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More transparency, says IMF
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September 27, 1999: 7:37 p.m. ET
Encourages global standards for release of economic and financial data
By Staff Writer M. Corey Goldman
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WASHINGTON (CNNfn) - In an effort to make the dubious art of economic number crunching just a little easier, the International Monetary Fund has adopted a guide, of sorts, to help its member countries report financial and economic statistics about themselves in a uniform way.
On Sunday, the Interim Committee of the IMF's Board of Governors unveiled in their communiqué a uniformed commitment to establish a set of guidelines for countries to report vital statistics about their economies and monetary policy actions to the rest of the world. The committee "urges the IMF and member countries to press ahead with efforts to improve the timeliness and comprehensiveness of data on capital flows."
The suggestions, which will likely be formulated into a more concrete code which all 182 of the IMF and World Bank's member countries would adopt, is designed to remove one of the most annoying and potentially damaging aspects of investing in a particular country - not knowing the true economic or financial performance of a country's economy.
"It seems ironic that we're arguing about whether or not transparency reports should be published," Gus O'Donnell, director of the British Treasury and Head of the Government Economic Service said Monday. "Do markets reward governments for greater transparency? I think the answer quite clearly is yes."
Statistical agencies like the Commerce Department in the U.S., Statistics Canada north of the border and the British Treasury are known throughout the world for providing a good section of numbers and percentages that calculate their own countries' growth rate, inflation rate, jobless rate, debt levels and other numbers that give investors at home and abroad a better handle on the economic performance of the country.
They are few and far between, however. Germany, until it revamped its reporting ahead of joining the European monetary union this year, was notoriously bad at reporting its financial health and the progress of its economy on a consistent basis. The Commerce Department, Statistics Canada and several other institutions have adopted set times to release economic data to financial markets.
In less-developed nations, there often is no agency that tallies the numbers or determines what kind of assets or liabilities exist - never mind allows the financial press to spit them out over the wires at a specific time.
In those cases, "there's often a lot of guessing by markets about how distorted the numbers are, which leads to countries and institutions releasing numbers that they think the market wants to see," O'Donnell said. The problem there is when the real numbers come out. "Governments who pledge transparency and try to inadvertently fool people will get caught," he said. "It prompts surprises, and financial markets don't like surprises."
Currently some 47 countries are subscribers to a service called Special Data Dissemination Standard, or SDDS. The IMF said it plans to encourage more of its members to partake in the updated version of that service - called General Data Dissemination System, or GDDS - to be implemented next year.
It also plans to encourage its member countries to adopt new standards for disclosing information and it will provide technical services to countries to help them enhance the quality and timing of the data they release.
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