Coverage and Accounting Rules

Coverage
The Debt Reporting System (DRS) covers external long-term debt, loans with an original maturity of more than one year. Both public and private debt are covered, however, while public debt is reported on a loan-by-loan basis, for private debt only aggregated data are available.

DRS reports debt stocks and related flows on long term debt, such as amortization and interest payments, plus any other service charges.

Short-term debt are not included in the DRS. However, the Bank is interested in total external debt, and collects and publishes data for total external debt. In those cases when debtor data are not available, figures are estimated on the basis of data collected by the BIS and/or the OECD.

Residency
External debt is owed to nonresidents, were residency is defined in relation to a territory, according to the IMF's Balance of Payments Manual. Thus, residents comprise the general government, individuals, private nonprofit bodies, and enterprises all defined in terms of their relationship to the territory of that economy. All other agencies are considered nonresidents.

Example; A Government of Brazil debt to Citicorp (New York) is an external debt, because the creditor institution is a resident of the United States. It is immaterial whether the debt is denominated in US dollars or in Brazilian currency. A government of Brazil debt to the Banco do Brasil (a major Brazilian commercial bank) in Rio de Janeiro that is denominated in US dollars is an internal debt, not an external debt, even when the debt is repayable in foreign currency. A government of Brazil debt to the London branch of the Banco do Brasil, however, is an external debt. The currency of repayment (probably US dollars or pounds sterling) is not the deciding factor because the creditor is located in the United Kingdom.

Valuation principle
Debt accounts are in most cases kept on a cash basis when measuring flows like interest and service charges. Following the principle of cash accounting implies that only interest paid should be accounted for, while accrued but non-paid interest should be excluded. This is opposed to SNA and BOP which both follows the principle of accrual accounting --recording the value of interest accrued rather than paid.

In the DRS loans are reported on their original value less any repayments, thus, in the case of non-paid interest, a ‘new’ loan will appear, covering service payments in arrears, because this is classified as short term – rather than long term – debt.

Unit of Account
Debt data are normally reported to the Bank in the currency of repayment and converted into a common currency (usually US-dollars) for aggregation purposes. For conversion of stock figures are the end period exchange rates used, while flows are converted using the averages of the exchange rates over the period.