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Friday, February 28, 2025

New Central Bank report: Errors and omissions returned to US$2B after

COVID-19

by

203 days ago
20240809
The Central Bank in Port-of-Spain

The Central Bank in Port-of-Spain

ROBERTO CODALLO

​The net er­rors and omis­sions of T&T’s bal­ance of pay­ments re­turned to over US$2 bil­lion in 2022 and 2023, fol­low­ing a dip dur­ing the pe­ri­od of the COVID-19 lock­down, ac­cord­ing to in­for­ma­tion re­leased by the Cen­tral Bank of T&T yes­ter­day.

The Cen­tral Bank pub­li­ca­tion of a note on er­rors and omis­sions in T&T’s bal­ance of pay­ments came af­ter econ­o­mist Mar­la Dukha­ran pub­lished a re­port last week Wednes­day, out­lin­ing that on av­er­age over US$2 bil­lion “dis­ap­pears” an­nu­al­ly from this coun­try in er­rors and omis­sions. She added that on a per capi­ta ba­sis, T&T is the world’s largest los­er of for­eign cur­ren­cy.

The Cen­tral Bank said the note is the first in a new se­ries that aims to ex­plain im­por­tant con­cepts and mon­e­tary pol­i­cy ac­tions to a broad pub­lic au­di­ence in non-tech­ni­cal terms.

In its note, the Cen­tral Bank ex­plained that the bal­ance of pay­ments is “a sta­tis­ti­cal state­ment that sum­maris­es fi­nan­cial trans­ac­tions be­tween res­i­dents of an econ­o­my and non-res­i­dents (or the rest of the world) dur­ing a pe­ri­od.”

The bal­ance of pay­ments com­pris­es the cur­rent ac­count, the cap­i­tal ac­count, the fi­nan­cial ac­count and the over­all bal­ance. The net er­rors and omis­sions rep­re­sent a bal­anc­ing item in the bal­ance of pay­ments of a coun­try, said the Cen­tral Bank.

T&T’s cur­rent ac­count, which shows the flows of goods, ser­vices, pri­ma­ry in­come and sec­ondary in­come be­tween res­i­dents and non res­i­dents, in 2023, record­ed a pos­i­tive sur­plus on its cur­rent ac­count of US$3.39 bil­lion.

The Cen­tral Bank said the cap­i­tal ac­count trans­ac­tions are “rel­a­tive­ly small,” but the fi­nan­cial ac­count, which shows trans­ac­tions be­tween res­i­dents and non res­i­dents that in­volve fi­nan­cial as­sets and li­a­bil­i­ties, record­ed a net out­flow of US$1.60 bil­lion.

“The over­all bal­ance rep­re­sents the change in in­ter­na­tion­al re­serves man­aged by the Cen­tral Bank over the pe­ri­od. In 2023, the change in in­ter­na­tion­al re­serves was -US$736.1 mil­lion,” said the Cen­tral Bank.

The Bank al­so em­pha­sised that in prin­ci­ple, the bal­ance of pay­ments must bal­ance, mean­ing the over­all bal­ance must be equal to its com­po­nents, the cur­rent, cap­i­tal and fi­nan­cial ac­counts.

The Cen­tral Bank ex­plained that its as­sem­bles da­ta on the coun­try’s bal­ance of pay­ments from pri­ma­ry sources, such as the Cen­tral Sta­tis­ti­cal Of­fice, the Min­istry of En­er­gy and Cus­toms. But it al­so col­lects da­ta from sur­veys in­volv­ing pri­vate and pub­lic in­sti­tu­tions.

“As not­ed ear­li­er, er­rors by re­port­ing agen­cies, and more so in­com­plete cov­er­age of trans­ac­tions con­sti­tute the er­rors and omis­sions in the bal­ance of pay­ments,” said the Cen­tral Bank.

It said two is­sues in the sphere of in­com­plete cov­er­age are: the mea­sure­ment of trav­el ex­pens­es and the re­sponse rate of com­pa­nies to the Cen­tral Bank’s sur­vey re­quests be­ing about 50 per cent.

It not­ed that er­rors and omis­sions were US$2.36 bil­lion in 2023 and US$2.07 bil­lion in 2022, but on­ly US$90.5 mil­lion and US$132.6 mil­lion in 2021 and 2020 re­spec­tive­ly. In 2019, er­rors and omis­sions to­talled US$1.10 bil­lion.


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