By Stefan Wagstyl in London and Jan Cienski in Warsaw
Published: May 6 2009 20:30 | Last updated: May 6 2009 20:30
The International Monetary Fund has corrected an embarrassing error that led to the publication of exaggerated estimates of the external debt levels of crisis-hit eastern European states.
In its latest Global Financial Stability Report, published in April, the IMF provided key numbers on 38 selected emerging market countries, including their 2009 external debt refinancing needs as a ratio of their foreign exchange reserves.
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But after the numbers for some countries were challenged by central bankers, analysts and journalists, the IMF revised the data and began publishing new figures for the external debt/reserves ratios of some eastern European countries.
The ratio for the Czech Republic was cut from 236 per cent to 89 per cent and Estonia’s was reduced to 132 per cent from 210 per cent. It is understood the figure for Ukraine is also being cut to 116 per cent from 208 per cent, that Lithuania’s ratio of 425 per cent may also be recalculated and that others may follow..
The IMF said on Wednesday it would verify its numbers and publish correct figures on its website as soon as they were available. “We regret any confusion that may have arisen as a result of our publication of erroneous figures.”
The fund added that it was now reviewing “how the errors occurred” and would “amend the IMF’s internal procedures according to the lessons learned”.
The error for the Czech Republic occurred because of “a data entry error”, the fund said. In other cases, short-term debt repayments were “inadvertently double-counted”.
The data revision comes at a sensitive time for central and eastern Europe, which has been particularly reliant on external debt financing compared with emerging markets in other regions.
Even after the reductions, the 2009 external debt refinancing/reserves ratios are much higher in eastern Europe than in Africa, Latin America or Asia. The figure for South Korea, the largest outside eastern Europe, is 93 per cent.
Charles Robertson, chief economist for emerging markets at ING, the Dutch bank, said in a report to clients: “What this means is that eastern Europe does not look as risky as it appeared in the . . . report released a couple of weeks ago.”
Zdenek Tuma, governor of the Czech National Bank, said: “We are pleased that the IMF took a detailed look at the matter, which led to a different conclusion.”
The eastern European error is the second time in less than a month that the IMF has had to correct published data. The fund changed its estimates of the costs of Britain’s banking losses from 13.4 per cent of gross domestic product to 9.1 per cent after the UK Treasury said the original number was wrong.
Source: http://www.ft.com/cms/s/0/303a1882-3a72-11de-8a2d-00144feabdc0.html
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