Net resource transfer/Gross National Product

(a)     Name:  Net resource transfer/Gross National Product (GNP).
(b)     Brief Definition:  The ratio of aggregate net resource transfers
(long-term) to GNP.
(c)     Unit of Measurement:  %.

(a)     Agenda 21:  Chapter 33:  Financial Resources and Mechanisms.
(b)     Type of Indicator:  Driving Force.

(a)     Purpose:  The purpose of this indicator is to help assess the
availability of long-term external finance to a country.  The ratio offers a
measure of the recourse to external finance in relation to the output of the
country.

(b)     Relevance to Sustainable/Unsustainable Development:  Financial
resources are obviously needed for the attainment of sustainable development. 
Agenda 21 calls for the monitoring of the provision of financial resources,
particularly in developing countries, so that the international community can
take further action on the basis of accurate and reliable data. Recourse to
external finance can be to stimulate investment and growth, increase
consumption, or augment reserves to cushion against future shocks.  Lack of
an adequate level of external finance can be a constraint to policy adjustment
and growth.

(c)     Linkages to Other Indicators:  This indicator is especially linked to
other economic indicators related to international cooperation, financial
resources, and consumption.  Examples would include Gross Domestic Product per
capita and the World Bank ratio of Debt to GNP.

(d)     Targets:  Not available.

(e)     International Conventions and Agreements: Not available. 

Net resource transfers are net long-term resource flows less interest payments
on long-term loans and profit remittances on foreign direct investment.  Net
long-term resource flows are defined as the sum of net resource flows on long-
term debt (excluding International Monetary Fund (IMF)), that is disbursements
less principal repayments, plus non-debt-creating flows.  Non-debt creating
flows are net foreign direct investment, portfolio equity flows, and official
grants (excluding technical cooperation).  Foreign direct investment is
defined as investment that is made to acquire a lasting management interest
(usually 10% of voting stock) in an enterprise operating in a country other
than that of the investor, the investor~s purpose being to have an effective
voice in the management of the enterprise.  It is the sum of equity capital,
reinvestment earnings, other long-term capital, and short-term capital as
shown in the balance of payments.  Portfolio equity flows are the sum of
country funds, depository receipts (American or global), and direct purchases
of shares by foreign investors.  Grants are defined as legally binding
commitments that obligate a specific value of funds available for disbursement
for which there is no repayment requirement.  Loan interest payments are the
amounts of interest paid by the borrower in foreign currency, goods, or
services.  Profit remittances on foreign direct investment are the sum of
reinvested earnings on direct investment and other direct investment income.

Gross national product is an economic aggregate.  It is the measure of the
total domestic and foreign output claimed by residents of an economy, less the
domestic output claimed by nonresidents.

The principal sources of the information for long-term external debt are
reports from member countries to the World Bank through the Debtor Reporting
System (DRS).  These countries have received either IBRD loans or IDA credits.

Reporting countries submit detailed loan-by-loan reports through the DRS on
the annual status, transactions, and terms of the long-term external debt of
public agencies and that of private ones guaranteed by a public agency in the
debtor country.  Information on debt owed to multilateral institutions is
drawn from the files of these institutions.  A total of 136 individual
countries report to the World Bank~s DRS.

Data on the use of IMF credit can be derived from the IMF~s Treasury
Department.  

The short-term debt data is reported by the debtor country or derived from
estimates from creditor sources.  The principal creditor sources are the
semiannual series of commercial banks~ claims on developing countries,
published by the Bank for International Settlements (BIS), and data on
officially guaranteed suppliers~ credits compiled by the Organisation for
Economic Cooperation and Development (OECD).  For some countries, estimates
are prepared by pooling creditor and debtor information.

Data on non-debt creating flows is derived from several sources.  Data on FDI
is from the IMF balance of payments, supplemented by detailed data on direct
investment from source and recipient countries.  Data on portfolio equity
flows is obtained from market sources and national statistical offices or
securities exchanges, and that on grants from the OECD Development Assistance
Committee.

Data on GNP are from national statistical offices, complemented by World Bank
staff estimates.

The lead agency is the World Bank.  The contact point is the Chief, Indicators
and Environmental Valuation Unit, Environment Department, the World Bank; fax
no. (1 202) 477 0968.

Not available.

LEAD AGENCY: WORLD BANK