- June 7, 2016
- Posted by: admin
- Category: Macroeconomic Management
By Rodney Lwanga Timothy Samora
2015
This paper summarizes the theoretical and practical compilation of financial derivatives that is used by Uganda in the compilation of the Balance of Payments (BoP). Some of the countries in the region are compiling data on derivatives. However, others are in the process of starting to compile this data. The principal objective of this paper is therefore to share the methodology used in compilation of data on financial derivatives for BoP purposes. Statistics on financial derivatives include commercial banks foreign exchange derivatives business. These statistics are important for the BoU to assess financial situations, monitor potential risks, and are utilized as effective references to monetary policymaking. They are also essential for increasing market transparency as they provide a full picture of the development of derivatives in the local and foreign market to the public.
However, even though there is a functioning system of compilation of financial derivatives activities, there still remain challenges in the existing methodologies on compiling Uganda’s derivatives statistics, and therefore improvements on existing data sources and reporting frameworks should be considered. It is challenging to obtain comprehensive data on derivatives. Notional values may be relatively easy to obtain, data on market values of investment positions may also be somewhat easy to obtain, whereas comprehensive data on transactions by enterprises dealing in commodity derivatives is difficult to obtain. Appropriate action should be taken to address these data gaps.