 17.3.2 is indicator 17.3.1, which measures the proportion of a country's total domestic budget that comes from foreign direct investments, official development assistance, and South-South Cooperation.