Selected Issues on the Treatment of Nonperforming Loans in Macroeconomic
by Ralph H. Kozlow
This paper was prepared for the IMF’s Electronic Discussion Group
on the Treatment of Nonperforming Loans in Macroeconomic Statistics. Due
to the linkages between loan recognition and interest accrual, and between
loan writeoffs and operating surplus, decisions that are reached regarding
the treatment of these loans may have a significant impact on the calculation
of major aggregates in the national and international economic accounts.
In this paper, recommendations are made on a number of important questions,
and these recommendations are briefly justified. In particular, the treatment
of loan principal (that is, how should nonperforming loans – or
loans more generally -- be valued?), loan interest (that is, should interest
be accrued on nonperforming loans?), and operating surplus (how should
output and profits be measured?) are separately discussed.
Last changed: June 18, 2003