This paper outlines the current practices for the compilation and dissemination of data on remittances in Ghana’s balance of payments framework.
It outlines discrepancies in this existing framework, as well as the need for additional data from new MTOs and Fintech companies to address the anomalies identified in the World Bank data on inward remittances and that from the Bank of Ghana’s data from the 23 authorised dealer commercial banks over the period 2016-2022.
This paper also illustrates weaknesses in the country’s remittance data as against that of the assessment of the World Bank’s remittance aggregates) and the need for specific practical guidance on data sources and compilation methods.
The inadequacy of practical compilation guidance concerns compilers, who, as a result, often produce data that is less credible than other balance of payments components.
As defined in the Balance of Payment Manual (BPM, the balance of payments (BOP) is a statistical statement that systematically summarises, for a specific period, the economic transactions of an economy with the rest of the world.
Transactions
Transactions, for the most part between residents and non-residents, consist of those involving goods, services and income; those involving financial claims on and liabilities to, the rest of the world; and those (such as gifts) classified as transfers, which involve offsetting entries to balance—in an accounting sense—one-sided transactions (International Monetary Fund, 1996).
Balance of payments statistics are included in a broad set of economic statistics known as the national accounts.
The System of National Accounts 1993 (1993 SNA) presents the conceptual framework for national accounts and the fifth edition (1993) of the Balance of Payments Manual (the BPM) presents the conceptual framework and the structure and classification of the balance of payments.
The high level of concordance between the 1993 SNA and the BPM is extremely important. In Ghana, over the past decade, remittances have constituted an important component of balance of payments accounts, which is, usually, recorded as receipts under the capital account section by the Bank of Ghana.
Ghana’s remittance receipts, in recent times, have assumed an increasing trend. The micro- and macro-economic impact of remittances has been widely documented in the various World Bank country reports.
Stabilising balance of payment
At the macro-level, remittances stabilise the balance of payments, hence contributing to closing the large and persistent trade gaps in many countries and preserving macroeconomic stability (World Bank, 2006).
At the micro-level, the development effects of remittances, with a certain degree of variety, have been documented for poverty alleviation, improving education and health outcomes, improving income distribution, and steering entrepreneurial spirit (Adams & Page, 2005).