COMPILATION OF QUARTERLY BALANCE OF PAYMENTS

In the world practice three different systems and their combinations are used to compile balance of payments:

	survey system
	settlements system, cash-based system;
	administrative system.

The survey system draws upon information from various statistical surveys and studies. Both sampling and census are used, depending on the requirements, field of study and peculiarities of a specific country. The structure of the questionnaire follows either the balance of payments structure or the structure of financial statements and accounting principles. The advantage of the survey system lies in its flexibility but, on the other hand, statistical surveys are expensive to conduct, they have a low response rate and are not very operational. Anglo-American countries Australia, New Zealand, the United Kingdom, Ireland, the USA, and Canada are among successful users of the survey system.

The settlements system is based on collection, coding and processing of international payments through resident banks. Based on the description of the transaction, clients, commercial institutions or the central bank attribute a transaction code to each incoming or outgoing payment in compliance with the balance of payments structure. The settlements system allows to collect detailed and operational information but is still limited: money flows do not reflect accrual approach, the description of a transaction or balance of payments code is often missing, netting appears, and money flows do not allow to estimate positions. Pure settlements system is being pushed out by the mixed system in most countries of continental Europe.

The administrative system draws information from the data collected beforehand by various agencies. The use of this system requires full control over external transactions by the public sector. There are few countries using solely administrative information for balance of payments purposes but almost all countries apply it to a larger or smaller extent. The major shortcoming of the administrative system lies in weak data quality control.

Estonia started compiling national balance of payments in 1992. Due to the weakness of the banking system at that time, the survey system was introduced. However, as this system is not sufficiently flexible in the changing economic environment, the possibilities to apply the settlements system upon compiling the balance of payments were studied. The settlements system was launched in parallel to the survey system in 1994. Arising from the compilation of international investment position as of 1996, surveys have become more significant. Above all, surveys facilitate collecting information on an accrual basis and other indicators not reflected in money flows (e.g. trade credit, reinvested earnings).

By now Estonia has developed its own mixed system of compiling balance of payments. Regarding other quarterly statistics on balance of payments and the external sector, the survey system supplemented with the information collected through the settlements system is significant. Besides monthly reports by the central bank, credit institutions and the government sector, the settlements system supplemented by various econometric models is applied upon compiling monthly balances of payment (see Compilation of balance of payments flash estimate).

Currently, ten different surveys are in use, collecting quarterly information from more than 3,200 enterprises. The quarterly settlements system involves approximately 80,000 transactions significant for the compilation of the balance of payments, the information on which is received through the so-called open system: the central bank gets information only on the debit or credit side of the foreign payment order. Only bank clients' payments are communicated. Banking sector transactions are recorded in the balance of payments based on banks' balance sheets, income statements and other financial reports.

Apart from the above, information is obtained from multiple other channels: official trade statistics, the Central Register for Securities, Financial Supervision Authority, surveys conducted by the Statistical Office of Estonia, Ministry of Justice Centre of Registers, accounting registers in Eesti Pank, public sector institutions etc. In addition, statistical surveys are conducted, assessments made and econometric methods applied.

With the approval of European Union institutions this model has recently been gaining popularity also in other European countries that so far had been obtaining information only from the cash-based system, established under tight capital control.